Published here June 2004.

Introduction | Pragmatic Methods to Control Risk
Employ Strategic Planning Techniques | Build in a Reasonable Time Contingency
Use Accomplishment Value to Supplement Float Analysis | Alphabet Soup? A Better Idea …
Build in a Managed Cost Contingency | Managing Technical Risk

Build in a Reasonable Time Contingency

Letís start with the realization that a CPM schedule would normally represent the most likely duration of the project. That means, in essence, that the calculated end date is at the mid-point of the range of dates that could be achieved. In this case, Zero Float means a 50% chance of meeting schedule. Is that good enough? We will need to ask: "what is the penalty for missing that date?"

The message, therefore, is to evaluate the potential consequences of a schedule delay, and to factor in a contingency that is consistent with the degree of risk. Certainly, we would take greater schedule precautions in the case of a $10,000 per day penalty contract than we would in a contract without a delay clause.

Remember, the project completion date, that is supposedly a most likely calculation, is based on the workscope that has been defined to the system. If our model has not recognized several activities that might pop up later (a normal situation), doesn't the project completion date have even less than a 50% chance? How much time contingency should we allow for unidentified work?

The point is that we must allow a time cushion. How much of a cushion will depend on:

  • The degree of acceptable risk or penalty for delays
  • How complete the definition of the workscope is
  • How well the work will be managed (if pressure is not kept on the schedule, slips of up to 50% can be expected)
  • How active Murphy is on your job

The easiest and safest way to build in a time contingency is to extend the project end date to a point where there is a comfortable amount of positive float. But this may not be practical for several reasons. It may not be cost effective. It may not be acceptable to your client. It may not fit with other programs associated with your project. However, it cannot be acceptable to proceed with a zero float plan if meeting the end date is important. Therefore, if the end date can't be moved, then the work must be replanned to create a schedule with reasonable positive float (time contingency).

Replanning, to gain schedule float, can involve one or more of the following:

  • Selective overlapping of tasks
  • Increased resources or use of overtime
  • Reducing scope
  • Outsourcing
  • Alternate strategies

As the available time cushion is reduced, the alternatives are to take preemptive actions to prevent high-risk incidents from occurring, and to increase efforts to identify all of the work as early as possible.

Also, when the schedule contingency is too small to allow slippage, more effort must be spent on managing task interfaces. My experience has been that as much time can be lost between tasks than in the execution of the tasks themselves.

Employ Strategic Planning Techniques  Employ Strategic Planning Techniques

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