Guest Post by John Ayers (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
My contention is management many times compromises quality to mitigate budget and cost issues resulting in a major risk to the project.
How to minimize the quality risk on a project is addressed in this paper. The approach to do this is based on my 30 years of project and project risk management experience and knowledge. Let’s start with a story to illustrate my contention.
HUBBLE TELESCOPE STORY
The baseline mirror polishing was based on a new process. NASA thought it was too big of a risk and went with a second source that used the standard polishing process to mitigate it. Well into project, NASA cancelled the standard polishing process company leaving only the new approach. The reason for cancellation was due to budget and schedule issues.
Before launch, the engineers approached management and requested another mirror test to confirm the shape before the telescope was launched into space. Management told the engineers that the project was over budget and behind schedule. Their answer was no. The telescope was launched and went operational but the images were fussy. The mirror shape was incorrect. It took NASA over a year to fix it in outer space at a very significant budget and schedule cost.
The point to this story is management compromised quality because of budget and schedule problems. If they applied effective project risk management, this event would most likely not have happened and the government could have saved millions of dollars. Question is-how is effective project risk management applied?
FOUR CORNERSTONES OF RISK MANAGEMENT
The cornerstones are listed in Table 1. Each one addresses a certain category of risks. Together they address virtually all possible risks that may affect the project.
Studies have shown that the majority of project failures are due to poor management of the known risks. The known risks are:
In the case of the Hubble Telescope story, schedule and costs were to be the culprits. To mitigate known risks, it is essential to apply excellent project management knowledge, leadership, and methods.
2. EARNED VALUE MANAGEMENT (EVM)
EVM measures the project progress against the baseline plan. It is a very effective tool for enhancing project management on a project because it identifies poorly performing WPs early for maximum time to identify the problem and resolve it. WPs are color coded to indicate their performance level and provide easy and quick identification. Red means the WP is performing poorly and needs attention. Yellow is caution. Keep an eye on it. Green is good. No need to pay any attention to it unless the color changes.
If you can manage problem WPs to a successful conclusion, then the probability is high that the project will be a success.
3. RISK MANAGEMENT
Risk management address the unknown risks on a project. These are the uncertainties and variations that surround all projects. Figure 1 shows the risk mitigation process for the unknown risks. Identification and analyze take place during the proposal phase to ensure the budget and schedule to mitigate the risks are included in your proposal before it goes to the customer. Response and monitor/control take place after contract award.
The majority of companies today subcontract out up to 60-70% of their work scope. As a result, the subcontract becomes a major risk to the project.
The two basic actions you can take to mitigate this risk are: (1) carefully select the subcontractor; (2) closely and frequently manage the subcontractor. Be aware of other risk factors (shown below). Add margin to your proposal to mitigate these risks. Start working with your subcontractors well in advance of the customers request for proposal (RFP) issuance.
Other risk factors:
- Insufficient time for subcontractor to prepare a solid proposal
- Soft requirements
- Late subcontract award
- Poor contractual arrangement with subcontractors suppliers
I have seen on many projects that I was involved in examples of management compromising quality to mitigate known risk issues. Do not give management a reason to compromise quality. Apply effective project risk management knowledge, experience, and methods to enhance the possibility that the known risks on a project will be managed well and major issues avoided.
Quality is not free. It is essential to the success of projects and more importantly to the health of the enterprise. Keep quality standards high.
Currently John is an author, writer and consultant. He authored a book entitled ‘Project Risk Management. It went on sale on Amazon in August 2019. He has presented several Webinars on project risk management to PMI. He writes a weekly column on project risk management for CERN. John also writes monthly blogs for APM. He has conducted a podcast on project risk management. John has published numerous papers about project risk management on LinkedIn.
John earned a BS in Mechanical Engineering and MS in Engineering Management from Northeastern University. He has extensive experience with commercial and DOD companies. He is a member of PMI (Project Management Institute). John has managed numerous large high technical development programs worth in excessive of $100M. He has extensive subcontract management experience domestically and foreign. John has held a number of positions over his career including: Director of Programs; Director of Operations; Program Manager; Project Engineer; Engineering Manager; and Design Engineer. He has experience with: design; manufacturing; test; integration; subcontract management; contracts; project management; risk management; and quality control. John is a certified six sigma specialist, and certified to level 2 EVM (earned value management).https://projectriskmanagement.info/
If you want to be a successful project manager, you may want to review the framework and cornerstones in my book. The book is innovative and includes unique knowledge, explanations and examples of the four cornerstones of project risk management. It explains how the four cornerstones are integrated together to effectively manage the known and unknown risks on your project.