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Dependencies, Contingency Planning and Phase Gates
Project Management · Chapter 3: Building a Comprehensive Project PlanSection 3.5 · lesson 19 of 7313 min · free with a free account
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In this lesson
Managing dependencies, sizing reserves and deciding at phase gates.
- Classify dependencies as mandatory or discretionary and internal or external
- Maintain a dependency log with owners, needed-by dates and fallback triggers
- Calculate contingency reserve, management reserve and total funding requirement
- Explain phase gate criteria and the go, no-go, recycle and conditional go decisions
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Transcript
Everything said in the video, section by section (1,757 words). Read along, or search it.
Opening Question
Five of Six Gate Criteria Met
Marrowfield is refitting its community center. The design phase is done, and today is the gate review. Dana Reyes, the project manager, presents. Marcus Bell, the director who sponsors the project, decides. Five of six gate criteria are met, with evidence: an approved design, a cost baseline, and a current dependency log. The sixth isn't. The city's permit for the street-side ramp has been applied for, but not granted. The city estimates three weeks. Should the project go ahead, stop, or go back and rework? By the end, you'll see what Marcus decides, and why.
Definition
What Makes Work Dependent
Start with dependencies. A dependency is a relationship between two pieces of work, or between work and something outside the project, that affects when or whether work can proceed. Sam Kowalski, the site supervisor, needs the hall framing finished before plasterboard goes on. The from end supplies something; the to end waits. Two tasks in the same room aren't dependent, unless one changes the timing or possibility of the other. A dependency that's written down can be dated, checked and assigned. Then a late arrival is something that was being watched.
Categories
Mandatory, Discretionary, Internal and External
Dependencies are sorted by two separate questions. First: how firm is the reason? A mandatory dependency, or hard logic, is required by the nature of the work, a law, or a contract. Concrete must cure before walls go on it. A discretionary dependency, or preferred logic, is one the team chose and could reverse. Painting before flooring keeps drips off the floor, but sheeting would allow the reverse. Discretionary doesn't mean unimportant. Unmaking the choice has a cost, like extra protection or a higher chance of rework. Second question: where is the other end? Internal means both ends are within the control of the team or its organization. External means at least one end sits with an outside party: a supplier, a government body, a client, a volunteer group. You influence them only by agreement and monitoring. Combinations vary. Framing before plasterboard is mandatory and internal. Painting before flooring is discretionary and internal. Volunteers doing the final clean is discretionary and external.
Quick Check
The Fire Marshal Sign-Off
Quick check. The fire marshal must sign off the new sprinklers before the hall can reopen. What kind of dependency is that? Pause, and decide. Mandatory and external. A legal sign-off can't be reordered, and the marshal is outside the team's control. That pairing needs the closest watching: no reordering is possible, and the other end has its own priorities.
Dependency Log
Owners, Needed-By Dates and Margins
Dana records each dependency in the dependency log, one row per dependency. Each row holds an identifier, a description, both categories, the from and to ends, an owner, a needed-by date, a status, and a fallback. The owner is the one person who sees that it's satisfied, or reports promptly that it won't be. The needed-by date is the latest it can arrive without delaying the waiting work. Row D-05: the supplier delivers the room partition. Mandatory, external. Lena Park, the purchasing lead, owns it. The supplier promises April 21st. Installation needs it by April 28th. That's a seven-day margin, the room a slip has before it does harm. The log is reviewed at regular intervals, and whenever something changes.
External Dependencies
Agree, Warn Early and Record
With no authority over a supplier, three practices carry the weight. Agree dates instead of assuming them: a specific date, exactly what's supplied and in what condition, and anything the supplier needs first, like an approved drawing. Arrange an early-warning contact: a named person who'll warn you if the date is at risk, with check-ins early enough that a fallback still works. Lena's check-in is April 7th, three weeks before the needed-by date. And record the commitment: the date, the content, who gave it, and in what form, like an email or an order clause. Whether it's legally binding is a question for counsel.
Fallback Plans
Trigger, Alternative and Owner
And every row needs a fallback plan: a prearranged alternative if the dependency fails. It has three parts. A trigger, an observable condition: the supplier hasn't confirmed dispatch by April 14th. An alternative action: rent a temporary screen, and fit the partition later. And an owner authorized to start it. Without a trigger, people wait and hope. With one, the decision is close to mechanical. A fallback answers one narrow question: what do we do if this item fails? The wider range of risk responses comes with risk planning.
Reserves
Contingency Versus Management Reserve
A different problem: uncertainty nobody can schedule. A reserve is time or money set aside to cope with it. A contingency reserve sits inside the baseline, for uncertainty the team has identified, like old wiring that may need replacing. A management reserve sits outside the baseline, for work nobody has identified yet. Using it usually needs the sponsor's approval, and releasing it changes the baseline. The split is for control. Contingency is tied to named causes, so the team can be asked why it was used. Management reserve is held above the team. Organizations differ, so a plan states its convention. Here, the cost baseline is the activity estimates plus contingency, and the total funding requirement adds the management reserve.
