0.11 Project planning  (Page 18/21)

There are some resources (like heavy equipment) that your company can buy, rent, or lease depending on the situation. You’ll need to examine leasing versus buying costs and determine the best way to go forward.

Contract types

You should know a little bit about the major kinds of contracts available to you so that you choose the one that creates the most fair and workable deal for you and the contractor. Some contracts are fixed price : no matter how much time or effort goes into them, you always pay the same ( [link] ). Some are cost reimbursable also called cost plus ( [link] ). This is where the seller charges you for the cost of doing the work plus some fee or rate. The third major kind of contract is time and materials ( [link] ). That’s where the buyer pays a rate for the time spent working on the project and also pays for all the materials used to do the work.

Risk management planning

Even the most carefully planned project can run into trouble. No matter how well you plan, your project can always run into unexpected problems. Team members get sick or quit, resources that you were depending on turn out to be unavailable, even the weather can throw you for a loop. For example, Hurricane Ike. So does that mean that you’re helpless against unknown problems? No! You can use risk planning to identify potential problems that could cause trouble for your project, analyze how likely they’ll be to occur, take action to prevent the risks you can avoid, and minimize the ones that you can’t.

A risk is any uncertain event or condition that might affect your project. Not all risks are negative. Some events (like finding an easier way to do an activity) or conditions (like lower prices for certain materials) can help your project. When this happens, we call it an opportunity; but it’s still handled just like a risk.

There are no guarantees on any project. Even the simplest activity can turn into unexpected problems. Any time there’s anything that might occur on your project and change the outcome of a project activity, we call that a risk. A risk can be an event (like a hurricane) or it can be a condition (like an important part being unavailable). Either way, it’s something that may or may not happen ...but if it does, then it will force you to change the way you and your team will work on the project.

If your project requires that you stand on the edge of a cliff, then there’s a risk that you could fall ( [link] ). If it’s very windy out or if the ground is slippery and uneven, then falling is more likely.

When you’re planning your project, risks are still uncertain: they haven’t happened yet. But eventually, some of the risks that you plan do happen. And that’s when you have to deal with them. There are four basic ways to handle a risk.