CU-MBA-SEM-IV-Project Management

What does project quality planning involves? To create project quality plan, project planner need to identify what are the quality requirements of the project, which all standards are we supposed to comply with and in what manner. Surely project quality plans undergoes changes just as the master project plan. Risk Management Plan The project risk is futuristic uncertainty that may occur during life of a project and can affect project deliverables. The risk can be recorded through cause-effect analysis. The cause of risk could be some hypothesis, limitation, requirement, etc. and the effect could be slippage of timeline, cost overrun/save, performance degradation/improvement, etc. of the project for example –new regulatory compliance may be enforced on power projects, economic uncertainty may lead to higher cost of labour, etc. Project risk management is about assessing future uncertainties which can have potential impact on project objectives and the exercise of creating risk management plan, prepares team for effectively managing those uncertainties. Communication Plan Projects get successfully delivery only when people work together. Project team can work together only when they know what they should do and they would know this, only when they are informed about it. That’s the precise reason why organizations should have communication plan. Communication plan is about establishing appropriate channels to let correct information flow top-down as well as bottom-up manner. Identifying Project Stakeholders The first thing that needs to be done at the time of creating communication plan for a project is, to identify stakeholders of the project and their information relevance (extent of information & time of receiving/sharing information). Stakeholders could be customers (internal/external), vendors, employees, partners, etc. and of course at different levels in the project organization with differential interest, importance & influence over project. Planning project communication: It is important for project manager to categorize project stakeholders & identify apt communication channels as per stakeholders’ category. Such arrangement will save project 151 CU IDOL SELF LEARNING MATERIAL (SLM)

managers’ time during project execution while dealing with amount of information he/she receives & has to communicate. Just for example, some stakeholders necessarily have to receive certain information (e.g. project sponsors to know about achievement/failure to achieve milestones in respect of specific timeline) similarly; project planner can identify categories of project stakeholders such as follows: for each of the identified stakeholder category, there has to be modes of communication that we need to establish as appropriate to the context of the project. Project procurement plan documents purchase policy illustrating purchase process, buy/lease/rent decisions, vendor selection, negotiation, financial concurrence, duration, legal concurrence, etc. Also it should chalk out roles authorized to make tendering process, financial & legal concurrence, and approval/rejection decision. 8.3 PROJECT MANAGEMENT METHODS A project management methodology is essentially a set of guiding principles and processes for managing a project. Your choice of methodology defines how you work and communicate. ... Different project management methodologies have their own pros and cons for different project types. On paper, PM methodologies are tool agnostic, i.e. you should be able to use any methodology regardless of what PM tool you use. In reality, most project management tools are specialized to use a handful of methodologies. This will be a factor in what methodology you eventually choose to use. The question now is: what are the different types of project management methodologies? What are their advantages and disadvantages? What kind of projects are they best suited for? Let us take a look at some of the most popular project management methodologies. 1. Waterfall The Waterfall methodology is the oldest methodology on this list. It was first outlined by Dr. Winston Royce in 1970 as a response to managing the increasingly complex nature of 152 CU IDOL SELF LEARNING MATERIAL (SLM)

software development. Since then, it has become widely adopted, most prominently in the software industry. The Waterfall methodology is sequential. It is also heavily requirements-focused. You need to have a crystal clear idea of what the project demands before proceeding further. There is no scope for correction once the project is underway. The Waterfall method is divided into discrete stages. You start by collecting and analyzing requirements, designing the solution (and your approach), implementing the solution and fixing issues, if any. Each stage in this process is self-contained; you wrap up one stage before moving onto another. Graphically, you can represent it as follows: The above is from a software development perspective. Individual stages would be different for creative project management, but the approach remains the same. Advantages “One of the driving factors behind waterfall management is that by investing time in the early stages of a project, managers ensure design needs and other requirements have been met— thus saving the time and effort generally associated with retroactively correcting problems” Thus, the Waterfall method has several advantages, such as: 153 CU IDOL SELF LEARNING MATERIAL (SLM)

 Ease of use: This model is easy to understand and use. The division between stages is intuitive and easy to grasp regardless of prior experience.  Structure: The rigidity of the Waterfall method is a liability, but can also be a strength. The clear demarcation between stages helps organize and divide work. Since you can't go back, you have to be \"perfect\" in each stage, which often produces better results.  Documentation: The sharp focus on gathering and understanding requirements makes the Waterfall model heavily reliant on documentation. This makes it easy for new resources to move in and work on the project when needed. Disadvantages  Higher risk: The rigidity of this methodology means that if you find an error or need to change something, you have to essentially start the project from the beginning. This substantially increases the risk of project failure.  Front-heavy: The entire Waterfall approach depends heavily on your understanding and analyzing requirements correctly. Should you fail to do that - or should the requirements change - you have to start over. This lack of flexibility makes it a poor choice for long and complex projects. Best for: The Waterfall methodology is most commonly used in software development. It works best for the following project types:  Short, simple projects  Projects with clear and fixed requirements  Projects with changing resources that depend on in-depth documentation 2. Agile Agile, another software development-focused PM methodology, emerged as a response to the failure of Waterfall method for managing complex projects. Although Agile PM ideas had been in use in the software industry for quite a while, it formally came into being in 2001 when several IT representatives released the \"Agile Manifesto\" 154 CU IDOL SELF LEARNING MATERIAL (SLM)

In approach and ideology, Agile is the opposite of the Waterfall method. As the name implies, this method favors a fast and flexible approach (here's one way to understand Agile as explained to kids). There is no top-heavy requirements-gathering. Rather, it is iterative with small incremental changes that respond to changing requirements. Graphically, it can be represented as follows: Advantages  Flexibility and freedom: Since there are no fixed stages or focus on requirements, it gives your resources much more freedom to experiment and make incremental changes. This makes it particularly well-suited for creative projects.  Lower risk: With Agile management, you get regular feedback from stakeholders and make changes accordingly. This drastically reduces the risk of project failure since the stakeholders are involved at every step. Disadvantages 155 CU IDOL SELF LEARNING MATERIAL (SLM)

 No fixed plan: The Agile approach emphasizes responding to changes as they occur. This lack of any fixed plan makes resource management and scheduling harder. You will constantly have to juggle resources, bringing them on/off on an ad-hoc basis.  Collaboration-heavy: The lack of a fixed plan means all involved departments - including stakeholders and sponsors - will have to work closely to deliver results. The feedback-focused approach also means that stakeholders have to be willing (and available) to offer feedback quickly. Best for: The flexibility of the Agile approach means that you can adapt it to different types of projects. That said, this methodology works best for:  When you don't have a fixed end in mind but have a general idea of a product.  When the project needs to accommodate quick changes.  If collaboration and communication are your key strengths (and planning isn't) 3. Hybrid The Hybrid approach, as the name implies, is a combination of the Waterfall and Agile methodologies. It takes the best parts of both Waterfall and Agile and combines them in a flexible yet structured approach that can be used across different projects. The Hybrid methodology focuses on gathering and analyzing requirements initially - a nod to the Waterfall method. From thereon, it takes the flexibility of Agile approach with an emphasis on rapid iterations. By combining attributes of Waterfall and Agile, the Hybrid method (sometimes called \"Structured Agile\") gives you the best of both worlds. Advantages  Increased flexibility: Past the planning stage, the Hybrid method affords you significantly increased flexibility when compared to the Waterfall method. As long as the requirements don't change substantially, you can make changes as they're requested. 156 CU IDOL SELF LEARNING MATERIAL (SLM)