Worked Example
Budgeting the Library Room Move
Priya Nair, Dana's planning analyst, runs the numbers for one piece of the work: moving the shelving in the center's library room. Five activities are estimated at 2,000, 4,000, 3,000, 6,000 and 1,000 dollars: 16,000 in all. Two named uncertainties get contingency: $600 on rewiring, for old wiring, and $400 on installation, for awkward deliveries. That's $1,000. So the cost baseline is $17,000. Policy sets management reserve at 5 percent of the baseline: $850. Total funding requirement: $17,850. But the team is measured against $17,000. Time works the same way: 20 working days, plus 3 days of contingency, is a 23-day baseline. A 2-day management reserve allows day 25, only if released. A flat 10 percent instead would add $1,600, for a $17,600 baseline: $600 more, with cushions on painting and removal, where no uncertainty was named.
Debate
Flat Percentage or Risk-Based Reserves
Which method is better is disputed. Flat percentages are quick, work early, and don't depend on a risk list that's always incomplete. Risk-based reserves can be reviewed, challenged, and released when a cause passes. A flat cushion treats familiar and novel work alike, and invites spending it. Which yields reserves closer to real overruns is empirical, settled only by comparing finished projects. How much money to hold against doubt is a question of values. Management reserve can't be sized from a risk list at all, since it's for what nobody identified. Policy sets it, or judgment from similar projects.
Quick Check
Total Funding With a 5 Percent Reserve
Quick check, on a different project. Activity estimates total $40,000, with $3,000 of contingency. Management reserve is 5 percent of the baseline. What's the total funding requirement? Pause, and decide. $45,150. The baseline is 40,000 plus 3,000: $43,000. Five percent of that is $2,150, and funding adds it on top. $45,000 takes 5 percent of the estimates alone, and $43,000 is just the baseline.
Phase Gates
Criteria, Evidence, Attendees and Decision
Now the gate itself. A phase is a stage with its own deliverables, like design, build or test. A phase gate review is a formal checkpoint at its end, deciding whether to proceed. Four elements define a gate. The criteria: conditions agreed and written in advance, because criteria written after the results tend to fit them. Each should be checkable, like design drawings approved in writing by the client. The evidence: signed approvals, test results, the cost report, the dependency log, and the reserve remaining. The attendees: the decision-makers, the project manager who presents, and people who can speak to the evidence. And finally, the decision. An open external dependency, or a reserve mostly spent with much work left, is exactly what a gate exists to surface, before the next phase commits money.
Gate Decisions
Go, No-Go, Recycle or Conditional Go
There are three possible decisions. Go: the criteria are met, and the next phase is authorized, with its resources released. No-go: the case no longer holds, or the gaps can't be closed. The next phase isn't released, and the project stops or pauses. Recycle: the phase is incomplete in specific, named ways. The team reworks the gaps and presents again. It costs time, but the problem is judged fixable. Many organizations add a conditional go: a go with conditions, each to be met by a stated date. Where's the line between that and recycle? Does the open item block work that starts right away, or only later work? If it blocks immediate work, recycle is honest.
Debate
How Rigid Gates Should Be
How rigid should gates be? One side says a gate you can pass with open items isn't a gate, because pressure to continue is strongest when stopping hurts most. The other says rigid gates add waiting, tempt teams to dress up problems, and lean on criteria that may be out of date. Whether stricter gates prevent failures, or mainly add delay, is empirical, and depends on the work. How much delay is worth it is a judgment of values.
Records
Decision Rights and Gate Records
A gate produces records. A checklist: each criterion, its evidence, and whether it's met. A decision record: what was decided, when, by whom, and why. And the conditions and actions, each saying what, by whom and by when, tracked in the dependency log or an action list. Records matter only if the decider had the power to decide. Decision rights, the formal authority to decide, are stated before the gate. Marcus holds them; Dana presents and recommends. Escalation moves a matter higher when the group can't agree, or the decision exceeds its authority, like releasing management reserve. A gate with no stated decision rights tends to end without a decision, and the project simply drifts on.
Case Resolution
A Conditional Go on the Ramp Permit
Back to the gate review, and the missing permit. Dana checks the dependency log. The permit blocks only the ramp work, five weeks into the next phase. Purchasing and indoor work fill those weeks. Her fallback: if the permit hasn't arrived by the end of week three, crews shift to more indoor work. Her early-warning contact at the city agreed to a Friday check-in. So Dana recommends, and Marcus records, a conditional go. No ramp work starts until the permit is in hand, owned by Dana, reviewed in week three. The trade-off is recorded too: they'll spend on materials before knowing the permit's outcome. Waiting has a certain cost; a refused permit is only possible.
Key Takeaways
Dependencies, Reserves and Gates
To recap. Classify each dependency twice: mandatory or discretionary, internal or external. Log it with an owner, a needed-by date, and a fallback with a trigger. Contingency reserve sits inside the cost baseline; management reserve sits outside it. And a gate ends in go, no-go, recycle, or a dated conditional go, decided by whoever holds the rights.
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Project Management (Business 230) is a self-paced online course of 73 video lessons in 12 chapters, from starting and defining a project to planning, budgets, scheduling tools, proposals, contracts, execution, monitoring, closure, teams and certification. It carries a NCCRS credit recommendation for 3 semester credits.
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