How do you actually go about mitigating risk? We talk about the need to mitigate all the time, but what kinds of things can you do to ensure that risks really are managed appropriately and mitigated to avoid the impact you think might be on the horizon? In this video, I talk about 5 different things you can try to mitigate risks. They are simple and practical, and you can easily turn them into solid actions for your risk log.

If you want a couple of extra suggestions, and some more detail (or you just prefer to read rather than watch), then the original article that prompted this video is available here: 7 Ways to Mitigate Risk.

The UK Government’s Infrastructure and Projects Authority’s Cost Estimating guidance talks about 8 principles for best practice estimating when it comes to working out how much your project will cost. I’ve already written about front-end loading, and today I wanted to look at another one that is really helpful – even if you don’t do huge scale infrastructure projects (which admittedly, the guidance is aimed at).

Estimates should be ‘reviewed and assured’. This is something you can implement regardless of the size of project – as long as you have more than one person in the team who has an opinion about the estimate.

The guidance says:

“Cost estimates that are reviewed and assured appropriately will be improved and become more reliable, further driving project discipline.”

You might already be doing this informally: a quick check in a team meeting, for example: “Is everyone OK with that if I put it into the figures at £5k?” But making a review a formal part of your estimating will elevate your practice and hopefully create more robust budgets.

Here’s how to do it.

1. Make it clear you will be reviewing cost estimates

As a team, explicitly call out that there will be a review and assurance process in place. Make sure you know what that is, and when it will be used. For example, as you prepare documentation to get sign off to move the project into another phase, or during backlog grooming etc. The whole process needs to be designed to remove ambiguity, so consider outlining what the inputs and outputs of the process will be and what triggers need to be reached to kick off a review.

The IPA guidance doesn’t mandate a review process but does say people in the review and assurance roles should be independent and make sure the process is robust and followed. Document the process so everyone knows what is coming. Ideally, the review team should stay the same throughout the project to provide some continuity, and now is the perfect time to plan to make that happen, allocating resources who can follow the project through its lifecycle.

If there will be different types of reviews (or reviewers) for different things, make that clear.

2. Find standard methodologies to compare against

So you don’t have any data in house to act as your benchmark? You will, with time, if you start collecting it now. Alternatively, check in with your colleagues or see if there is any available industry benchmark data that will help you assure your in-house estimates.

3. Schedule reviews

The easiest way to review cost estimates is a simple peer review process. Get colleagues to review each other’s schedule estimates (as these translate into financial amounts if you are charging clients by the hour) and budget estimates where these are not based on formal supplier quotes.

Where your project warrants it, block out the time for formal reviews. Independent assurance is particularly useful when it’s timed to coincide with ‘big’ events on the project like the approval of a business case for the next phase, for example.

Make sure people know when the review is coming so they can prepare for it and resources can be available to run it. Plus, the actual process takes time and you’ll want to factor that in to your schedule so executives aren’t expecting work to continue during that time, prior to the review being signed off.

4. Act on the data

The thing with getting other experts to weigh in on how much things are going to cost is that often experts disagree. That gives you, as the project manager, a role to play in making sure that any potential conflict is addressed and dealt with professionally, without it causing fireworks in the team.

Another time to act on the data is before the project moves into the next stage, whatever that might be in your process. If the estimates have changed or need to be refreshed, this is the time to do it. It’s fine that the figures are updated: what’s important is that they accurately reflect the costs as you see them at the moment.

Benefits of reviewing and assuring cost estimates

As you can imagine, there are plenty of good things about reviewing estimates as a team, not least that you should end up with better quality data. Here are some other benefits:

• The initial estimates will be better as people will want them to stand up to scrutiny
• Assumptions will be highlighted transparently
• There will be increased confidence in the estimating process overall
• It produces better data which in turn should lead to better decision making
• Experts are trusted to produce quality estimates which improves the whole culture around the project and elevates team members to strategic influencers.

As you can see, there are numerous reasons for using the principle of review and assure when producing cost estimates. How do you manage this process in your teams?

If you want to read it, the IPA Guidance is here (pdf).

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The Standard for Earned Value sets out an approach for scope management with the goal of maintaining the performance measurement baseline. You need to keep the integrity of the baseline, otherwise there is no point in having it to measure against.

And given that change happens, you need a plan for dealing with those changes. I was interested in finding out why there needed to be a separate scope management process in the Standard. Perhaps you manage change differently if the project uses EV methods?

