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| © 2014 Shoebox Films IM Global |
Tom Hardy’s gripping new film Locke, as well as being an absorbing drama, can act as a case study into the management of key person risk on major projects.
*** Please note that this post contains spoilers of the film. ***
Ivan Locke is a site manager working on a historically large construction project. One of the most critical activities in this project is the concrete pour. Preparations have been going on for months, and the cost of the pour failing could run to hundreds of millions of pounds. The night before the pour is scheduled to start, Locke abandons the project without notifying anybody in advance of his intentions. There is nobody who can take over managing the pour at such short notice.
Seasoned project managers will recognise this situation as a key person risk that has suddenly become a major issue. Many of us have been there. The project plan relies on the participation of a subject matter expert, or somebody with a detailed understanding of the project, and that person is transferred to another project, moves on, or is otherwise unavailable. The impact on the project’s critical path can be significant, while we wait for a replacement resource. These circumstances are relatively common, but somehow we are rarely prepared for them. What steps can we take to both avoid and mitigate these key person risks?
Risk Identification
The first and most crucial step is to identify the key personnel on the project. Which of your resources are you solely relying on to deliver tasks on the critical path? Who has expertise that you cannot easily find elsewhere? Who are the scarce resources who could take a long time to replace if lost to the project? These are your key personnel.
In the film, as with a lot of projects, this identification activity seems not to have been done. Locke’s global reputation as a gun site manager has led his senior management to relax and assume that everything is in good hands because the best person is on the job. This is actually the very situation where “what-if” questions need to be asked when planning the project, and a serious oversight on a major project.
Assessing Likelihood
Assessing the likelihood of key person risks can be problematic; you can’t really approach your key team members and ask if they are planning on leaving during the course of the project. A useful step is to consider the general staff turnover in projects at your firm, and the relative priority of your project compared to others competing for your resources. You can consider what might happen to your key personnel if the project runs over schedule. Would you still be able to retain them, or would they be redeployed? Suppliers of external resources should be asked what measures they have in place and what they could commit to contractually in terms of replacing their resources. Many firms seek vendor guarantees that key personnel will be assigned exclusively to their project, but these guarantees are limited in their usefulness, as vendors are no more able to stop their employees falling sick or resigning than you are.
The likelihood should be considered separately for each key resource, and can be assessed determined on a probability scale such as Remote-Unlikely-Moderate-Likely-Highly Likely. In the absence of detailed information, you could start with a view that the likelihood is moderate and then move in the direction of likely or unlikely, depending on the prevailing circumstances of the project.
Ivan Locke’s long-established reputation as a reliable and efficient site manager would suggest that his departure from the project is unlikely, although you can never rule out people departing due to resignation or illness. (I myself once had to leave a project due to a dog-sledding accident in the Arctic, but that’s another story).
Despite it seeming unlikely, Locke does in fact leave the project, because of circumstances outside both his and his employer’s control. The impact of his unforeseen departure is so great that it horrifies his boss Gareth, and gives rise to senior level crisis management meetings in the dead of night. This shows that we need to consider the impact of even the most unlikely key person risks before we decide whether we need to actively mitigate them.
Assessing Impact
Gareth is instantly aware of the cost impact of a failed pour - hundreds of million of pounds. The schedule impact can be pretty readily assessed also. How long would it take to undo the work done in the failed pour, reschedule, reconfirm all of the supplier contracts, council approvals, etc? How long before Locke could be replaced and his successor brought up to speed? What is the knock-on effect to other critical activities?
When we consider impacts, we also need to lift our eyes beyond the direct impact to the project, to include the potential impact on the business as a whole. A more complete impact study will consider reputational impact, and potential legal and regulatory breaches in addition to the more readily understood cost and schedule impacts. At one point Locke explains the quality implications of even a partially failed pour - cracks in the building and potential collapse of one of the largest structures in Europe. It’s not too difficult to envisage the potential reputation, regulatory and legal impacts flowing from such an outcome.
Impact analysis needs to be as objective as possible to be useful. For each risk factor, the project should define objective criteria for the different levels of impact that reflect the organisation’s appetite for risk. These definitions will differ between projects and organisations. For example, a 1 hundred thousand pound financial impact on a giant construction project such as Locke’s would be much less significant than the same impact would be for a three month software development project at a cash-starved start-up.
Rating the Risk
Once we know the likelihood and potential impact, it is possible to plot the risk using a heat map such as the one below. Looking at the heat map we can see that even an unlikely risk of severe impact is still an extreme risk well worth mitigating.
Weighting the potential impact of hundreds of millions lost by a risk factor of just 20% tells us that the project would have a potential exposure in excess of 20 million pounds in the event of Locke leaving, which suggests that the risk must be mitigated against.
Mitigation
As soon as the issue emerges in the film, two possible mitigation strategies emerge. Gareth chooses to escalate this issue to Board level, and their response is to sack Locke immediately and replace him with somebody from outside the project. Given that the pour is due within hours, this is clearly a spectacularly unhelpful strategy that does nothing to resolve the issue.
Locke’s suggestion is more realistic: he will walk his assistant Donald through what needs to be done on the phone, working throughout the night to ensure that the pour is a success, even in his absence. This is potentially workable, but subsequent events show that even this approach has serious limitations when further issues emerge that Donald is not in a position to handle.
Locke had clearly given some thought to the need to document what he knows; every detail is recorded in a binder with names, contacts, schedules etc. That is a good move, but unfortunately Donald doesn’t know where it is and is not familiar with the contents. That information needs to be readily accessible to all who need it and people have to be kept across it as the project progresses, not just briefed on it when an issue arises. Clearly a paper file is insufficient for a project of this size, and Locke should know better.
We know that the project has a risk exposure of more than 20 million pounds, so it would be well worth investing a sizable sum on a document management system that can serve both this and subsequent projects to mitigate such risks. If there is another manager who can step in and take over from Locke, as the Board seems to think, then that person should have been involved in the project from the start, even if just in a review and advisory capacity. The ultimate mitigation of a key person risk is to duplicate your key person; with a risk of such potential impact, appointing an assistant site manager to shadow Locke might also have been worth doing from the outset.
Knowledge sharing around the team is an excellent way to mitigate key person risks The more vital information that is solely in the head of a key person, the bigger the potential impact. Having identified your key personnel, you should go one step further and identify the key knowledge that they have, and find ways to ensure that it is shared effectively.
Locke is a tense and gripping drama, but it’s also a potent reminder that we don’t need that sort of drama in our own projects, and that there are steps we can take to avoid that.
© 2014 Gregory.J. Young. All Rights Reserved.
About Greg
Greg Young is a project management veteran with more than twenty years managing projects on three continents.
