Module 03 : Knowing What the Project Is, Part 2 * Project Management (x470)
Feb 25, 2016
Module 03 : Knowing What the Project Is, Part 2
*Project Management (x470)
*Class Road MapSessio
n 1Foundational Concepts
Sessions 2 & 3
Knowing WHAT the
Project Is
Session 4
Knowing WHERE the Project Is
Session 5
Closure, Group
Presentation, Advance
Topics
2
*Session 3 Agenda
Short Quiz 1
• Questions / Review• Short Quiz
Knowing WHAT the Project Is
• Communication Plan• Risk Response Plan• Vendor Responses• Responsibility Assignment Matrix
Team Sessions
• Communication Plan• Risk Response Plan• Responsibility Assignment
Matrix3
Project Plan
*Knowing What the Project Is:Project Planning
Scope Schedule Cost Stakeholder
Managem
ent
Communication PlanRisk Response PlanVendor Responses
Responsibility Assignment Matrix (RAM)
*Knowing What the Project Is:Communications Management Plan
* Distribution structure of the info – what info goes to who, via what method, frequency
* Description of info to be provided – format, content, level of detail, owner
* Collection and filing structure that details methods for gathering and storing various types of info
* Methods for accessing info between schedules* Methods for updating and refining communications
management plan as the project moves on* Escalation process
Objective: Meet stakeholder communication needs.
5
*Knowing What the Project Is:Basic Risk Concept* Project risk is an uncertain event or condition,
that if it occurs, has a positive or negative effect on the project
* Risk management focuses on:– Known unknowns– Proactive management
* Risk management effort should be commensurate with the risk and importance of the project
* Tolerance for Risk- Avoider- Neutral- Lover 6
*Knowing What the Project Is:Risk Management
* Systematic process of identifying, analyzing, and responding to project risks.
* Maximizes probability and consequence of positive events and minimizes probability and consequence of adverse events
* Risk and information are inversely related
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8
*Knowing What the Project Is:Project Risk Planning Steps
Plan Risk Manageme
ntIdentify
Risk
Perform Quantitative Risk Analysis
Perform Qualitative Risk Analysis
Plan Risk Responses
Objective: Understand project risks and develop options and actions to minimize threats and enhance opportunities to project success
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*Knowing What the Project Is:Risk Management PlanningObjective: Determine conduct of risk management activities
for the project
Plan Risk Manageme
ntIdentify
Risk
Perform Quantitative Risk Analysis
Perform Qualitative Risk Analysis
Plan Risk Responses
10
*Knowing What the Project Is:Risk Management Plan
MethodologyRoles and ResponsibilitiesBudgetingTimingRisk TypesRisk assessment metric definitionsProbability and impact matrixReporting formatTracking
Risk management structure and performance for the project
11
*Knowing What the Project Is:Risk Types
“The starting point for best practices in risk management is the development of a classification systems for the types of risks.” – Harold Kerzner
Technical, quality or performance Project Management
Organizational
External• Legal / regulatory• Labor• Weather• Force Majeure:
earthquake, floods, etc..
*Knowing What the Project Is:Other Risk Types Examples
* Boeing• Financial• Market• Technical• Productio
n
ABB• Contracts and
agreements• Responsibility and liability• Financial• Political• Warranty• Schedule• Technical• Resources• Supply and demand chain
management• Customer• Consortia• Environmental
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*Knowing What the Project Is:Risk Breakdown Structure
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*Knowing What the Project Is:Risk Assessment Metric Example
Assessment Probability Impact
High > 50%Significant disruption of project requirements (schedule, cost, scope) even with close monitoring
Medium 25% - 50%Potential disruption of project requirements; close monitoring may overcome difficulties
Low < 25%Little potential to disrupt project constraints; normal monitoring should overcome difficulties
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*Knowing What the Project Is:Risk IdentificationObjective:
Identify project risks
* Process of determining risks that might affect the project and documenting their characteristics
* Iterative process* Outputs
– Risks (risk register)– Triggers
Plan Risk Manageme
ntIdentify
Risk
Perform Quantitative Risk Analysis
Perform Qualitative Risk Analysis
Plan Risk Responses
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*Knowing What the Project Is:Qualitative Risk Analysis
Objective: Rank risks according to the probability of its occurrence and its impact to the project if it occurs
Plan Risk Manageme
ntIdentify
Risk
Perform Quantitative Risk Analysis
Perform Qualitative Risk Analysis
Plan Risk Responses
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*Knowing What the Project Is:Qualitative Risk Assessment *Ordinal Scales (rank-ordered values)
–High, Medium, Low–Red, Yellow, Green–A, B, C
*Cardinal Scales (assigns values)
–0 to 100% for likelihood of occurrence
–0 to 10 for impact of occurrence
*Knowing What the Project Is:Qualitative Risk Assessment – Ordinal Model
Prob
abilit
y
Impact
High
Medium
Low
Medium HighLow
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*Knowing What the Project Is:Qualitative Risk Assessment – Cardinal Model
Prob
abilit
y
Impact
2
19
4
6
8
10
2 4 6 8 10
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*Knowing What the Project Is:Risk Response Plan
Objective: Develop options and actions to minimize threats and enhance opportunities to project success
Plan Risk Manageme
ntIdentify
Risk
Perform Quantitative Risk Analysis
Perform Qualitative Risk Analysis
Plan Risk Responses
*Knowing What the Project Is:Risks Strategies
Threats• Avoidance – changing
plan to eliminate the risk • Transference – shifts
consequence of a risk to a third party, including ownership
• Mitigation – reduces probability and/or consequences of an adverse risk to acceptable level
• Acceptance – risk is assumed. Contingency plan may be developed or team may deal with the risk only at the time of occurrence
Opportunities• Exploit – ensuring that
the opportunity is realized • Share – allocating
ownership to a third party best able to realize benefit / opportunity
• Enhance – modifies size of the opportunity by increasing probability and/or positive impacts and by identifying and maximizing key drivers of the opportunities
• Acceptance – risk is assumed. Contingency plan may be developed or team may deal with the risk only at the time of occurrence
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*Knowing What the Project Is:Risk Response Plan Template
ID Risk Type Risk Description Risk
TriggerImpacted
Areas Probability Impact Priority Strategy Owner Statu
s
I Impacted Area/s: Enter area of potential impact: Scope, Quality, Schedule, Cost2 Probability: Enter probability of occurrence: Low, Medium, High3 Impact: Enter severity of consequences: Low, Medium, High4 Strategies: Accept, Avoid, Mitigate, Transfer5 Status: Open (O) or Close (C)
*Team Work (40 minutes)
Develop Communications Plan• Use only three major documents on each phase
for your plan
Create Risk Response Plan• Develop the risk types for your project• Identify project risks and triggers for your project
(use Post-It Notes)• Use Ordinal Model to prioritize risks (agree on H,
M and L definitions – probability and impact)• Fill-in Risk Response Plan Form with your top 5 to
10 ranked risks • Update High-Level Risk section in your Scope
Statement
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*Knowing What the Project Is:Project Procurement Planning StepsObjective: Identify and cost products, services or results from
outside the project team needed to meet project goals/deliverables.
