1. Likely risk factors:
These can be listed as (five primary causes of project risk):
- Financial risks (e.g. cost estimate risk)
- Technical risks (e.g. spec change)
- Commercial risks (e.g. promotion risk, volume market risk)
- Execution risks (e.g. overrun)
- Contractual or legal risks (e.g. change of policy)
- Staffing risk (e.g. absenteeism, resignation, unavailability of needed skills, ineffective training,…)
or
2. Discuss project termination (the one you have been working on Unit IV and VI)
The four main reasons for project termination are:
? Terminations by addition and by integration both occur when a project has been successful; a termination by addition project is so successful to the point of being more successful than imagined. The project organization institutionalizes the project as a formal part of the organization.
? Termination by integration officially brings the project resources into the organization.
? Termination by extinction can occur when a project has been successful or unsuccessful. In the successful case, the project is transferred to its intended users and all final phase-out activities are conducted. In the unsuccessful stage the project work is stopped and human resources return to their starting points.
? Termination by starvation amounts to benign neglect; a project is officially kept open although no work progresses and no new resources are assigned.
Termination through starvation, or deliberate lack of resources, may occur for several reasons, causing projects to be terminated before completion. One reason for starvation results from changes in upper management priorities or organizational goals.
Work breakdown structure for project termination issues can be divided into an emotional and an intellectual half. The emotional side can be divided into staff and client sides. The intellectual half can be divided into internal and external halves. Emotional staff issues include the fear of no future work, diversion of effort, and loss of interest in remaining tasks. Emotional client issues include a change in attitude, loss of interest in the project, and unavailability of key personnel. Intellectual internal issues include certification needs, control of charges to the project, and disposal of unused material. Intellectual external issues include communicating closure, closing down facilities, and agreement with suppliers on outstanding commitments.
3. Qualitative Risk Assessment Matrix
NOTE #1: You should mention the approach used in risk identification (brainstorming meeting, Delphi method, past history, multiple assessments)
NOTE #2: These should be assessed in terms of probability (likelihood) and consequences (the level of impact)
E.g.
Identified risk factors Likelihood Explanation
• 1. Key team members pulled off project High
• 2. Chance of economic downturn Low
• 3. Project funding cut Medium
• 4. Project scope changes High
• 5. Poor spec. performance Low
NOTE #3: use the above analysis of risk likelihood and consequence to classify the risks in the matrix
NOTE #4:
• A risk designated as low in likelihood and low in consequence may be of little consequence to the project; even if it occurs, it has little impact.
• A risk low in likelihood but high in consequence is one that must be accommodated; if it does occur it will wreak havoc on budget, schedule, satisfaction, or quality (or all four).
• A risk that is high in likelihood but low in consequence should be managed as if it will occur and should receive significant contingency planning.
• A risk that is high in likelihood and consequence is very serious, and merits serious consideration in the form of contingency planning and mitigation efforts.
4. Quantitative Risk Assessment:
Probability of Failure Consequences of Failure
Maturity = .3 Cost = .1
Complexity = .3 Schedule = .7
Dependency = .5 Performance = .5
Reliability = .5
• Use project team’s consensus to determine the score for each Probability of Failure category: Maturity (Pm), Complexity (Pc), and Dependency (Pd).
• Calculate overall probability.
Pf=(Pm+Pc+Pd)/3
Pf = (.3 + .3 + .5)/3 = .37
• Use project team’s consensus to determine the score for each Consequence of Failure category: Cost (Cc), Schedule (Cs), Reliability (Cr), and Performance (Cp).
• Calculate Cf by adding the four categories and dividing by 4:
Cf = (Cc+Cs+Cr+Cp)/4
Cf = (.1 + .7 + .5+ .5)/4 = .45
• Calculate Overall Risk factor for the project by using the formula:
Risk Factor = Pf + Cf – (Pf x Cf)
Risk Factor = .37 + .45 – (.37 x .45) = .6535 or .65
According to the severity levels, this would be classified as medium risk.
Rule of Thumb:
Low Risk RF 0.30
Medium Risk RF = 0.30 to 0.70
High Risk RF 0.70
5. Risk mitigation strategies:
Accept
Minimize
Share
Transfer (e.g. with fixed price outsourcing contract, with insurance contract, etc.)
Contingency Reserves
Task contingency (with multipliers)
Managerial contingency
Insurance
Other Mitigation Strategies
Mentoring
Cross training
Control and Documentation
Change management
NOTE: Which mitigation strategies are best for different risks? (the reasons to select a certain mitigation strategy: based on risk consequences, alternatives, etc.)
E.g. if the impact of the risk is low, the best course of action might be to accept it.
6. Resource Leveling
? Create a project activity network diagram.
? Develop resource loading table.
? Determine activity late finishdates.
? Identify resource overallocation.
? Level the resource loading table.
NOTE: Use MP to level resources.