Critical Chain and Risk Management
-- Protecting Project Value from Uncertainty (Part 6)
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6. PROJECT AND RISK RESPONSE CONTROL
-- CLARITY OF PRIORITIES AND CORRECTIVE ACTION
At several points in this paper, the need for and benefit of effective project control has been highlighted. Planning, scheduling and synchronization are all processes that will create a model of expectation for the project organization. But that model needs to be managed once it comes into contact with reality. Appropriate resource behaviors, especially the required focus on the most important task at hand, require the occasional guidance to clarify priorities in a shifting situation. And if the critical chain scheduling process is used, something needs to be used to replace task due-dates to assess the health of project promises.
Project Control with Buffer Management
The buffers introduced in the Critical Chain scheduling methodology do not only serve to protect project promises in a static manner. They also provide an ongoing view of the health of the project as reality impacts the expected model that is the original schedule. As tasks take longer than the schedule anticipates, buffers are consumed. As they take less time, those buffers are replenished. Awareness of project buffer consumption relative to the completion of the critical chain (and to the expected variability of the remaining work on the chain) provides an important forward-looking focal point for managing project execution.
A number of straightforward ways of assessing buffer consumption make it clear to everyone involved when and where corrective actions need to be taken. Effective Buffer Management is a critical factor in successful implementations of Critical Chain-based project management systems.
Buffer Management typically involves a combination of real-time access to buffer condition and periodic "buffer management meetings." Real-time, daily updates of project and buffer status are feasible in a Critical Chain environment due to the simple data needed to update active tasks. That data requires only one number at the end of each day -- a current estimate of time to complete the task at hand. Immediate issues can be quickly identified through this process.
Periodic multi-project buffer management meetings, typically involving project owners, project managers, and resource managers, start with buffer status of the portfolio's projects. Those with buffers "in the green" require little if any discussion. Those "in the yellow" or "in the red" are rightfully the focus of the meeting, with project managers highlighting identified opportunities and actions for buffer recovery (Patrick, 1999a). These meetings are also useful for supporting regular, forward-looking risk management as well, again with an eye to current buffer condition and to its ability to absorb the impact of identified risks.
Buffer Management and Risk Identification
Consistent buffer management is a major contributor to the establishment of a risk management culture in a particular project environment. Risks and their positive flip side -- opportunities -- are, by definition, potential future occurrences that require a forward-looking approach to support their identification. The everyday process of developing an estimate-to-complete task status keeps short- and immediate-term risks in the forefront of the mind of the reporting resources. In addition, the elimination of task estimates as commitments and the related transfer of safety to the buffer should support a greater willingness to raise concerns, if the buffer is there to absorb them and they are not expected to have to have an immediate solution to protect their personal performance.
Buffer management also provides a clear view of the cumulative risk effects of project performance. Buffer consumption at any point in time is the result of all previous work, which can eat away at the buffer quietly but insidiously as the project progresses. If buffer consumption is tracked against the amount of chain completed, or alternatively if buffer remaining is tracked against the amount of buffer required to protect what remains of the chain, trends of diminishing buffer condition or the crossing of pre-determined thresholds will serve to identify indications of risk for the project as a whole.
Buffer Management, Risk Assessment and Response Control
Once a possible risk is identified via its impact on buffers, assessment of whether is deserves further attention is required. There are two mistakes that can be made in dealing with identified risks -- not acting on them if action is indicated and acting on them if they don't really matter. Project managers are probably sufficiently paranoid so that the risk of not acting is relatively remote. However, that same paranoia can sometimes drive analyses and actions that are not really necessary. And those unnecessary actions will only serve to distract resources and managers from getting on with the necessary work.
Buffer charts, tracking buffers condition against chain completion or buffer required for remaining work, can be utilized in a way that is not unlike the way control charts are used in statistical process control for production environments. For an identified risk, a "what-if" analysis can be easily performed, resulting in a view of the schedule or budget buffer after its run-in with the concern. If sufficient buffer remains for protection of the promise from the variation anticipated for the remaining work, then it is not worth the time and attention necessary to develop corrective actions. In this way, buffer management as risk response control has, embedded within it analysis useful for assessment of individual risks as well.
Buffer Management and Risk Mitigation
The quality of actions taken to avoid or mitigate identified risks is highly dependent on the quality of thinking that goes into their design. The quality of thinking applied to a situation is highly dependent on the environment in which it takes place. With buffer management as the primary project control mechanism, consideration of corrective action takes place when buffer status leaves what is commonly referred to as the "green zone" and crosses into the "yellow zone," or when trends of accelerating buffer consumption are detected. These assessment triggers occur when there is still considerable buffer, and therefore allow the necessary thinking to take place in an environment that is not one of "panic."
If, on the other hand, it does threaten to move the buffer "into the red," then the required mitigation needed to protect the project promise -- in terms of buffer reclamation necessary to bring it back to "the green" -- provides guidance on the magnitude of the required corrective action.
This article is an expanded version of one originally presented at the national Project Management Institute Symposium (Nashville, November, 2001). It is presented here in linked sections for ease of reading on the web. This version has been accepted for the 2002 World Project Management Week conference (Hong Kong, March, 2002). For off-line reading and sharing, the full article can be downloaded in Adobe Acrobat (pdf) format at ccrisk.pdf or in Microsoft Word format at ccrisk.doc.
1. INTRODUCTION
-- MANAGING UNCERTAIN EVENTS FOR CERTAIN PROMISES
2. PROJECT PLANNING
-- DEPENDENCIES AND DURATIONS
3. PROJECT SCHEDULING
-- INTEGRATIONS, VARIATION, AND RATIONAL PROMISES
4. RESOURCE BEHAVIORS
-- MINIMIZING THE EFFECT OF PARKINSON'S LAW
5. SYNCHRONIZATION OF THE PIPELINE
-- MINIMIZING RISK OF CROSS-PROJECT IMPACTS
6. PROJECT AND RISK RESPONSE CONTROL
-- CLARITY OF PRIORITIES AND CORRECTIVE ACTION
7. THE THEORY OF CONSTRAINTS
-- MORE THAN CRITICAL CHAIN PROJECT MANAGEMENT
8. SUMMARY -- A FORWARD-LOOKING APPROACH TO FUTURE RISKS
9. REFERENCES
