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problem but not necessarily a crisis. But if the construction of a manufacturing plant is behind schedule and plant workers have already been hired to begin work on a certain date or the delay in the plant will activate penalty clauses for late delivery of manufactured items for a client, then the situation could be a crisis. Sometimes exceeding a target favorably also triggers a crisis. As an example, a manufacturing company had a requirement to deliver 10 and only 10 units to a client each month. The company manufactured 15 units each month but could only ship 10 per month to the client. Unfortunately, the company did not have storage facilities for the extra units produced, and a crisis occurred.

How do project managers determine whether the out-of-tolerance condition is just a problem or a crisis that needs to appear on the crisis dashboard? The answer is in the potential damage that can occur. If any of the items on the next list could occur, then the situation would most likely be treated as a crisis and necessitate a dashboard display:

There is a significant threat to:

The outcome of the project.

The organization as a whole, its stakeholders, and possibly the general public.

The firm’s business model and strategy.

Worker health and safety

There is a possibility for loss of life.

Redesigning existing systems is now necessary.

Organizational change will be necessary.

The firm’s image or reputation will be damaged.

Degradation in customer satisfaction could result in a present and future loss of significant revenue.

It is important to understand the difference between risk management and crisis management.

In contrast to risk management, which involves assessing potential threats and finding the best ways to avoid those threats, crisis management involves dealing with threats before, during, and after they have occurred. [That is, crisis management is proactive, not merely reactive.] It is a discipline within the broader context of management consisting of skills and techniques required to identify, assess, understand, and cope with a serious situation, especially from the moment it first occurs to the point that recovery procedures start.1

Crises often require that immediate decisions be made. Effective decision making requires information. If one metric appears to be in crisis mode and shows up on the crisis dashboard, viewers may find it necessary to look at several other metrics that may not be in a crisis mode and may not appear on the crisis dashboard but are possible causes of the crisis. Looking at metrics on dashboards is a lot easier than reading reports.

The difference between a problem and a crisis is like beauty; it is in the eyes of the beholder. What one stakeholder sees as a problem, another stakeholder may see it as a crisis. Table 8.3 shows how difficult it is to make the differentiation.

TABLE 8.3 Differentiating between a Problem and a Crisis

METRIC/KPI PROBLEM CRISIS Time The project will be late but still

acceptable to the client. The project will be late and the client is considering cancellation.

Cost Costs are being overrun, but the client can provide additional funding.

Costs are being overrun and no additional funding is available. Cancellation is highly probable.

Quality The customer is unhappy with the quality but can live with it.

Quality of the deliverables is unacceptable, personal injury is possible, the client may cancel the contract, and no further work may come from this client.

Resources The project is either understaffed or the resources assigned have marginal skills to do the job. A schedule delay is probable.

The quality or lack of resources will cause a serious delay in the schedule, and the quality of workmanship may be unacceptable such that the project may be canceled.

Scope Numerous scope changes cause changes to the baselines. Delays and cost overruns are happening but are acceptable to the client for now.

The number of scope changes has led the client to believe that the planning is not correct and more scope changes will occur. The benefits of the project no longer outweigh the cost, and project termination is likely.

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Action Items The client is unhappy with the amount of time taken to close out action items, but the impact on the project is small.

The client is unhappy with the amount of time taken to close out action items, and the impact on the project is significant. Governance decisions are being delayed because of the open action items, and the impact on the project may be severe.

Risks Significant risk levels exist, but the team may be able to mitigate some of the risks.

The potential damage that can occur because of the severity of the risks is unacceptable to the client.

Assumptions and constraints

New assumptions and constraints have appeared and may adversely affect the project.

New assumptions and constraints have appeared such that significant project replanning will be necessary. The value of the project may no longer be there.

Enterprise environmental factors

The enterprise environmental factors have changes and may adversely affect the project.

The new enterprise environmental factors will greatly reduce the value and expected benefits of the project.

These conclusions about crisis dashboards can be drawn:

The definition of what is or is not a crisis is not always clear to the viewers.

Not all problems are crises.

Sometimes unfavorable trends are treated as a crisis and appear on crisis dashboards.

The crisis dashboard may contain a mixture of crisis metrics and metrics that are treated just as problems.

The metrics that appear on a traditional dashboard reporting system may have to be redrawn when placed on a crisis dashboard to ensure that the metrics are easily understood.

Crisis metrics generally imply that either this situation must be monitored closely or that some decisions must be made. But project managers must be careful not to overreact.

NOTE 1 Wikipedia contributors, “Crisis Management,” Wikipedia, The Free Encyclopedia, https://en.wikipedia.org/w/index.php? title=Crisis_management&oldid=774782017.

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