 More structured: By borrowing the initial planning phase from Waterfall, the Hybrid method addresses one of the biggest complaints about the Agile approach - lack of structure and planning. Hence, you get the \"best of both worlds\". Disadvantages  Requires compromise: Since you're essentially reconciling two polar opposite approaches, both sides will need to compromise on requirements and flexibility.  \"Best of both worlds\" approach robs you of the flexibility of Agile and the surefootedness of Waterfall. Any iterations you make will have to comply with the budgeting and scheduling constraints set up front. Best for The Hybrid approach is best-suited for projects that have middling requirements when compared to Agile and Waterfall, i.e. they require structure as well as flexibility. Mostly, this would be medium-sized projects with moderately high complexity but fixed budgets. You would likely have an idea of the end product but you are also open to experimentation. You will need close collaboration, especially past the planning stage. 4. Scrum 157 CU IDOL SELF LEARNING MATERIAL (SLM)

Scrum isn't a fully-featured project management methodology. Rather, it describes an approach to Agile management with a focus on project teams, short \"sprints\" and daily stand- up meetings. While it borrows the principles and processes from Agile, Scrum has its own specific methods and tactics for dealing with project management. As Mike put it earlier: \"Agile is the philosophy, and Scrum the methodology. While scrum is agile, agile isn’t scrum.\" The Scrum approach places the project team front and center of the project. Often, there is no project manager. Instead, the team is expected to be self-organizing and self-managing. This makes it ideal for highly focused and skilled teams, but not so much for others. Advantages  Scrum \"sprints\": The Scrum approach is heavily focused on 30-day \"sprints\". This is where the project team breaks down a wish list of end-goals into small chunks, then 158 CU IDOL SELF LEARNING MATERIAL (SLM)

works on them in 30-day sessions with daily stand-up meetings. This makes it easy to manage large and complex projects.  Fast paced: The \"sprint\" approach with its 30-day limit and daily stand-up meetings promotes rapid iteration and development.  Team-focused: Since the project team is expected to manage itself, Scrum teams have clear visibility into the project. It also means that project leaders can set their own priorities as per their own knowledge of their capabilities. Besides these, it has all the benefits of Agile - rapid iteration and regular stakeholder feedback. Disadvantages  Scope creep: Since there is no fixed end-date, nor a project manager for scheduling and budgeting, Scrum can easily lead to scope creep.  Higher risk: Since the project team is self-managing, there is a higher risk of failure unless the team is highly disciplined and motivated. If the team doesn't have enough experience, Scrum has a very high chance of failure.  Lack of flexibility: The project-team focus means that any resource leaving the team in-between will hugely impact the net results. This approach is also not flexible enough for large teams. Best for The Scrum approach is best for highly experienced, disciplined and motivated project teams who can set their own priorities and understand project requirements clearly. It has all the flaws of Agile along with all its benefits. It works for large projects, but fails if the project team itself is very large. In short: use Scrum if you're developing complex software and have an experienced team at your disposal. 5. Critical Path Method (CPM) The above four project management methodologies emerged from software development. While you can certainly use them for non-software projects, there are better alternatives at your disposal. 159 CU IDOL SELF LEARNING MATERIAL (SLM)

One of the more popular alternatives is the Critical Path Method (CPM). In the Critical Path Method, you categorize all activities needed to complete the project within a work breakdown structure. Then you map the projected duration of each activity and the dependencies between them. This helps you map out activities that can be completed simultaneously, and what activities should be completed before others can start. Advantages  Better scheduling: The emphasis on mapping the duration of activities and their interdependencies help you schedule tasks better. If task X depends on task Y to be finished first, CPM will help you identify and schedule for it.  Prioritization: The success of the CPM methodology depends on identifying and mapping critical and non-critical activities. Once you've mapped these activities, you can prioritize resources better. Disadvantages  Scheduling requires experience: As any experienced project manager will tell you, things always take more time than you expect. If you don't have real-world experience with scheduling, you are bound to miscalculate time for each activity.  No flexibility: Like the Waterfall method, CPM is front-heavy. You need to plan everything out at the very start. If there are any changes, it makes the entire schedule irrelevant. This makes this method unsuitable for projects with changing requirements. Best for The Critical Path Method is best-suited for projects with interdependent parts. If you require tasks to be completed simultaneously, or for one task to end before another can begin, you'll want to use this methodology. CPM finds a lot of application in complex, but repetitive activities such as industrial projects. It is less suited for a dynamic area such as creative project management 160 CU IDOL SELF LEARNING MATERIAL (SLM)

8.4 PROJECT SCHEDULING TECHNIQUES Project Scheduling is an activity that distributes the estimated effort across the planed project duration by allocating the effort to specific software engineering tasks. The Schedule connects the scope, work estimates and deadline into a network of SE tasks and Must Manage Parallelism (tasks can be undertaken simultaneously) & Dependency (task has an effect on subsequent tasks). Failure by project management to recognize that the project is falling behind schedule. The basic principles of scheduling are allocation of time and effort to each task,compartmentalization of the work, note task interdependencies; define responsibilities, outcomes and milestones of the project. Scheduling Tools Here are some tools and techniques for combining these inputs to develop the schedule: Schedule Network Analysis – This is a graphic representation of the project's activities, the time it takes to complete them, and the sequence in which they must be done. Project management software is typically used to create these analyses – Gantt charts and PERT Charts are common formats. Critical Path Analysis – This is the process of looking at all of the activities that must be completed, and calculating the 'best line' – or critical path – to take so that you'll complete the project in the minimum amount of time. The method calculates the earliest and latest possible start and finish times for project activities, and it estimates the dependencies among them to create a schedule of critical activities and dates. Schedule Compression – This tool helps shorten the total duration of a project bydecreasing the time allotted for certain activities. It's done so that you can meet time constraints, and still keep the original scope of the project. You can use two methods here: 161 CU IDOL SELF LEARNING MATERIAL (SLM)

Crashing – This is where you assign more resources to an activity, thus decreasing the time it takes to complete it. This is based on the assumption that the time you save will offset the added resource costs. Fast-Tracking – This involves rearranging activities to allow more parallel work. This means that things you would normally do one after another are now done at the same time. However, do bear in mind that this approach increases the risk that you'll miss things, or fail to address changes. The project schedule is the main output from schedule development and includes at least the planned start and expected finish dates for each project activity. The project schedule, which is a preliminary schedule until resource assignments have been confirmed, is presented in summary form (the master schedule) or in detail. The project schedule is generally presented graphically, using one or more of the following formats:  project network diagrams  bar charts  milestone charts  Gantt charts 8.5 GANTT CHARTS AND NETWORK DIAGRAMS The Gantt chart is connected to the WBS as both reflect project activities. The WBS presents work packages, which can be decomposed further into specific project activities. A Gantt chart presents these project activities in a sequenced and logical fashion, with associated time and resource estimates. A Gantt chart is an ideal way of presenting a network schedule. The slide illustrates a project network diagram with date information added. Henry L Gantt (1861 – 1919) around 1917 developed a system of bar charts for scheduling and reporting progress of a project. These charts latter were known as Gantt Charts. It is a 162 CU IDOL SELF LEARNING MATERIAL (SLM)

pictorial representation specifying the start and finish time for various tasks to be performed in a project on a horizontal time-scale. Each project is broken down to physically identifiable and controllable units, called the Tasks. These tasks are indicated by means of a bar, preferably at equi-distance in the vertical axis and time is plotted in the horizontal axis (Figure 1). In this figure “Task A” is land preparation, “Task B” is procurement of inputs etc. Land preparation (Task A) takes five days starting from day one. However in practice the time scale is superimposed on a calendar i.e., if land preparation starts on 1st June it would be completed by 5th June. Length of the bar indicates required time for the task whereas the width has no significance. Though the bar chart is comprehensive, convenient, and very effective, it has the followinglimitations: Like many other graphical techniques are often difficult to handle large number of tasks in other words a complex project. Does not indicate the inter relationship between the tasks i.e., if one activity overruns time what would be the impact on project completion. 8.6 PERT TECHNIQUES AND QUIZ The PERT technique is a method of minimizing trouble spots, programme bottlenecks, delays and interruptions by determining critical activities before they occur so that various activities in the project can be coordinated. PERT terminology 163 CU IDOL SELF LEARNING MATERIAL (SLM)

