Project Management Institute

Risk management in a downsized environment


by David F. Connors, PMP

Is our biggest risk a hidden risk ... such as an asset taken for granted that isn't noticed until it is gone?

Think about managing a project in a recently downsized environment. The normal reaction is to register concern that key individuals have been eliminated or have left voluntarily ... they were, of course, the ones with the most options and greatest mobility. After the fact, we resize to validate our baseline and key assumptions. How can we perform all the creative tasks that we have committed to the stakeholders? Will we be able to recover from the losses and maintain our commitments? Do we still have a core group of design and development personnel that can complete the project on schedule and within budget? Where are our exposures? What adjustments must we make? We call team meetings and review all commitments and determine if a bottom-up or a top-down plan review is appropriate. We ultimately recommit, possibly using a new or revised schedule, and move forward confidently, only to miss our schedule by a significant margin. Where did we go wrong? the stakeholders demand to know. We looked at all of your concerns; we made staffing adjustments, giving you our best people, and even made adjustments to the schedule. How, where, when did we fail?

The Problem May Be Inherent in the System. Management, intent on preserving their schedules and commitments, and subsequently their revenue and profitability, consciously make the decision to eliminate “noncritical skills” and protect their “creative core of key personnel.” To that end, they eliminated administrative and support personnel, hiring temporary personnel to replace them, and thought that they were covered. What project manager threatens to quit because an administrative release coordinator is eliminated rather than a design engineer? What project manager, for that matter, is even aware of or tracks staffing in those administrative support areas? Hierarchically, some of these people, and their tasks, may be so far removed from the center that the project manager is not even aware they exist, let alone what and how they do their jobs. Within the management chain, the higher you go within the organization, the administrative personnel surrounding that manager are more senior. As such, management is protected from the upheaval by the natural order of things and therefore they see little or no direct impact from their decisions.


David F. Connors, PMP ([email protected]), has over 30 years of corporate IT experience, with more than 25 years experience in project management. He has worked extensively in the area of risk assessment, evaluating product development plans and conducting earned-value analysis. He also has been an instructor at the university level and has worked with universities in reviewing curricula vs. future industry needs. He is currently running corporate seminars and conducting corporate training through his own company, PM Intervention Inc.

We are suddenly at risk of having a whole new group of tasks and personnel on the critical path.

Hidden Costs. Recently, many of our largest and fastest growing companies have been eliminating support positions. As an example, secretarial staff has been cut repeatedly. If there are no secretaries that must mean that there is no expense associated with memos and all memos are now free, right? Of course, this doesn't make logical sense. Here's how it works. Management presumes that the technical people will assume an additional burden and do their own memos—after all, they all have very costly workstations with all the latest tools. If the technical and middle-management staff needs secretarial support, we can hire them from a temporary agency at a much lower cost than the cost of retaining a permanent hire.

What's the net result here? Prior to the job cuts, let's assume that a word-processing professional could type a one-page letter at a cost of $1.00. Now the managers and technical people type their own memos. Of course, they don't type very well and take five times as long. They also are being paid four times as much. That $1.00 memo now costs $20.00 in this cost savings environment! Additionally, people already overworked because of an additional workload brought about from earlier personnel cuts are not doing their primary job while typing that letter. Schedule and reschedule a meeting a few times and the hidden costs begin to come out. Management isn't cost cutting; they are cost hiding!

A few years ago people could typically scan their mail at varying depths, depending upon the subject matter, and forward that mail to the proper person. This task took about an hour a day. With the advent of e-mail, the volume of paper and copy time is no longer a consideration and people are all buried with “e-carbon copies” and can spend four to five hours after the workday attempting to catch up on their mail so that they don't miss some critical missive. These same people, in all probability, are also spending several hours a month maintaining their workstations and resolving problems that the recently eliminated workstation support personnel formerly did ... again in lieu of doing or in addition to doing their primary job. Toss in an exception condition, such as the need to expedite a delivery to maintain schedule or some other situation that makes it necessary for us to circumvent normal procedures, and the fabric of work begins to unravel. We risk missing our schedule when much of our technical and management time evaporates into the mists of administrative and support housekeeping.

What are “exception conditions” and “recovery actions”? Picture a restaurant filled with customers. Two waitresses bring out meals to their respective tables. Each waitress hears from one of her patrons that “this isn't what I ordered.” Two exception conditions have occurred. Fixing the problem, or the “recovery,” depends on many factors. If the meal orders were switched by mistake, the plates can be exchanged in the kitchen and the problems are solved. However, if each patron has cut into his meal and taken a bite, we have a bigger “exception” and the “recovery” must be quite different. In the meantime, each patron might be seated at a table as part of a group, so now one person is not eating and the others are feeling self-conscious. A domino effect takes place: as new meals are prepared for the “offended parties,” desserts are delayed at both tables, which delays the end of the meal and closing out the checks, which prevents later parties from being seated on time. If you have ever been to a new restaurant and experienced “opening night,” you understand this domino effect. Now relate these exception conditions and recovery actions to your finely drawn project schedule.

