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Practice Of Project Mgt.
PY 674 – Session 7
Project Manger’s Tools and Skills
1
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 6
Review - Week 6 - Chapter 11: Planning
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The most important responsibilities of a Project Manager are:
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Planning
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Integrating (resources, schedules, dollars) and
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Executing plans! (Plan your work – work your plan)
The best project plans identify all work required so that it will be readily
identifiable to each project participant. This is a requirement in a successful
project because:
1. If the tasks are well understood prior to being performed, much of the work can
be preplanned
2. If the task is not understood, then during execution, more knowledge is gained
that leads to changes in resource allocations, schedules, and priorities
3. The more uncertain the task (RISK), the greater the amount of information
needed and processed to ENSURE project success
PMBOK Chapter 5
2
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 6
Review - Week 6 - Chapter 11: Planning
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There are two proverbs that affect project planning:
 Failing to plan – is Planning to fail
 Failing to plan means that failure comes as a complete surprise, rather than
preceded by worry and depression!
See consequences of not planning on p. 396 of text.
There are 4 basic reasons for project planning:
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1. To eliminate or (significantly) reduce uncertainty
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2. To improve efficiency of the operation
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3. To obtain a better understanding of the objectives
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4. To provide a basis for monitoring and controlling work
PMBOK Chapter 5
3
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 6
Review - Week 6 - Chapter 11: Planning
Project “bromides” . . .
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Document your assumptions and thinking in planning –
hindsight is always 20 / 20 ~ (I should have known that . . .ughhh)
The Life cycle approach to project planning doesn’t handcuff the PM –
a roadmap is always easier than asking for directions
Control and validation points are called many things:
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Design reviews
On-off ramps, or
Stage Gates
PMBOK Chapter 5
4
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 6
Review - Week 6 - Chapter 11: Planning
A Project Manager will define !!!!!
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Goals and objectives
Major milestones
Requirements
Ground rules and assumptions
Time, cost, and performance constraints
Operating procedures
Administrative policy
Reporting requirements
Risk Management process
PMBOK Chapter 5
5
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 7
Review - Week 6 - Chapter 11: Planning
NOTE – many times it is not possible to satisfy all project objectives.
Management must help prioritize objectives at this point.
A PM must know differences between SOW and WBS
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At a low level of the WBS, the interdependence between activities can become so complex that
meaningful networks cannot be constructed.
Many companies have been successful in managing programs without the use of a WBS,
especially for repetitive programs.
Not all technical specialists are good planners
Executives must not set unrealistic milestones and then “force” line management to fulfill
them.
Executives must realize that creating unreasonable deadlines may require the re-establishment
of priorities. Changing priorities can push milestones backward.
PMBOK Chapter 5
6
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 6
Review - Week 6 - Chapter 11: Planning
NOTE – No matter how hard you try, planning is not perfect, and sometimes plans
fail!
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See typical reasons on p. 431 of text book
Sometimes projects fail just because the PM “bites off more than they can chew”.
The flu can visit you!!
Today most projects not completed within time and budget are behavioral rather
than
quantitative. They include:
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Poor morale
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Poor human relations
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Poor labor productivity
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No commitment by those involved in the project
PMBOK Chapter 4
7
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 7
Week 7 - Chapter 17: Risk Management
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There is NO single textbook answer on how to manage risk – one size
does not fit all projects or circumstances.
Risk management is the act or practice of dealing with risk. It includes :
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Planning for risk
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Identifying and analyzing risk issues
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Developing risk handling strategies (called mitigation), and
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Monitoring risks to determine how they have changed
It is a full time career by its self.
http://jobs.efinancialcareers.com/Risk_Management.htm
PMBOK Chapter 11
8
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 7
Week 7 - Chapter 17: Risk Management
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Risk has two primary components of that event:
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A probability (likelihood) of occurrence of that event
Impact of that event occurring (amount at stake)
Here’s real risk -
PMBOK Chapter 11
9
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 7
Week 7 - Chapter 17: Risk Management
Hedge funds – what are they trying to risk?
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Institutions To Ramp Up Hedge Fund Portfolios
June 5, 2008 Expect institutional investors to increase their hedge fund
allocations by as much as 50% over the next couple of years, according to one
finance professor at the University of Pennsylvania's Wharton School.
Christopher Geczy, who heads Wharton’s alternative investments certificate
program, said recent high-profile hedge fund meltdowns “do not immutably
change the longer-term outlook” for the industry, and expects institutions to up
their current 10% allocation to hedge funds to between 12.5% to 15%.
Patrick Egan, founder of Attalus Capital, which manages a $3 billion fund of hedge
funds for institutional investors, added that institutions are increasingly moving
into “active management” of alternative investments to achieve the actuarial rate
of returns needed to pay for their employee's retirement.
