PROJECT CONTROL & RISK

PROJECT CONTROL & RISK Purpose of Control Control Process Cost/Schedule/Technical Control Introduction to Earned Value Project ...

PROJECT CONTROL & RISK

• Purpose of Control Control Process


• Cost/Schedule/Technical Control


• Introduction to Earned Value


• Project Changes and Change Control


• Importance of Managing Risk

Purpose of Control
To make the actual meet the plan

The Process

1. Key performance areas


2. Set standards


3. Measure performance


4. Compare


5. Fix

A Question of Balance

• Too little control?


• Too much control?

What Forms do these “Standards” Take?

• Cost


• Schedule


• Performance

A Control Example
You’re two months into a three month project.  You’ve spent 90% of your budget.
Defend yourself.

Three Important Terms

• BCWS:  The plan, integrating schedule and budget


• BCWP:  What you planned to spend for work actually done


• ACWP:  Actual dollars spent at a point in time, for the work actually done

More Terms

• BAC:  Original budget at completion


• TAC:  Original time at completion


• ECAC:  Estimated cost at completion


• ETAC:  Estimated time at completion

Four Relationships
Cost Variance = BCWP - ACWP
Schedule Variance = BCWP - BCWS
ECAC =  ACWP  X  BAC
BCWP
ETAC =  BCWS  X  TAC
BCWP
Changes and Change Control

• The last step of the control process:  FIX

• Two Types:  Business and Technical Changes

Business Changes (aka CCPs)

• Business related


• Driven by such things as:


• Spec relief


• Deliverables changes


• Funding shifts


• Schedule changes


• Acts of God


• Subcontractor changes

Technical Changes (aka ECPs)
Technological issues, such as:

• New technologies


• Laws of physics


• Competitor response


• Threat changes


• Changes in user requirements (real or political)

Change Control

• Changes cost $, usually big $


• So they need control


• PM responsibility


• Signed baselines


• High levels of authority


• Some tools:


• Zero sum/DTC/caps

PROJECT RISK MANAGEMENT

• Risk defined


• A brief history


• Types of project risk


• The PMBOK sequence


• Tools

RISK DEFINED
The likelihood (probability) and the impact of an undesirable event “Fear of harm ought to be proportional not only to the gravity of the harm, but also to the probability of the event.”  (Antoine  Arnauld, 1665)

• Both matter


• Examples

A BRIEF HISTORY

• The management of risk forms the boundary between the old world and modern times


• Old world


• Fates and gods


• Short time horizons


• Man’s role:  accept, maybe react

SO WHAT CHANGED?

• Rise of rational man


• Man can plan and influence the future


• Development of math, probability, forecasting


• Multiply XII times VIII


• Rise of zero and Arabic numerals


• Rise of trade, business, shipping


• Longer time horizons


• Large commercial ventures mean more at stake

THE CRITICAL QUESTIONS
To what extent does the past foretell the future?
Can we extrapolate from the past to predict a future event? “Nature has established patterns originating in the return of events, but only for the most part.”  (von Leibnitz to Bernoulli, who then developed the
Law of Large Numbers, 1703)

TYPES OF PROJECT RISK















THE PMBOK RISK MANAGEMENT SEQUENCE

• Risk identification


• Risk quantification


• Risk response development


• Risk response control

TOOLS FOR RISK MANAGEMENT (more or less in order)

• Expert opinion


• Simulation


• Historical Analysis/ “Lessons Learned”


• “Risk Reduction”


• Contracting/Procurement Strategy


• CPFF, FFP, “Make or Buy,” Sole Source, etc.


• Insurance, bonding


• Multiple paths


• Management attention (e.g., “Top 10” Lists)


• Workarounds