From the course: Project Management Simplified

How much safety margin does a project need?

From the course: Project Management Simplified

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How much safety margin does a project need?

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- Once you have your project plan with all the tasks laid out and the times estimated, it's time for step four which is to think about how much extra time and indeed money you might need if things go less than perfectly, which they will. But just to stress, we're not adding a safety margin so we can sit around taking it easy. We're doing it because we care. We want to give our customer, either our boss or the external stakeholders an estimate that is reliable. If you quote the average, you'll be late or overspent 50% of the time, and that's not a good success rate. So how much safety margin or contingency should we add? Well, there's a great formula which says that if you go halfway between the average and the worst, you'll be 90% safe. And this applies to both adding a safety margin for time and also adding a safety margin for money. So for example, if your average-based total is 10 weeks for your project, and you estimate the worst case to be an extra eight weeks late, taking you up to 18, you just add half the maximum lateness, that's four weeks, and promise your boss or customer 10 plus four which is 14 weeks. And then you'll be 90% safe. Of course, you'll still fail on one project in 10 but most project managers would love to have a 90% success rate. And you don't just add a chunk of four weeks on the end called contingency because the boss or customer will take that back out, and it will worry them. Don't you know what you're doing? So you spread it through the project along the critical path just adding a week to one task and a week to another, et cetera, so it's invisibly embedded in small pieces that won't be noticed. And then everyone's happy. Remember, we're doing this to plan for reality and to make sure we can give the customer a date that they can rely on. So we added four weeks to our 10-week project. Often people just add 10% but that's not enough. In our example just now, we would only have added one week onto the 10 which is never going to be enough. Adding 10% does not make you 90% safe. You have to go halfway to the worst case, whatever you estimate that to be. And of course for some projects where failure absolutely cannot happen like the cake for my daughter's wedding, I would add the full eight on and order it 18 weeks ahead of time just to be completely safe. But remember, however much you decide to add, you then spread it through the critical path so that your boss or customer can't easily take it back out of your plan. So have a look at your real example now and ask yourself for each task how bad it might be. Add up all the worst cases to get a massively depressing total and then, because it's never going to be that bad, add on just half of that total so you're halfway between the average and the worst. Does that feel like a safe figure but also one that you could feel comfortable quoting to your customer? Because that's what you need to do.

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