Project Management Chap 11-12

Termination clause

A contract clause that allows the buyer or supplier to end the contract.

Cost plus incentive fee (CPIF) contract

A contract in which the buyer pays the supplier for allowable performance costs along with a predetermined fee and an incentive bonus.

Cost plus percentage of costs (CPPC) contract

A contract in which the buyer pays the supplier for allowable performance costs along with a predetermined percentage based on total costs.

Cost plus fixed fee (CPFF) contract

A contract in which the buyer pays the supplier for allowable performance costs plus a fixed fee payment that is usually based on a percentage of estimated costs.

Fixed-price contract

A contract with a fixed total price for a well-defined product or service

Lump-sum contract

A contract with a fixed total price for a well-defined product or service

Statement of work (SOW)

A description of the work required for procurement.

Influence diagram

A diagram that represents decision problems by displaying essential elements, including decisions, uncertainties, and objectives, and how they influence each other.

Decision tree

A diagramming analysis technique used to help select the best course of action when future outcomes are uncertain.

Bid

A document prepared by sellers to provide pricing for standard items that the buyer has clearly defined

Proposal

A document prepared by sellers when there are different approaches for meeting buyer needs.

Risk register

A document that contains results of various risk management processes, often displayed in a table or spreadsheet format.

Request for Proposal (RFP)

A document used to solicit proposals from prospective suppliers.

Request for Quote (RFQ)

A document used to solicit quotes or bids from prospective suppliers.

Interviewing

A fact-finding technique that is normally done face to face, but can also occur through phone calls, e-mail, or instant messaging.

Flowchart

A graphic display of the logic and flow of processes that helps you analyze how problems occur and how processes can be improved. A diagram that shows how various elements of a system relate to each other.

Risk breakdown structure

A hierarchy of potential risk categories for a project.

Watch list

A list of risks that have low priority but are still identified as potential risks.

Probability/impact matrix or chart

A matrix or chart that shows the relative probability of a risk occurring and the relative impact of the risk.

Contract

A mutually binding agreement that obligates the seller to provide specified products or services and obligates the buyer to pay for them.

Risk management plan

A plan that documents the procedures for managing risk throughout a project.

Top Ten Risk Item Tracking

A qualitative risk analysis tool for identifying risks and maintaining an awareness of risks throughout the life of a project.

Monte Carlo analysis

A risk quantification technique that simulates a model's outcome many times to provide a statistical distribution of the calculated results.

Brainstorming

A technique by which a group attempts to generate ideas or find a solution for a specific problem by amassing ideas spontaneously and without judgment.

Sensitivity analysis

A technique used to show the effects of changing one or more variables on an outcome.

Risk acceptance

Accepting the consequences if a risk occurs.

Procurement

Acquiring goods and services from an outside source.

Risk sharing

Allocating ownership of a risk to another party.

Unit pricing

An approach in which the buyer pays the supplier a predetermined amount per unit of service, and the total value of the contract is a function of the quantities needed to complete the work.

Delphi technique

An approach used to derive a consensus among a panel of experts to make predictions about future developments.

Make-or-buy decision

An organization's decision to make certain products and perform certain services inside the organization or to buy them from an outside organization.

Risk

An uncertainty that can have a negative or positive effect on meeting project objectives.

Risk enhancement

Changing the size of an opportunity by identifying and maximizing key drivers of the positive risk.

Sellers

Contractors, suppliers, or providers who provide goods and services to other organizations.

Cost-reimbursable contracts

Contracts that involve payment to the supplier for direct and indirect actual costs.

Cost plus award fee (CPAF) contract

Cost plus award fee (CPAF) contract

Risk exploitation

Doing whatever you can to make sure a positive risk happens.

Management reserves

Dollar amounts included in a cost estimate to allow for future situations that are unpredictable (sometimes called unknown unknowns). Funds held for unknown risks.

Contingency reserves

Dollar amounts included in a cost estimate to allow for future situations that may be partially planned for (sometimes called known unknowns) and that are included in the project cost baseline. Provisions held by the project sponsor or organization to reduce the risk of cost or schedule overruns to an acceptable level

Risk avoidance

Eliminating a specific threat or risk, usually by eliminating its causes.

Risk-averse

Having a low tolerance for risk.

Triggers

Indications for actual risk events.

Risk factors

Numbers that represent the overall risk of specific events, given their probability of occurring and the consequence to the project if they do occur.

Constructive change orders

Oral or written acts or omissions by someone with actual or apparent authority that can be construed to have the same effect as a written change order.

Fallback plans

Plans developed for risks that have a high impact on meeting project objectives, and implemented if attempts to reduce the risk are not effective.

Contingency plans

Predefined actions that the project team will take if an identified risk event occurs

Runaway projects

Projects that have significant cost or schedule overruns.

Contingency allowances

Provisions held by the project sponsor or organization to reduce the risk of cost or schedule overruns to an acceptable level

Risk mitigation

Reducing the impact of a risk event by reducing the probability of its occurrence.

Secondary risks

Risks that are a direct result of implementing a risk response.

Unknown risks

Risks that cannot be managed proactively because they have not been identified and analyzed.

Known risks

Risks that the project team has identified and analyzed and that can be managed proactively.

Risk transference

Shifting the consequence of a risk and responsibility for its management to a third party.

Risk events

Specific uncertain events that may occur to the detriment or enhancement of the project.

Risk utility

The amount of satisfaction or pleasure received from a potential payoff.

Point of Total Assumption (PTA)

The cost at which the contractor assumes total responsibility for each additional dollar of contract cost in a fixed-price incentive fee contract.

Risk appetite

The degree of uncertainty an entity is willing to take on in anticipation of a reward.

Risk tolerance

The maximum acceptable deviation an entity is willing to accept on a project or business objectives as the potential impact.

Risk owner

The person who will take responsibility for a risk and its associated response strategies and tasks.

Project procurement management

The processes required to acquire goods and services for a project from outside the performing organization.

Expected monetary value (EMV)

The product of a risk event probability and the risk event's monetary value.

Workarounds

Unplanned responses to risk events when no contingency plans are in place.