Risk Management and Project Scheduling

Risk management plays a significant role in project scheduling

Anyone involved in project management will understand the pressures of progressing delivery against an uncertain backdrop, where not everything is under your control. Uncertainties can arise from a variety of sources, such as market conditions, supply chain performance, evolving regulatory landscape, community and stakeholder pressures and so on.

The Association for Project Management (APM) defines a risk event as:

"An uncertain event or set of circumstances that would, if it occurred, have an effect on the achievement of one or more [project] objectives."

Understandably there will often be a low appetite to project risk, particularly where public money is being spent. Proactive management of risks is therefore integral to project success. Good risk identification, analysis and management will:

provide you with a better understanding of the risks attached to the project,
help you to assess the probability and impact of a risk event on your project timeline; and,
help you to develop effective mitigations in response.

Managing schedule risk can be challenging, but success in identifying and assessing risks, and implementing effective responses to them, will help you to keep your project on track and avoid setbacks.

5 things to consider when incorporating risk into your project planning

1. Monte Carlo or bust

Whilst there are numerous techniques to assess the significance of identified risks, there are principally two core approaches: qualitative and quantitative.

All projects tend to include some form of qualitative approach to management, typically captured in a risk register. This approach involves a subjective assessment of the types of risk that may occur, the likelihood of the risk occurring, and the nature of the impact they will have – such analysis is normally based on the knowledge and experience of the individuals taking part in the risk identification and analysis.

Quantitative risk assessments can be a powerful method for analysing the overall effect of risk on project objectives, however they are less common, often requiring more specialist tools and expertise. When it comes to schedule risk analysis, a widely used quantitative technique is Monte Carlo simulation, however like all data-based analysis, it relies on good quality inputs to be effective. A key source of input data will be your qualitative risk register, therefore focus effort on getting risks (and your schedule!) to a high quality first before applying more advanced simulation tools.

2. Be proactive - prioritise and mitigate

Risk responses are typically considered in terms of ‘avoid’, ‘treat’, ‘transfer’ or ‘tolerate’. Of course, not all risks can be avoided, it may be impractical or too costly to avoid a risk completely, so another mitigation strategy is required.

Ensure that high-priority risks (the ones that matter most in terms of likelihood and impact to your project schedule/budget), are given further attention to mitigate slippage and protect timelines. For example, these strategies may include reallocating resources to mitigate risk to a key milestone, adjusting task dependencies to mitigate risk to the duration of an early phase of work, or allocating additional time as a contingency measure for activities on your critical path.

3. Risk as an opportunity

When identifying risks, it is natural to consider all the things that could possibly go wrong and put your project into difficulty. However, not all ‘uncertain events’ are negative; some uncertainties may generate upside possibilities for the project if they happen, which may save time (and cost!), for example, an unexpected finding from the site survey which improves scheduled utilities works. Best-practice risk management therefore advocates for the proactive management of both threats and opportunities through the project risk process. Where schedule opportunities are identified, response actions should aim to exploit, enhance, share or reject the opportunity.

4. Continual monitoring and review

Effective management of schedule risk should be an ongoing process throughout the project lifecycle.

Conduct risk reviews in conjunction with regular schedule progress tracking to identify any new risks that may emerge, and monitor existing risks based on changing circumstances. This will help ensure your schedule risk management approach remains current and aligned with the evolving project environment.

As delivery progresses, don’t forget to monitor risk responses and assess how effective any mitigations have been. This can will help with benchmarking data and opportunities to apply learning for any future projects.

Top tip: use risk triggers to support risk monitoring and controls. These serve as indicators that a risk has or is about to occur, they can also be helpful in giving an indication of when a risk is expected to occur. Define and keep a close eye on risk triggers to help you in taking timely actions to mitigate any potential impacts.

5. Assign ownership

Each risk needs an assigned owner who is responsible for the management, monitoring and control of that specific risk, including the implementation of any response actions.

Selecting the risk owner typically involves discussion and consideration of the nature of the risk, and assessing who is best placed to understand the particulars of the specific risk, correctly determine the potential impacts and develop an effective mitigation strategy in response.

Choosing and assigning the right owner is an important step in your schedule risk management process. Risks need to be managed by individuals who have the knowledge, resources and authority to deal with them effectively.

In summary, risk management plays a vital role in project scheduling by incorporating the identification, analysis and management of risks into the planning process, and implementing responses to keep project delivery on track. Further information and tools can be found in some of the links below.

Navaz is a Chartered Project Manager at Arup with extensive advisory and project delivery experience at both project and major programme level. Navaz is skilled at planning and managing projects and programmes for client organisations.

If you have any questions on this topic, or would like support, please contact your Delivery Associate, or email DeliveryAssociatesNetwork@Arup.com