1. Module 03 : Knowing What the Project Is, Part 2

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

5. * 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

6. * 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

7. * 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. 8 “The starting point for best practices in risk management is the development of a classification systems for the types of risks.” – Harold Kerzner

9. * 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. 10 Objective: Understand project risks and develop options and actions to minimize threats and enhance opportunities to project success

11. 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. 12 Objective: Rank risks according to the probability of its occurrence and its impact to the project if it occurs

13. 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. 14 Probability Impact High Medium Low MediumHighLow 14

15. 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. 16 Probability Impact 2 16 4 6 8 10 24 6 8

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

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19. 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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21. 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. 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. 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. 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. 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. 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. 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. 28 * Develop the RAM for your project. * Note: Use only 3 major deliverables of each phase for your RAM * 20 minutes

29. 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