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Course materials chapter 5 winter 2014

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This Chapter deals with risks associated with resources

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Course materials chapter 5 winter 2014

  1. 1. UCLA Extension Risk Analysis & PM Winter 2014 POLA 1 Chapter 5 Identifying Project Resource Risk
  2. 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. 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. 4 UCLA Extension Risk Analysis & PM Winter 2014 POLA Sources of Resource Risk The major sources are:  Human Resources  Outsourcing  Money
  5. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.
  22. 22. 22 UCLA Extension Risk Analysis & PM Winter 2014 POLA End of Chapter 5

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