Program Management Insurance: Contingency Planning

by David N. Rasmussen, Senior Consultant, Cutter Consortium

When you came to work today, did you encounter a big surprise? A reall-lly BIG surprise with a major program initiative? If not today, did it happen yesterday, or last week, or last month? Is it one that may cost significant time, effort, and money to resolve? Anyone who has worked on major IT programs for any length of time in their career has experienced, or will encounter, that inevitable day when their best-laid plans have gone awry!

That day is exactly the WRONG time to determine the necessary corrective actions in order to resolve the problem. The response to potential disasters should be planned at the beginning of the program initiative as a normal part of program management. It's not a magical process; it's the result of recognizing some key elements that can potentially impact program results. Those elements are assumptions, dependencies, risks, and contingencies.

All program initiatives are based on a set of assumptions that largely refer to environmental factors, outside of direct management control, that can affect the program. They usually involve timely delivery of products and services from external suppliers, the availability and adequacy of key skills, and performance of internal and external partner organizations, for example. Within this set of assumptions are a key few whose consequences could have major negative impacts on the successful attainment of program objectives if the assumptions do not hold.

Assumptions result in dependencies -- the reality that the success of the program is dependent on one or more key external factors. Accompanying these dependencies is a set of risks -- risks that the dependencies cannot be satisfied within the acceptable project parameters and constraints. Many risks are manageable; a few risks may not be. Risks are "triggered" by a sequence of events that increase the probability of a risk occurring. Once a risk occurs, a set of contingent actions should be implemented that are designed to mitigate the negative consequences of the risk.

When program assumptions are not defined and documented, it is impossible to develop contingent actions in advance. The relationship of these elements is simple:

Assumptions -> Dependencies -> Risks -> Contingencies

One of the key steps in developing the program plan should be the identification and documentation of the program assumptions and dependencies. Once these have been discussed and agreed upon among the program team members, the responsibilities for defining the associated risks, potential impacts, and trigger points should be assigned. Trigger points are just what the name implies -- signs, signals, events that indicate a risk may occur. When these signs appear, that is the time for program management to review the contingency plan and determine if and when to implement the appropriate contingent actions.

This approach to contingency planning is not foolproof. It won't prevent some risks from occurring. However, it can help reduce the probability of risks occurring, provide management with improved tools for implementing preventive or corrective action, and help minimize the negative consequences to the program initiative. Without program contingency plans, your management surprise can easily turn into a giant management headache! With contingency plans in place, you have a chance of keeping surprises from becoming catastrophes. You even may be able to avoid some altogether. Contingency planning is like insurance -- how much do you want to plan in advance in order to protect against unknown environmental events and potential catastrophic program results?

-- David N. Rasmussen, Senior Consultant, Cutter Consortium