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

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4. Project Plan What * Knowing What the Project Is: Project Planning ScopeScheduleCost Stakeholder Management Communication Plan Risk Response Plan Vendor Responses Responsibility Assignment Matrix (RAM)

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

9. 9 Objective: Determine conduct of risk management activities for the project

10. 10 Methodology Roles and Responsibilities Budgeting Timing Risk Types Risk assessment metric definitions Probability and impact matrix Reporting format Tracking Risk management structure and performance for the project

11. 11 “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..

12. * 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 12

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14. 14 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 14

15. 15 Objective: Identify project risks * Process of determining risks that might affect the project and documenting their characteristics * Iterative process * Outputs – Risks (risk register) – Triggers

16. 16 Objective: Rank risks according to the probability of its occurrence and its impact to the project if it occurs

17. 17 * 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

18. 18 Probability Impact High Medium Low MediumHighLow 18

19. 19 Probability Impact 2 19 4 6 8 10 24 6 8

20. 20 Objective: Develop options and actions to minimize threats and enhance opportunities to project success Plan Risk Responses

21. 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 21

22. 22 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)

23. 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 23

24. Objective: 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 Procurement Seller responses Sellers selected Procurement contracts signed Conduct Procurement

25. 25 * 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

26. 26 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

27. 27 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

28. 28 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

29. 29 RISK LOCATION FFP FPE FPIF CPIF CPAF CPFF CS C CPPC 0 % 100 % CONTRACTOR’S RISK 0 % 100 % CUSTOMER’S RISK RISK SHARING METER

30. 30 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

31. 31 * Develop the RAM for your project. * Note: Use only 3 major deliverables of each phase for your RAM

32. 32 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

33. 33 * 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