would just like for you to read through the questions carefully and make sure they are all answered. Winsome Manufacturing Company produces plastic storage containers and sells them to the home consumer through home sales events. At the company’s qua

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20170917181256pp_for_project_execution.ppt
Home>Applied Sciences homework help> would just like for you to read through the questions carefully and make sure they are all answered. Winsome Manufacturing Company produces plastic storage containers and sells them to the home consumer through home sales events. At the company’s qua

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Managing Project Risks and Opportunities

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Scenario

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  • The design manager and the engineering manager were discussing with you the software tool they normally use for their design and engineering work.

  • It is critical to their process, but there are some defects in the software that result in errors in the designs.

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Scenario

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  • The team knows how to find the errors and correct them, but it takes additional time during the design and engineering timeline.

  • The managers just received an e-mail from the software vendor stating that a new version of the tool will be available right as the design tasks are expected to begin.

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Scenario

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  • Historically, the vendor is known to deliver the software about four weeks later than announced.

  • The upgrade corrects the defects that the team knows about, as well as provides some new functionality that will make some of the engineering tasks faster.

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Scenario

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  • The vendor is strongly encouraging training for the design and engineering teams to use this new version.

  • As the project manager, you must decide whether or not the team will use this new version of the software.

  • The vendor is offering a 50% discount on the training if people are signed up within the next ten days.

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Scenario

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  • Answer the following questions:
  • What risks does this use of technology introduce to the project?
  • What is the impact of each risk?
  • What is the probability of each risk?
  • Based on your understanding of the risks, will you tell the managers whether or not they should sign up their people for training?

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What risks does this use of technology introduce to the project?

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Software Risks

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  • A list of potential software risks include:
  • Database complexity
  • Development required
  • Management ability
  • Software complexity
  • Software maturity
  • System size
  • Telecommunication aspects

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Suppliers & Sub-contractors Risks

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  • Ability to deliver, skills, and quality of the software
  • Accreditation
  • Alternative suppliers and/or sub-contractors
  • Availability
  • Claims and variations
  • Commercial terms
  • Quality of goods and services provided
  • Reliability of supplier
  • Safety attitude
  • Special considerations

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Suppliers & Sub-contractors Risks (cont.)

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  • Control and supervision
  • Cost of goods and services provided
  • Delivery of goods and services provided
  • Failure of a critical supplier and/or sub-contractor
  • Flow-on conditions from prime contract
  • Lead times for orders
  • Limited number of suppliers or producers
  • New or existing sub-contract
  • Overseas versus local sub-contractors

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Suppliers & Sub-contractors Risks (cont.)

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  • Stability of joint ventures and/or partnerships
  • Timeliness
  • Transferability of warrantees and/or guarantees
  • Warranty of goods and services provided

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Technology Risks

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  • A list of technology risks include:
  • Availability of key components
  • Failure rates
  • Lack of technical knowledge
  • Maintenance
  • Need for further development
  • New or non-standard performance
  • Quality requirements

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Technology Risks (cont.)

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  • Obsolescence
  • Reliability, availability, maintainability
  • Spare parts and support
  • Specification does not reflect client needs
  • Specification incomplete or misleading
  • Technical standards or regulations change
  • Technical standards or regulations unclear
  • Technological change
  • Technology not available

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What is the impact of each risk?

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Cost, Schedule, and Performance Factors

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  • Cost, schedule, and performance are what is impacted by risk.
  • The impact probabilities include:
  • 0.1 = Insignificant
  • 0.3 = Low
  • 0.5 = Medium
  • 0.7 = Very High
  • 0.9 = Catastrophic

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0.1 = Insignificant

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Cost Factor Schedule Factor Performance Factor
Budget estimates not exceeded, some transfer of money Negligible impact, slight schedule change compensated by available schedule slack Minimal or unimportant performance impacts

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0.3 = Low

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Cost Factor Schedule Factor Performance Factor
Project costs exceed budget by 1% to 5% Minor slip in project schedule, less than 1 month Small reduction in performance

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0.5 = Moderate

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Cost Factor Schedule Factor Performance Factor
Project cost estimates increased by 5% to 10% Small slip in project schedule from 1 to 3 months Some reduction in performance

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0.7 = Very High

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Cost Factor Schedule Factor Performance Factor
Project cost estimates increased by 10% to 20% Project schedule slip from 3 to 6 months Significant reduction in performance

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0.9 = Catastrophic

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Cost Factor Schedule Factor Performance Factor
Project costs increased by more than 20% Large project schedule slip, key milestones not achieved Key performance criteria cannot be achieved

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Cost, Schedule, and Performance Factors

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  • For each risk you will need to determine the following:
  • Whether it is a cost, schedule, or performance factor
  • Whether the impact is insignificant, low, moderate, very high, or catastrophic
  • Read the number that ranges from 0 to 1 from the appropriate table, and then use that number in the succeeding calculations

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What is the probability of each risk?

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Probability Factors

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  • They include:
  • Maturity factors
  • Complexity factors
  • Integration, interfacing, and dependency factors
  • Commercial risk and management process factors

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Probability Factors

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  • Here are the actual probabilities that you will employ:
  • 0.1 = Rare
  • 0.3 = Unlikely
  • 0.5 = Possible
  • 0.7 = Likely
  • 0.8 = Highly likely
  • 0.9 = Almost certain

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Impact & Probability Factors

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  • First, you will need to figure out which of the four (4) impact probabilities listed in the previous slides applies.
  • Second, you will need to decide which one of the other six (6) probabilities to assign.
  • Once you have made these two decisions, you have just about answered the question.
  • In the last part of the question, will need to justify your selections.

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Based on your understanding of the risks, how will you tell the managers whether or not they should sign up their people for training.

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Risk Priority Matrix

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Recommended Formula

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  • there are two formulas that can be used to calculate the risk factor.
  • The recommended equation is:

RF = P + C – (P*C)

where

P = the selected probability and

C = the selected consequence or

impact value.

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Recommendation

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  • All you need to do is substitute the probability and impact factors selected into the equation on the previous slide, perform the calculation, and calculate the result.
  • This will tell you whether or not the team members should or should not sign up for the training.

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Example

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  • It is obvious that the impact is an interfacing factor.

  • Suppose that you believe that it is unlikely that there will be only minor interfacing problems.

  • Then, the probability value is 0.3, which is read off from the first column of the Table on slide 24 .

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Example

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  • Next, you will need to decide the impact factor.

  • Since going to training may impact the budget, create a minor slip in the schedule with possibly a small reduction in performance, the impact factor is 0.5.

  • The last step is to substitute these two values into the equation.

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Example

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  • Here is the calculation:

RF = P + C – (P * C)

= 0.3 + 0.5 – (0.3 * 0.5)

= 0.8 – 0.15

= 0.65

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Example

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  • With a 0.65 probability of the training affecting the project schedule, you may come to the conclusion that the training is not worthwhile.
  • This is not an unreasonable conclusion, and so you see how to address this discussion board question.

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Caveat

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  • Please note that your selection of probabilities may be different from my selection.

  • I encourage you to review the example carefully, specify your own values, and then reach your own conclusions.

  • Then you will have answered the question, and understand how to deal with this elusive issue called risk.

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