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