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CHAPTER 6.2

RISK MANAGEMENT FOR THE SIGMAPHOBIC

Managing Schedule, Cost, and
Technical Risk and Contingency

L ots of things make me nervous, but none like the sight of a sigma, that weird,
E-like gizmo that signifies the sum of a series of often obscure values.
I was reminded of this phobia when I browsed through a series of articles on
Decision Analysis. I’m wondering if there are other people like myself, who pre-
fer a more visual and pragmatic approach. I’m not knocking Monte Carlo, deci-
sion trees, and other probabilistic techniques. It’s just that I’m not mathematically
oriented, and can’t get comfortable with this stuff. I can’t even pronounce
Taguchi, let alone understand Taguchi methods. Can we take something called
Fuzzy Logic seriously?

I wholeheartedly support the premise, presented periodically, that CPM,
and its various network modeling techniques, cannot be relied upon as a
sole determination of a project schedule, or the basis for schedule-driven
resource and cost planning. Certainly, we must recognize that we can rarely
capture, in such a CPM model, all the conditions that can affect the project
schedule.

Given the above, and the desire (necessity) to manage project risks, are there
pragmatic means, other than these structured probabilistic techniques, that we
can use to identify, quantify, and minimize risk? The answer, I believe, is a re-
sounding YES! And these pragmatic means are available to anyone using today’s
typical project management software products.

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