Contingencies and Triggers

Quick reference

• 00:05 Hi I'm Ray Sheen.
• 00:06 I'd like to talk with you now about one of the most commonly used techniques for
• 00:09 managing project risk, and that's using contingency planning.
• 00:13 In fact, in many organizations, risk management is called contingency planning.
• 00:18 Contingency response to risk is a two-step response.
• 00:23 The Project Management Body of Knowledge, the PMBOK Guide,
• 00:26 defines Contingent Response Strategies as responses provided
• 00:30 which may be used in the event that a specific trigger occurs.
• 00:35 Contingent response is appropriate for risk with high impact.
• 00:38 But whose probability is very uncertain.
• 00:41 When you response for this risk would lead to a project approach
• 00:44 that is in some way inferred to baseline plan.
• 00:47 Such as it takes longer or the quality of deliverable's degraded,
• 00:51 then the project team does not want to use this response unless they have to.
• 00:56 That's why this two-step approach is selected.
• 00:59 It provides opportunity to make wise decisions.
• 01:02 The first step of this response is to use the acceptance strategy.
• 01:06 The project baseline is unchanged.
• 01:08 The project condition is as originally planned.
• 01:11 The next step is to prepare an alternative plan using an appropriate risk
• 01:16 response strategy, such as avoid, mitigate, transfer,
• 01:19 exploit, enhance, share, or escalate.
• 01:23 Let's call this plan b.
• 01:24 Plan b is inferior to the baseline plan.
• 01:27 If plan b is better than the baseline plan,
• 01:29 well you should change the plan b immediately.
• 01:32 The last element of a good contingency response strategy
• 01:35 is to have a very clear trigger.
• 01:37 This is the event or the warning that the probability of that risk has changed from
• 01:41 unlikely and uncertain to likely, and the plan b now needs to be implemented.
• 01:47 Let's talk about that risk trigger.
• 01:49 It's a crucial element in managing contingent risk response.
• 01:53 A risk trigger should be set up as part of risk planning.
• 01:56 When you have risk with high uncertainty,
• 01:58 the preferred approach is often contingent response.
• 02:02 Now, the need for establishing the trigger during risk planning
• 02:04 is to ensure that you have buy end on the trigger.
• 02:07 Some people are risk seekers, others are risk avoiders.
• 02:11 Risk avoiders often want to set the trigger at a very early or
• 02:14 very low threshold.
• 02:15 Whereas risk seekers want to stay with the current plan as long as possible,
• 02:20 assuming that it's better than plan b.
• 02:23 If you try to get them to agree on switching to plan b in
• 02:26 the middle of the project, when people have been working 10 or
• 02:29 12-hour days, often there's an argument and conflict on the team.
• 02:33 Because risk seekers will feel like you're giving up and not trying hard enough and
• 02:37 risk avoiders will feel like the current approach is helpless and a waste of time.
• 02:42 Instead, have the discussion during project planning when everyone is calm and
• 02:47 rational.
• 02:48 Select the risk trigger, and when that risk trigger condition occurs, but
• 02:51 not before, you switch to plan b.
• 02:55 The trigger then is used to indicate that it's time to switch to plan b.
• 02:59 This trigger is something whose status needs to be tracked by the core team, so
• 03:02 they know whether it's indicating a change.
• 03:05 Put in your project control plan.
• 03:08 A good risk trigger will have these attributes.
• 03:10 First, it would be appropriate for the type of risk.
• 03:13 Meaning, it really does indicate that this risk has moved from an unlikely condition
• 03:17 to a likely condition, or possibly has even occurred.
• 03:21 Second, the risk trigger is timely with respect to the project schedule.
• 03:25 It provides enough time to respond to the risk and implement plan b.
• 03:28 You wanna avoid a lagging indicator
• 03:31 that shows up well after the risk has been experienced.
• 03:35 Ideally, it is a leading indicator and warrants if the risk is impending.
• 03:39 Third, it is discrete.
• 03:41 Now by that, I mean, it's a clear indication of the risk status.
• 03:45 The trigger is either on or off, it's black or white, but not shades of grey.
• 03:50 That again, avoids debate among the team members,
• 03:53 and it's easier to set the control limit.
• 03:56 Finally, it's documented.
• 03:57 Your trigger and you alternate plan should both be documented.
• 04:01 Then everyone knows immediately what to do.
• 04:04 When it's time to go to plan b, you don't waste time explaining to team members and
• 04:08 stakeholders why you're doing what you're doing.
• 04:11 This has already been done and coordinated with them.
• 04:13 Also, project team members and
• 04:15 even stakeholders often change during the lifecycle of the project.
• 04:19 Documenting triggers helps the newbies come up to speed.
• 04:23 The contingent response is a valuable and
• 04:26 practical response to project risks, use it wisely.

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