Project Management Ch 5,6,7
Funding Risks
Evaluate the risk of reductions in funding - a cut in the project
Benefits of Risk Management
A proactive rather then reactive approach Reduces surprises and negative consequences Provides better control over the future Improves changes of reaching project objectives on time, within budget
Top Down Estimates (Macro)
Estimates analogy, group consensus or mathematical relationships
What did we learn from Heathrow Snapshot
A tendency to focus on technical challenges and shortchange human side of the project
Activity
An element of the project that requires times but may not require resources
Accept Opportunity
Be willing to take advantage of the opportunity if it occurs
Reasons for Adjusting Estimates
-Interaction costs are hidden in estimates. -Normal conditions do not apply. -Things go wrong on projects. -Changes in project scope and plans.
Risk Assessment (4 Steps)
1. Risk Identification 2. Risk Assessment 3. Risk Response Development 4. Risk Response Control
Reference Class Forecasting (3 Steps)
1. Select a reference class of projects similar to your potential project 2. Collect and arrange outcome data as a distribution. 3. Use the distribution data to arrive at a realistic forecast
Forward Pass
A process that identifies all the early times
Tasks should never exceed
5 days or at the most 10 workdays
Project Network
A graphical representation of a project that depicts the activities and shows the predecessor relationships among the activities. A tool used for planning, scheduling and monitoring project progress
Delphi Method
A group of decision process about the likelihood that certain events will occur Advantage: Experts never need to be brought together physically
Risk Breakdown Structure (RBS)
A hierarchical representation of risks according to their risk categories.
Lags
A lag is the minimum amount of time a dependent activity must be delayed to begin or end. The use of lags in project networks occurs for two primary reasons: 1) When activities of long duration delay the start of finish of successor tasks. 2) To constrain the start or finish of an activity.
Risk Profile
A list of questions that addresses traditional areas of uncertainty on a project.
Laddering
Activities are broken into segments so the following activity can begin sooner and not delay the work.
Parallel Activities
Activities that can take place at the same time if desired
Two Approaches Project Network
Activity on Node (AON) Activity on Arrow (AOA)
Share Opportunity
Allocate some or all of the ownership of an opportunity to another party who is best able to capture the opportunity for the benefit of the project
Free Slack
Amount of time that an activity can be delayed without delaying any immediately following activity
Backward Pass
An activity that finds all the late start and late finish times
Burst Activity
An activity that has more than one activity immediately following it.
Merge Activity
An activity that has more than one activity immediately preceding it.
Contingency Planning
An alternative plan that will be used if possible foreseen risk event becomes a reality
Looping
An attempt by the planner to return to an earlier activity
Risk Management
An attempt to recognize and manage potential and unforeseen trouble spots that may occur when the project is implemented.
Risk
An uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives.
Direct Costs
Are clearly chargeable to a specific work package Ex: Labour, materials, equipment
The chances of a risk event occurring
Are greatest during the early stages of a project
General and Administrative Overhead Costs
Are not directly linked to a specific work package Ex: Advertising, accounting, salary of senior mgmt
Contingency Reserves
Are set up to cover identified risks; these reserves are allocated to specific segments or deliverables of the project
Management Reserves
Are set up to covered UNIDENTIFIED risks and are allocated to risks associated with the total project
Scenario Analysis
Assesses the significance of each risk event in terms of probability and impact Easiest and most commonly used technique for analyzing risk
Technical Risks
Backup strategies if chosen technology fails. Assessing whether technical uncertainties can be resolved.
Bottom Up Estimates (Micro)
Based on estimates of elements found in the WBS
Types of Estimates
Bottom up/Top Down
Direct Project Overhead Costs
Can be tied to project deliverables or work packages Ex: Salary of project manager, rental space, supplies or machinery
Avoiding Risk
Changing the project plan to eliminate the risk or condition
Top Down Approaches
Consensus methods Ratio methods Apportion method Function point methods for software and system projects Learning curves
Risk Register
Details all identified risks, including descriptions, category, and probability of occurring, impact, responses, contingency plans, owners, and current status
Activity on Node has come to
Dominate nearly all project network plans
Non-Project factor examples
Equipment down time can alter time estimates
Schedule Risks
Expedite or Crash the project to get it back on track, use best people for high risks
FMEA (Failure Mode and Effects Analysis)
For any activity or item, define the potential failure modes, including the likelihood of occurrence, and the ability to detect and characterize the effects of those failures.
