TOSSA COLLEGE OF ECONOMIC DEVELOPMENT

DEPARTMENT OF PROJECT PLANNING AND MANAGEMENT

DEPARTMENT OF ECONOMICS (MSc)

PROJECT EXECUTION AND RISK MANAGEMENT

INDIVIDUAL ASSIGNMENT

PREPARED BY

YASSIN ESHETU MEHAMMED

ID No. TCED/162/14

SUBMITTED TO: - MELKAMU TADESSE PHD

September 2022 Dessie, Ethiopia

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1. What are project execution management and project risk management?

Ans;

 To make clear that to implement or execute a project means to bring out actions planned in
the project proposal with the plan to attain development objectives and deliver results and
out puts. It is true that Implementation of a project involves coordinating and guiding the
project team members to complete the work as out lined in the approved project plan. In the
process of implementation resources, people are kept focused on the work to attain as per
the intended plan. It is also the project process that is most directly affected by the project
application area in that the product of the project is actually created by all concerned
stakeholders. Project execution is always concerned with the ideas of activities that can
produce the expected project outputs, the process and sequences of those activities, the time
frame or schedules to do those activities write down in plan, the responsible body for
carrying out each planned activities.

Whereas project risk management meansa term that clearly shows the identifying, analyzing, and
responding to the planned task in the risk throughout the life of a project and in the best interests of
meeting of minds or project objectives as it is determined, Identifying, analyzing, prioritizing, and
responding to the planned risk events, integration of risk management activities into our project
management functions. It is the developing responses to risk to meet our project objectives in some
of the objectives of risk management reduce the number of surprise events, minimize consequences
of adverse events, and maximize the results of positive events. It is the management of the risk that
will be executed and planned to the aimed project.

2. Briefly discuss the following fundamentals of Project Execution Management concepts

A, Project integration management;
Ans; Project integration management is a project management knowledge area that helps
teams work together more seamlessly. Integration management takes various processes,
systems, and methodologies and brings them together to form a cohesive strategy. In order to
accomplish this, trade-offs need to be made.
B,Project scope management

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Ans; Project scope management refers to the total amount of work that must be done in order to
deliver a product, service, or result with specified functions and features. It includes everything
that must go into a project, as well as what defines its success.
C, Project human resource (HR) management

Ans; Project human resource (HR) management is an element of project management

concerned with organizing, managing, and leading a project team. The team includes everyone
who has assigned roles and responsibilities for completing the project.
D, Project Cost Management

Ans; Project Cost Management is a method that uses technology to measure cost and
productivity through the full life-cycle of enterprise level projects. PCM encompasses several
specific functions of project management including estimating, job controls, field data
collection, scheduling, accounting and design.
E, Project procurement management

Ans; Project procurement management is the creation and maintenance of relationships with
external resources needed to complete a project. A project procurement manager communicates
with vendors to buy, rent or contract products and services needed to achieve project objectives.
F, Project communication management

Ans;Project communication management is a collection of processes that help make sure the
right messages are sent, received, and understood by the right people. Project communication
management is one of the 10 key knowledge areas in the PMBOK (Project Management Book
of Knowledge).
G, Project quality management
Ans;Project quality management is the process of continually measuring the quality of all
activities and taking corrective action until the desired quality is achieved.
H, Project time management

Project time management involves analyzing and developing a schedule and timeline for project
completion. Formalized time management processes provide a buffer for things like unexpected
roadblocks and misestimated project timelines.

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 3. Briefly discuss the four pillars in project execution management:-
Ans;

There are four pillars in project execution management tasks. They are system, people, Processes
and leadership.
1. System: It includes the actual site preparation, buildings, Equipment, machinery, facilities…etc.
and it is being ready to functioning to deliver planned project objectives. Without a system,
none of the project tasks are come to effect.
2. People: The Organizational framework should be systematized with the structure of the project
and Personnel‘s are hired and trained must be followed up to bring the objective of the projet
tasks. Also the adequate ‗soft institutions‘ for managing and operating the project
3. Processes: This process outlines the Supply Chain Management (i.e. Procurement of logistical
mats), Maintenance managementand Accounting systems, marketing and public or stakeholder
relations in the process must be implemented to reach the final goals.
4. Leadership: A good project leader must have gained prior experience across the three main
areas in the execution of a project Creating and sharing the vision of the organization. To create
and shared vision, leaders should show commitment to the project in a visible manner, and these
leaders must have the ability to articulate clearly what the project is designed to do and how to
arrive at that end. As communication holds more than 90% of the project tasks, Effective
Communication must incentivize performance Motivation skills Honesty and integrity in the
Team-building at project sites.