Scope Statement
• Other planning documents
• Procurement Management Plan
• Statements of Work• Make or Buy Decision• Procurement
documents (RFI, RFP, RFQ, IFB)
• Source selection criteria
Plan Procuremen
t
• Seller responses• Sellers selected• Procurement contracts
signed
Conduct Procuremen
t
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*Knowing What the Project Is:Contracts*Major Types
–Fixed Price or Lump Sum –Cost-Reimbursable–Time and Material (T&M)
*Risk and reward relationship*Using wrong contract type can be
devastating
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*Knowing What the Project Is:Principles of Incentive Contracts
TARGET COST: $20,000TARGET FEE: $1500
SHARING RATIO: 80/20 %
• CUSTOMER PAYS 80% OF OVERRUN• CONTRACTOR PAY 20% OF OVERRUN• PROFIT IS $1500 LESS CONTRACTOR’S 20%
• CUSTOMER KEEPS 80% OF UNDERRUN• CONTRACTOR KEEPS 20% OF UNDERRUN• PROFIT IS $1500 PLUS CONTRACTOR’S 20%
NOTE: LIMITATIONS MAY BE IMPOSED ON PRICE OR PROFIT
EXAMPLE
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*Knowing What the Project Is:Contract Variations
FFP Firm-Fixed-Price• High likelihood of scope
change• Profit margin can be high
FPEFirm-Fixed-Price with Economic Price adjustment
• Adjustments for escalation factors and inflation
• Negotiated adjustment cycle
FPIF Fixed-Price-Incentive -Fee
• Contractor can earn add’l profits
• Ceiling on contract price
CPIF Cost-Plus-Incentive-Fee
• Contractor can earn add’l profits
• Floor and ceiling exists on profits
CPAF Cost-Plus-Award-Fee
• Negotiated profit range• Customer decides on profit at
the end
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*Knowing What the Project Is:Contract Variations (cont.)CPFF Cost-Plus-Fixed-
Fee• Fee is fixed (in $$ not %)• Contractor motivated to
complete early
CS Cost-Sharing• No profits allowed• Customer and contractor share
costs• Contractor may retain control
of propriety knowledge
C Cost• No profits allowed• Contractor usually a non-profit• Cost limitation may be imposed
CPPCCost-Plus-Percentage-Of-Cost
• Cost incurred may be unlimited• Contractor can maximize profit• Scope changes may be
frequent and unlimited
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*Knowing What the Project Is:Relative Contract Risk
RISKLOCATION
FFPFPE
FPIF
CPIF
CPAF
CPFF
CSC
CPPC
0 %
100 %
CONT
RACT
OR’S
RIS
K
0 %
100 %
CUST
OMER
’S R
ISK
RISK SHARING METER
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*Knowing What the Project Is:Responsibility Assignment MatrixObjective: Maps stakeholder function/s to deliverables
Deliverable
Sponsor Project Manager
Functional Manager
1
Functional Manager
2Project Charter
Owner Reviewer
Scope Statement
Approver Owner Input Req’d
Input Req’d
WBS Approver Owner Input Req’d
Input Req’d
Resource
Role: who does whatResponsibility: who decides what
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*Team Work
*Develop the RAM for your project. *Note: Use only 3 major deliverables of each phase for your RAM
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*Knowing What the Project Is:Balancing the Plan
• Do your end and milestone dates meet the expectations of the stakeholders?
• Are resources available to meet project requirements?
• Does your cost baseline meet the project requirements?
• Trade-Off Analysis• Iterative Process• Trade-offs between
competing objectives
Scope
Time Cost
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*Knowing What the Project Is:Planning Best Practices Summary* Determine appropriate project life cycle approach* Use Scope Statement / WBS to baseline project scope* Develop a project schedule to baseline project time* Develop a cost baseline * Focus is more on “knowing what the project is”* Partner with line managers to get agreement on
scope, time and cost baselines* Change control process should be in place as soon as
possible* Validate progressive elaboration outputs