Some of the terms frequently used in PERT are as follows: • Activity: A recognizable work item of a project requiring time and resource for its completion. • Dummy Activity: An activity that indicates precedence relationship and requires no time nor resource. Program Evaluation and Review Technique (PERT) is a calculation method that uses a weighted average duration estimate to determine activity durations. It uses the distribution’s mean (expected value) instead of the most likely estimate originally used in critical path method (CPM). In PERT, estimates of completion time are obtained for each activity in the form of three points:  most likely – the calculated activity duration given the likely available resources and their productivity, realistic expectations regarding the availability of these resources, dependencies on other participants, and interruptions on the type of activities  optimistic – the calculated activity duration based on a best-case scenario of what is described in the most likely estimate  pessimistic – the calculated activity duration based on a worst-case scenario of what is described in the most likely estimate An activity duration estimate constructed using some average of the three estimated durations can provide a more accurate estimate than the single point most likely estimate. PERT Requirements When PERT was first developed, it consisted of a number of basic requirements. For example, the individual tasks undertaken to complete a project must be clear so that they can be sequenced as part of a schedule. These events and activities are sequenced on the network using a highly logical set of ground rules that allow the determination of critical paths. 164 CU IDOL SELF LEARNING MATERIAL (SLM)

Time estimates are calculated for each activity on a three-way basis – optimistic, most likely, and pessimistic. These figures should be estimated by the person(s) most familiar with the activity. PERT's extensive planning (i.e. three-way basis) helps identify critical path analysis independencies that can be used to indicate where the greatest effort is required to keep a project on schedule. The probability of meeting deadlines by developing alternate plans is another application. For example, the probability of achieving the desired result can be compared against the pessimistic and optimistic estimates. The three-way basis for estimation (optimistic, most likely, and pessimistic) is used to derive an expected time. PERT is used for R&D projects where the risks in calculating time durations have a high variability, and is the basis for variance simulation. 8.7 SUMMARY  The basis of project planning is the entire project. Unlikely, project scheduling focuses only on the project-related tasks, the project start/end dates and project dependencies. Thus, a ‘project plan’ is a comprehensive document that contains the project aims, scope, costing, risks, and schedule. And a project schedule includes the estimated dates and sequential project tasks to be executed.  ‘Project planning and scheduling’ go hand-in-hand and are essentials of project management. In a nutshell, ‘Project planning’ is an elaborative process that includes all details of the project, from its inception to completion. And ‘Project schedule’ is the tracker that monitors the sequences and tenure of project-related tasks.  In the planning phase the project structure is planned based on project appraisal and approvals. Detailed plans for activity, finance, and resources are developed and integrated to the quality parameters.  The WBS is a breakdown/ decomposition of project work into distinct work items at higher level. These work items are aligned with the project objective and can help the project team to create expected deliverables. 165 CU IDOL SELF LEARNING MATERIAL (SLM)

 Once project scope is determined and work breakdown structure (WBS) is created, the next step is to create delivery timeline.  A project management methodology is essentially a set of guiding principles and processes for managing a project. Your choice of methodology defines how you work and communicate.  Some popular project management methodologies are: waterfall, agile, scrum, hybrid and critical path method.  The project schedule is the main output from schedule development and includes at least the planned start and expected finish dates for each project activity.  Various scheduling methods are: GANTT Chart, PERT Chart, BAR charts, network diagrams etc. 8.8 KEYWORDS  Project planning- Project planning is usually the longest phase of the project management life cycle. It involves determining cost, schedule, and scope baselines and using these to create a detailed roadmap for executing project activities and producing deliverables.  Project scheduling- In project management, a schedule is a listing of a project's milestones, activities, and deliverables. Usually dependencies and resources are defined for each task, then start and finish dates are estimated from the resource allocation, budget, task duration, and scheduled events.  Work breakdown structures- A Work breakdown structure is a comprehensive, hierarchical model of the deliverables constituting the scope of a project. It details everything a project team is supposed to deliver and achieve. A work breakdown structure categorizes all project elements, or work packages, into a set of groups and may be used to form cost estimates.  Project scheduling techniques- Techniques such as PERT (Program Evaluation and Review Technique), CPM (Critical Path Method) and GANTT are the most used to plan into details a project, prevent uncertainties and avoid risk. 166 CU IDOL SELF LEARNING MATERIAL (SLM)

 Agile- The Agile family of methodologies is a superset of iterative development approaches aimed at meeting ever-changing customer requirements. Agile development proceeds as a series of iterations, or sprints, with incremental improvements made in each sprint. Since agile projects do not have fixed scopes, agile methodologies are adaptive, and the iterative work is guided by user stories and customer involvement.  Scrum-Scrum is an iterative development procedure used in software development projects. Scrum-based projects focus on prioritizing requirements and working towards a clear set of goals over a set time period, called a sprint.  Critical path method- The Critical path method is used to estimate the shortest length of time needed to complete a project and to determine the amount of float for activities that are not part of the critical path.  Network diagrams- Network Diagrams are a graphical portrayal of the activities and events of a project. They show how each activity relates to others in the project, the sequence of activities, and the need to perform some tasks before others.  PERT- The Program Evaluation Review Technique (PERT) breaks down the individual tasks of a project for analysis. PERT charts are considered preferable to Gantt charts because they identify task dependencies, but they're often more difficult to interpret.  GANTT- A Gantt chart is a type of bar chart that shows all the tasks constituting a project. Tasks are listed vertically, with the horizontal axis marking time. The lengths of task bars are to scale with tasks’ durations.  Three way estimation- A superset of estimating techniques that use averages (or weighted averages) of most likely, optimistic, and pessimistic costs, and duration estimates to form final estimates. 8.9 LEARNING ACTIVITY 1. What is Project Planning? Discuss in detail, the activities that underscore the importance of project planning in project management. _________________________________________________________________________ _________________________________________________________________________ 167 CU IDOL SELF LEARNING MATERIAL (SLM)

2. During the planning stage of the project, the team should refer to the work breakdown structure and identify measures against which team performance can be judged. ___________________________________________________________________________ _______________________________________________________________________ 8.10 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Why is it critical to monitor all phases of strategic plan implementation? 2. What is a project schedule in Project Management? 3. What is a Gantt chart in Project Management? 4. Note on Network diagram 5. Note on PERT Techniques Long Questions 1. Why do we need Project Planning? Discuss briefly. 2. What goes into planning for Resources? 3. What do you understand by Project Quality Planning? 4. What are the advantages and disadvantages of waterfall method? 5. What are the key differences between PERT and GANTT? B. Multiple Choice Questions 1. While assessing your project processes, you have identified some uncontrolled process variations. Which of the following would be the appropriate chart you may use for this purpose? a. Control chart\" b. Pareto diagram c. PERT chart d. Critical path 168 CU IDOL SELF LEARNING MATERIAL (SLM)