In most corporate administrative support areas, temporary administrative and support personnel do very well with the normal day-to-day activities of their jobs after a short training period. What is commonly forgotten is that the more experienced support people really earn their pay when exceptions occur. Typically, over time, temporary personnel cycle from job to job or company to company—they are, after all, temporary help. Their experience is often capped at an “entry” level. Also over time, core experienced full-time help may leave to assume new duties or opportunities. When this occurs the greatest risk is that there is no one left in the support organization that has experience in handling a majority of the possible “exceptional conditions.”

Who Do We Turn to for Help? What happens when there is no one left who understands how to move the administrative processes along? A department may see little direct impact from the first downsizing; we still have the depth of organization to be able to find a person who has the experience to solve a support problem. Eventually, however, the result is that administrative and support tasks fall back on the key technical people that we have so carefully protected from support problems. While they are busy with support efforts, their critical creative work grinds to a halt.

This type of situation normally presents at the worst possible time: when a failure of one sort or another has occurred and we enter recovery mode. This is a time when timely response is critical in order to prevent a hiccup from becoming a heart attack. A frantic call is made to the administrative department to invoke an exception process and the person answering the phone has no idea what to do or how to begin. When questioned, this person can respond only in mechanical terms: “I get a J-2 form via e-mail and forward it with the material I get from you.” Who sends you that e-mail? “I don't know. It comes from a user—ID JJPN0382.” Who knows how to do this? “I don't know. Bill always did those things, but he's gone now.”

As we trace the process back through our organization, we get several variations of the same answer. The temporary people don't have the experience, or authority, to circumvent the established process and those who were so empowered are no longer around. Add a holiday and vacations or a recent change in management and it only gets worse.

The end result is that the exception process that used to take an extra few hours now takes the active involvement of key technical and support management personnel perhaps several days to recover. During this time period, they are inefficient, frustrated, and not doing their primary jobs. Accomplishing the recovery takes an unacceptable amount of time, slows down the entire process, halts all other dependent processes, and impacts overall morale. The schedule is missed and the risk management process has failed.

For years we have been unconsciously dependent on what has been an overnight recovery process that required a few hours of overtime by “someone” in one of our support groups. Now invoking that process can require more than a week's effort by our most critical people, who are forced to understand and reinvent a process they only knew by name a few days ago. This risk exposure also becomes more likely in areas with projects having long cycle times. There is also a greater probability of having less frequently used skills disappear over time in large project areas where there are large organizations supporting them. These skills may simply fade away, unnoticed until they are gone.

A Whole New Area of Risk. It was insidious, but over time an ever-increasing percentage of our normal workday has become consumed by recovery actions. These aren't the exciting or even particularly unique activities; these are situations when someone gets ill or a machine needs scheduled or unscheduled maintenance. We unconsciously become dependent upon our support personnel to perform recovery actions for us. We do this so often that we typically consider their actions a part of the norm! “That's not a failure, not even an exception,” we cry, “it was merely a hiccup!” We don't plan for these events, but somehow we take them into account when we schedule our workload. Not knowing what will go wrong, we unconsciously build the time into our schedule ... not enough that we have to justify the time or put that time into the manageable float. We aren't even aware of these exceptions. They are so ingrained into our day-to-day activities that we aren't even aware that they are exceptions anymore. We expect a certain number of errors and build them and their recovery into our schedule. There has historically been no need to highlight them.

Until now! ... The support personnel who also handled these exceptions as a “normal” part of their workday may no longer be available ... thereby creating a new exception category. The entire project is at risk due to inexperience; not by the key technical or planning personnel, but by the cornerstones of our process—the ever-reliable, helpful, frequently invisible and therefore forgotten administrative and support personnel.

In trying to save us by downsizing to cut costs, management may have eroded our base of support personnel and created a stealth risk. We are suddenly at risk of having a whole new group of tasks and personnel on the critical path. We must recognize that fact and ask a whole new series of questions when creating our project plan in this new environment, with its new challenges and risks.

In a downsized environment, project managers must now pay particular attention to support functions—they cannot be taken for granted. We must investigate and question what happens in the event of a process failure; and we must determine what can go wrong and who will correct the problem. The cost to add these new investigations to the planning process is minimal, but the cost of ignoring them can be disastrous. ■

Reader Service Number 184

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM Network June 2001



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