answer the 4 question attach

Project Procurement Management Chapter 05: The Management of

Project Procurement Risks

Contract Negotiations Chapter 05: Planning Contract Negotiations:

Strategies, Tactics and Countertactics

Week 5

Question: What is risk management for project procurement and why is it relevant?

Answer: “Risk management . . . Is the art and science of identifying, analyzing and responding to risk factors throughout the life of a project and in the interests of its objectives.” (PMBOK 1997, PPM, p.59)

The Reason: “[D]uring the course of a projects’ life-cycle the same tasks may be assigned to different organizations for performance: including going from make to buy, and from buy to make work. The inherent risks associated with these tasks may well be unaffected by a change with the designated performance responsibility. A risk is a risk no matter whether the work is to be made or bought.” (PPM, p.59)

Project Procurement Risks

Risk: “Probability of loss or injury, a dangerous element or factor, the chance of loss, the degree of probability of such loss.”

(Webster, New Collegiate Dictionary, PPM, p.60)

Risk Identification: “The process of systematically identifying all possible risk events which may impact a project . . . Not all risks will impact all projects, but the cumulative effect of several risk events occurring may well be more severe than examination of individual risk events might suggest.”

(Wiedman, Project and Program Risk Management, PPM, p.60-61)

What is Risk Management

Risk Assessment: “The process of subjectively determining the probability that a specific interplay of performance, schedule, and cost, as an objective, will or will not be attained along the planned course of action.”

(Cleland and Kerzner, A Project Management Dictionary of Terms, PPM, p.60)

Risk Management: “[I]s the systematic process of identifying, analyzing, and responding to risk. It includes maximizing the probability and consequence of positive events and minimizing the probability and consequence of adverse events to project objectives.” (PMBOK 2000, p.127, PPM, p.61)

What is Risk Management

Risks Associated with:  Technical, Quality, or Performance

The potential for a critical component to not function as required – “A Show Stopper”

 Schedule Performance

The probability that a critical item will not be available when needed – “An Annoyance to a Catastrophe”

 Cost Performance

The probability that critical item costs will exceed that originally planned, committed, or EVEN AVAILABLE!!! “Breeds Disagreement with Owners”

All have an adverse impact on the other two!

Types of Risks

From Where do we Identify Project Risks?  The Work Breakdown Structure (WBS)

Systematic decomposition of project elements and their potential risks  Brainstorming

Facilitated time-limited session with no boundaries for content  The Delphi Technique

Structured consensus from recognized experts

Includes ranking of criticality and final scoring  Interviewing

Project- and/or subject-specific individual consultation

AND, one more from Dr. Thompson:

 Been there, done that, experienced that before

Identifying Project Risks

The “Risk” Formula: Risk Score = Probability (Likelihood) x Consequence (Impact)

Assessment of Project Risk

Project Procurement Management Figure 5.3: Qualitative Risk Analysis: Probability x Consequence Figure 5.4: Qualitative Risk Analysis: The Ranking of Project Risks

Avoid the Risks  Requires Prior Definition and Established Methods  PPM may require Low Bid acceptance v. Qualified Bidders

Transfer the Risks  Share or entirely shift responsibility to others - possibly via Contract

 Customer relief from requirement or Insurance

Mitigate the Risks  Likelihood Reduction through: Staff Experience, Testing, Prototyping,

Accept the Risks  An Exercise in Contingency Planning and Enforcement!

Risk Management Actions

Why Create One?  May be a Requirement of the Procurement Process  Just Good Practice!

Contents 1. Introduction and Methodology

2. Risk Description

3. Risk Definition 4. Organizational Roles and Responsibilities

5. Risk Processes and Approach

6. Monitoring 7. Deliverables

8. Documentation and Reporting

The Risk Mitigation Plan

Risk Registers

Risk Registers

Risk Registers

Risk Registers

Project Procurement Management Chapter 05: The Management of

Project Procurement Risks

PPM Week 5 Discussion Question

Question 05a: During the project procurement process, which is of greatest importance to address: Technical & Quality Risks, Schedule Risks or Cost Risks and why?

Question(s): What are the approaches to negotiation planning strategies?

Win-Win versus Win-Lose Is Win-Win a Unicorn? A faint illusion?

How do we get to a Win-Win agreement:

Plan, Plan, and Plan! Practice, Practice, Practice!

Negotiation Planning Strategies

Ten (10) Successful Negotiation Strategies: 1. Plan the Contract Negotiation

Document the Plan, tactics and Countertactics 2. Adopt a Win-Win Approach

- Avoid negotiating a singe issue - Recognize your opponent has different priorities - Ask questions to understand your opponent

3. Maintain High Aspirations Ask for what you need and want

4. Use Simple Language Avoid colloquialisms, technical jargon, and slang

5. Ask Questions, and Actively Listen - Practice questioning and listening - Understand your natural expressions

Negotiation Strategies

Ten (10) Successful Negotiation Strategies: 6. Build Solid Relationships

- Focus on performance-based goals - Build trust

7. Maintain Personal Integrity - Honor Commitments - Establish a Personal Code of Conduct

8. Conserve Concessions - Make Contingent Concessions - Vary Concessions Offered - Avoid Compulsory Reciprocation

9. Make Patience an Obsession - Don’t Rush, Watch for Delay tactics - Become Comfortable with Silence!!!

10. Be Culturally Literate and Adopt Appropriate Norms - Treat Everyone with Respect

Negotiation Strategies

Top 12 Tactics (from Dr. Thompson’s Perspective): Tactic 1: “The Full Monty”

Ask for Everything Possible / Offer Less / Know when to Walk Away

Tactic 2: “The Scape-Goat”

Defer to the Need for Approval by Someone Else in your Organization Tactic 3: “Just Say Nothing”

The Less you Speak, the Better / Be Comfortable with Silence

“He who Speaks First, Loses!” Tactic 4: “Just Say No”

Say No and Wait for Counterproposal

Tactic 7: “My Facts are Better than Your Facts”

“It’s about Preparation and Knowledge”

Negotiation Tactics and Countertactics

Top 12 Tactics (from Dr. Thompson’s Perspective: Tactic 10: “Desperate Deals”

Know What Your Opponent May NEED to Accomplish and WHEN Tactic 13: “How Much do You Have to Spend”

Seek to Align Opponent’s Funding with Offer Tactic 14: “Lose the Battle, Win the War”

Offer small Concessions to Maintain Larger Positions Tactic 22: “It’s a Competitive World”

Seek to Bring Others to the Negotiation Tactic 41 & 42: “Open-Ended and Loaded Questions”

Put Opponent in a Position of Not Being Able to Answer, or Answering too Much

Tactic 50: “Say Yes, And…Yes, But” Seek Just a Bit More – the “and”, or Seek Something Different – the “but”

Negotiation Tactics and Countertactics

Contract Negotiations Chapter 05: Planning Contract Negotiations:

Strategies, Tactics and Countertactics

CN Week 5 Discussion Question

Question 05b: Select four contract negotiations tactics or countertactics and discuss their relevance/importance to the project procurement process and why?

Project Procurement Management Chapter 05: The Management of

Project Procurement Risks

Contract Negotiations Chapter 05: Planning Contract Negotiations:

Strategies, Tactics and Countertactics

Week 5