Risk

Tasks in parallel - three week schedule

The problem of parallel activities

There is a great deal of information available concerning Risk Management on the web. The Institute of Risk Management, the HSE, APM and Wikipedia are all good sources.
I would just like to add two thought here.

1) The problem of parallel activities
Imagine a project programme (or schedule in the US) where a task of 1 week duration is followed by three parallel tasks also of 1 week duration each. These three tasks must all be completed before a final task (also of 1 week duration) can commence. It’s clearly a three week overall programme.

However, let’s take a closer look at the three parallel activities and consider the possibilities. I’ll simplify the maths by suggesting that a task can either finish early (E) or late (L).

There are eight scenarios (two possible outcomes to the power of three tasks). Seven of those eight include at least one Late finish, which because the successor task depends upon all three tasks being complete results in a late overall finish. So in this simple five task schedule the odds are stacked 7:1 in favour of a late finish. Understand now why so many projects finish late? A simple sensitivity test using Monte Carlo simulation allows this problem to be spotted at the planning stage, but most contractors don’t do one.

2) Investment Project Risk
When we talk about value, I think it helps if we actually think about Net Present Value and the constituent parts. Both risk and value management can be applied to any of these constituent parts so as to improve the NPV. For any organization the sum of all the NPVs of its investments is the organization’s value.

Risk and value impacting investment NPV

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