MIDTERM 3 Flashcards
A formal, comprehensive project risk plan allows the project manager to be ______ regarding the innumerable things that can and do go wrong with a project.
proactive
- any unforeseen thing that might — or might not — occur during a project.
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. - not necessarily negative; it’s just an event where the outcome is uncertain.
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. - have either a negative or positive effect on the project’s objectives.
PROJECT RISK
are uncertain factors, internal or external, that threaten the financial health of an organization.
BUSINESS RISKS
MOST COMMON PROJECT RISKS
1) COST RISK
— an escalation of project costs.
— the risk that the project will cost more than the budget allocated for it due to poor budget planning, inaccurate cost estimating, andscope creep.
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2) SCHEDULE RISK
— risk that activities will take longer than expected, and is typically the result of poor planning.
— delays result in missed timelines and a possible loss of competitive advantage.
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3) PERFORMANCE RISK
— risk that the project will fail to produce results consistent with project specifications.
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4) GOVERNANCE RISK
— board and management performance.
— behavior of the executives who are project sponsors and stakeholders.
— risk is easier to mitigate and manage with proper stakeholder engagement.
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5) STRATEGIC RISK
— are types of performance risks.
— results from errors in strategy.
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6) OPERATIONAL RISK
— risks from poor implementation and process problems.
— type of performance risk because poor implementation prevented the ideal outcome to happen.
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7) MARKET RISK
— competition, foreign exchange, commodity markets, and interest rate risk, as well as liquidity and credit risks.
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8) LEGAL RISK
— are unpredictable
— come from contract risks and litigation brought against the organization.
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9) EXTERNAL HAZARD RISKS
— risks from storms, floods, and earthquakes.
— can also result from vandalism, sabotage, and terrorism.
— all serious incidents
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10) PROJECT DEFERRAL RISK
— risks associated with failing to do a project.
— occur if there is only a limited window of opportunity for conducting a project.
The process of conducting risk management planning, identification, analysis, response planning, and monitoring and controlling risk on a project.
PROJECT RISK MANAGEMENT
Six Steps Process for a PROJECT RISK PLAN
Step 1: Make a List
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Steps 2 and 3: Determine the Probability of Risk Occurrence and Negative Impact
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Step 4: Prevent or Mitigate the Risk
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Step 5: Consider Contingencies
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Step 6: Establish the Trigger Point
PREPARING RESERVES
1) ESTABLISHING RESERVES
— enables you to leverage the plan to its fullest potential.
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2) CONTINGENCY RESERVES
— designated amounts of time and/or budget to account for risks to the project that have been identified and actively accepted.
—- created to cover known risks to the project.
A symbolic, transactional process, or process of creating and sharing meaning.
COMMUNICATION
- should include an e-mail protocol and much more.
- plan how you will communicate effectively as your project matures.
PROJECT COMMUNICATION PLAN
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- Project managers and team members must predetermine how stakeholders should interact to achieve maximum efficiency as they move through the project life cycle.
__________________ must be identified and analyzed in the multi-project risk environment.
Coordination points
- process of forecasting the time, cost, and resources needed to deliver a project.
- typically happens during project initiation and/or planning and takes the project’s scope, deadlines, and potential risks into account.
- gives you and your stakeholders a general idea of how much time, effort, and money it’ll take to get the job done.
ESTIMATING
WAYS TO ESTIMATE PROJECTS
1) Top-down estimating
— broad look at the project as a whole, then breaks the total estimate down into major phases of work.
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2) Bottom-up estimating
— more accurate than top-down estimation because it starts with a detailed list of tasks and estimates each step.
— individual task estimates are then combined
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3) Analogous estimating
— compares the current project to similar past projects.
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4) Parametric model estimation
— uses past projects to inform new project estimates.
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5) Three-point estimating
— estimates a project based on 3 different scenarios: best-case (or optimistic), worst-case (or pessimistic), and most likely.
— estimates for all 3 scenarios are then added up and divided by 3 to generate a simple average.
Why Estimating Time and Cost Are Important
- To support good decisions.
- To schedule work.
- To determine how long the project should take and its cost.
- To determine whether the project is worth doing.
- To develop cash flow needs.
- To determine how well the project is progressing.
- To develop time-phased budgets and establish the project baseline.
Factors Influencing the Quality of Estimates
- Planning Horizon
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. - Project Duration
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. - People
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. - Project Structure and Organization
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. - Padding Estimates
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. - Organization Culture
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. - Other Nonproject Factors
Estimating Guidelines for Times, Costs, and Resources
1) Have people familiar with the tasks make the estimate.
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2) Use several people to make estimates.
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3) Base estimates on normal conditions, efficient methods, and a normal level of resources.
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4) Use consistent time units in estimating task times.
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5) Treat each task as independent, don’t aggregate.
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6) Don’t make allowances for contingencies.
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7) Adding a risk assessment helps avoid surprises to stakeholders.