Risk Identification (step 1)
Generate a list of all the possible risks that could affect the project Use RBS in conjunction with work Identify the macro risks first then specific areas can be checked
Research suggests
Groups make more accurate judgements about risk than individuals
Learning curve also known as
Improvement Curve, Experience Curve, and Industrial process curve
Work situations where we are asked for time and cost estimates, most of us are
Inclined to add a little padding to reduce the risk of being late
Best way to improve estimates
Is to collect and archive data on past project estimates and actuals
Mega Projects
Large scale, complex ventures hat typically costs $1 Billion or more, take many years to complete EX: High speed rail lines, Olympics, Aircrafts
Preferred Approach in Defining the Project
Make rough top-down estimates, develop WBS, Make bottom up estimates, develop schedules and budgets, Reconcile differences between top-down and bottom up estimates
Retaining Risk
Making a conscious decision to accept the risk
Risk Response Development (Step 3)
Mitigate risk, avoid risk, transfer risk, escalating risk, retaining risk Develop a strategy to reduce possible damage Develop Contingency plans
Functions points are derived from
Multiplying the number f kinds of elements by the weighted complexity
Escalate Opportunity
Notify the appropriate people within the organization of the opportunity
Escalating Risk
Notifying the appropriate people within the organization of the threat
Mitigating Risk
Reducing the likelihood an adverse event will occur. Reducing impact of adverse event.
Transferring Risk
Passing risk to another party
At work package level, estimates should be made by the
Person most familiar with the task (Sometimes first line supervisors)
Risk Severity Matrix
Prioritizes what risks to address
Direct project overheads can be tied to
Project deliverables or work packages
Template method
Project is similar to past project (Then use this method)
Danger Path
Project network ends with more than one activity. Danglers can be avoided by tying dangler activities to a common project start or finish node
White Elephants
Projects are overbudget, under value, and the costs of maintaining the project exceed the benefits received
Cost Risks
Review price to avoid the trap of using one lump sum to cover price risks
Risk Response Control (Step 4)
Risk Register, Risk Control, Establishing a change Management system
Risk Assessment (Step 2)
Scenario Analysis, Risk Assessment Form, Risk Severity Matrix, Probability Analysis
Exploit Opportunity
Seek to eliminate the uncertainty associated with an opportunity to ensure that it definitely happens.
Path
Sequence of activities between a project's start and finish
Start to Finish Relationship
Situations in which the finish of an activity depends on the start of another activity.
Why are gaps desirable?
So you can add missing or new activities later
Function point methods for software and system projects
Software development projects are frequently estimated using weighted macro variables called function points
Several people with relevant experience of the task are used to estimate
Sometimes called Crowdsourcing
Hammock Activity
Spans over a segment of a project. Has a duration that is determined after the network plan is drawn. Is used to aggregate sections of the project to facilitate getting the right amount of detail for specific sections of a project. Is very useful in assigning and controlling indirect project costs
Past Experience is a good
Starting point for developing time and cost estimates.
Enhance Opportunity
Take action to increase the probability and/or the positive impact of an opportunity
Phase Estimating
Used when an unusual amount of uncertainty surrounds a project and it is impractical to estimate times and costs for the entire project
Apportion Method
Used when projects closely follow past projects in features and costs.
Probability Analysis
Uses statistical techniques in assessing project risk
Total Slack
Tell us the amount of time an activity can be delayed and not delay the project
Bottom Up Approaches
Template Methods Parametric Procedures Range Estimates
One of the major advantages of a dedicated project team is
The Speed gained from concentrated focus and localized project decisions
Project Networks are developed from
The WBS Schedule
Contingencies
The estimate for contingencies should assume normal or average conditions.
Finish to Finish Relationship
The finish of one activity depends on the finish of another activity
Network Sensitivity
The likelihood the original critical path(s) will change once the project is initiated. A network schedule that has only one critical path and noncritical activities that enjoy significant slack would be labeled 'insensitive'.
Critical Path
The longest path; determines expected project duration
Estimating
The process of forecasting or approximating the time and cost of completing project deliverables.
Bar Charts are popular because
They present an easy-to-understand, clear picture on a time scaled horizon
Phase Estimating preferred by
Those working on projects where the final product is not known and the uncertainty is very large
Project Networks represent
Three Quarters of the planning process
Main disadvantage of top-down estimating
Time and cost for a specific task are not considered
Ratio Methods
Top-Down Ratio methods are often used in the concept or need phase of a project to get an initial duration and cost estimate for the project
Three things to ask in regards to a project network node
What must be completed before (Predecessor) What must be completed after (Successor) What can occur while the activity is taking place (Concurrent or Parallel)
Negative Slack Occurs
When the critical path is delayed
Finish to Start Relationship
When the next activity in the sequence must be delayed even when the preceding activity is complete
Range Estimating
Works best when work packages have significant uncertainty associated with the time or cost to complete