MP900387301So many projects employ third party contractors and technology development personnel on projects today. It seems like the norm for getting any large project done. Organizations these days infrequently rely on purely in-house talent to dedicate as resources on projects.

I want to focus on “Resource Risk” for all my project management practitioners today because I have run across so many elements and aspects to “Resource Risk” that PMOs don’t organically take into account.

There are basically five different aspects to “contractor resource” risk that I want to focus on so that you can take these into account when you help plan or execute a project.

1. Contractor Skills–Often it is the case that when projects are bid by contractors, they will identify the highest skilled and competent resource personnel they think will win the contract. However, when the job is actually carried out, often the contractor will rely on a mix of highly competent and “just plain support” personnel to really get the job done.

2. Contractor Availability–In project environments where a contractor has worked for a long time, and there is familiarity between the firm and the third party, it is almost assumed that the contractor will supply all the resources that he has supplied in previous work. But when the job actually starts, the contractor may say that he is spread too thin with his high quality resources, or the same resources that he has supplied in the past, so he seeks to substitute new resources with which the firm may be unfamiliar.

3. Contractor Sub-contracting–Unless actually specified by the project award of work, many contractors or third parties will sub-contract some work to be able to satisfy requirements among a number of firms looking for services in a given geographic area.

4. Contractor Working Conditions–This relates to a risk that I uncovered when I was working with a large organization that was engaged in a huge project where the site conditions were clearly undefined due to previous work in that area many years ago that had been abandoned and was now being revisited. Awarding a project contract in a geographic area where the contractor may encounter unknown site conditions, or even hazardous conditions, may result in additional cost and delay in cleanup which was not originally envisioned as part of the project. This results in a “Pay Me Now or Pay Me Later” type situation in which, either the firm identifies what hazards may be in the site before project initiation, or they will surely incur costs later when the contractor arrives on site for work.

5. Intellectual Property Arising from Technology Development–In addition to the use of third parties, there is a great deal of technology development being carried out with new projects today. The question of who owns the Intellectual Property from this technology development is always a point of contention if you do not address it up front in the project. It can be a “risk” if not handled properly. Be sure you understand when you launch your project that the alternative solutions could employ new technology and how you want the resource risk and technology development risk handled.

I hope this discussion prompts you to define “risk” appropriately for your projects and to have a mitigation plan in place for all the high probability/high impact risks you identify. I know that many of your organizations have robust project risk management plans in place and that is the best defense against “unknowns” that may be lurking in the woodwork to grab you as you proceed through the project.

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