4. Discuss the processes and approaches of project execution management.

Ans;

Every project task requires a series of processes to bring the project to fruition. These processes are
pretty consistent, regardless of the industry or the type of deliverables. So that what are these
project management processes, and what do they consist of are our main targets.The five project
management processes are initiating, Planning, Executing/implementation, Monitoring and
Evaluation and Closing. The Project Management Body of Knowledge breaks down the over
arching process of managing a project into five stages, or ―process groups.‖ These process groups
are typically defined as follows:

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 a. Initiating:

During this phase, the project is conceptualized, and feasibility is determined in the project. We
must understand that some activities that should be performed during this process includes
defining the project goal; defining the project scope; identifying the project manager and the
key stakeholders; identifying potential risks, and producing an estimated budget and time line.

b. Planning:

Next to initiation process, the project manager will create a blueprint to guide the whole project
from ideation through completion. This blueprint will map out the project‘s scope; resources
required to create the deliverables; estimated time and financial commitments; communication
strategy to ensure stakeholders are kept up to date and involved; the execution plan; and proposal
for ongoing maintenance. If the project has not yet been approved, this blueprint will serve as a
critical part of the pitch.

c. Executing:

During this phase, the project manager will conduct the procurement required for the project and
staff the team. Execution of the project objectives requires effective management of the team
members on the ground. PMs are responsible for delegating and overseeing the work on the project
while maintaining good relationships with all team members and keeping the entire project on time
and budget. The Project Management must, therefore, be highly organized and an exceptional
leader. That‘s because they will need to address team concerns and issues that arise along the way,
requiring frequent and open communication with all team members and stakeholders.

d. Monitoring and control:

During this process group, project managers will closely measure the project's progress to ensure it
is developing properly. Documentation such as data collection and verbal and written status reports
may be used. Monitoring and controlling are closely related to project planning. While planning
determines what is to be done, monitoring and controlling establish how well it has been
doneMonitoring will detect any necessary corrective action or change in the project to keep the
project on track.
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e. Closing/phase-out:

The closing process group occurs once the project deliverables have been produced and the
stakeholders validate and approve them. During this phase, the project manager will close contracts
with suppliers, external vendors, consultants, and other third-party providers. All documentation
will be archived, and a final project report will be produced. Further, the final part of the project
plans in the plan for troubleshooting and maintenance that will kick into place. When we come to
Approaches of Project Execution, it depends on and the most known are Top-down approach,
Bottom-up approach technical, Collaborative participatory approach. To discuss them one by one
we will elaborate them as follows.

i. Top-down approach

In simple terms, a top-down approach is an investment strategy that selects various sectors or
industries and tries to achieve a balance in an investment portfolio. The top-down approach
analyzes the risk by aggregating the impact of internal operational failures. It measures the
variances in the economic variables that are not explained by the external macro-economic factors.
As such, this approach is simple and not data-intensive. The top-down approach relies mainly on
historical data. This approach is opposite to the bottom-up approach directly.

ii. Bottom-up approach technical

A bottom-up approach, on the other hand, is an investment strategy that depends on the selection of
individual stocks. It observes the performance and management of companies and not general
economic trends. The bottom-up approach analyzes individual risk in the process by using
mathematical models and is thus data-intensive. This method does not rely on historical data. It is a
forward-looking approach unlike the top-down model, which is backward-looking.

iii. Collaborative participatory approach

Participatory Approach of a project seeks to engage the local populations in any development
projects. Participatory approach of development projects hastaken a variety of forms since it
emerged in the late 1970s, when it was introduced as an important part of the basic needs approach
to development projects. Most manifestations of public participation in development projects seek to
give the poor a part in initiatives designed for their benefit in the hopes that development projects

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 will be more sustainable and successful if local populations are engaged in the development
process.