2. The lowest element in the hierarchical breakdown of the WBS is a. Work package b. Deliverable c. Responsibility matrix d. Bottoms up budget 3. Information to develop a project network is collected from the a. Work breakdown structure b. Budget c. Project proposal d. Responsibility matrix 4. You would like to see a list of all the resources and the tasks that they are assigned to. What view best displays this information? a. GANTT Chart b. Resource Usage c. Task Usage d. Resource Sheet 5. _____________ is a recognizable work item of a project requiring time and resource for its completion. a. Activity b. Dummy activity c. Both (a) & (b) 169 CU IDOL SELF LEARNING MATERIAL (SLM)

d. None of these Answers 1 – a, 2 – a, 3 – a, 4 – a, 5 – a 8.11 REFERENCES  Baker, K., An Introduction to Sequencing and Scheduling, John Wiley, 1974.  Jackson, M.J., Computers in Construction Planning and Control, Allen & Unwin, 1986.  Moylan, W. A. (2002). Planning and scheduling: the yin and yang of managing a project. Paper presented at Project Management Institute Annual Seminars & Symposium, San Antonio, TX. Newtown Square, PA: Project Management Institute.  Burke, R. (1992): Project Management - Planning and Control. 2nd Ed., Wiley, Chichester.  Cleland, DJ. (1999): Project Management - Strategic Design and Implementation. McGraw-Hill, New York.  Harvard Business Review, Managing Projects and Programs Series: Reprints from Harvard Business Review — No. 21300, c 1971.  Moder and Phillips, Project Management With CPM and PERT  Robert K. Wysocki, 2009, Effective Project Management: Traditional, Agile, Extreme. Fifth Edition. Indianapolis.  Richard H. Thayer, Edward Yourdon (2000). Software Engineering Project Management (2nd ed.). Wiley-IEEE Computer Society Press. ISBN 0-8186-8000-8.  Fleming, Quentin (2005). Earned Value Project Management (Third ed.). Project Management Institute. ISBN 1-930699-89-1.  Filicetti, John, Project Planning Overview, PM Hut (Last accessed 8 November 2009). 170 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 9- PROJECT SCHEDULING 171 STRUCTURE 9.0. Learning Objective 9.1. Introduction 9.2. Critical Path Method 9.3. Node Diagram & Activity Diagram 9.4. Activity on Node & Arrow Diagram 9.5. Crashing of Networks 9.6. Simulations & Scenarios 9.7. Summary 9.8. Keywords 9.9. Learning Activity 9.10. Unit End Questions 9.11. References 9.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Understand about project scheduling in detail.  Know about the steps in scheduling projects  Understand about activity sequence and dependencies  Understand critical path method and the steps involved.  Understand activity on node and arrow diagrams  Understand network diagrams and the crashing of networks CU IDOL SELF LEARNING MATERIAL (SLM)

9.1 INTRODUCTION Schedule management includes the processes required to ensure timely completion of the project. But before a project schedule is created, a project manager should typically have a work breakdown structure (WBS), the time estimate for each task, and a resource list with availabilities for each resource. A Schedule is created using a consensus-driven estimation method; the reason for this is that a schedule itself is an estimate: each date in the schedule is estimated, and if those dates do not have the buy-in of the people who are going to do the work, the schedule will be inaccurate. Setting overall completion dates must be done by the project team and key stakeholders. The project manager assists by assimilating information about scope, budget, resources, and estimating times for completion of project tasks. Once an overall schedule is set, the project manager is responsible for monitoring the progress of the project and revising the schedule if needed. This must be done in consultation with project team members who are doing the work. There will typically be give-and-take as a project proceeds among budget, features, and schedule. It is essential for the project manager to keep all participants informed as to current schedule status. The schedule development process should generate a project schedule that meets the following criteria:  Complete— the schedule must represent all the work to be done. This is why the quality and completeness of the WBS is so important.  Realistic— the schedule must be realistic with regard to time expectations and the availability of beneficiaries to participate  Accepted— the schedule must have \"buy-in\" from team members and stakeholders, especially the beneficiaries. Schedule management consists of a series of tasks and steps designed to help manage the time constrains of the project, the steps are:  Defining the Schedule  Publishing the Schedule  Monitoring the Schedule  Updating the Schedule 172 CU IDOL SELF LEARNING MATERIAL (SLM)

The creation of the project schedule requires the team to define the conditions that will lead to the development of the schedule. The first piece of information needed for this step comes from the WBS that has all the activities identified for the project. The quality and completeness of the WBS will determine the quality of the schedule, and this is a good time for the project team to review if all the project activities are accounted for. Building the schedule is actually an easy part but once a project is published and issues and changes start to creep, the schedule becomes difficult to manage since it’s the resources with the less flexibility. The goal of defining the schedule is for the project team to have a complete understanding of all the work that needs they must accomplish, by defining the schedule the project also develops an understanding of the constraints, dependencies and sequence of the activities. Activity Sequence The first step in the creation of the project schedule is to define the sequence of the activities on a list; this sequence follows the natural progress the project will follow in the project cycle. The act of identifying which activity comes before or after another is the process of identifying dependency relationships between the activities. There are three types of activity dependencies. Technical or mandatory dependency is defined by the type of work or activity, for example building the foundations before building the walls of a school. Discretionary dependencies are selected by the project manager to accommodate organizational or resource constraints, these are also based on educate guesses the project makes in order to circumvent other constraints. The last dependency come from external factors imposed to the project, for example the project beneficiaries completing harvesting of their crops. The end result is a list of activities in a sequence that will allow the development of relationships. The next step is to determine the type of relationship among all activities; there are four types of relationships: 173 CU IDOL SELF LEARNING MATERIAL (SLM)

 Finish to Start, in this relationship the successor activity cannot begin until the predecessor task has completed, this is the most common type of relationship.  Start to Start, in this relationship the successor activity depends on the start of the predecessor activity, used for starting activities in parallel but a delay of the first activity delays the successor activity.  Finish to Finish, this relationship has the finish of the successor activity dependent on the finish of the predecessor.  Start to Finish, the finish of the successor activity is dependent on the start of its predecessor, it is seldom used. 9.2 CRITICAL PATH METHOD Critical path is the sequential activities from start to the end of a project. Although many projects have only one critical path, some projects may have more than one critical paths depending on the flow logic used in the project. If there is a delay in any of the activities under the critical path, there will be a delay of the project deliverables. Most of the times, if such delay is occurred, project acceleration or re-sequencing is done in order to achieve the deadlines. Critical path method is based on mathematical calculations 174 CU IDOL SELF LEARNING MATERIAL (SLM)

and it is used for scheduling project activities. This method was first introduced in 1950s as a joint venture between Remington Rand Corporation and DuPont Corporation. The initial critical path method was used for managing plant maintenance projects. Although the original method was developed for construction work, this method can be used for any project where there are interdependent activities. In the critical path method, the critical activities of a program or a project are identified. These are the activities that have a direct impact on the completion date of the project. Key Steps in Critical Path Method Let's have a look at how critical path method is used in practice. The process of using critical path method in project planning phase has six steps. Step 1: Activity specification You can use the Work Breakdown Structure WBS to identify the activities involved in the project. This is the main input for the critical path method. In activity specification, only the higher-level activities are selected for critical path method. When detailed activities are used, the critical path method may become too complex to manage and maintain. Step 2: Activity sequence establishment 175 CU IDOL SELF LEARNING MATERIAL (SLM)

