In this episode of Project Insights, hosts Zoe Mervine and Hatim Elnueri interview PMA’s Chief Knowledge Office, Francisco Cruz, on the topics of decision-making and risk management. Francisco is a highly credentialed civil engineer who currently leads PMA’s Miami office and is an expert in these areas.
Risk management is commonly defined as a process or system used to identify and control potential threats to a project. Francisco begins by describing the different approaches that he takes when assessing a project, including decision analysis, qualitative risk analysis, and quantitative risk analysis. The decision to use one approach over the other relies heavily on the project’s life cycle stage and its level of definition. For example, when attempting to assess the forecast and potential outcome for costs and schedule early in a project life cycle, Francisco might use decision trees and probabilistic branching, while later in a project he might bring in Monte Carlo simulation and parametric modeling.
Another key consideration that Francisco brings up is beginning with a great team. These professionals are not just those who will be determining the potential risks that might occur, the sequencing that needs to happen, and all the other facets of the process, they also are the people that will actually be carrying out these tasks. Assembling a team that can carry out these tasks with both caution and confidence, as well as creating connections with outside groups, is essential.
While building a team, it’s also important to consider the prior knowledge that they bring to a project. As Francisco told the hosts, “We know mostly everything that is going to happen because it has happened [already]”. In other words, to have the best chance of foreseeing issues that might occur, it’s best to have a team that has the most experience encountering and overcoming a variety of roadblocks.
Considering advances in technology, a team that knows how to bring the wealth of information supplied by similar projects to bear on your current project is vital. There are many internet sources that can supply risk managers with data and models to consider. Along with this store of data, Francisco advocates for the use of artificial intelligence (AI), while recognizing its drawbacks. Because AI can pull information from hundreds of thousands of projects, it can effectively create potential schedule for the type of project you are working on. Once obtained, however, you will still need an expert to review and ensure the data is pertinent to this project and covers any areas that AI might have missed. The strides we are making in the realm of artificial intelligence plus the enhanced documentation for all types of projects will ensure that AI becomes an increasingly useful tool for risk management.
In projects where there is little historical data as a basis for decisions, Francisco finds it important to discuss the use of calibration. Risk management for these projects often involves surveying individuals on what they think about potential outcomes and may introduce bias, such as optimism bias, anchoring bias, or group biases. Calibration is a measure that a risk manager takes to lower these potential effects, such as asking questions both while the participants are in a group and when they are by themselves. This better ensures the quality of data for the project and its outcomes.
Francisco leaves the hosts with his most important advice for those working in risk management, which he believes can have a substantial impact on projects, especially if they run into a large-scale issue. To learn about this and more pertaining to decision and risk management, listen to Episode 003 of Project Insights!