Schedule is a major risk in any project, turnaround, or business endeavor. Schedule overruns and missed deadlines can have very large impacts on all measures of success. Customer satisfaction, schedule overrun, lost production, and earned value (in projects) are a few of the measures that can be impacted when things are late. How to quantify schedule risk in projects, turnarounds, or business operations is a legitimate question that often comes up.
It is not uncommon for project managers and companies to want a distinct risk consequence category for schedule risk. This is not something I recommend. In my opinion, any legitimate schedule risk can be quantified as a cost or, in rare cases, one of the other risk categories.
There is a quantifiable value associated with any delay on the critical path of a project or business activity. The costs include direct and indirect costs related to delaying the start-up or grand opening. Other costs associated with various delays include crew overtime, demurrage, penalties, late fees, and equipment rentals. Opportunity costs such as idle workers and lost future sales can also be calculated. All of these are quantifiable using standard economics and can be used in the risk category of cost.
Other reasons for not having a schedule risk category include confusing overlap between cost and schedule risk and general clutter. Cost and schedule risk can be confusing when the cost risk is minimal but the schedule risk shows a significant level of risk. I have seen this on many occasions but, in my opinion, it makes no sense. If you can delay something without impacting cost, safety, or some other risk category, then it is generally considered schedule ‘float’ and not a risk. Removing the schedule risk category quickly resolves the issue. Also, given that there are typically four risk categories being used already (SHE, Cost, Quality, and Corporate), adding others that overlap can create confusion and unnecessary work with no added value.
To summarize – there is no legitimate schedule risk that cannot be quantified as a cost or falls within one of the other risk categories. If a ‘schedule’ risk lacks a non-schedule risk component, then it is either schedule ‘float’ or inconvenience, and it should be ignored.