Risk Management and Schedule Management

1. Risk Management and Schedule Management E. Keith Sinkhorn Department of Engineering 21 February 2007

2. Outline • Risk Management • Cost of Doing Business • Shared Risk • Schedule Management • Engineering at CSU-Pueblo • Industrial Engineering • BSIE • MSISE • Engineering – Mechatronics • BSE

3. Risk Management • Risk management is the art and science of accounting for business conditions that involve some element of chance. • In the construction industry, sources of risk can include:

4. Cost of Doing Business • The price of nearly everything comes down to some version of this equation: Price = cost to provide a service + money the provider makes for providing it • For a service that involves risk, this equation looks like: Price = cost to provide a service + money the provider expects to make • The second part of price is the “cost of doing business” with the provider

5. Shared Risk • Insurance premiums are the sum of cost to insure plus the cost of doing business with the insurance company. • In any business venture involving risk, you should expect to be fairly compensated for accepting risk. • An employer that will not equitably share risk is not worth working for.

6. Risk Management - Safety • Risk management gets easier with experience. • Record keeping is key to improvement in the management of risk. • Always remember that the cost to prevent an accident is cheaper than the cost of an accident occurring. • According to OSHA, the average cost of an eye injury is about $1,463

7. Schedule Management • Schedule management is a subset of the larger activity of project management. • Construction contracts tend to be long-term projects involving multiple activities. • Estimating the durations of these individual activities is crucial. • Again, record keeping is the best way to improve your estimation of activity times.

8. Activity Durations • You should always estimate an optimistic and pessimistic duration for each activity. • Optimistic – How long will it take if nothing goes wrong? • Pessimistic – How long will it take if there are some reasonable obstacles? • If you have no basis for estimating the pessimistic duration, begin by adding 30%-50% to the optimistic duration.

9. Schedule Management • Identify which activities are critical activities and cannot be delayed without affecting the duration of the entire project. • Remember not to over-promise and under-deliver. Customers hate that. • In the long run, a reputation for developing schedules that you can stick to will mean more to you than winning a few bids by over-promising.

10. Engineering Opportunities at CSU-Pueblo • Bachelor of Science in Industrial Engineering • Four year degree accredited by the Accreditation Board for Engineering and Technology (ABET) • Master of Science in Industrial and Systems Engineering • Core courses (15 hours) + Track (9 hours) + Electives (12 hours)

11. Engineering Opportunities at CSU-Pueblo • Bachelor of Science in Engineering with an emphasis in Mechatronics • New hybrid degree • Mechatronic systems are electrical and mechanical devices integrated with computer controls. • The Engineering department will pursue ABET accreditation once the first class of graduates is produced.