Organisational Design and Project Risk

C o n f i d e n t i a l1

Program : MBA

Semester : IV

Subject Code : PM0016

Subject Name : Project Risk Management

Unit number : 10

Unit Title : Organisational Design and Project Risk

Lecture Number : 10

Lecture Title : Organisational Design and Project Risk

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C o n f i d e n t i a l

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Objectives :

The objectives of this lecture are to:

• Explain organisation design and its need.

• Identify and manage the needs and requirements of an organisation.

• Assess all shortcomings in a project and plans.

• Estimate the errors in the project and initiate rectification measures.

• Appreciate the importance and need for documentation.

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Unit-10 Organisational Design and Project Risk

Project Risk Audit


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Lecture Outline

• Introduction

• Organisational Design and Purpose

• Organisational Design Services

• Management of Needs and Requirements

• Requirements Management Model

• General Types of Requirements

• Planning Shortcomings

• Estimation Errors

• Measures to Reduce Estimation Errors

• Need for Documentation

• Summary

• Check Your Learning

• Activity

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Introduction

• Organisational design is a formal guideline of development that brings

together- people, information, and technology of an organisation.

• Organisational development matches the organisation structure as

closely as possible to the organisation goal.

• With the help of design process, organisations aim to ensure that the

collective efforts of the members lead to better handling of risks.

• Organisations adopt design process as an internal change under the

guidance of an external channel.

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• Organisational design helps an organisation to enhance its processes and

achieve the main goals successfully.

• Organisational design is implemented with the creation of a strategy.

• Organisational design strategy combines the objectives of the

organisation and motivates members to achieve desired outcomes.

• The purpose of an organisation’s existence is the foundation for every act

of its members.

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Organisational Design and Purpose


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The organisational design services include:

• Understanding objectives of change and the environment in which it

exists.

• Understanding business activities of the organisation.

• Suggesting new developmental models for processes and interfaces and

utilising them for defining new structures, roles and relationships for

offshore processes.

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Organisational Design Services


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• Requirement can be defined as a demand expressed and accepted by

stakeholders of a project regarding the behaviour of the project.

• Requirements management is a process similar to risk management

process.

The benefits of using methods to manage requirements are as follows:

• Effectiveness and efficiency of the process increases.

• The ability to establish right goals for project organisation is

established.

• The impact of changes required during the work is reduced.

• The consequences that these changes might have on the general

design can be understood easily.

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Management of Needs and Requirements


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Requirements Management Model

Checkingrequirements

Negotiating the requirements

Accepting the requirements

Preparing and documenting requirements

Gathering problems and needs

Identifying stakeholders


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The types of requirements that an organisation or a project could

have are:

• Business requirements.

• Business user requirements.

• Functional requirements.

• System (Non-Functional) requirements.

• Software requirements.

The characteristics of the requirements that are defined for the

project or the organisation are:

• Unambiguous.

• Specific.

• Testable.

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General Types of Requirements


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• It is important to plan in advance for the shortcomings in a project.

• This reduces the project overheads.

The shortcomings that may occur in a project are:

• Change in project scope.

• Change in planning.

• Project visibility.

• Work environment.

• User involvement and management tools.

• Insufficient details on project strategy, project definition, value

management, technology management.

• Linkage with programs and portfolios.

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Planning Shortcomings


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• Estimation error is the error caused by observing a sample instead of the

whole project.

• Estimation is an important activity for projects.

• The process of budgeting and planning is based on estimates.

• To reduce the risks arising from estimation errors, it is necessary to

improve the systems and capacities of both project management and

quantitative estimation.

• Project estimation can be carried out by either of the two estimations:

• Bottom-up estimation

• Top-down estimation

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Estimation Errors


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The following are the measures to reduce estimation errors:

• Keeping track of project uncertainty and risks.

• Investing more in detailed planning.

• Selecting estimators based on the number of projects that can

be managed rather than on cumulative project management

experience.

Tips to overcome the project estimation errors are:

• Confirm all assumptions.

• Do not expect trouble-free projects.

• Specify exactly what estimates include.

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Measures to Reduce Estimation Errors


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• Documentation helps to maintain the historic details of the project.

• Documentation helps to store the details of the methodologies followed in

a project, which can be used as a learning base for future projects.

In general, the following details of a project should be documented:

• Basic usage of the project.

• Listing all the techniques used in the project helps to achieve advance

techniques.

• User interface.

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Need for Documentation


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Project documentation guides the project team and readers to:

• Define the aim and background of the project.

• Identify key deliverables and note milestone dates.

• Assess quality, scope, resources, risk, training, and cost.

• Document the technical parameters and technologies to be used.

• Address the manner in which items are to be built or deployed.

• Document any back-out or contingencies that could occur.

• Communicate progress and update stakeholders.

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Need for Documentation contd…


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Summary

• Organisational design provides guidelines to bring people,

information and technology under a common base that is

achieving a goal.

• The requirements of a project are business requirements,

business user requirements, functional requirements,

system requirements and software requirements.

• Documentation serves as a source of knowledge for future projects.

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Check Your Learning

1. What are the tips to overcome the project estimation errors?

Ans: The tips to overcome the project estimation errors are:

• Confirm all assumptions.

• Do not expect trouble-free projects.

• Specify exactly what estimates include.

2. Mention any of the three shortcomings that may occur in a project.

Ans: The shortcomings that may occur in a project are:

• Project visibility.

• Work environment.

• User involvement and management tools.

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Activity

Assume that you are working for a Machine tools industry.

Your industry has been offered a new project. You are appointed as

the project manager for this project. It is your responsibility

to prepare a project plan. What are the initial steps you would

take to plan the project and what are the measures you would

adopt to plan for possible risks?

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Organisational Design and Project Risk

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