Contingency and Triggers

Quick reference

• 00:00 Hi, I'm Ray Sheen, I'd like to talk with you now about one of the most commonly
• 00:06 used techniques for managing project risk, and that's using contingency planning.
• 00:12 In fact, in many organizations risk management is called contingency planning.
• 00:17 >> Contingency response to risk is really a two step response.
• 00:21 The Project Management Body of Knowledge, the PMBOK Guide,
• 00:25 defines contingent response strategy as responses provided,
• 00:29 which may be used in the event that a specific trigger occurs.
• 00:33 Contingent response is appropriate for risks with high impact, and
• 00:37 where the probability is very uncertain.
• 00:40 When the response for these risks would lead to a project approach that is in some
• 00:44 way inferior to the baseline project plan, such that it takes longer or
• 00:48 the quality of deliverable is degraded,
• 00:51 then the project team does not want to respond unless they absolutely have to.
• 00:56 That's why the two step approach is selected.
• 00:59 It provides an opportunity to make a wise decision.
• 01:02 The first step of this response is to use the accept strategy.
• 01:06 The project baseline is unchanged, the project continues as originally planned.
• 01:10 The next step is to pair an alternative plan using an appropriate risk response
• 01:15 strategy, such as avoid or mitigation transfer, exploit, enhance, or share.
• 01:21 Let's call this plan B.
• 01:22 Plan B is inferior to the baseline plan.
• 01:25 If plan B is better than the baseline plan, well,
• 01:28 you should start Plan B immediately.
• 01:30 The last element of a good contingency response strategy,
• 01:33 is to have a very clear trigger.
• 01:35 This is an event or warning that the probability of the risk has changed from
• 01:40 being unlikely to likely, and therefore Plan B needs to be implemented.
• 01:45 Let's talk about that risk trigger,
• 01:47 it's a crucial element of managing contingent risk response.
• 01:50 A risk trigger should be set up as part of risk planning.
• 01:54 When you have risks with high uncertainty,
• 01:56 the preferred approach is often a contingent response.
• 01:59 The need for establishing that trigger during risk planning,
• 02:02 is to ensure that you have buy in on the trigger.
• 02:05 Some people are risk seekers and others are risk avoiders.
• 02:08 Risk avoiders often want to set the trigger at a very low threshold.
• 02:12 Whereas risk seekers want to stay with the current plan as long as possible,
• 02:16 assuming it's better than plan B.
• 02:18 If you wait to agree on switching to plan B in the middle of the project,
• 02:22 when people have been working 10 or 12 hours a day, they're stressed out,
• 02:26 often there'll be an argument and conflict on the team.
• 02:29 Because risk seekers will feel like you're giving up and not trying hard enough.
• 02:33 And risk avoiders will feel like the current approach is hopeless and
• 02:37 a waste of time.
• 02:38 Instead, have the discussion about a trigger during the planning phase,
• 02:42 when everyone is calm and the rationale to select the risk trigger is clear.
• 02:47 Then when the trigger conditions occur but not before, you switch to Plan B.
• 02:53 The trigger then is used to indicate that it's time to switch.
• 02:57 The trigger is something whose status needs to be tracked by the core team, so
• 03:00 they know whether it's indicating it's time for change.
• 03:03 Put it in your project control plan,
• 03:05 a good risk trigger will have three attributes.
• 03:09 First, it will be appropriate for the type of risk, meaning it really does indicate
• 03:13 that this risk has moved from an unlikely condition to a likely condition.
• 03:18 Or possibly, it's even occurred.
• 03:20 Second, the risk trigger is timely with respect to the project schedule.
• 03:24 It provides enough time to respond to the risk and implement Plan B.
• 03:29 You want to avoid a lagging indicator that shows up after the risk has already been
• 03:33 experienced.
• 03:35 Ideally, it's a leading indicator, and warns the team that the risk is impending.
• 03:40 Third, it's discrete, and by that I mean it clearly indicates the risk status.
• 03:44 The trigger is an on or off, it's black or white, not various shades of gray.
• 03:50 This again avoids the debate among the team members, and
• 03:52 it's easier to set the control limit.
• 03:54 Finally, it is documented, your trigger and
• 03:57 your ultimate plan should be both be documented.
• 04:00 Then everyone knows immediately what to do.
• 04:02 When it's time to go to plan B, you don't waste time explaining to other team
• 04:06 members and stakeholders, why you're doing what you're doing.
• 04:10 They've already been coordinated with.
• 04:12 Also, project team members and
• 04:13 even stakeholders often change during the lifecycle of the project.
• 04:18 Document the triggers to help the newbies come up to speed.
• 04:22 >> The contingent response is a valuable and
• 04:25 practical response to project risks, use it wisely.

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