Professional Documents
Culture Documents
RISK
Purpose of Control
Control Process
Cost/Schedule/Technical Control
Introduction to Earned Value
1
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
2
A Question of Balance
Too little control?
Too much control?
C
Control
C
Mistakes
Amount of Control
3
What Forms do these “Standards”
Take?
Cost
Schedule
Performance
4
A Control Example
You’retwo months into a three
month project. You’ve spent 90%
of your budget.
Defend yourself.
5
Three Important Terms
BCWS: The plan, integrating schedule
and budget
6
More Terms
BAC: Original budget at completion
7
Four Relationships
Cost Variance = BCWP - ACWP
Schedule Variance = BCWP - BCWS
ECAC = ACWP X BAC
BCWP
ETAC = BCWS X TAC
BCWP
8
Changes and Change Control
Thelast step of the control
process: FIX
9
Business Changes (aka CCPs)
Business related
Driven by such things as:
Spec relief
Deliverables changes
Funding shifts
Schedule changes
Acts of God
Subcontractor changes
10
Technical Changes (aka ECPs)
Technological issues, such as:
New technologies
Laws of physics
Competitor response
Threat changes
Changes in user requirements (real
or political)
11
Change Control
Changes cost $, usually big $
So they need control
PM responsibility
Signed baselines
High levels of authority
Some tools:
Zero sum/DTC/caps
12
PROJECT RISK MANAGEMENT
Risk defined
A brief history
Types of project risk
The PMBOK sequence
Tools
13
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)
Bothmatter
Examples
14
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
15
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
16
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.”
17
TYPES OF PROJECT RISK
People
Time
Political Financial
Technical
19
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
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