2. 2
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Project Resource Risk
Definition of Resource: people, equipment,
money, building, infrastructure, software,
etc. required for project execution
We all want the best skills, best
equipment, best resources for in our
projects.
Resource Risks are THIRD in
Importance/Prevalence after Scope and
Schedule
3. 3
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Desirable Resource Traits
Reliable
Efficient
On-time
Cheap
Makes Lots of Money
Best Equipment
Best Building
Highest Attention
Fastest Partners in a Relay Race
Etc.
4. 4
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Sources of Resource Risk
The major sources are:
Human Resources
Outsourcing
Money
5. 5
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Human Resource Risks
People:
Motivation – loss of team interest, cohesion
Late Start – staff not available when needed, e.g.
due to delayed finish or early start of another
project
Loss – permanent staff loss due to resignation,
death, termination, etc.
Queuing – slip due to bottleneck; waiting to use
equipment or to receive service
Temporary Loss – temporary staff loss due to
illness, hot site, Jury Duty,…
6. 6
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Outsourcing Risks
Late and/or Poor Output
Turn-over: Unhappy Employees
Requires Extensive Supervision
Delayed Start – no control over this; other
commitments;
Solution:
Service Level Agreement (SLA)
Build Penalty (liquidated damages) into Contracts
Pay more for expedited/better results
7. 7
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Money
Limited – what can this cause?
Prioritization: delay/abandon some projects
Excessive – can be mismanaged
Currency Changes –can affect budget
Funds Transfer: can be delayed
8. 8
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Resource Planning
Determine:
Resource Requirements
Types of Skills
Number of Skills
Backup
Holidays: consider these in schedules
Consider Religious Practices
Can use Histogram Analysis to plot
hours/dates of availability
9. 9
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Staff Acquisition
Before Acquiring Project Staff, Determine:
Skill Requirements – know what you need
Staff Ability
Staff Availability
Project Environment
Acquisition Circumstances; etc.
Sources of Staff:
Outsourcing: Hire from outside, from another
Division; Could be Temporary or Permanent
10. 10
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Procurement Process
Decide to Make or Buy
Know your Company’s Process and
Follow it – Procurement Department
Observe Lead Times
PMP: Plan Procurement, Conduct
Procurement, Administer Procurement,
Close Procurement
11. 11
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
List of Procurement Process Steps
(Generic: variations by City Department)
THINK OF THE RISKS INVOLVED IN EACH of
the FOLLOWING PROCESSES!
Develop Specification of Materials and/or Services
Required
Develop RFP
Get Approval for RFP
Get Approval to Publish/Advertize RFP
Advertize RFP
Hold Bidders Conference
Issue Addendums/Addenda if Needed
Receive Proposals
12. 12
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
List of Procurement Process Steps
(Generic) contd.
Evaluate Proposals
Select Vendor/s
Negotiate Contract
Recommend Award of Contract
Obtain Approval to Award Contract
Execute Contract
Manage Contract/Procurement
Close Contract/Procurement
Conduct Lessons Learned
13. 13
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Money
Cost Estimating MUST be:
Bottom-up using WBS & Historical Information
(best)
Parametric Estimation
Verify with Quotations from Contractors
and/or other realistic methods.
14. 14
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Developing a Project Budget
Start with WBS at Work Package Level
Estimate the Cost for the Work
Roll-up the Costs (add them up: WBS Aggregation)
Determine (Estimate) Other Costs:
Staffing and Outsourcing
Leases (Building, Equipment, Software)
Other Equipment, Building, Software Costs
Travel
Telephone (all forms of Communications)
Other Overhead Costs: Networking, Electricity, Water, etc.
Training
Upgrades, Promotions,
Overtime, etc.
15. 15
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Developing a Project Budget contd.
Perform Cost Budgeting: Accumulate ALL
the Cost Estimates for the Project
Review your Budget Constraint and
Determine the Risk Level
Determine the Required Contingency
Fund/Reserve
Determine Required Management
Reserve
16. 16
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Summary and Risk Situations
Know these Risk Situations:
Required Skills Lacking Committed Staff
Resource Over-commitments
All Activities with Insufficient Resources
Uncertain Activity Effort / Duration
Estimates
Uncertain Activity Cost Estimates
17. 17
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Summary and Risk Situations
contd.
Understaffed Activities
Contract Risks
Unique Resources Needs and the
Availability of the Resources
Part-time Participants (Team, workers,
stakeholders, government agencies..)
City Lead-times for Plan Checks,
Inspections, Approvals, Corrections, etc
18. 18
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Summary and Risk Situations
contd.
Long Distance Team Members
Impact of the Work Environment: Unions,
Government Laws, etc.
Budget Requirements that Exceed the
Project Budget Constraint
19. 19
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Summary and Risk Situations contd.
Outsourcing of Work
Late Funding Requests for Required
Training, Equipment Purchases, Travel,
Leases, etc.
Determine ALL Project Costs and
Resource Needs
Roll-up (Accumulate) ALL Project Costs
Determine and Include Contingency
Reserves and Management Reserves
20. 20
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Summary and Risk Situations contd.
Determine and Cost all Known Future
Changes that will affect Resources
(people and money)
Use Right Estimation Methods and
Resources: Historical Information, Expert
judgment, Rule of Thumb, WBS, the
People who will DO the work, etc.
Obtain Approval
Obtain SIGNED Budget
21. 21
UCLA Extension Risk Analysis & PM
Winter 2014 POLA
Homework Due in-class when we meet again
List 3 ways to deal with QUEUING
problem associated with Resource Usage
List 3 Reasons for Outsourcing and List 3
Disadvantages of Outsourcing
Either make a list or provide no more than
once sentence for each response.