In this step, the correct activity sequence is established. For that, you need to ask three questions for each task of your list. Which tasks should take place before this task happens. Which tasks should be completed at the same time as this task. Which tasks should happen immediately after this task. Step 3: Network diagram Once the activity sequence is correctly identified, the network diagram can be drawn. Although the early diagrams were drawn on paper, there are a number of computer software’s, such as Primavera, for this purpose nowadays. Step 4: Estimates for each activity This could be a direct input from the WBS based estimation sheet. Most of the companies use 3- point estimation method or COCOMO based function points based estimation methods for tasks estimation. You can use such estimation information for this step of the process. Step 5: Identification of the critical path For this, you need to determine four parameters of each activity of the network.  Earliest start time ES - The earliest time an activity can start once the previous dependent activities are over. Earliest finish time EF - ES + activity duration.  Latest finish time LF - The latest time an activity can finish without delaying the project.  Latest start time LS - LF - activity duration. The float time for an activity is the time between the earliest ES and the latest LS start time or between the earliest EF and latest LF finish times. During the float time, an activity can be delayed without delaying the project finish date. The critical path is the longest path of the network diagram. The activities in the critical path have an effect on the deadline of the project. If an activity of this path is delayed, the project will be delayed. In case if the project management needs to accelerate the project, the times for critical path activities should be reduced. 176 CU IDOL SELF LEARNING MATERIAL (SLM)

Step 6: Critical path diagram to show project progresses Critical path diagram is a live artefact. Therefore, this diagram should be updated with actual values once the task is completed. This gives more realistic figure for the deadline and the project management can know whether they are on track regarding the deliverables. Advantages of Critical Path Method Following are advantages of critical path methods: • Offers a visual representation of the project activities. • Presents the time to complete the tasks and the overall project. • Tracking of critical activities. 9.3 NODE DIAGRAMS AND ACTIVITY DIAGRAMS Both CPM and PERT describe the work plan of project where arrows and circles respectively indicate the activities and events in the project. This arrow or network diagram includes all the activities and events that should be completed to reach the project objectives. The activities and events are laid in a planned sequence of their accomplishments. However, there are two types of notations used in the network diagram. 9.4 ACTIVITY ON NODE AND ARROW DIAGRAMS Activity-on-Arrow (AOA), and Activity-on-Node (AON). In AOA notation, the arrow represents the work to be done and the circle represents an event – either the beginning 0f another activity or completion of previous one. This is shown in the figure below: For AON notation, a box (or node) is used to show the task itself and the arrow simply show the sequence in which work is done. This is shown in figure below: 177 CU IDOL SELF LEARNING MATERIAL (SLM)

The Activity-on-Node, or Precedence Diagram uses similar logic to Activity-on-Arrow (A-O- A), but it is represented differently. With this technique, the activity is represented by a box or node, with the arrows showing logic relationship between boxes as shown below: A-O-N Network Diagram Specification:  There is no dummy activity.  All the information that wanted to any activity is written on the box (node) area. 178 CU IDOL SELF LEARNING MATERIAL (SLM)

 The time overlapping problem for activities is solved by this technique.  The delay time for activities can be solved without needing to return to the plan details.  The Activity Early Start (E.S) The Activity Early Finish (E.F) It is the earliest time that an activity can finish with. E.F = E.S + Duration (D)  The Activity Late Finish (L.F) It is the latest time that an activity can finish with.  The Activity Late Start (L.S) It is the latest time that an activity can start with. L.S = L.F - Duration (D)  The Activity Total Float (T.F) The float for an activity is the amount that its duration can slip without causing the project to be delayed. Any activity with a zero float is on the critical path (C.P). T.F = L.F – E.F (or) = L.S – E.S Critical path (C.P) is the path that has the longest duration where activities have zero float It is the earliest time that an activity can start with. Network Diagram Once all the information on the sequence and duration of the project activities has been completed, the next step is to develop a network diagram. A network diagram is a graphical representation of the sequence of project activities and the dependencies among them. The network diagram is read from left to right or top to bottom. The network diagram uses a diagram technique in which boxes represent activities, used by project scheduling software. The complex and dynamic nature of development projects make this toll especially valuable because it forces the project team to address the potential interactions of project activities that can be easily missed otherwise. 179 CU IDOL SELF LEARNING MATERIAL (SLM)

The value of the network diagram is that provides the project team with visibility and control over the project schedule. It also helps determine the total duration of the project and its critical path or path with the longest duration. The figure below shows an example of a project network diagram that includes the duration estimates and dependencies. 9.5 CRASHING OF NETWORKS In CPM jargon, the process of reducing an activity time is called crashing. Crashing an activity refers to taking special costly measures to reduce the duration of an activity below its normal value. These special measures might include using overtime, hiring additional temporary help, using special time-saving materials, obtaining special equipment, etc. Crashing the project refers to crashing a number of activities in order to reduce the duration of the project below its normal value. The CPM method of time-cost trade-offs is concerned with determining how much (if any) to crash each of the activities in order to reduce the anticipated duration of the project to a desired value. The data necessary for determining how much to crash a particular activity are given by the time-cost graph for the activity. The normal point on the time-cost graph for an activity shows the time duration) and cost of the activity when it is performed in the normal way. The crash point shows the time and cost when the activity is fully crashed, i.e., it is fully expedited with no cost spared to reduce its duration as much as possible. As an approximation, CPM assumes that these times and costs can be reliably predicted without significant uncertainty. 180 CU IDOL SELF LEARNING MATERIAL (SLM)

9.6 SIMULATIONS AND SCENARIOS Crashing Example: The network and durations given below shows the normal schedule for a project. You can decrease (crash) the durations at an additional expense. The Table given below summarizes the time-cost information for the activities. The owner wants you to you to finish the project in 110 days. Find the minimum possible cost for the project if you want to finish it on 110 days. (Assume that for each activity there is a single linear, continuous function between the crash duration and normal duration points). Solution: Assume that the duration-cost relationship for each activity is a single linear, continuous function between the crash duration and normal duration points. Using the normal duration (ND), crash duration (CD), normal cost (NC), and crash cost (CC), the crash cost slope for each activity can be determined as follows; S CC NC A − − = 181 CU IDOL SELF LEARNING MATERIAL (SLM)

S day A $100 / 120 100 14000 12000 = − − = SB = $200/day SC = $600/day SD = $60/day SE = $120/day SF = $300/day A 120 B 20 CDE F 40 30 50 60 The normal cost for the project is the sum of a normal cost for each activity. The normal cost for the project is $48300 and the normal duration is 140 days. The activity which should be crashed is the one on the critical path which will add the least amount to the overall project cost. This will be the activity with the flattest or least-cost slope. The duration can be reduced as long as the critical path is not changed or a new critical path is created. In addition, the activity duration cannot be less than the crash duration. SD = $60/day (least-cost slope) Maximum of 10 days can be cut from this schedule by reducing the duration of activity D to the crash duration of 20 days. 182 CU IDOL SELF LEARNING MATERIAL (SLM)

Overall duration is 130 days and there are multiple critical paths (B-F-E and B-C-D-E). Total project cost at this duration is the normal cost of $48300 plus the cost of crashing the activity D by 10 days (60 * 10 = $600) for a total of $48900. The next activity to be crashed would be the activity E, since it has the least-cost slope ($120 per day) of any of the activities on the critical path. Activity E can be crashed by a total of 10 days. Crashing the activity E by 10 days will cost an additional $120 per day or $1200. The project duration is now 120 days and the total project cost is $50100. There are now three critical paths (A, B-C-D-E, and B-F-E). The next stage of crashing requires a more thorough analysis since it is impossible to crash one activity alone and achieve a reduction in the overall project duration. Activity A is paired with each of the other activities to determine which has the least overall cost slope for those activities which have remaining days to be crashed. Activity A ($100) + activity B ($200) Activity A ($100) + activity C ($600) + activity F ($300) 183 CU IDOL SELF LEARNING MATERIAL (SLM)

