Project Planning and Project

Risk

Yidersal D (PhD)
Project risk:
 An event that, if it occurs, causes either a
positive or negative impact on a project 
 Keys attributes of Risk
Uncertainty
Positive and Negative
Cause and Consequence

Yidersal D (PhD)
• PMBOK ® Definition
– “The systematic process of identifying, analyzing,
and responding to project risk”
• Steps
– Risk Management Planning
– Risk Identification
– Qualitative/Quantitative Risk Analysis
– Risk Response Planning
– Risk Monitoring & Control
Yidersal D (PhD)
 Value From Managing Risks
 Opportunity to move from “fire-fighting” to
proactive decision making on the project.
 Better chance of project success.
 Improved project schedule and cost
performance.
 Stakeholders and team members better
understand the nature of the project.
 Helps define the strengths and weaknesses of
the project.

Yidersal D (PhD)
 Why Not Risk Management?
 With so much benefit to managing risk, why is
it often overlooked? :
1. The organization is too busy with real problems to
worry about potential ones,
2. There is a perception that there is not too much
that can go wrong, or
3. They have a fatalistic belief that not much can be
done about risks, or
4. “Shoot the messenger” mentality; fear that
disclosure of project risks will be seen as an
indication of project weakness.
Yidersal D (PhD)
 Risk Management Planning
• Plan for the Planning
• Risk planning should be appropriate for the project
• Questions you should ask:
– How risky is the project?
– Is it a new technology or something your organization
is familiar with?
– Do you have past projects for reference?
– What is the visibility of the project?
– How big is the project? 6. How important is the
project?

Yidersal D (PhD)
 The Risk Management Plan
• What should it include?
– How you will identify, quantify or qualify risk
– Methods and tools
– Budget
– Who is doing what
– How often
– Risk categories, levels, and thresholds for action.
– Reporting requirements
– Monitoring, tracking and documenting strategies

Yidersal D (PhD)
 Identifying Risk
 Identify project, product and business risks;
 Continuous, Iterative Process
 What is it and what does it look like
 The sooner the better
 The more the merrier
 A fact is not a risk (it’s an issue).
 Be specific
 Don’t try to do everything at once

Yidersal D (PhD)
 Identification Techniques
• Brainstorming
• Checklists
• Interviewing
• SWOT Analysis (strengths, weaknesses
opportunities, threats)
• Delphi Technique (anonymous consensus building)
• Diagramming Techniques
– Cause & effect
– Flow Charts
– Influence Diagrams
Yidersal D (PhD)
Risks and Risk Types

Yidersal D (PhD)
Risks and Risk Types

Yidersal D (PhD)
 Risk Analysis
 Assess probability, seriousness, consequences
and urgency of each risk.
 Probability may be very low, low, moderate,
high or very high.
 Risk effects might be catastrophic, serious,
tolerable or insignificant.
 Urgency might be immediate, short term, or
long term

Yidersal D (PhD)
 Analyzing Risk - Qualitative
 Subjective
 Educated Guess
 High, Medium, Low
 Red, Yellow, Green
 1-10
 Prioritized/Ranked list of ALL identified risks
 First step in risk analysis

Yidersal D (PhD)
 Risk Analysis - Quantitative
 Numerical/Statistical Analysis
 Determines probability of occurrence and
consequences of risks
 Should be focused to highest risks as
determined by Qualitative Risk Analysis and
Risk Threshold

Yidersal D (PhD)
Risk Analysis

Yidersal D (PhD)
Risk Analysis

Yidersal D (PhD)
Probability and Impact Analysis
Risk Probability Impact Expected Value

1 25% 45,000.00 11,250.00

2 50% 2,000.00 1,000.00

3 30% 100,000.00 30,000.00

Yidersal D (PhD)
 Risk Response Planning
• Draw up plans to avoid or minimize the effects
of the risk;
• Techniques/Strategies:
– Avoidance – Eliminate it
– Transference – Pawn it off
– Mitigation – Reduce probability or impact of it
– Acceptance – Do nothing
• Strategy should be commensurate with risk
– Hint: Don’t spend more money preventing the risk
than the impact of the risk would be if it occurs
• The Risk Response Plan/Risk Response Register
Yidersal D (PhD)
Risk Management Strategies