However, David Lees, a senior partner of myCIO Wealth Partners, a consulting
firm, warned that the risk of losing substantial amounts of capital in the
alternatives space has also increased versus other investments.
“If you chose well, you can do very well, if you chose wrong, you can do
substantially worse than average,” he said.
» Source: http://www.finalternatives.com/node/4528
PMBOK Chapter 11
10
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 7
Week 7 - Chapter 17: Risk Management
 Why is decision making under certainty the preferred
method to define risk and risk outcome?
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Risks can be viewed as “outcomes” (i.e. states of nature)
that can be described within established confidence
limits (i.e. probability distributions).
E.g. – if the probability of being correct is .95, the
probability of being incorrect is = 1 - .95 or .05;
E.g. – if the probability of being correct is .99 the
probability of being incorrect is = 1 -.99 or .01.
PMBOK Chapter 11
11
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 7
Week 7 - Chapter 17: Risk Management
 The text gives many examples of table construction to
present various “states of nature” (think PERT here) for
predicting risk and outcomes. (see pp. 712 & 713)
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How many states of nature does the PERT calculation
contain?
Not many projects use these sophisticated tools – but
they can be very useful when risk is ambiguous and
needs clarity to define and build mitigation plans around.
PMBOK Chapter 11
12
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 7
Week 7 - Chapter 17: Risk Management
 Remember – we said that a risk management strategy
should be established early in your project – and that
risk should be continually addressed throughout your
project.
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Well this text book says the same thing. (see p. 718)
So as skilled practitioners – what will be your approach
to a risk management process?
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PMBOK Chapter 11
Copyright © The Conestoga Group 2003
Application of Project
Management
PY 674 – Session 7
Week 7 - Chapter 17: Risk Management
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There are 3 key steps to the risk management process:
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1. Risk planning
2. Risk assessment
3. Risk handling
PMBOK Chapter 11
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Copyright © The Conestoga Group 2003
Line of Business:
Vendor Name:
Business Need:
Contract Version:
Sample of contract
High risk contract; no auto drive to exclusive legal review
Drives legal review up to exclusive legal review level
New
Contract Criterion:
Contract Amount
CBI Business Value/Profit
Customer Information
Business Impact
Mission Critical2
Operational Impact
Regulatory
Contract Duration
Contract Complexity
1
Line of Business Contact:
Date (MM/DD/YY):
Contract Category:
Contract Type:
2
3
$500k or more in total committed
expense over the life of the
contract
Between $50k and $500k in total
$50k or less in total committed
committed expense over the life of expense over the life of the
the contract
contract
Profit is $0 or negative over the life
Profit is $500k or more over the life Profit is between $0 and $500k
of the contract or expense item
of the contract
over the life of the contract
only
Sensitive customer information1 is Non-sensitive customer information No customer information is
is involved
involved
involved
Contract Failure - There is a
Contract Failure - There is a
Contract Failure - There is minimal
probability for either material
probability for either minimal
reputation risk, minimal
reputation risk, material
reputation risk, possible
remediation costs and minimal
remediation costs and/or material remediation costs and/or liability
liability exposure
liability exposure
exposure
Yes
No
Large number of interfaces to other Few interfaces to other
Off the shelf (shrink wrapped)
processes/systems
processes/systems
software with no interfaces
Noncompliance - minimal
Noncompliance - cease and desist
Noncompliance - no regulatory risk
regulatory risk and minimal
or material financial penalties
and no financial penalties
financial penalties
Greater than 5 years
2 to 5 years
Less than 2 years
Multiple agreements and/or
Moderate complexity in number of
Simple/Basic contractual terms and
complex contractual terms and
agreements and/or contractual
conditions
conditions
terms and conditions
Bob Rauscher
09/11/07
Consulting
Addendum
Select One:
Select One
Select One
Select One
Select One
Select One
Select One
Select One
Select One
Select One
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Scoring
A = Exclusive Legal Department
review and negotiation
B = Contract Office review and
Legal Department signoff
Financial Risk Assessment
YES
GLBA Risk Assessment
NO
Third Party Risk Assessment
YES
C = Contract Office review and
Legal Department involvement
upon request
Copyright © The Conestoga Group 2003
D = Exclusive Contract Office
review and negotiation
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Application of Project
Management
PY 674 – Session 7
Week 7 - Chapter 17: Risk Management
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Summary:
Besides planning – risk management is perhaps the
most essential portion of PM, and it is often ignored or
given a minor role.
It needs to be prominent in All phases of the project life
cycle
PMBOK Chapter 11
16
Copyright © The Conestoga Group 2003
Application of Project
Mgt.
Mind Break . . .?
17
Copyright © The Conestoga Group 2003