In the House of Commons Committee of Public Accounts Report titled “Preparations for the London 2012 Olympic and Paralympic Games – Risk assessment and management” a risk assessment and work breakout was reviewed. It was the thirty ninth report of session 2006-2007. The following items were reviewed during the London Olympics meeting:
- The need for strong governance and delivery structures
- Delivering the Games against an immovable deadline
- The requirement for the budget to be clearly determined and effectively managed
- Applying effective procurement practices
- Planning for a lasting legacy
- Effective progress monitoring and risk management arrangements
Some of the items I found interesting is how far out the London team was formulating risk management strategies. The games are to be played in just a few days, yet the London project team had risk assessment at the forefront of most of their meetings since day 1 of the planning process. In fact, they divided the risk into 4 strategic objectives, then into 42 sub sections, that were then assigned to 17 project managers. In addition to this, they had project managers that are solely in charge of venues and some for the lasting legacy plans for using the venues after the Olympic Games. Even so, how does one even start to plan for such a large scale project such as this? How does one even start to recognize all the risks involved with large projects as this let alone try to mitigate these risks as well with contingency plans?
Another area I found interesting was the budgetary planning involved. Since day 1 the London project team had been estimating costs. However, even at that time in 2006 some budgetary items remained uncertain such as taxes, contingency provisions, security, and private sector funding issues. This project is so daunting that it will be interesting to see how successful the games are when the preliminary revenue and TV ratings are released in the next couple of months. It seems that there will be no way to stick to preliminary budget estimates with such large scale projects such as these. So how does one accurately estimate the costs that these games require sometimes 10 years in advance of construction and the games.
Has anyone out there been involved with large scale projects? What was done on your project teams to make the planning, risk management, and budget management processes a success?
Below is a link to the House of Commons Committee of Public Accounts Report titled “Preparations for the London 2012 Olympic and Paralympic Games – Risk assessment and management”
http://www.publications.parliament.uk/pa/cm200607/cmselect/cmpubacc/377/377.pdf
I’ve been around Bosch Power Tools during the development and launching of a new product. That firm’s approach to budget management is to spend a lot of time doing diligence and research before committing any funds. While this leads to high up-front costs, it saves Bosch from undertaking a bad project or going in with a poor idea of the actual costs.
Of course you can never control the future, so budgeting and planning is just everyone’s best guess. For some companies, like Bosch, the way to make the guess as accurate as possible is just to spend tons of time thinking about the numbers, running reports, doing research, and being critical/ conservative about any numbers that come up.
Usually when a project has a hard or immovable deadline, the normal reaction is to throw as many bodies (resources) as needed to get the job done. This sometimes is unrealistic for a private entity but given the exposure and reputational risk involved for an event such as the Olympics, I wonder what level of resources will be utilized in London. Risk management does become central for large projects of this nature and there are well established methods used to orchestrate and mitigate them.
When looking at this report, the first thing that jumped out at was the importance the committee placed on “Continuity of key people on major projects.” In my career, I’ve seen initiatives die after one key person leaves (after much time and many resources have been invested). Some firms even purchases key individual insurance. So it is very important that organizations, such as the Olympic committee, ensure the proper knowledge is shared. And also have a solid contingency plan.