The least-cost slope will be activity A + activity B for a cost increase of $300 per day. Reducing the project duration by 5 days will add 5*300 = $1500 dollar crashing cost and the total project cost would be $51600. Activity B cannot be crashed any more. Final step in crashing the project to 110 days would be accomplished by reducing the duration of activity A by 5 days to 110 days, reducing activity C by 5 days to 35 days, and reducing activity F by 5 days to 55 days. The combined cost slope for the simultaneous reduction of activity A, activity C, and activity F would be $1000 per day. For 5 days of reduction this would be an additional $5000 in total project cost. The total project cost for the crashed schedule to 110 days of duration would be $56600. 9.7 SUMMARY  Schedule management includes the processes required to ensure timely completion of the project. But before a project schedule is created, a project manager should typically have a work breakdown structure (WBS), the time estimate for each task, and a resource list with availabilities for each resource. 184 CU IDOL SELF LEARNING MATERIAL (SLM)

 Setting overall completion dates must be done by the project team and key stakeholders. The project manager assists by assimilating information about scope, budget, resources, and estimating times for completion of project tasks. Once an overall schedule is set, the project manager is responsible for monitoring the progress of the project and revising the schedule if needed. This must be done in consultation with project team members who are doing the work.  The creation of the project schedule requires the team to define the conditions that will lead to the development of the schedule. The first piece of information needed for this step comes from the WBS that has all the activities identified for the project.  The first step in the creation of the project schedule is to define the sequence of the activities on a list; this sequence follows the natural progress the project will follow in the project cycle. The act of identifying which activity comes before or after another is the process of identifying dependency relationships between the activities.  There are three types of activity dependencies. Technical or mandatory dependency is defined by the type of work or activity, for example building the foundations before building the walls of a school. Discretionary dependencies are selected by the project manager to accommodate organizational or resource constraints, these are also based on educate guesses the project makes in order to circumvent other constraints. The last dependency come from external factors imposed to the project, for example the project beneficiaries completing harvesting of their crops.  Critical path is the sequential activities from start to the end of a project. Although many projects have only one critical path, some projects may have more than one critical paths depending on the flow logic used in the project.  Both CPM and PERT describe the work plan of project where arrows and circles  Respectively indicate the activities and events in the project. This arrow or network diagram includes all the activities and events that should be completed to reach the project objectives.  A network diagram is a graphical representation of the sequence of project activities and the dependencies among them. 185 CU IDOL SELF LEARNING MATERIAL (SLM)

 Crashing an activity refers to taking special costly measures to reduce the duration of an activity below its normal value. 9.8 KEYWORDS  Project Scheduling- Scheduling in project management is the listing of activities, deliverables, and milestones within a project. A schedule also usually includes a planned start and finish date, duration, and resources assigned to each activity.  Work Breakdown Structure- A Work breakdown structure is a comprehensive, hierarchical model of the deliverables constituting the scope of a project. It details everything a project team is supposed to deliver and achieve. A work breakdown structure categorizes all project elements, or work packages, into a set of groups and may be used to form cost estimates.  Activity Sequence- is the process of identifying and documenting relationships among the project activities. In the project management, the key benefit of this type of process is that it defines the logical sequence of work to obtain the greatest efficiency given all project constraints.  Critical Path Method- The Critical path method is used to estimate the shortest length of time needed to complete a project and to determine the amount of float for activities that are not part of the critical path.  Activity Diagram- An activity diagram is one method of representing a process model. It describes the behavior of a system by depicting the sequencing of events through workflow.  Node Diagram-Activity-on-node is a project management term that refers to a precedence diagramming method which uses boxes to denote schedule activities. These various boxes or “nodes” are connected from beginning to end with arrows to depict a logical progression of the dependencies between the schedule activities.  Crashing- A schedule compression technique used to speed up project work by increasing the rate at which critical path activities are completed by adding more resources — usually more personnel or more equipment. Crashing increases project costs, so it is used first on activities that can be sped up at the least additional cost. 186 CU IDOL SELF LEARNING MATERIAL (SLM)

 Crash Point- this is the point (point A) to which the project can be crashed using the cheapest crash cost per unit of time for a critical path component. ... The maximum crash point (point D) is the point at which all critical path activities have been crashed right up to their limits. 9.9 LEARNING ACTIVITY 1. Does the project schedule identify all pre-construction activities and allocate adequate time for each? ___________________________________________________________________________ _______________________________________________________________________ 2. What are the components of Critical Path Method? ___________________________________________________________________________ _______________________________________________________________________ 9.10 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Which are the critical bottleneck activities where any delays must be avoided to prevent delaying project completion? 2. What should a network diagram include? 3. Draw a project network diagram with an example. 4. Note on CPM 5. Note on simulations Long Questions 1. What is an Activity Sequence? 2. Discuss Critical Path Method 3. Define Activity diagrams and discuss them briefly 4. What is Float time? What is its significance? 187 CU IDOL SELF LEARNING MATERIAL (SLM)

5. Explain Crashing of Networks B. Multiple Choice Questions 1. Critical Path is always a. The longest path b. The shortest path c. Middle path d. most profitable path 2. What is the particular task performance in CPM known as? a. Activity b. Dummy c. Event d. Contract 3. What is the completion of a CPM network diagram activity commonly known as? a. Connector b. Event c. Node d. All of these 4. Activity in a network diagram is represented by? 188 a. arrows b. square c. circles CU IDOL SELF LEARNING MATERIAL (SLM)

d. rectangles 5. Critical activities have a. Zero float b. maximum float c. minimum float d. None of these Answer 1 – b, 2 – c, 3 – d, 4– a, 5 - a 9.11 REFERENCES  Angus, R.B. and N.A. Gunderson (1997): Planning, Performing, and Controlling Projects - Principles and Applications. Prentice-Hall, London.  Bell, C.E. and J. Han (1991): A New Heuristic Solution Method in Resource- Constrained Project Scheduling. Naval Research Logistics 38, 315-331.  Bell, C.E. and K. Park (1990): Solving Resource-Constrained Project Scheduling Problems by A* Search. Naval Research Logistics 37, 61-84.  Blazewicz, J.; W. Domschke, and E. Pesch (1996): The Job Shop Scheduling Problem: Conventional and New Solution Techniques. European Journal of Operational Research 93, 1-33.  Brinkmann, K. and K. Neumann (1996): Heuristic Procedures for Resource- Constrained Project Scheduling with Minimal and Maximal Time Lags: The Resource-Levelling and Minimum Project Duration Problems. Journal of Decision Systems 5, 129-155. 189 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 10- RISK MANAGEMENT 190 STRUCTURE 10.0. Learning Objective 10.1. Introduction 10.2. Project Risk Analysis & Management 10.3. Assessing & Identifying Project Risk 10.4. Project Risk Management Guidelines & Training 10.5. Standards & Best Practices for Project Risk Management 10.6. Project Risk Management 10.7. Case Study 10.8. Summary 10.9. Keywords 10.10. Learning Activity 10.11. Unit End Questions 10.12. References 10.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Understand what Project Risk is all about  Understand Project Risk Analysis and Management  Understand how to assess, identify and manage project risk  Understand guidelines for project risk and training  Understand standards and best practices for project risk management  Understand how to draw risk matrices CU IDOL SELF LEARNING MATERIAL (SLM)

