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MGT 172: Chapter 7-9

Terms in this set (34)

Risk
uncertain event that has positive/ negative effect on project objectives
Risk Management
a proactive attempt to recognize and manage internal events & external threats that affect likelihood of project's success
-risk event what can go wrong
-consequences: Minimize risk's impact
-anticipation: what can be done before event occurs
-what to do when an event occurs (contingency plans)
Risk event graph
Risk Management Benefit
-proactive rather than reactive
-reduce surprise & negative consequence
-prep PM for risk
-provide better control over future
-improve chances of reaching project performance objective within budget & time
Risk Management Process
-step 1: risk ID - analyze project to ID source of risk
-step 2: Risk assessment- in terms of severity of impact, likelihood of occurrence, controllability
-step 3: Risk response development: develop strategy to reduce possible damage, develop, contingency plan
-step 4: Risk response control- implement risk strategy, monitor, adjust plan for new risks, change mgmt
Risk Management Process: Step 1- Risk ID
-generate list of risks through brainstorming, problem ID, and risk profiling
-macro risk first, then specific events
-Goal: Identify potential risk before they occur, risk ID is a team effort!
Risk Management Process: Step 2-Risk Assessment
-methods for understanding importance of risk & their need for attention
-ie: scenario analysis, risk assessment form, risk severity matrix, failure mode & effects analysis
scenario analysis
prob., likelihood, impact/consequence of event
risk assessment form
tool used to assess impact of risks on a project
risk severity matrix
provides a basis for prioritizing which risks to address using color coded zones (red, yellow, green)
failure mode & effects analysis
impact x prob. x detection = risk value
-overall score "Ranks" risks
Step 3: Risk Response Development
situation: driving really fast car
mitigating risk: reducing probability or likelihood an adverse event will occur reduce impact/consequence of adverse event (have mom drive in car with you/max speed cap)
-transferring risk: paying a premium to pass the risk to another party (buy insurance)
-avoiding risk; changing project plan to eliminate risk or condition (don't drive car)
-retaining risk: making a conscious decision to accept the risk (oh well, be careless..)
Contingency Planning
alternative plan will be used if possible foreseen risk event actually occurs (plan ahead)
-includes cost/time estimate
-plan of action that will reduce/mitigate negative impact of risk -> implemented after risk has materialized
-having no plan may slow managerial response decisions made under pressure can be dangerous/costly
Risk Response Matrix
Opportunity management approaches
uncertain event will bring positive effect
-exploit: seeking to eliminate uncertainty associated with opportunity to ensure that it definitely happens
-share: allocating some or all of ownership of an opportunity to another party who is best able to capture the opportunity for the benefit of the project
-enhance: take action to increase probability & positive impact of an opportunity
-accept: being willing to take advantage of an opportunity if it occurs, but not taking action to pursue it
contingency funding
-funds to cover project risks- identified & unknown (size of funds reflect overall risk of project)
-budget reserves linked to identify risks of specific work packages
-management reserves: funds to cover unforeseen risks of total project (established after budget reserves)
Time Buffers (total slack)
-amount of time used to cover unforeseen risk delays in the overall project schedule
Step 4: Risk Response Control
-risk control: execution of risk responsibility strategy, monitoring of triggering events, initiating contingency plans, watching for new risks
-fostering an open org environment
-repeating risk ID/assessment exercises
-assigning & documenting responsibility for managing risk
Resource Assignment & smoothing
project network times are not a valid schedules until resources have been assigned
-resources assigned to activities based on estimate captured in Basis of Estimates (BOEs)
-assumption: resources availabel in required amts when needed (include ppl, materials, equip)
Assigning resources
resources assigned to work packages based on Basis of Estimates (BOE)
-tasks are time-phased: assigning resources results in a time=phased resource usage profile. these profiles are matched against resource availability ->leads to time-phased cost as well
Assigning resources answers...
-Will the resources be adequate and available to support the project?
-Will the project need contractors?
-How much flexibility is there in using the resources?
-Is the original deadline realistic considering resources?
resource histogram
display resource usage vs. resource availability to show whether they've overallocated or underallocated
resource smoothing
levels out resource usage by delaying noncritical activities by using positive slack to reduce peak demand and fill in valleys (to minimize peaks & valleys)
-involves rescheduling individual tasks to time frames with lower resource usage. use slack!
-where in the schedule are projects likely to have resource overloads? usually at the end or at the beginning (or parallelisms- a lot going on at once)
-would you use free or total slack first when smoothing? free slack so you don't have to push out the project
Factors to consider when assigning work
-don't pick same people for toughest assignment
-choose people with keen eye to foster their development through participation on project
-pick people with compatible work habits/personalities but who complement each other
-team up veterans with new hires to socialize them
-select people who may need to learn to work together on later stages
-scheduling tools facilitate this process + auto-smoothing feature
Types of project baselines
-technology: what is to be developed
-schedule: how long it'll take
-cost: how much
project cost & schedule baselines
time-phased work packages with budget allocations for projects
-should not be changed whenever project runs over cost
-without time phased budget, good project schedule and cost control are not possible (actual performance measured against this and variances are identified)
Establish Change management system
-projects change as they progress (aka risk position, scope, project team)
-change control system involve reporting, controlling, recording changes to project baseline
-sources of change: project scope changes, implement of contingency plan, improve changes suggested by project team members
Change control process
designed to ID proposed changes, list expected effects of those changes on schedule & budget, review/approve/disapprove changes, negotiate & resource conflicts, communicate changes, assign responsibility for implement change, adjust schedule/budget
benefits to change control system
inconsequential changes are discouraged, cost of changes are maintained, integrity of WBS & performance measures= maintained, allocation is tracked, responsibility for implementation is clarified, effect of change is visible to all parties, implementation is monitored, scope changes reflected in baseline/performance measures
Reduce Project Duration
-time is money = cost-time tradeoffs: reduce time of critical activity usually incurs additional direct costs ->used to shorten duration
Reasons for imposed project duration dates
-customer requirements & contract commitments
-time-to-market pressure
-incentive contracts
-unforeseen delays
-overhead/goodwill costs
-pressure to move resources to other projects
Crashing the schedule
-reduce duration of critical path -> decrease project duration
-add cost/schedule risk accelerates completion
-options for accelerating completion->resources, outsourcing project work, scheduling overtime, establish core project team, reducing scope, modifying relationships
project costs
-indirect cost: not associated with work packages or activity (ie. supervision, interest) & they vary over time.
-direct cost: assigned directly to work packages (labor/materials). crashing activities increase direct cost.
Reduce Cost
if cost is issue? reduce scope, owner= most responsible, outsource, brainstorm cost-saving point
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