I suspect you don’t – but you do need a way to tie scope changes back into the time and cost baselines so your EV metrics don’t go off track.

Read along with me as I dig into this Chapter of the Standard and uncover what’s different about managing scope in the world of earned value (it’s Chapter 10, if you are interested).

Inputs

There are four inputs to this process:

• The project management plan – in particular, the performance measurement baseline and the integrated change control process
• The performance measurement baseline. So important they mention it twice – in the plan above and in its own separate called out line!
• Change requests – because we’re talking about what happens when a change happens
• The integrated change control system – this is the process for change control. Is a process really another input to a process? I get that having a way to evaluate project changes is important if you want to evaluate a project change. Let’s assume this relates more to the tech, decision making framework etc.

So what do you have to do with those inputs?

What to do

There are three main things that need to happen as part of this process.

First, the change should be analyzed. The Standard suggests that a Change Control Board is convened to do that. I think the CCB is a really useful group and we relied on it in my last job. Our CCB looked at operational and project changes so the team could see the impact of ‘normal’ changes as well as the project-related ones.

I think this really needs to be done, at least at an introductory level, before the CCB gets together – otherwise what will they talk about? In reality, all these things have to happen in a logical order because you might approve the change but then need to do the analysis of what happens to the project in terms of the work.

For example, you need to update the baseline and the WBS to incorporate the change. The tasks to be done are added to a work package, and in EV, the process for doing that is a bit counter-intuitive. The Standard explains you close the current work package and move the money to the new work package, along with the new budget for the new tasks. The rationale for this is to maintain the integrity of the cost variance while removing any schedule variance. Create a new control account and carry on.

Then, the cost and schedule baseline need to be revisited. That improves the correlation between the work to do, and the baselines for budget, scope and time.

All in all, there is a surprising amount of work required for handling a scope change in an EV setting. No wonder you get the impression that it’s hard to make changes and that there needs to be adequate planning up front to avoid extra tasks arriving later.

Outputs

The outputs from this process are:

• Performance measurement baseline updates (let’s hope you have the tools and support to make this part easy)
• Project management plan updates (review the WBS and dictionary, plus anything else)
• Change request status updates (update the change system to note what was approved/rejected etc).

I read this chapter and was surprised. I mean, not surprised that you have to do scope control or update the baseline, but surprised at the admin involved in re-aligning all the different aspects of the performance measurement baseline. I suppose I knew that it needed to be done hypothetically, but I had never unpicked what it would look like to have to do that work.

I have a new respect for schedulers and project control managers.

Not only do you need to deal with the change and incorporate the decision to do it into the work (which all projects need to be able to do), there’s an added level of admin required to maintain the integrity of the EV reporting.

The Standard says, for example, “Budget must never be transferred simply to eliminate variances.”

Well, back in the day, I did exactly that. On a project (where we were not using EV), our overall capex budget was set. I had the flexibility to move money around within the different capex lines, as long as overall we stayed in budget. So I did. It meant the difference between hospitals receiving the kit they needed to work efficiently or not, and it was never large sums of money. The budget remained overall balanced, and no one really minded how it was distributed as long as everyone got what was needed and we knew where the cash was going.

I learned a lot about budget tracking from that project and I quite enjoyed it. I’m not sure I would have enjoyed it as much if I had had to incorporate EV reporting as well.

There’s a worked example in the book, so if all this doesn’t really make sense to you, or you can’t see the flow of the changes, that’s helpful.

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Thinking about the cost of quality revolves around two things: how much it costs to comply with quality requirements and how much it costs to put problems right.

The infographic below shows the four considerations for working out the cost of quality for your project: prevention and appraisal before things go wrong, and dealing with internal and external failures in case they do.

Which of these do you use on your projects? Tell us more about how you manage the cost of quality in the comments below!

Do you work in a PMO and desperately need extra project managers? I’ve got some tips in this video that should help you make a pitch for the resources you need.

You’ll need to put together a proposal that explains what the person (or people) will do, when you need them, what they will be doing, and what kind of level you are anticipating recruiting at. It also helps if you can make the case for their work being directly linked to a faster delivery of business strategy – in other words, you can help the organisation meet its goals more effectively if you have the bodies on the ground to support the delivery.

There are more tips in the video.

Let me know in the comments: have you been successful in leading the charge to secure more PM resources for your delivery teams? I’d love to hear more tips about how to make the case and get the funding to grow the team!

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