Lean Scheduling and Risk Management

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Lean management practices after great success in optimizing manufacturing and production is being adapted to meet the needs of project management. At its core, Lean is a philosophy that emphasizes collaboration, efficiency, and “just in time” planning.  In comparison,  Project Risk Management is often a highly formalized and front loaded where assessment and planning are performed during the planning phase along with the development of the CPM schedule. While the risk assessment and plans can be updated during project execution, these normally only take place at major project milestones at scheduled “risk workshops” that are often disruptive and outside the main flow of the key project activities. The question here is how can Project Risk Management fit onto the lean process and add value.

A key aspect of Lean is the capture and recording of data for use in how processes work, how long they take and the obstacles or issues encountered during execution. These records provide a rich source of objective information about the types and levels of risk in project activities that can be data mined as part of a schedule risk assessment. This historical data can provide “reference class” estimates where activities are automatically assigned risk based upon how they are categorized. This “automation” should allow projects to minimize the upfront risk assessment process.

Lean makes projects more efficient as it continuously integrates timely information into “Just in Time” planning. During execution, Lean projects shift the scheduling responsibilities over to the teams who are performing the actual work. While the original CPM schedule is not abandoned, the order and relationships of smaller activities are managed by the groups who are performing the work. In this way, the project can take advantage of peoples experience and current conditions to optimize the workflow of the activities over the next several weeks. At weekly meetings, activities are re-arranged, relationships modified, and expected completion times revised. During these meetings, existing risks can be updated and new risks identified as an inherent part of the process. With this Project Risk Management becomes a continuous and “Just in Time” process.

In practical terms it means that risk analysis is conducted automatically each time when new team activity is defined. It is usually done during regular planning meeting. The risk analysis helps to identify if the activity can be accomplished during next week or following weeks. If not more resources can be assigned, activity can be split on few activities, etc. The actual project performance is monitored this information helps to adjust risk assignment, as well as risk probabilities and impacts. The risk analysis is performed using Monte Carlo simulations or using bayesian belief networks.

As we have seen, Project Risk Management and Lean or not incompatible: however, it will require risk management to let go of some of its rigid formalism of the past. The days where project risk managers will be able to fly in, produce a risk plan, and then leave and hope that it remains relevant and actionable are gone.