Risk comes in three main forms:
Effectively, schedule and technical risks are financial risks. Schedule delays cost money in terms of penalties, interest, expedite fees, and overtime labor. Technical risks may lead to schedule risks with the same costs, and may incur additional costs for replacement materials and overtime labor for engineering and program management.
Identify risk through proposal review, contract review, and program review. These processes yield insight into the project through calculated analysis. Team leaders pinpoint issues, evaluate potential solutions, and implement action plans to avoid and minimize risk. All of these reviews are documented and defined processes, parts of an overall system, designed to capture and share information in order to provide risk mitigation.
Reviews are best completed by a team of functional specialists. Depending upon the size of your organization, this may be a dedicated team or a group who meets as-needed to review current business. Incorporation of functional specialists throughout all phases of review – proposal, contract, and program – ensures that all documents and topics receive their due scrutiny. You would not take your car to a body shop for engine repair, so do not trust your contracts manager (or any single individual) to review and approve your contracts. No person can be knowledgeable about all topics in a complex proposal.
Proposal review ensures that you and your customer are “on the same page.” Expectations may not be clear and pre-award discussions can save post-award headaches. This is your chance to clarify product specifications and negotiate terms and conditions. Proposal reviews may be required as part of your organization’s delegation of authority whereby senior management approves proposals over a threshold.
Contract review ensures that what you proposed is what your customer awarded. Intentions are often lost in translation – especially with long proposal calendars, complex products, and change in personnel. Compare the award to the proposal, notes, and any records of negotiation. Immediately address any discrepancies with the appropriate functional expert and the customer representative.
Program review is a regular (often monthly) status of all projects or programs in process. This review includes updates on schedule, technical, and financial progress and risks, and should include mitigation steps already implemented and those considered for implementation. Regular review allows issues to be identified and addressed before they get out of control.