5. Discuss the processes and approaches of project risk management.

Ans;

The risk management process are identifying risks, planning risk management, Risk analysis, risk
response plan and some others as follows.

i. Planning risk management: Deciding how to approach and plan the risk management
activities for the project
ii. Identifying risks: Determining which risks are likely to affect a project and documenting the
characteristics of each
iii. Performing qualitative risk analysis: Prioritizing risks based on their probability and impact
of occurrence
iv. Performing quantitative risk analysis:Numerically estimating the effects of risks on project
objectives
v. Planning risk responses:Taking steps to enhance opportunities and reduce threats to meeting
project objectives
vi. Controlling risk: Monitoring identified and residual risks, identifying new risks, carrying out
risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the
project.

Risk Management Approaches: There three kinds of approaches that can be followed for involving
management and stakeholders in identifying risks are:

 Top down-approach: this is the decision-making process that centralized at projects‘ governance
level.
 Bottom-up approach: this is the decision-making process that is done at management level in
project execution system. Operational risks are identified by any staff member while performing his
or her daily work in the project.
 Mixed approach: it is the broad entity that states the criteria (top-down) by which the heads of
unit identify and manage risks (bottom-up). Risks may be viewed and assessed throughout the
organization at any level (e.g., group, program, office, project, etc.). In order to set the framework,

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the hierarchy of risks on which attention is focused corresponds to the enterprise, operational and
project levels.

6, Using the information in Table, assuming that the project team will work a standard
working week (5 working days in 1 week) and that all tasks will start as soon as possible.

Tasks Duration (working Predecessor/s

days)
A 5
B 15 A
C 25 B
D 15 B
E 30 B
F 10 C,D
G 10 E,F
H 5 G
I 5 H

A. Develop a good network diagram for the project

ANS

B, Determine the critical path of the project

Assume all durations are in days

Path 1;A – B – C – F – G – H - I Length = 5+15+25+10+10+5+5=75 days

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Path 2; A – B – D – F – G – H – I Length = 5+15+15+10

Path 3;A - B – E – G – H – I Length =5+15+30+10+5+5=70days

 The critical path is the longest path through the network diagram Path 1, A-B-C-F-G-H-I

C,Calculate the slack time for each activities

Finding the earlist start time and latest start time for alternative in the diagram

Let ES-earliest start time for an activity

EF-earliest finish time

t- Activity time

Activity Es t EF
A 0 5 5
B 5 15 20
C 20 25 45
D 30 15 45
E 15 30 55
F 45 10 55
G 55 10 65
H 65 5 70
I 70 5 75

NB the earlist finish time for activity I the last activity in the project is 75

THE last finish time for activity is known the latest startfor an activity can be computed as follows

Let LS = Latest start time for an activity

LF =Latest finish time

t =activity time

Then LS=LF-t LF=LS+t

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Activity t Ls Lf
A 15 0 5
B 15 5 20
C 25 20 25
D 15 20 35
E 30 20 50
F 10 45 55
G 10 55 65
H 5 65 70
I 5 70 75

7. Discuss the four basic response strategies for each negative risks and positive
risks

the four basic response strategies for negative risks

Ans;
Strategies for Negative Risks are avoided, transfer, mitigate, and accept the systems. To see
them one by one we discuss as follows:
i. Avoid: Risk Avoidance can involve changing the project management plan to get rid of the
danger posed by the risk. Some risks can be avoided by clarifying requirements, getting
additional information, improving communication or acquiring expertise.
ii. Transfer: Transferring a risk requires moving, shifting or reassigning some or all of the
negative impact and ownership to a third party. This does not eliminate the risk but gives
another party the responsibility to manage it.
iii. Mitigate: Risk Mitigation implies a reduction in the probability and/or impact of a negative
risk. Reducing the probability and/or impact of a risk occurring is often more effective than
dealing with the risk after it has occurred.
iv. Accept: This strategy indicates that the project team has decided not to change the project
management plan: schedule, approach or reduce project scope or is unable to identify
another suitable response strategy.

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positive risk in project management

positive risk in project management is actually a good thing for projects. Some of your critical
success factors for project risk management can rely on taking positive risks.

