The Psychological Impact of Risk Analysis

Without risk analysis, a project manager and a team never develop a realistic project plan. If the team members are asked for task time estimates and they know that their estimates will be a matter of record, this is considered when they estimate the task duration; if they are even a little uneasy about the tasks, they can be expected to give padded time estimates. Knowledge of the worst case estimate in past experiences will drive up the estimate. In fact the worst case estimate provides for the most comfortable time buffer.

It would seem that if the task time estimates for all tasks are buffered, the actual project would always finish early. However, the opposite seems to be the case. Task leaders who know they have a padded finish date seem to feel free to start the task late, give their task effort a low priority, and lack the determination to get on with it in a world of conflicting demands. This behavior results in all of the padding in each task time effort being used up before the task is completed. Thus, the project finishes very late. Survey data that shows projects typically over-run in time by 100 percent or more seems to be, in part, a product of this particular situation.

Risk analysis raises to task leader's consciousness the difference between “most of the time” completion data and worst case completion data. When the project manager asks for both estimates and a report of how much difference there is between them (Δ), the task leader must rethink a padded time estimate. When he or she knows that a risk factor will be developed to protect him or her from being blamed for project delay, he or she is more willing to give serious consideration to both estimates. The task leader feels that he or she can be comfortable with the “most of the time” estimate because, “I told you that it might take longer.”

The risk factor used for a string of tasks is the sum of the Δ times likelihood, (Y) for each task.

The risk factor, added to the working Gantt chart, provides a finish date. The project manager can expect the actual finish date to be close to, but not later than, the date derived from this analysis.

When the task team has a date to finish the project and it is the date that they have determined collectively, they are very highly motivated to meet that date. They take great pride in their accomplishment when they do hit that date. Being able to hit the projected finish date provides strong motivation for the team members. Workers like to work with a project manager who knows how to hit a team's completion date.