Module 03 : Knowing What the Project Is, Part 2

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What * Knowing What the Project Is: Project Planning Stakeholder Management

* 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

* 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

* 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 7

8 “The starting point for best practices in risk management is the development of a classification systems for the types of risks.” – Harold Kerzner

* Boeing Financial Market Technical Production ABB Contracts and agreements Responsibility and liability Financial Political Warranty Schedule Technical Resources Supply and demand chain management Customer Consortia Environmental 9

10 Objective: Understand project risks and develop options and actions to minimize threats and enhance opportunities to project success

11 Objective: Identify project risks * Process of determining risks that might affect the project and documenting their characteristics * Iterative process * Outputs – Risks (risk register) – Triggers

12 Objective: Rank risks according to the probability of its occurrence and its impact to the project if it occurs

13 * 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

14 Probability Impact High Medium Low MediumHighLow 14

15 AssessmentProbabilityImpact 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 15

16 Probability Impact

17 Objective: Develop options and actions to minimize threats and enhance opportunities to project success Plan Risk Responses

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19 ID Risk Type Risk Description Risk Trigger Impacted Areas ProbabilityImpactPriorityStrategyOwnerStatus I Impacted Area/s: Enter area of potential impact: Scope, Quality, Schedule, Cost 2 Probability: Enter probability of occurrence: Low, Medium, High 3 Impact: Enter severity of consequences: Low, Medium, High 4 Strategies: Accept, Avoid, Mitigate, Transfer 5 Status: Open (O) or Close (C)

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Objective: Identify and cost products, services or results from outside the project team needed to meet project goals/deliverables. Scope Statement Other planning documents

22 * 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

23 TARGET COST: $20,000 TARGET 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

24 FFP Firm-Fixed-Price High likelihood of scope change Profit margin can be high FPE Firm-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

25 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 CPPC Cost-Plus- Percentage-Of- Cost Cost incurred may be unlimited Contractor can maximize profit Scope changes may be frequent and unlimited

26 RISK LOCATION FFP FPE FPIF CPIF CPAF CPFF CS C CPPC 0 % 100 % CONTRACTOR’S RISK 0 % 100 % CUSTOMER’S RISK RISK SHARING METER

27 Objective: Maps stakeholder function/s to deliverables DeliverableSponsorProject Manager Functional Manager 1 Functional Manager 2 Project Charter OwnerReviewer Scope Statement ApproverOwnerInput Req’d WBSApproverOwnerInput Req’d Resource Role Role: who does what Responsibility Responsibility: who decides what

28 * Develop the RAM for your project. * Note: Use only 3 major deliverables of each phase for your RAM * 20 minutes

29 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