There are four primary ways you can choose to respond to positive risks in project
management:

Exploit it. Exploiting a positive risk means acting in ways that will help increase the

A. chances of it occurring. ...

B. Share it. ...
C. Enhance it. ...
D. Accept it.

8,List the different factors (problems and experiences) affecting project execution
management.

Ans;

 Many factors are affecting the success or failure of implementation-related projects. A

talented project manager is one of the key contributors to manage them effectively. Many
fundamental steps and guides in the project management processes are taken for granted
because they seem very basic and obvious. This includes better and more factual testing
methods, communication processes and protocols, and the role of key staff members and
project manager. This results in many problems like delays in execution that result in
missed deadlines, uncertainty about the exact deliverables and expectations, confusion
about the direction of the execution, work requirements, and project status, dissatisfaction
in the client due to the quality of deliverables.

Also there are Factors that lead to success of projects are Political Commitment, Simplicity of
Design, Careful preparation, Good management, Involvement ofbeneficiaries/community, and
others. Also we can say that Factors and problems that lead to failure of projects:

 Financial Problems
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  Management problems
 Technical problems
 Political problems
 Poor scheduling of projects leading to delays in implementation.
 Misallocation of funds
 Delay and sometimes lack of counterpart funding
 Lack of accountability and transparency
 Bureaucracy in decision-making.
 Selfishness/nepotism/favoritism by some project managers.
 Weak monitoring systems
 Natural calamities like drought, earthquakes, landslides, and hailstorms.
 Policy changes
 Migration of beneficiaries
 Lack of team work
 Lack of incentives for implementers.

9. Discuss the benefits of risk management

The following are some of the specific benefits of a preventative risk management
program:

See risks that are not apparent. Many of the real risks facing an organization cannot be gleaned
from a textbook. A comprehensive preventative risk management program leverages a team of
experts to identify and provide a deeper understanding of all types of risks.

Provide insights and support to the Board of Directors. Board members may find it difficult to
identify risks outside their areas of expertise and experience. Providing resources and advisory
services to the Board and its committees charged with risk management will make them better able
to discharge their duties.

Get credit for cooperation. Many regulatory agencies have policies where they ―give credit‖ to
companies under investigation for having a compliance or a risk prevention program in place.
While it is impossible to avoid risk and the manifestation of risk into potential problems, regulators

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want to see that an event is not due to a systemic breakdown and that the company has measures in
place—such as proper leadership, training and certification—to prevent such activity.

Build a better defense to class-actions. Plaintiffs in class actions and other downstream litigation
often rely on their ability to convince triers of fact that the defendants have been negligent. This is
harder to prove when the company can point to a preventative risk mitigation program that is in
place to minimize these risks.

Reduce business liability. Regulators and shareholders increasingly view litigation risk as a
business liability. Reducing litigation risk upfront makes the company a more attractive investment.

Frame regulatory issues. Preventative risk management programs provide greater insight into
insurance, indemnity and liability issues and allow the company to better focus and structure its
inquiry.

10. An agricultural company wants to decide which commodity should stock to get maximum
profit. It was supplied with the following information. The probability that the rain will be
excess, normal and deficient is 0.40, 0.30 and 0.30. The estimated profit or loss three
commodities in respect of these different kinds of rain are:

State of nature (Rain)

Alternatives Excess Normal Deficient

Teff 10000 -4000 15000

Wheat 4000 -3000 8000

Sorghum 4000 1000 -1000

Determine the optimal decision under each of the following decision criteria and show how you arrived at it:

Ans;

A. Maximax,
Using this optimistic approach, we choose the alternative with the best possible payoff

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 State of nature (Rain)

Alternatives Excess Normal Deficient Row

maximum

Teff 10000 -4000 15000 15000

*column
maximum

Wheat 4000 -3000 8000 8000

Sorghum 4000 1000 -1000 4000

Therefore, under Maximax criteria, the 1st alternative or Teff is our optimal decision to get
maximum profit, since 15000 is the overall best.

B. Maximin,
Using this pessimistic or conservative approach, we choose the alternative with the best of
the worst payoffs. We 1st choose the worst payoff in each alternative and then choose the
best of the worst.

