Risk Management and Schedule Management

E. Keith Sinkhorn

Department of Engineering

21 February 2007

Outline

• Risk Management– Cost of Doing Business– Shared Risk

• Schedule Management• Engineering at CSU-Pueblo

– Industrial Engineering• BSIE• MSISE

– Engineering – Mechatronics• BSE

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:

Safety Weather

Resource Availability Liability

Cost Technology

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

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.

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

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.

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.

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.

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)

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.