10.3.1-Contingency Planning

10.3.1 Contingency Planning

This is developing alternate plans that will be used if a possible risk event occurs.  Since this is a plan, it answers questions of what, where, when and how much action will be taken. Contingency planning evaluates alternate remedies for possible risk events and selects the best plan among alternatives.  The absence of a contingency plan when a risk event occurs, can lead to delays, panic, acceptance of first remedies and decision making under pressure which can be costly and ineffective. Conditions for activating the implementation of the contingency plan should be decided on by the organization and documented fully.  The plans need to be communicated to all team members to avoid surprises and resistance.  It is best practice to develop specific plans for handling risks associated with major components of the project such as technical risks, schedule risks, cost risks and funding risks.

Technical Risks – often problematic and can shut the project down. High risk technical areas of the project need to be identified. Methods need to be developed to asses if the whether technical uncertainties can be resolved. Models and design experiments can be used  to resolve the risk as quickly as possible.

Schedule Risks– contingency funds can be set aside for crashing ( or speeding up) the project if a project is coming in late.  Other techniques might include laddering of project activities and other precedence approaches such as start-to-start – relationships. We will discuss project crashing in detail in Unit 7

Cost Risks:  Projects of long duration are subject to increasing costs because of changes in prices of materials and other resources. Cost components need to be identified and estimates made of the amount of change for those that may change during the project.

Funding Risks– this deals with looking at the sources of funding for the project and whether funding might be cut, or even the project cancelled before completion. This is particularly of true of government funded projects which are subject to the political landscape, severe budgets or change in strategy. For business projects, the CEO might leave (or top management changed) leading to cancellation of a pet project or  there might be changes in priorities and strategies. Questions such as “can the project be completed in chunks?” or “is the project scalable such that some objectives might be achieved” will  be useful strategies.