Yidersal D (PhD)
Risk Management Strategies

Yidersal D (PhD)
 Risk Monitoring and Control
 Monitor the risks throughout the project;
 Assess each identified risk regularly to decide
whether or not it is becoming less or more
probable.
 Also assess whether the effects of the risk have
changed.
 Each key risk should be discussed at
management progress meetings

Yidersal D (PhD)
 Risk Monitoring and Control
• Continuous, Iterative Process
• Done right the risk impact will be minimized:
– Someone IS responsible
– Watch for risk triggers
– Communicate…
– Take corrective action - Execute
– Re-evaluate and look for new risk constantly
• Tools:
– Risk Reviews
– Risk Audits
Yidersal D (PhD)
Risk Indicators

Yidersal D (PhD)
 Project Implementation Planning &
Scheduling
 Project implementation phase embraces the period
from the decision to invest to the start of commercial
production.
 Deviations from the original plans and budgets could
easily jeopardize the entire project.
 Need to determine the technical and financial
implications of the various stages of project
implementation.
 Implementation plan will be the basis for monitoring
and controlling the actual project implementation
Yidersal D (PhD)
Project Implementation Planning & Scheduling

 The implementation schedule must present the

costs of project implementation as well as the
schedule for the complete cash outflows & inflows
of funds
 To implement a project means to execute all the on-
and off-site work tasks necessary to bring a project
from the feasibility study stage to its operational
stage
 A realistic schedule should be drawn up for the
various stages of the project implementation phase.
Yidersal D (PhD)
Project Implementation Planning & Scheduling

 A well-designed project implementation

schedule clarifies and describes what the project
should deliver and within what time frames.
 How to create a time-related framework that
helps project planners to deal with the “on time”
part of the project objectives
 What needs to be outlined to produce
deliverables and achieve goals on schedule,
within budget and according to expectations.

Yidersal D (PhD)
 Project Implementation Planning &
Scheduling
• Project implementation planning is intended
– to draw attention to the planner the financial
implications,
– the project scheduling and
– to the possibilities of the early detection of
implementation delays and their financial
consequences

Yidersal D (PhD)
 Project Implementation Planning &
Scheduling
• Implementation planning and scheduling
include:
– Determination of the type of works
– Determination of the logical sequences of events in
the work task.
– Preparation of a time phased implementation
schedule, positioning all the work tasks correctly in
time.
– Determination of the resources needed
– Documentation of all implemented data
Yidersal D (PhD)
 Project Implementation Planning &
Scheduling
• The following methods may be used
– Gantt chart
– Critical Path Method (CPM) or Net work analysis
– Project Evaluation and Review Techniques (PERT)
– Simple formats

Yidersal D (PhD)
Project Implementation Planning & Scheduling
• The main stages are:
– Appointment of implementation team
– Company formation & legal requirements
– Financial planning
– Organizational build-up
– Technology acquisition and transfer
– Detailed engineering and contracting
– Negotiation and award of contract
– Purchase of material and supplies
– Production marketing
– Start up and initial production
Yidersal D (PhD)
 Project Implementation Plan includes

• Project implementation schedule

– What activities can produce expected project outputs?
– What is the sequence of these activities?
– What is the time frames for these activities?
– Who will be responsible for carrying out each activity?
• The role of the implementing agency
– Specific responsibilities of the key staff during the project
implementation and monitoring are outlined.
• Beneficiary participation
– Involvement of the beneficiaries in planning and
implementation and what is expected is spelt out.
Yidersal D (PhD)
 Project Implementation Plan includes
• Organizational structure and staffing consider the following:
– project structure for purposes of management
– qualifications and skills for the staff
– job descriptions and specifications for the staff
– technical assistance if needed
• Financial management looks at:
– funds management, accounting period, financial reports &
statements
• Reporting system
– Who will report?
– Whom to report?
– When to report?
– Standard design and reporting format is needed
Yidersal D (PhD)
 Project Implementation Plan includes
• Sustainability
– Project should be sustained beyond the life of funding –
especially if it is a grant.
– Project should not exhaust the available resources like raw
materials and labor.
• Time control and remedial action
– Supervisors must be particular in:
• Time control measures
• Time scheduling
• Time extension and postponement
• Damages for non-completion
• Defect or warranty period
Yidersal D (PhD)
 Project Implementation Plan includes
• Project implementation schedule and
Supervision
– This includes set of checks and balances to ensure
that the time schedule is being adhered to.