10.1 INTRODUCTION The PMBOK® Guide describes risk as, an uncertain event or condition that if it occurs, has a positive or negative effect on a project's objective. The key element of this definition is that the effect of the uncertainty, if it occurs, may be positive or negative on the objectives of the planned endeavour. In project management, risk management is the practice of identifying, evaluating, and preventing or mitigating risks to a project that have the potential to impact the desired outcomes. Project managers are typically responsible for overseeing the risk management process throughout the duration of a given project. Project risk management is the process that project managers use to manage potential risks that may affect a project in any way, both positively and negatively. The goal is to minimise the impact of these risks. A risk is any unexpected event that can affect people, technology, resources, or processes (including projects). Unlike a regular problem that may arise, risks are incidents that may occur suddenly, sometimes entirely unexpected. Although Project Risk Management works the same for every project, it can take different forms. Different types and sizes of projects require a different approach to risk management. In many large-scale projects, a relatively large amount of attention is paid to comprehensive risk management and mitigation strategies for when problems arise. For smaller projects, a simple prioritised list of high, medium, and low priority risks is sufficient. 10.2 PROJECT RISK ANALYSIS AND MANAGEMENT Risk is defined as an event that has a probability of occurring, and could have either a positive or negative impact to a project should that risk occur. A risk may have one or more causes and, if it occurs, one or more impacts. For example, a cause may be requiring an environmental permit to do work, or having limited personnel assigned to design the project. The risk event is that the permitting agency may take longer than planned to issue a permit, or the assigned personnel available and assigned may not be adequate for the activity. If either of these uncertain events occurs, there may be an impact on the project cost, schedule or performance. All projects assume some element of risk, and it’s through risk management 191 CU IDOL SELF LEARNING MATERIAL (SLM)

where tools and techniques are applied to monitor and track those events that have the potential to impact the outcome of a project. Risk management is an on-going process that continues through the life of a project. It includes processes for risk management planning, identification, analysis, monitoring and control. Many of these processes are updated throughout the project lifecycle as new risks can be identified at any time. It’s the objective of risk management to decrease the probability and impact of events adverse to the project. On the other hand, any event that could have a positive impact should be exploited. The identification of risk normally starts before the project is initiated, and the number of risks increase as the project matures through the lifecycle. When a risk is identified, it’s first assessed to ascertain the probability of occurring, the degree of impact to the schedule, scope, cost, and quality, and then prioritized. Risk events may impact only one or while others may impact the project in multiple impact categories. The probability of occurrence, number of categories impacted and the degree (high, medium, low) to which they impact the project will be the basis for assigning the risk priority. All identifiable risks should be entered into a risk register, and documented as a risk statement. A process of risk management in projects is a rational chain of practices taken by decision-agents in order to keep the implementation of the project under certain conditions. The decision-agents need to identify, analyze and evaluate the risks in all project life cycle and use their organizational structure and administrative practices in order to act on the risks in favor of the project. Project complexity and the maturity of the organizations are viewed as important factors that can affect the success of a project. Managing of project risk is an integral part of quality project management system,and fundamental to achieving good project outcomes. That is, systematic identification and assessment of risk and effectively dealing with the results is significant to the success of the project. Risk management in projects is one of the major areas of interest in the area of project management. Risk management is designated as one of the main project management knowledge areas in the project management body of knowledge (PMBOK) by the Project Management Institute. 192 CU IDOL SELF LEARNING MATERIAL (SLM)

In this chapter, we provide a standard framework for risk management and discuss implementation techniques for projects of all types and sizes. This should provide you with a better understanding of how to address the following challenges:  Do we have a comprehensive project risk management policy?  What elements of project risk management are necessities for our organisation to implement?  How do we balance the requirements and controls of a risk management programme with efficient and streamlined project execution?  Are our current project risk management procedures effective at mitigating project risk?  How do we align our project specific risk management activities with our enterprise risk management objectives?  What are some key questions we should be asking about project risks throughout the project lifecycle? The objective of project risk management is to understand project and programme level risks, minimise the likelihood of negative events and maximise the likelihood of positive events on projects and programme outcomes. Project risk management is a continuous process that begins during the planning phase and ends once the project is successfully commissioned and turned over to operations. 10.3 ASSESSING AND IDENTIFYING PROJECT RISK Risk identification is the identification of all possible risks that could either negatively or positively affect the project. It is important in the risk identification process to solicit input from all project stakeholders including those outside of the core project team. Potential contributors to risk identification include:  Project team members (planners, engineers, architects, contractors etc);  Risk management team members;  Subject matter professionals (IT, Safety, Legal etc);  Customers (internal and external); 193 CU IDOL SELF LEARNING MATERIAL (SLM)

 End users; and  Organisation management and leadership. Successfully capturing all project risks increases with frequent communication and feedback amongst team members and stakeholders. These discussions should attempt to identify inaccuracies, inconsistencies and assumptions regarding the project. The resulting product of these working sessions should be the initial list of identified risks. From the initial list of identified risks, a risk register or log can be populated to ensure that all risk items are analysed, prioritised and monitored. Risk registers should typically include the following fields:  Risk type;  Description;  Cost impact;  Probability;  Risk level;  Possible responses; and  Action owner. Risk identification is the identification of all possible risks that could either negatively or positively affect the project. It is important in the risk identification process to solicit input from all project stakeholders including those outside of the core project team. Potential contributors to risk identification include:  Project team members (planners, engineers, architects, contractors etc);  Risk management team members;  Subject matter professionals (IT, Safety, Legal etc);  Customers (internal and external);  End users; and  Organisation management and leadership. Successfully capturing all project risks increases with frequent communication and feedback amongst team members and stakeholders. These discussions should attempt to identify 194 CU IDOL SELF LEARNING MATERIAL (SLM)

inaccuracies, inconsistencies and assumptions regarding the project. The resulting product of these working sessions should be the initial list of identified risks. From the initial list of identified risks, a risk register or log can be populated to ensure that all risk items are analysed, prioritised and monitored. Risk registers should typically include the following fields:  Risk type;  Description;  Cost impact;  Probability;  Risk level;  Possible responses; and  Action owner Risk identification is the identification of all possible risks that could either negatively or positively affect the project. It is important in the risk identification process to solicit input from all project stakeholders including those outside of the core project team. Potential contributors to risk identification include:  Project team members (planners, engineers, architects, contractors etc);  Risk management team members;  Subject matter professionals (IT, Safety, Legal etc);  Customers (internal and external);  End users; and  Organisation management and leadership. Successfully capturing all project risks increases with frequent communication and feedback amongst team members and stakeholders. These discussions should attempt to identify inaccuracies, inconsistencies and assumptions regarding the project. The resulting product of these working sessions should be the initial list of identified risks. From the initial list of identified risks, a risk register or log can be populated to ensure that all risk items are analysed, prioritised and monitored. Risk registers should typically include the following fields: 195 CU IDOL SELF LEARNING MATERIAL (SLM)

