Will Foulds from Redstone Risk Ltd and Mark Franklin from Safran Software Solutions discuss how to realise extra value from cost and schedule risk analysis. Check out the full video through the link below:
The majority of project teams conduct cost and schedule risk analysis (CSRA) for one simple reason – more realistic information = better business decisions.
Revealing the likely impact of individual risks on a project’s cost and time to complete, CSRA is a valuable tool in every project team’s toolbox. It ultimately enables organisations to turn their project risk data into meaningful messages that inform project teams, guide their decision-making and engage them in a way that many traditional project management techniques simply cannot.
Another well-known business benefit of CSRA is its role in strengthening customer confidence. Effective CSRA enables project managers to consider schedule and cost risks side by side and demonstrate how mitigation could help to deliver the project on time and on budget. It’s highly likely that the pain caused by leaving a project to chance and getting it wrong and the benefits delivered by CSRA far outweigh the cost of performing it.
UNLOCKING UNTAPPED VALUE
While CSRA’s importance as a decision-making tool is no secret, many project teams are still skimming the surface when it comes to understanding its full business benefits. By delving deeper into its capabilities, project teams can realise the full potential of this process and optimise outcomes across a number of key areas:
Communicate better with key stakeholders
In many cases, discussions with stakeholders revolve around the use of traditional risk registers. However, use of static figures and tables can be uninspiring and make the relevance of key risk data difficult to see.
Enabling the rapid creation of dynamic diagrams and graphs, Safran’s CSRA software (Safran Risk) brings the relevance of risk data to life in a way that guides smart decision-making. An increased move towards visual thinking on projects can also help to ensure that risk management remains engaging and relevant to executives in a hurry and the next generation of project managers.
Win over hearts and minds
The effective use of CSRA can help project teams to keep one step ahead when preparing for likely questions from senior-level stakeholders, making it easier to get them on board with risk management activities. It’s worth bearing in mind that risk-related decisions are rarely based on hard data alone; developing stakeholders’ understanding and building their confidence is key to securing their engagement.
The ability to use CSRA to plan for a number of different ‘what if’ scenarios can support project teams in getting the attention of key stakeholders and helping them feel empowered to support the team’s intelligence-based recommendations.
Focus risk efforts where it matters
Effective risk management isn’t about planning for every uncertainty set out in the risk register. In the project world, time is money, and it’s important not to waste it by trying to manage insignificant risks.
A key advantage of CSRA is that it enables project teams to make the most of their time and energy by using data to validate which risks most significantly impact project outcomes and tackle them proportionately.
Prepare for many versions of the future
When conducting a risk analysis, many project teams will only run a single model. However, this could leave them unprepared for handling unforeseen events.
By inputting data for a number of possible scenarios, CSRA can help project teams to prepare for the most likely versions of the future and ‘stress test’ their schedule’s ability to withstand unwanted setbacks.
Uncover hidden insights
Each CSRA generates a wealth of valuable data, however, often, only a fraction of this is put to good use. For example, the process may reveal a number of potential critical paths. This enables project teams to proactively intervene on hidden ‘hot-spots’ to keep timings and costs on track.
Graphs generated as part of a CSRA may also reveal hidden interrelationships, helping project teams to make more intelligent decisions and optimise project outcomes.
DOING IT RIGHT
One thing that project teams should remember when conducting a CSRA, is that quality data inputs will result in quality outputs. Without an effective understanding of their risk data, project teams won’t be able to drive valuable insights from the CSRA process.
Project teams also need to know their audience, as this will shape the level of depth and complexity required from their CSRA reports. For example, they should take account of who they are talking to. Is it another risk management specialist, or the business’ CEO, who simply needs to know the level of spend needed to keep project risks under control?
When done well, CSRA can be a vital part of a project team’s armoury. By using its capabilities to the full, they can get people on board with mitigation activities and ensure that risk is never pushed to the sidelines, while boosting business value in many different areas.