Anti-buffering: Moving risk from schedule activities to the contingency reserves

Anti-buffering the project is an excellent way to motivate risk management. Many PMs are unimpressed by risk management because they don't see the value of putting risks in an spreadsheet that they look at a few times in the project. While even this can give some possible results it doesnt go far to generate real value.


Completing the PMBok risk processes is another story all together - following these processes generate much more value. One of the main values are the relationships between schedule development and risk analysis through the contingency reserve. A main result is that the schedule contingency reserve is where we should put the risk of specific activites.


Lets take an example in a project I am managing:

I have a task which is to implement a PBX functionality called "whisper mode" for a call center.


When I estimated this task intially I put in some buffer for risk since I had only recieved one high level estimate. You could say that at this point my risks where unknown.


As I started to investigate the design and possibilities the risks become clearer. One design called for more software and was more complicated. The other solution uses built in functionality. So lets put that this way:

• Solution A: Cost 10, Time 2 - probablity that I can use this one 30%.


• Solution B: Cost 20, Time 20 - probablity that I can use this 70%.

So how do I include this in schedule development and risk processes?


I put the minimum time in the schedule and then put the difference in the contingency buffer. In other words I am saying that there is a risk I may have to use solution B.





So I will put in my risk register "Risk: Have to use Solution B" with a schedule impact of 18 and a cost impact of 10 and a probablity of 70%.

This effectively removes the buffering in the activity and moves it to the contigency buffers.



And I will put in my contingency schedule buffer 18 days and my contingency budget buffer 10 and leave my activity at time 2 with a cost of 10.

Now somebody might say this is very missleading. Wouldnt it be better to put the more probable result in the schedule and then put a opportunity in the risk register. In other words put the time cost at 20 and time at 20 and then put an oppertunity of 18 days and 10 cost units in the contingency reserves.

Hmm...dont think so. One cant have negative contigency reserves and the effect is to buffer the schedule activity to a maximum which as we know from Critical Chain is not a good idea.