Chapter three

Looing at project
The Nature of Projects
 Any project should start with a clear understanding of the nature of the
project itself.
 The essential constituent of a project comprise the tasks, technologies,
resources and organization required to undertake it.
 The complexity in a project needs to be identified at the earliest stage
possible in order to be able to manage it appropriately
 Project complexity can be defined as consisting of many varied interrelated
parts and can be operationalized(measured) in terms of differentiation and
interdependency (Baccarini, 1996).
 Differentiation - the number of varied elements, e.g. tasks, technologies,
resources, specialists, component.
 Interdependence or connectivity--the degree of interrelatedness between
these elements.
 Project complexity- organization, technology, task environment , resource,
information, decision making, systems etc.
 Complexity affects the project objectives of time, cost and quality. Broadly,
the higher the project complexity the greater the time and cost.
 Dealing with large complex projects is to split them up into smaller,
more manageable parts.
 Risk and uncertainty can sometimes be confused as being the same;
however, it is possible to distinguish between the two terms.

 Uncertainty can be regarded as the chance occurrence of some

event where probability distribution is genuinely not known.

 Risk is set of possible outcomes that can be predicted on the basis

of statistical probability.
Mapping project risks
 A Risk Mapping is diagram which very quickly highlights the types and degrees of
risks to which the project is exposed.
 Mapping project risks enable to see how risky the project is, which can be
compared with risk maps of alternative or completed projects.
 It also enables to see how risks are distributed through out the project
Why are Projects Risky?
 Common characteristics: Factors found in all projects which make them
inherently risky include:
 Uniqueness. Every project involves at least some elements that have not
been done before, and naturally there is uncertainty associated with these
elements.
 Assumptions and constraints. Assumptions and constraints may turn out to
be wrong, and it is also likely that some will remain hidden or undisclosed,
so they are a source of uncertainty in most projects.
 Stakeholders. These are a particular group of people who impose
requirements, expectations and objectives on the project.
 Performance/quality standards. The higher the standard of performance or
quality required in a project
 Financial risk. Large capital outlays , unbalanced cash flows
 External environment. Environmental factors which
introduce risk into projects include:
 market volatility
 competitor actions
 emergent requirements
 client organisational changes
 PESTLIED (political, economic, social, technological,
legal, international, environmental, demographic)
factors.