PROJECT CONTROL & RISK- Purpose of Control Control Process

  • Cost/Schedule/Technical Control
  • Introduction to Earned Value
  • Project Changes and Change Control
  • Importance of Managing RiskPurpose 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?

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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

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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