1. 1 Lecture 4.2: Risk Assessment, Prioritization and Resource Allocation Dr. John MacCarthy UMBC CMSC 615 Fall, 2006

2. 2 Agenda Prioritization, Resource Allocation and Scheduling Risk Assessment EV, TPMs & Reprogramming

3. 3 Prioritization Program Manager will generally use top-down data to determine rough allocation of budget to activities Generally the initial bottoms up calculated cost will exceed available budget Program Manager will look at the benefit of putting more effort into task and the risk associated with putting less effort into a task and determine final funding levels based on this analysis (which generally requires a revision of the BOE to reflect a decrease in scope) A PM will also generally attempt to keep a bit of “Management Reserve” (~10%) to cover unexpected problems.

4. 4 Prioritizing Tasks Deliver CLINs Items Meet Cost Meet Schedule Perform activities that support quality CLINs delivery Do other SOW Activities Do what the customer says they want Pareto’s Rule Negotiate Contract Changes

5. 5 Risk Assessment, Task Prioritization, Resource Allocation & Scheduling Risk is the potential for a negative future reality that may (or may not) happen. The severity of a risk is determined by 1) the consequence of the event and 2) the probability of that consequence. Consequence is generally associated with: Cost failure (i.e., overrun) Schedule failure (i.e., slip) Technical failure (i.e., Risk Assessment in task prioritization: What is the negative consequence of not doing something? What is the probability of that consequence? If risk is low, the priority of the task is low Risk Assessment in resource allocation: What is the negative consequence of devoting (X%) fewer resources to the task than was requested? What is the probability of that consequence? If risk is low, reduce the resources allocated to the task Risk Assessment in scheduling: What is the negative consequence of compressing the schedule (X%)? What is the probability of that consequence? If risk is low, compress the schedule

6. 6 EV, TPMs and Reprogramming As the program progresses the PM monitors (generally on a monthly or quarterly basis) the: Risk Database Cost and Schedule Performance (EV variances) These are reported as “roll-ups” that may be “decomposed” to specific WPs TPM trends If high priority tasks appear to be at risk, the PM will select the appropriate handling approach If “control” is required, the PM may reallocate resources from lower priority/risk areas to address higher risk areas