State of nature (Rain)

Alternatives Excess Normal Deficient Row

maximum

Teff 10000 -4000 15000 -4000

Wheat 4000 -3000 8000 -3000

Sorghum 4000 1000 -1000 -1000

Therefore, under pessimistic approach, we choose Sorghum, since -1000 is the best of the
worst payoff.

C. Minimax regret (savage criterion),

Using this approach, choose the alternative with the minimum of all maximum regrets
across all alternatives. Regret also known as opportunity loss is the difference between
the best payoff in a particular state of nature and the actual payoff received

Regret = best of payoff –payoff received

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 State of nature (Rain)

Alternatives Excess Normal Deficient

Teff 10000 -4000 15000

R=10000- R= 1000-(- R=15000-

10000=0 4000)= 5000 15000=0

Wheat 4000 -3000 8000

R= 10000- -3000 R=15000-

4000=6000 8000=7000
R=1000-(-
3000)=4000

Sorghum 4000 1000 -1000

R= 10000- R= 1000- 15000-(-

4000=6000 1000=0 1000)=16000

Column 10000 10000 15000

maximum

Regret table

State of nature (Rain) Maximum

regret
/loss/row

Alternatives Excess Normal Deficient

Teff 0 5000 0 5000

Wheat 6000 -4000 7000 7000

Sorghum 6000 0 16000 16000

Since the decision is to be made based on the minimax regret, we 1st determine the maximum regret
for each alternative and then choose the minimum of these maximum regrets, which is 5000 and the
1st alternative or Teff is our choose based on minimax regret approach

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D. Equal likelihood (Laplace), maximize the average payoff (best of average),
Using this approach, we chose the alternative with the best average payoff.

State of nature (Rain)

Alternatives Excess Normal Deficient Row

average

Teff 10000 -4000 15000 7000

(maximum)

Wheat 4000 -3000 8000 3000

Sorghum 4000 1000 -1000 1333.3

Therefore, based on Laplace approach, the 1t alternative or Teff is chosen. Since, the best
of these alternative averages is 7000

E. Hurwicz Alpha criterion α=0.8,

This approach finds a compromise between the best and worst payoff. Using this
approach, we choose the alternative with the best weighted average payoff based on the
coefficient of realism α=0.8 and thus 1- α=0.2

State of nature (Rain)

Alternatives Excess Normal Deficient Weighted

average

Teff 10000 -4000 15000 (15000*0.8) +

0.2(-
4000)=11200

Wheat 4000 -3000 8000 (8000*0.8)+0.2*-

3000=5800

Sorghum 4000 1000 -1000 (4000*0.8)-

0.2*1000=3000

Therefore, using the realistic approach, we choose 1st best weighted alternative or Teff.

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F. EMV (expected monetary value)
This method is a weighted average of the payoffs for a decision alternative. The weights
are the probabilities of the different states of nature

State of nature (Rain)

Alternatives Excess Normal Deficient EMV

Teff 10000 -4000 15000 10000 *0.4 + (-

4000*0.3)+ (15000*0.3)=
7300

Wheat 4000 -3000 8000 (4000*0.4) +(-3000*0.3)

+(8000*0.3)=3100

Sorghum 4000 1000 -1000 (4000*0.4)+(1000*0.3)+(-

1000*0.3)=1600

Probabilities 0.4 0.3 0.3

Therefore, the best expected value is 7300; alternative 1 or teff is our choice.

G. EOL (expected opportunity loss)

To begin, we obtain an opportunity loss or regret table

Regret = |best payoff- payoff recieved|

State of nature (Rain)

Alternatives Excess Normal Deficient

Teff 0 5000 0

Wheat 6000 4000 7000

Sorghum 6000 0 16000

To make decision using the expected opportunity loss approach, we calculate the
weighted average of the regrets for each decision alternative

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 State of nature (Rain)

Alternative Exce Norm Deficie EOL

s ss al nt

Teff 0 -5000 0 (0*0.4)+(5000*03)+(0*0.3)=1500

Wheat 6000 -4000 7000 (6000*0.4)

+(4000*0.3)+(7000*0.3)=5700

Sorghu 6000 0 16000 (6000*0.4)+(0*0.3)+(16000*0.3)

m =7200

Probabiliti 0.4 0.3 0.3

es

From these regret values the minimum is our choice, which is 1500 and alternative 1 or
teff is taken.

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