The Seventh Dimension of Project Management

________

by Michael Singer Dobson, PMP

Risk and the Triple Constraints

The Triple Constraints

How long do we have? (Time Constraint)

How much (of what) can we spend? (Cost Constraint)

What exactly does this puppy have to do, anyway? (Performance Criteria)

The Six Dimensions

Time/Performance/Cost

Time/Cost/Performance

Performance/Time/Cost

Performance/Cost/Time

Cost/Performance/Time

Cost/Time/Performance

Time

Specific Deadline

Event Triggered

Degree of Urgency

Cost

Cash

Personnel

Equipment

Supplies

Overhead

Intangibles

PerformanceFunctional/Technical Requirements

Purpose/Desired End-State

Evaluation Criteria

Establishment of the “Good Enough” Point

Know Where “Good Enough” Lives

Continuous Improvement inside projects

“Exceeds customer expectations”

Quality and Time/Cost

Value

It ain’t dog food if the dogs don’t eat it.

Six Possible Outcomes

Outstanding

Exceeds Expectations

Fully Satisfactory

Barely Adequate

Failure

Catastrophe

Using Triple Constraints in Risk

ProcessesRisk Identification

Risk Analysis

Risk Response

Risk Monitoring and Control

The Hierarchy of Constraints

Driver

Middle Constraint

Weak Constraint

Risk #1—Getting the Hierarchy Wrong

• The most overlooked question in project management is

__________“WHY?”

Classical Risk vs. Project Management

Risk

Limited use of the Law of Large Numbers

Evaluating impact on project objectives

New Risk Response Categories

Leverage

Relax

Absorb

Threat Risk and the Triple Constraints

Take More Time

Consume More Resources

Degrade Performance

THREATTHREAT

Oppportunity Risk and the Triple ConstraintsSave Time

Lower Resource Consumption

Improve or Increase Performance

OPPORTUNITYOPPORTUNITY

Known Knowns, Known Unknowns,

and Unknown Unknowns

Contingency/reserve

Dig deeper

Think backward

The Fine Art of Bad Decision-Making

Butch Cassidy, the Sundance Kid, and Etta Place

QuickTime™ and a decompressor

are needed to see this picture.

Elements of Decision-Making

Frame the problem

Generate alternatives

Evaluate alternatives

Make a choice

Test and evaluate

Decision Matrix

Fight Give Up

Go to JailStart a Rock

Slide

Go for Position and Shoot Us

Starve Us Out

Surrender to Us

Bad is Better Than Worse

Fight Give Up

Go to JailDie Jump

Likely to Die “I Can’t Swim!”Possible

Survival and Escape

UpgradUpgradee

BuildBuildWeak Weak

DemandDemand(35% Likely)(35% Likely)

Strong Strong DemandDemand

(65% Likely)(65% Likely)

Cost $120M

Cost $50M

Revenue $90MNet -$30M

Revenue $200MNet $80M

Weak Weak DemandDemand

(35% Likely)(35% Likely)

Strong Strong DemandDemand

(65% Likely)(65% Likely)

Revenue $60MNet $10M

Revenue $120MNet $70M

Value of the Decision(.65*$80M)+(.35*$30M)

=$41.5M

Value of the Decision(.65*$70M)+

(.35*$10M)=$49M

Build or Build or Upgrade?Upgrade?

Decision=UPGRADE$49M

Numbers Aren’t Decisions!

Adapted from PMBOK® Guide

Decision Options

Correct Action

Correct Rejectionof Action

Failure to Act(Type I Error)

InappropriateChoice

(Type II Error)

When Cost is WeakIs cash a flexible resource?

Do you have contingency funds?

Is there an acceptable degree of budget overrun?

Can you go back to the well?

Can someone else pay part of the bill?

Are there flexible resources available?

Can you borrow staff/equipment/consumables?

Can you borrow from other client deliverables?

Are there resources whose costs aren’t charged to your project?

Can you exploit intangible resources (call in favors, etc.)?

Do you have project sponsors or key stakeholders who can help?

When Time is WeakCan you delay to acquire out-year budget authority?

Can you use delay to promote quality or solve problems?

Can you schedule delay to coincide with resource availability?

Could delay lead to lower resource consumption during critical time periods?

When Performance is Weak

Can you change grade?

Can you cut, modify, or substitute features?

Can you cut, modify, or adjust scope?

Can you cut -ilities?

PS—Cutting quality is usually a bad idea

Risk in 3D

Always a function of the Triple Constraints

Risks to the driver are always serious

Use the Weak Constraint as a resource

Michael Dobson, PMP