Yidersal D (PhD)
 Project Implementation Schedule
• Effective and balanced timing of the delivery of various input
requirements must be established by accurate project
scheduling.
• Various methods of analysis and scheduling are available. The
most simple and popular method involves the bar or Gantt
chart,
• 3 steps:
– The planner determines the logical sequence of events
– The planner will analyze how specific tasks are to be undertaken –
subtasks
– Establish the implementation schedule showing the proposed start
& duration of project implementation and the correct positioning
and duration of all activities and tasks
Yidersal D (PhD)
 Project Implementation Plan includes
• The description of each task should include:
– The work to be done
– The resources needed
– The time it takes to complete the task
– The responsibility for the task
– Information inputs required for the task
– Results to be produced
– The deliverables set being archived within each project
phase
– Interrelationship with other activities
Yidersal D (PhD)
 Project Planning
• A project can be broken down into a number of
subsidiary tasks.
• A number of project management tools exist to
allow the scheduling and resourcing of each of
these tasks.
• One activity that is central to all of this is Project
planning.
• Plan is a scheme or method worked out
beforehand for the accomplishment of an
objective.
Yidersal D (PhD)
 Project Planning
• A proposed or tentative project or course of action,
systematic arrangement of elements or important
parts, a configuration or outline is said to be plan.
• The term planning implies the working out of sub-
components in some degree of detail and the
planned use of all resources.
• A project plan can be as simple as a list of tasks
that need to be carried out or it can be a complex
document involving a number of charts, tables,
costing, etc.
Yidersal D (PhD)
 Project Planning
• The plan is the detail of how the project will be
accomplished.
– The first stage of planning a project is to define the
objectives and goals of the project understanding the
needs of the project and defining clear, measurable
objectives.
• Project planning is a project management tool
that displays the project tasks and the time
resources of each task.

Yidersal D (PhD)
 Project Planning
• Prior to the 1950s, projects were managed on an
ad hoc basis using mostly Gantt Charts, and
informal techniques and tools.
• At that time, two Network Diagram models:
– "Critical Path Method" (CPM) and
– “Program Evaluation and Review Technique" PERT,
were developed.

Yidersal D (PhD)
 Gantt or Bar Chart
• Gantt chart is a scheduling technique used for
simple projects.
• It is a visual project planning device that spreads
future time horizontally and the activities to be
performed vertically.
• Since 1917; Useful for showing work Vs time in
form of bar charts
• Even though a lot of info, easy to read and ,
understand to monitor and follow progress, it is
not very good for logical constraints
Yidersal D (PhD)
Gantt or Bar Chart

Yidersal D (PhD)
 Network Techniques
 These are more sophisticated than the
traditional bar charts.
 In these techniques, the activities, events and
their interrelationships are presented by a
network diagram also called arrow diagram.
 The two common types are:
• Critical Path Method (CPM)
• Program Evaluation and Review Technique
(PERT)

Yidersal D (PhD)
 Network Techniques
• Critical path method (CPM)
– CPM is used where the project term regards the time
estimates for task completion as being very sound.
– Activity-on-node network construction
– Repetitive nature of jobs

Yidersal D (PhD)
 Network Techniques
• Program evaluation and Review Technique
(PERT)
– PERT makes an attempt to apply rational scheduling
techniques to complex project.
– Multiple task time estimates (pessimistic, most
likely and optimistic
– Activity-on-arrow network construction
– Non-repetitive jobs (R & D work)

Yidersal D (PhD)
• History
– Developed in 1950’s
– CPM by DuPont for chemical plants
– PERT by U.S. Navy for Polaris missile

Yidersal D (PhD)
• CPM was developed by Du Pont and the
emphasis was on the trade-off between the
cost of the project and its overall completion
time (e.g. for certain activities it may be
possible to decrease their completion times
by spending more money - how does this
affect the overall completion time of the
project?)

Yidersal D (PhD)
• PERT was developed by the US Navy for the
planning and control of the Polaris missile
program and the emphasis was on completing
the program in the shortest possible time. In
addition PERT had the ability to cope with
uncertain activity completion times.

Yidersal D (PhD)
• CPM calculation
– Path
• A connected sequence of activities leading from the
starting event to the ending event
– Critical Path
• The longest path (time); determines the project duration
– Critical Activities
• All of the activities that make up the critical path

Yidersal D (PhD)
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