Finally, A Use For Risk Managers!

 

As my regular readers are aware, I take a rather dim view of the entire risk management arena, and have, on more than one occasion, referred to it as “institutional worrying, tripped out in statistical jargon.” I have also accused them of pushing their ideas of management information generation and analysis way past their  proper epistemological boundaries, wasting time and resources that could be better spent on the creation or maintenance of legitimate information streams. And, while I still hold these views, it occurs to me that the risk managers could actually provide a much-needed service to the project management world.

This much-needed service has to do with the second accusation I’ve leveled against them – that they push their Gaussian-curve-based notions of management information creation into areas where they simply don’t work. This is also something our friends, the accountants, do all the time. To be fair, business schools across the world regularly teach that virtually any piece of management information that involves money must originate with the general ledger, and their students simply take this notion into the real world. However, once a project has been provided its actual costs by Work Breakdown Structure element at the reporting level, the general ledger has no further contribution to the information systems that allow the assessment of project cost, scope, or schedule performance, period. None. Zero. Zilch. Nada.

Ah, but the accountants will never accede to that notion. Need an analysis on the cost variance? They’ll be happy to compare your budgets to your actuals, and can’t be convinced that that’s not a cost variance. Need an estimate at completion (EAC)? They will gladly provide a number based on the rate that you are spending, without taking into account (or even recognizing, really) the role of the actual performance against the project’s scope. It’s just the way they roll. It is futile to try to reason them out of these analysis techniques – they’re convinced of their efficacy, and similarly convinced that all who disagree with them are rubes. What’s a project management information system analyst to do?

Call in the risk managers!

Look at all the damage they do to legitimate PMISs. Surely, with a little redirection, they could inflict similar devastation on the accountants! I remember in the early 1990s, I saw a whole host articles from contributors who would perform some sort of statistical analysis on the float (both free and total) from complex schedule networks, trying to tease out some kernel of insight. It would take a few attempts to read the entire article, since these tended to be about as interesting as watching grass grow. 

Just think of all the introspection that could be caused by a statistical analysis of some similarly irrelevant data sets, such as the number of transactions within a given project compared to the variability of labor overhead rates! It sounds really insightful, yes? But it’s completely irrelevant, much like the “information” the risk analysts force upon project teams. Something similar has already occurred – the whole statistical analysis of how much women make compared to men. That this analysis has been completely debunked once one takes into account the nature of the work, the degree requirements, the general preference of women to take jobs that provide more schedule flexibility, etc., etc.,  doesn’t stop the statistic of “X number of cents for every dollar men make” from being lobbed about ad infinitum. 

Also, by Metcalf’s Law, any comparison of the average wages earned by any disparate demographic groups will yield a variance. It’s irrelevant, which will make the accountants’ jobs far, far more frustrating as they attempt to round those square epistemological pegs. Let the risk managers perform their analyses on the data sets within the general ledger! With the accountants’ energy so diverted away from advancing their misguided agenda, the risk analysts will have finally contributed significantly to the advancement of PM!