Management of change and change control begins with business planning and pre-fiscal year planning and forecasting.
Anticipating and recognizing where and when organizational change may occur leads us to plan for the change, quantify the effects of change, develop contingency plans, and overall reduce resistance to change.
For example, all
businesses had over 6 months in which to plan for the economic downturn which
began 3rd Quarter of 2007. Although no
one may have foreseen the depth of the downturn, every business should have
planned several levels of contingencies.
This year, the COVID-19 virus hit us with no warning from China and businesses experienced a heavy economic impact due to shutdowns and other actions to battle virus. Although much of the actions to battle the virus have become politically-driven, businesses have had more than 6 months to plan for the continued effects of these actions on their business. These changes may present new opportunities to some businesses and may drive other businesses to reconfigure or adapt some processes.
Planning for the impacts of change is not difficult, but it can be time consuming and expensive in tying-up senior-level resources.
That is why it should be done before the completion of the previous fiscal year (usually the calendar year for most companies). Many companies begin their planning and budgeting for the next fiscal/calendar year in November, when they have a good idea of how they will end the present year.
Management of change and contingency planning should be both top-down and bottom-up, and occur at all levels within the organization.
Even individuals should have contingency plans for their careers. For example, if a certain skill will enable you to achieve advancement, what is your plan of action if your department's budget does not allow for your offsite training to acquire that skill.
Initial planning for all projects MUST include Change Management planning. Like organizational change, the project manager must anticipate changes, plan for their impacts on the project, and plan for a way to mitigate or eliminate or ignore the impact of the change.
A Change Management Plan is an integral part of the overall Project Plan (this document is produced during the Planning Stage, according to PMI's PMBOK®).
As part of the
Change Management Plan, a process is established to place controls around the
effect of change called, Change Controls. Typically, "change control" refers
to the process surrounding the identification, evaluation, and approval to
incorporate the change (or not) into the overall project scope.
In all projects, the steps in a Change Control process should include:
Similar to the management of change, the management of risk should be driven by organizational governance and occur at all levels of an organization.
Risks to the achievement of objectives must be anticipated and decisions made, before the risk occurs, on how to deal with the risk - mitigate, avoid, accept, or ignore.
The choice of which method to deal with the risk depends on the effect of the risk on the achievement of the related business objective. For example, a minor risk may be ignored and dealt with later; where a major risk may have to be mitigated (it effects reduced) and the consequences accepted.
Measuring performance on a project or within a company is an excellent way to "see a risk coming your way." Once you have established a Risk Management Plan (as part of a business plan or a project plan), setup metrics and thresholds to measure the occurrence of a risk and trigger an action to deal with the risk.
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Once Risks have been anticipated and identified, a company can perform qualitative and quantitative analyses to determine the potential effect of the risk, the probability of the risk occurring, and the relative consequence or impact of the risk on the business, department, or project.
Companies may get very detailed and very focused on their risk analysis. They may choose to run simulations, such as a Monte Carlo simulation, Decision Tree analysis, and/or an analysis of Standard Deviations. Based on their analysis, an organization can prioritize the risks and determine the appropriate response, should the risk occur.
There are four basic risk response techniques:
In general, the two most used risk response methods are mitigation and avoidance. For financial risk exposure the most used risk response technique is Transference, where the consequence of the risk is shifted to a 3rd party, along with ownership of the response, i.e., insurance policies, performance bonds, and warranties.
All organizations should be able to incorporate the following into their business and project plans.
"We have planned for our management of change and risks at the enterprise-level and at the individual project level. We have developed Change Management Plans, implemented Change Controls, created Risk Management Plans, and have dealt with the impact of unplanned and unforeseen risks and changes to businesses and projects."
The critical importance of Change Management and Risk Planning cannot be over-emphasized.
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