ENSURING RESILIENCE IN PROJECT BUSINESS

At the moment, the situation in project business is changing so dynamically, that you really don’t know any more what you’re up against and how things will continue. Be it the effects of the pandemic, global delivery delays or the consequences of the war in Ukraine. The consequences for projects are often dramatic. Deadlines can no longer be met, the promised delivery runs behind schedule, budgets are blown and, of course, resources for follow-up projects are blocked. It is certainly highly frustrating, especially for a discipline that traditionally prides itself on keeping its promises and being able to deliver the promised supplies ‘in time‘, ‘in budget‘ and ‘to specification‘. The question is whether and what can be done to counteract these effects.

One thing is pretty clear: we will have to expect further disruptions to the project business in the future, at shorter and shorter intervals and with increasingly serious consequences for the projects and the organizations involved. Instead of complaining about the circumstances, we should be taking pro-active measures to help us better cope with the impact of change. Business continuity or organizational resilience is the capability of an organization to continue the delivery of products or services at pre-defined acceptable levels following a disruptive incident.

Ensuring organizational resilience

As a first step, the organization should consider which events affect the project business and how, and what effects can be expected in the process. For example, the shortage of construction materials can significantly affect the deadlines and delivery reliability of construction projects. It can have an impact on the entire project portfolio, as such this is a cluster risk and should be dealt with preventively. Therefore, when planning all projects, close attention should be paid to which materials are needed in which quantities on which dates and from which suppliers. It may be possible to plan for alternative materials from local suppliers to avoid long delivery routes and the associated risks. Diversification of suppliers is also a potential solution. Substitution of the material or other construction methods can also be applied here. Finally, stockpiling of the bottleneck material is also a possibility.

It is important to plan for possible disruptions to the process in the project portfolio and the affected projects. For this purpose, the portfolio should be analyzed to determine which projects could possibly be affected by external disruptions, which dependencies exist between the projects in the portfolio and which scenarios could result from the disruptions. This is an aspect that should be studied when selecting and prioritizing projects, among other things.  If necessary, the shortage of materials can also be considered in the contracts with the customer of the project, where possible delays or even cost increases are contractually regulated.

In scheduling and cost planning, buffers for delivery problems or delays can be taken into account and the customers can thus already be prepared for any problems. Based on the scenarios, customers can also demand alternative solution concepts if necessary, which helps both sides, customers and contractors. See also Tiba´s blogpost on the “inadequacy of human striving”. Effectuation is another appropriate approach of dealing with the unexpected. See the effectuation principles in one of our posts on the way dealing with the pandemic.

Conclusion

The essential message is, we can do something and are not completely at the mercy of the increasing changes or disturbances from the environment in the project business. In view of the serious impact of environmental influences, we are forced to improve the resilience of our actions. We need to prepare corresponding preventive measures for the project business and defend ourselves against the negative consequences.

 

Author: Reinhard Wagner, Managing Director of Tiba Managementberatung

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