Welcome to the Wonderful World of Contingency Planning

By: Kamal Patel

Contingency planning on a business transformation project often feels like a Catch-22: people don’t want to do contingency planning because there’s a superstition that admitting that there exist key risks that can impact their go-live or business ramp-up will somehow bring them about.

But by not coming up with contingency plans, those very same ignored risks are only more likely to have a major impact at go-live. Keeping in mind the uncomfortable truism of Murphy’s Law that anything that can go wrong inevitably will, it’s generally a better approach to be over-prepared and underwhelmed rather than be under-prepared and overwhelmed.  

Issues will inevitably arise that end up impacting or even slowing down certain aspects of business operations. At that point, it’s too late to plan for contingencies because they’ve already happened and all you have left is improvisation and heroics. But there is a better way.

Contingency planning is all about creating controls to help manage and reduce risk by creating and rehearsing multiple rapid recovery or workaround methods.  The focus is on key activities and likely failure points that have the most risk and largest impact on business operations.

An Illustration: How Contingency Plans Work in Action

Here’s an example of how effective a contingency plan can be at mitigating issues.

I was on a project where the leadership team was already aligned to a contingency plan and has it in play (a rare occurrence, unfortunately). As part of that plan, it was agreed that no inventory would be moved during the final switch from the old system to the new, as any difference between where the product was in reality versus where it was reflected in the system would cause disruption during business go-live and ramp-up. 

Just imagine the headache: you need to ship a product, so you go to the shelf where the system tells you that item is stored, only to find a completely different product in its place; now multiply that problem by a factor of a thousand. 

With that said, very close to go-live, there were some decisions made to physically move the inventory within the warehouse to generate some cost ratio benefits per square foot. This inevitably led to the aforementioned disruption during go-live, since the inventory was out of sync between systems and physical locations, which caused the distribution center team to require additional time to reconcile, make inventory adjustments, and map to the new location. 

Since inventory conversion is a managed risk item and is reviewed consistently through the lifecycle of the project, the project had a contingency plan in place to generate and analyze reports for proposed adjustments.  With support from resources that were able to review and validate the inventory adjustments required, the process was expedited without a hiccup. 

The lesson here is that by having a contingency plan for this eventuality, we were able to save precious time during the go-live weekend. And though we had some minor delays with the release of the system, we were still able to avoid days or weeks of delays that would have occurred had there not been a clear plan on how to correct the inventory location accuracy issue.  

Challenges to Contingency Planning

Even once you’ve decided to invest resources in contingency planning, effectively completing the exercise can be difficult. Here are some of the bottlenecks and disruptions that can occur, as well as how to overcome them.

Challenge #1: Everyone Wants to Be a Priority

Every team will feel its area of focus and processes are critical, which will make it challenging to get alignment on the scope of contingency planning. Who do you prioritize? Who gets a say?

Some areas of the project may indeed have a large number of risks. It’s up to you and the contingency planning team to sort through and identify which are truly likely to materially impact the business as a whole—for example, direct customer impacts— and focus on planning mitigations for those areas. 

How to Manage Competing Priorities: Start assessing risks early and iterate often to get to the truly important ones. Have regular contingency planning cycle milestones integrated into a project’s critical path plan to maximize the team’s focus throughout the lifecycle of the project.

Challenge #2: Lack of Followup

Another issue can occur when the risks you’ve identified are not followed up consistently to close or mitigate them through the project lifecycle. People agree the risk exists and agree that it should be closed but then get distracted. A more insidious variety of this challenge is when an old risk is closed but the solution in itself creates a new different risk that hasn’t been considered. Here you have the problem of either having an outdated picture of what the nature of your risk is, or not even realizing that a wholly new and different risk has come about.

Similarly, lack of follow-up can manifest itself in actual mitigation plan training. Once a mitigation or scramble plan is identified to handle a given failure point, everyone nods and goes about their day without preparing, training the extended teams, or even properly documenting what the execution of that scramble plan would mean for the folks on the ground. When the day comes to have to activate the scramble plan no one even is quite sure what to do. 

How to Mitigate: Clearly identify resources that will own any follow-ups involved in contingency planning, whether to close risks or prepare to use the contingency plans.  Here again, multiple iterations and relentless reassessments are instrumental to ensure plan accuracy and associated follow-up activities completeness.

Challenge #3: Leadership Isn’t Fully on Board

Be on the lookout for limited buy-in and support from leadership and stakeholders, since for the plan to be effective, it’s imperative to have support from the leaders who will be needed to rally the teams to perform the activity. All hands on deck! If leadership believes that contingency planning is a result of poor project execution rather than a sign of best practices to project health, it’s your job to communicate the importance and explain how it can keep issues from arising down the road.

How to Mitigate: Clarifying where contingency planning fits in with the overall project plan will make leaders and stakeholders more amenable to the idea if they understand why it is required. Be ready to answer “what’s in it for us” to prove the value of the plan. Last but not least, remember to continue educating the leaders that, beyond having a handy Plan B in the event things go wrong, the contingency planning exercise in itself helps the teams to consider what could go wrong so as to prevent it. 

Challenge #4: Team Members Aren’t Motivated

With team members involved heavily in the day-to-day of getting the project to go-live, you may find it difficult to motivate them. They may not have the time or focus to come up with a plan B since they’re putting significant time into Plan A (go-live). 

How to Mitigate: Communicate frequently to ensure alignment with task owners to drive the contingency plan creation and display accountability for team members. Make people comfortable by assuring them that the team is doing all it can to ensure Plan A will be successful, but in the event of an issue where Plan B may need to be invoked, you have a plan for how the teams will operate and execute.The impact of an outage with no workaround plan can negatively impact a project timeline, relationships with customers, and, in certain industries such as medical device manufacturing, can impact lives. You cannot plan for everything, but you can help mitigate risk for high-impact areas by developing a proactive strategy based on thought processes against disruptive events that might occur.