Any plan is subject to change and expecting the unexpected is part of the risk management of any plan. Volatility is describing how frequent we’re expecting the change to happen within the planned schedule. The changes can be expected as a result of variety of causes, in summary:
– Can arise from internal related issues to the project
- The project target (schedule)
- The project’s estimated budget
- The project’s scope
- Key personnel working on the project
– Can arise from external issues not necessarily have direct impact:
- Changes in the industry
- New technology has been introduced
- Change in organizational management
Till now I think I have not added anything new to most of you, as what I’m mentioning is an essential part of project’s risk management especially to those who are working in the field.
The interesting part is how much each of those factors affect the project performance? Which one of them affecting the performance the most?
This article addresses these two issues, as researchers found out the following astonishing results after surveying almost 650 experienced project mangers across US & UK in relation to their recent projects,
- Changes in key personnel happening once or twice during the project life have a negative impact on the projects performance by being 50% or more under-performance. Moreover, Projects with no changes in key personnel are at risk of under performance by 22%.
- Almost all projects experience change and any project is expecting to experience 8 unforeseen changes on average including but not limited to change in schedule, scope and budget. Such changes are expected to extend the schedule by almost 10% than initially estimated.
- There is a positive relationship between the size of the project & the volatility. The larger the project, the higher the volatility expected. Ultimately this will lead to affecting the performance negatively.
Drs. Andrew Gemino and Blaize Reich and Dr. Chris Sauer have studied three dimensions of volatility in project management: changes in governance, such as key project personnel; changes in targets, such as budget, schedule and scope, and external changes related to organizational strategy, technology and industry. They found out that out of the three, governance volatility and changes to key personnel had the largest impact and the most devastating.
I don’t have much of experience in project management but I’ve been part of projects during my career path and I think this is very much true. You can have a contingency plan to many factors and succeed but not to human ‘intellectual’ and ‘experience’.
To mitigate this risk, some companies are offering their valuable staff an incentive scheme (retention technique)
1# what do you think, is human asset the most valuable and riskier in running a project? Please share your experience in this matter.
2# what other ways can companies retain their effective staff in order to reduce their risk?