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uling than we did about technical risks. Technology forecasting was very rarely performed other than by extrapolating past technical knowledge into the present.

Today, the state of the art of technology forecasting is being pushed to the limits. For projects with a time duration of less than one year, we normally assume that the environment is known and stable, particularly the technological environment. For projects over a year or so in length, technology forecasting must be considered. Computer technology doubles in performance about every two years. Engineering technology is said to double every three or so years. How can a project manager accurately define and plan the scope of a three- or four-year project without expecting engineering changes resulting from technology improvements? What are the risks?

A Midwest manufacturing company embarked on an eight-year project to design the manufacturing factory of the future. The plant is scheduled to go into the construction phase in the year 2006. How do we design the factory of the future without forecasting the technology? What computer technology will exist? What types of materials will exist and what types of components will our customers require? What production rate will we need and will technology exist to support this production level?

Economists and financial institutions forecast interest rates. The forecasts appear in public newspapers and journals. Yet, every company involved in high tech does some form of technology forecasting, but appears very reluctant to publish the data. Technology forecasting is regarded as company proprietary information and may be part of the company's strategic planning process.

We read in the newspaper about cost overruns and schedule slips on a wide variety of large-scale development projects. Several issues within the control of the buyer, seller, or major stakeholders can lead to cost growth and schedule slippage on development projects. These causes include, but are not limited to2:

• Starting a project with a budget and/or schedule that is inadequate for the desired level of performance or proxies such as integration complexity

• Having an overall development process (or key parts of that process) that favors performance over cost and schedule

• Establishing a design that is near the feasible limit of achievable performance at a given point in time

• Making major project design decisions before the relationships between cost, performance, schedule, and risk are understood

These four causes will contribute to uncertainty in forecasting technology and the associated design needed to meet performance requirements. And the inability to perfectly forecast technology and the associated design will contribute to a project's technical risk, and can also lead to cost and schedule risk.

The competition for technical achievement has become fierce. Companies have gone through life-cycle phases of centralizing all activities, especially management functions, but are decentralizing technical expertise. By the mid-1980s, many companies recognized the need to integrate technical risks with cost and schedule risks, and other activities (e.g., quality). Risk management processes were developed and implemented where risk information was made available to key decision-makers.

The risk management process, however, should be designed to do more than just identify the risk. The

2. Edmund H. Conrow, "Some Long-Term Issues and Impediments Affecting Military Systems Acquisition Reform," Acquisition Review Quarterly, Defense Acquisition University, Summer 1995.

process must also include: a formal planning activity, analysis to estimate the likelihood and predict the impact on the project, a handling strategy for selected risks, and the ability to monitor the progress in reducing these selected risks to the desired level.

A project, by definition, is something that we have not done previously and will not do again in the future. Because of this uniqueness, we have developed a "live with it" attitude on risk and attribute it as part of doing business. If risk management is set up as a continuous, disciplined process of planning, assessment (identification and analysis), handling, and monitoring, then the system will easily supplement other systems as organization, planning and budgeting, and cost control. Surprises will be diminished because emphasis will be on proactive rather than reactive management.

Risk management can be justified on almost all projects. The level of implementation can vary from project to project, depending on such factors as size, type of project, who the customer is, relationship to the corporate strategic plan, and corporate culture. Risk management is particularly important when the overall stakes are high and a great deal of uncertainty exists. It forces us to focus on the future where uncertainty exists and develop suitable plans of action to prevent potential issues from becoming potential problems and adversely impacting the project.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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