Quote from sachinm on 5 October 2023, 12:53 pm

As an idea to get the ball rolling here, we can ask how human biases influence an Estimator's work within your industry, and practice area? How have you managed?

So, for example within Dave Snowden's Cynefin Framework, there are "known unknowns" appreciated in the "Complicated domain". Here, estimators know that there are limits to their understand of the potential out-turn costs.

Unknowns Lead to Overruns & Delays

IF we get the scope wrong

OR we get the requirements and quality wrong

THEN we will have much rework

AND our cost estimates will turn out wrong

An example of this is measurement contracts (sometimes called ‘re-measurement’ or ‘measure and value’ contracts) where an independent review of the Works may need to be carried out as the design (or type of works) can be described in reasonable detail at Works outset, but the amount cannot. This remeasurement process measures again the quantities of work to be undertaken. This could be appropriate in cases such as excavation works where the quantity of excavation required is difficult to assess until after the works have begun or where the design has not been completed in sufficient detail for bills of quantities to be produced.

So, in the above example...what can one do to measure the uncertainty, and complexity?

In reality this would be managed via the contracting routes (e.g., NEC Option X22 on Early Contractor Involvement (ECI), Option C (target contract with activity schedule)).

What else can we do from a management of complexity perspective to measure the "known unknowns"?

As an example, we are seeing Natural Language Processing (NLP) being used to identify gaps in functional sizing on Software Requirements by using CRUD (Create, Read, Update, Delete) gap analysis on Objects/Interactions to come up with better cost estimates, and system integration test scripts. Here, Ron Jeffries advocated the use of Cosmic Function Point (CFP) as the ISO 19761 standard for functional sizing on software projects. CFP measures the movement of data via one of the 4 types of data movements (Entry, Exit, Read, Write).

Can you use this same approach in your industries, and practice areas?

For example, can a similar sizing and gap analysis can be done on Sponsor Requirements or H&S Site Works Planning to automate the peer review process. using a similar CRUD (Create, Read, Update, Delete) analysis?

If not, what else can the Practical Guidance include to help you manage your projects better? Let us know your thoughts...

Quote from sachinm on 6 October 2023, 12:20 pm

Another useful challenge to raise in the Practical Guidance, is to ask "How can we report on Complexity?"

Traditional risk reporting frameworks typically use the Work Breakdown Structure (WBS), to report risk events against the structure the work to be done to accomplish project objectives. Similarly, risk registers also use the Organisational Breakdown Structure (OBS) and the Cost Breakdown Structure (CBS), to similarly identify the Risk Owner (and Mitigation Response Owner) as well the Funding Source for any Contingency Mitigation/Risk Impact.

David Hilson has suggested that in addition to the Risk Breakdown Structure (RBS), which arranges project risks by risk category and subcategory to identify the various areas and causes of potential risks, we can also use a new hierarchy called Risk Impact Breakdown Structure (RiBS) to look at the impact of the risk (effect or consequence). An example RiBS could have different levels of impact types (e.g., Time, Cost, Scope/Quality, and Other Objectives), depending on the specific objectives of the project, such as Reputation, Regulatory Compliance, Business Benefits, Safety etc., and also depending on the level of detailed analysis required to support effective management of risk.

• RBS: Grouping risks by the RBS indicates common sources of risk, allowing preventative measures to be taken, and increasing the efficiency of risk responses by targeting root causes to tackle multiple related risks.
• RiBS: Mapping risks against the RiBS allows analysis of the types of risk exposure faced by the project, indicating where the management team should focus attention when developing risk responses.

Click to expand and see an example of a Risk Impact Breakdown Structure (RiBS) ⤵️

 

How can Cross-framework mapping improve our understanding of risk concentration?

This combination of two hierarchical frameworks can also be applied in the risk area, providing new insights into patterns of risk exposure:

• RBS x RiBS

Cross-mapping of RBS against RiBS indicates the combination of sources of risk and potential impacts on project objectives. Hot-spots within this matrix shows particular cause-effect chains which are significant for the project, and will be useful to support development of effective risk responses. These might be either preventative (targeting common causes of risk) or corrective (addressing common impact areas with fallback plans and/or contingency).

• RiBS x CBS

The combination of frameworks maps the RiBS (types of risk impact) against the CBS (cost structure of the project). This exposes which types of risk impact are likely to have the greatest effect on the project budget, and can be used to develop targeted contingency funds.

Citation:Hillson, D. (2007). Understanding risk exposure using multiple hierarchies. Paper presented at PMI® Global Congress 2007—EMEA, Budapest, Hungary. Newtown Square, PA: Project Management Institute.

A common weakness of traditional risk management has been its inability to properly diagnose, and thereon communicate, the overall project risk. How then does traditional hierarchical categorisation and reporting frameworks need to change to analyse and report the overall risk exposure of a project?