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Avoiding the Dark Side -

Preparation, History, and Defense

Proper preparation on the outset of a project will be time well spent to avoid unpleasant negative results at the conclusion of the project. Whether engaging in a Firm Fixed Price project or a Cost Plus Fixed Fee project, risk assessment and analysis are key components in preparation for submitting a bid and ultimately executing the project. Proper risk analysis will include identification and communication of important steps, logic, key assumptions, limitations, and decisions in order that the results can be interpreted appropriately. These risk analysis results are intended to serve several functions including, but not limited to, contingency information for scheduling, budgeting, and project control purposes, as well as provide tools to support decision making and risk management as the project progresses through planning and implementation. Cost and schedule risk analysis should be considered integral parts of project planning with the same weight as scope and execution plan development, resource planning, procurement planning, cost estimating, budgeting, and scheduling.

GAPPCS Schedule Management Services

The quantitative impacts of risk factors on project plans are analyzed using a combination of professional judgment, empirical data, and analytical techniques. Similar to the identification and assessment process, risk factor quantification involves multiple project team disciplines and functions. However, the quantification process relies more extensively on collaboration between cost engineering, designers, and risk analysis team members with lesser inputs from other functions and disciplines.


The key assumptions are important to help ensure that project leadership and other decision makers understand the steps, logic, limitations, and decisions made in the risk analysis, as well as any resultant limitations on the use of outcomes and results. After consideration of all above defined factors, appropriate cost contingencies and schedule allowances will be developed to guard against financial loss and unforeseen schedule delays.

Subsequent to bid award, contingencies will be an integral part of the project schedule and project cost tracking. The ownership or end client will not be tolerant of project delays that were not properly planned with appropriate contingency for risk factor identification with associated cost and schedule impact allocations. It also goes without saying that the cost impacts of improperly planned delays will have detrimental effects on the company bottom line.

Why are these project aspects important and how do they relate to a relationship between your company and GAP Project Controls Services? Essentially, properly developed and maintained project schedules and associated reports provide a historical record of events during a project and the resulting consequences of those events. This information will be critical in cases of projects in which the contracts contain large payment retainage or liquidated damage clauses. In these cases, the owner and/or contractor must protect themselves in the event of circumstances that negatively impact the progress of a project. Detailed information relative to the circumstances surrounding delays may be crucial in organization defense against litigation proceedings. The schedule will also be a valuable record in cases where a project encounters a large amount of change orders from the original scope of work. If the client makes changes which result in scrap of original material and purchase of alternate material, and/or the installation of such material is significantly changed from the original scope, it may follow that cost and schedule impacts would result. It will be important during and at conclusion of the project that the accumulation of such decisions be factored into the final analysis of the success or failure of the project.

  
 
 

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