Don’t overlook new risks from changes

Back in 2011, we were conducting a review of a specialty-vessel build across multiple locations. Our client, the COO, was worried the delivery date might be slipping. And, if it was, by how much and why.

A month later, we landed in Geneva to deliver our findings to the CEO. He was rightly proud of his company’s achievements and approach. They had completed all the engineering prior to placing any contracts, chosen solid contractors and picked the best people to oversee construction.

The news that delivery would be delayed by at least four months went down about as well as you might expect. ‘But we did everything right!’ the CEO lamented.

So what went wrong?

The team had indeed planned the project well, but then approved two design changes after construction began while failing to identify the associated risks. A raft of nasty surprises had already sabotaged their efforts before our forecast confirmed what no one wanted to hear.

The team had indeed planned the project well, but then approved two design changes after construction began while failing to identify the associated risks. A raft of nasty surprises had already sabotaged their efforts before our forecast confirmed what no one wanted to hear.

As predicted, the vessel was delivered four months late. The two changes were arguably ‘nice to haves’, not required for the charter’s first five years. Apart from the cost of the changes, the price for not managing the risks was around $60 million in lost revenue plus reputational damage.