 Risk type;  Description;  Cost impact;  Probability;  Risk level;  Possible responses; and  Action owner 10.4 PROJECT RISK MANAGEMENT GUIDELINES AND TRAINING Risk is defined as an event that has a probability of occurring, and could have either a positive or negative impact to a project should that risk occur. A risk may have one or more causes and, if it occurs, one or more impacts. For example, a cause may be requiring an environmental permit to do work, or having limited personnel assigned to design the project. The risk event is that the permitting agency may take longer than planned to issue a permit, or the assigned personnel available and assigned may not be adequate for the activity. If either of these uncertain events occurs, there may be an impact on the project cost, schedule or performance. All projects assume some element of risk, and it’s through risk management where tools and techniques are applied to monitor and track those events that have the potential to impact the outcome of a project. Risk management is an on-going process that continues through the life of a project. It includes processes for risk management planning, identification, analysis, monitoring and control. Many of these processes are updated throughout the project lifecycle as new risks can be identified at any time. It’s the objective of risk management to decrease the probability and impact of events adverse to the project. On the other hand, any event that could have a positive impact should be exploited. The identification of risk normally starts before the project is initiated, and the number of risks increase as the project matures through the lifecycle. When a risk is identified, it’s first assessed to ascertain the probability of occurring, the degree of impact to the schedule, scope, cost, and quality, and then prioritized. Risk events may impact only one or while others may impact the project in multiple impact categories. The probability of occurrence, number of 196 CU IDOL SELF LEARNING MATERIAL (SLM)

categories impacted and the degree (high, medium, low) to which they impact the project will be the basis for assigning the risk priority. All identifiable risks should be entered into a risk register, and documented as a risk statement. Guidelines for Project Risk Management The benefits of project risk management are huge. Effective quantitative risk management is an essential component to delivering projects successfully—on time, within budget, and with high-quality results. By following these guidelines, you are one step closer to mitigating risks and managing a successful project. 1. Identify Risks Early The first step is to identify the risks present. This involves focusing on the various scenarios that may occur and developing a plan of action. Consult the project plan, and Safran Risk, to establish risks associated with project schedule and cost. By recognizing the potential impact of these risks early, you are equipping the project team with the right information and potential scenarios to make an informed decision sooner, thus providing greater impact to future project performance. 2. Communicate, communicate, and communicate All too often we see failed projects occur because project managers were unaware of the approaching risks. Known risks should be continuously evaluated and brought to the forefront as a standard topic for team meetings. Open communication ensures the project manager has the best, and most recent, information at all times. 3. Project Risks vs. Project Opportunities Project risks have a negative connotation and at times overwhelm the project opportunities. Make sure to create time to handle the project opportunities. There are often a few opportunities with a high benefit, that don’t require a big investment in time or resources. Place a few minutes to focus on these and create an environment where both risks & opportunities are considered appropriately. One opportunity example could be “buying down risk” at a fraction of its potential cost if left alone. 4. Analyze and Prioritize—Then Again 197 CU IDOL SELF LEARNING MATERIAL (SLM)

As risks are identified, a team must decide how to prioritize them. Treating all risks equally doesn’t deliver the best possible results. Risks have different levels of impact, so it’s important to focus on risks that can cause the biggest losses and gains. As risks pass through the project hierarchy, risks may be re-prioritized based on each level. Risk analysis allows project and risk managers prioritize where time and resources are better spent. 5. Risk Management Software Managing risks is a task completed throughout the project life-cycle. Unfortunately, a lot of project teams struggle to finish successfully and are overloaded with tasks to be completed quickly. Connecting activities to the risk analysis helps project managers understand what is most important, and managing risks helps to focus on the current situation of risks and project goals. Risk Management Training Training is the keystone to any risk management plan. Without a formal training effort, a risk management approach will most likely not be embraced or followed. Not only should training occur at the inception of the policy but it should also include: On-boarding for new hires; Regular “brown bag” or informational session to review any lessons learned, updates to policy, or identified leading practices; and Required refresher sessions to maintain staff awareness of the risk management policies and procedures and to emphasise the organisations commitment for risk management. Training is often forgotten aspect of policy implementation; however this is a particularly crucial function to establish an effective risk management approach. Often overlooked training is crucial for informing employees about the importance of risk management and its various elements. 10.5 STANDARDS AND BEST PRACTICES FOR PROJECT RISK MANAGEMENT A well-defined risk management process can help to greatly increase project and programme success. However, risk management has traditionally been overlooked and is considered by many of the more fuzzy areas of project management. At a minimum, organisations with significant capital expenditures should clearly define their procedures and expectations for risk management, communicate its importance, adequately train its personnel, and monitor high risk projects for compliance with risk management procedures. 198 CU IDOL SELF LEARNING MATERIAL (SLM)

Project Risk Management Standards set out a specific set of strategic processes which start with the overall aspirations and objectives of an organisation, and intend to help to identify risks and promote the mitigation of risks through best practice. Risk Management Standards set out a specific set of strategic processes which start with the overall aspirations and objectives of an organisation, and intend to help to identify risks and promote the mitigation of risks through best practice. Standards are often designed and created by a number of agencies who are working together to promote common goals, to help to ensure that organisations carry out high-quality risk management processes. The ISO 31000 risk management standards framework includes:  ISO 31000:2009 – Principles and Guidelines on Implementation  ISO/IEC 31010:2009 – Risk Management – Risk Assessment Techniques  ISO Guide 73:2009 – Risk Management – Vocabulary These ISO standards are designed to help guide organisations with a number of different strands of risk management. In project management we have unforeseen and uncertain or unplanned events that can impact a project either positively or negatively. A negative risk is normally referred to as a threat whereas a positive impact on a project is an opportunity. In other words, a risk is any unexpected event or result that may negatively affect the projects timetable. Generally, a risk can affect the people, processes, technology and resources involved in a project. Many times a risk is unpredictable and you may not tell when it will occur. Due to their uncertainty, project risks require serious preparation in order to manage them efficiently and effectively. Therefore, project risk management refers to the process where project managers use their experience and other professional tools to minimize any potential problem that may be a threat to the success of the project. 10.6 PROJECT RISK MANAGEMENT There are many project risks which need to be done away with for a successful project. There are 5 steps for a sound project risk management: 199 CU IDOL SELF LEARNING MATERIAL (SLM)

1. Identify the Risk This is the first key step for a sound risk management in projects. This step involves uncovering, recognizing and describing the risks that might affect the project or the outcome of the project. The early the identification of the risk the better. Therefore, risk identification refers to the process of listing the potential risks and their characteristics. The results of risk identification are usually documented in a risk register. The risk register includes the listed risks along with their sources, potential risk responses and the risk category. This information is further used for risk analysis which in turn will support creating risk responses. The main aim of risk identification is to ensure that all risks are identified. Ultimately, the purpose of risk identification is to minimize negative impact of project hiccups and threats and to maximize the positive impact of the project opportunities. It’s through the Identification of a risk that the project manager is able to control the impact of the risk on the project. Potential project risks awareness reduces the numbers of surprises during the project delivery and, thus, improves the chances of project success allowing the team to meet the time, schedule, and quality objectives of the project. Identification of risk allows one to create a comprehensive understanding that can be leveraged to influence the stakeholders and create better project decisions. Therefore, good risk identification creates good project communication and eventually good project decisions. Consequently, risk identification is the foundation of good risk management and no spread sheet or any fancy tool that will overcome poor tax identification. The whole team should be involved in tax identification since its typically is one of brainstorming and all the brainstorming rules apply. All members of the project team should identify all the potential risks in a project. 2. Analyze the Risk Risk analysis is basically risk assessment. Risk assessment is very important. It refers to a careful examination of what in the project could cause harm to people, so that they can take precautions or what they should do to prevent harm. A good risk assessment has 5 steps to be thorough and successful. 200 CU IDOL SELF LEARNING MATERIAL (SLM)