Project Management in Practice

Fifth Edition

Chapter 3

Project Activity and Risk

Planning

Copyright © 2014 John Wiley & Sons, Inc.

 Introduction
• Good planning is not a guarantee for the
project success.
• Poor planning is a guarantee for the project
failure.
• Planning is a good thing for the human life,
and not only for the projects.

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 The Basis of a Project Plan
the “Project Charter”
• The primary function of a project plan is to serve the PM as
a map of the route from project start to finish.
• Should include the business case of the project
(organization’s expected financial benefits) and strategic
reasons for the project.
• Should contain sufficient information that, at any time, the
PM knows what remains to be done, when, with what
resources, by whom, when the task will be completed, and
what deliverables the output should include.
• Also needs the project’s history to date
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 Categories of Elements Required in
the Project Charter
1. Overview.
2. Objectives.
3. General approach.
4. Contractual aspects.
5. Schedules.
6. Resource requirements
7. Personnel
8. Risk management
9. Evaluation methods
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 Overview
• Brief description of the project.
• Deliverables or Project Scope.
• List of the major milestones or significant events in the
project schedule and any constraints on the project scope.
• Business case for the project
– Strategic reasons for the project
– Expected profitability
– Competitive effects
• Intent is to communicate to stakeholders and the project
team members, the reasons for the project

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 Objectives
• Another name is project mission statement
• More detailed description of the…
– Scope
– Deliverables
– Outcomes
• Communicate to project team members
what will be done to achieve the overall
project objectives.

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 General Approach
• The technological and managerial
approaches to the work are described.
• The relationship between the underlying
project and the other projects.
• The organization’s standard management
practices.

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 Contractual Aspects
• Contains a complete description of all
agreements made with the client or any third
party.
• Includes all reporting requirements; the
technical specifications of all deliverables,
agreements on delivery dates, penalties, and
others.

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 Schedule
• Summary of schedules and milestones.
• Work breakdown structure (WBS)
• The tasks, and the time to complete each
task.

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 Resource Requirements
• Estimates of project expenses.
– Capital and operating.
• Costs associated with each task.
• Overhead and fixed charges.
• Project budget.
• Cost monitoring and cost control procedures.
• Details of materiel acquisition.
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 Personnel
• Stakeholders, sponsor, project manager, and
some team members.
• Special skill requirements.
• Necessary training.
• RACI matrix.

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 Risk Management
• Listing of potential disasters
– Major and minor
– Late subcontractor deliveries, bad weather,
unreasonable deadlines, equipment failure,
changes in project scope
• Contingency plans are described
– Does not stop disasters
– Softens the impact
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 Evaluation Methods
• Evaluation procedures and quality standards
• Procedures for monitoring, collecting, and
storing data on project performance
• May contain the RACI matrix instead of the
personnel section.

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 The Planning Process-Overview
(for Software Projects)
1. Develop and evaluate the concept of the project.
2. Carefully identify what project deliverables must
have to be successful and design a system.
3. Create a system (build a prototype).
4. Test the prototype with recursion of step 3.
5. Integrate the deliverable into target system.
6. Validate the deliverable.
7. Let client test it. If the client accepts and can
operate, then continue.
8. Make sure client understands operating and
maintenance requirements
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 The Planning Process
• Once approved, project should have a launch meeting.
• Project manager should review project objectives, to make
sure:
• He understands the expectations that the organization, the
client, and other stakeholders have for the project.
• Identify who have a major interest in the project (project
stakeholders including the senior manager(s) who is part of this
project).
• Determine if anything about the project is atypical.
• The PM may chair the launch meeting, but the senior
manager introduces the project to the group, and discusses
its contributions to the parent organization
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 Results of the Launch Meeting
1. The project’s scope is understood.
2. Various functional managers understand their
responsibilities and have committed to
develop an initial task and resource plan.
3. Any potential benefits to the organization
outside the scope are noted.

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 Sorting Out the Project-The Work
Breakdown Structure (WBS)
• Inadequate up-front planning is a primary
contributor to the failure of a project.
• A primary purpose of the WBS is to ensure
that no task is overlooked.
• Every task, no matter how small, should be
listed
– Along with material and human resources.
• This is a non-trivial task

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Extensions of the Everyday WBS
• WBS generally oriented towards deliverables.
• Can be reshaped with some additional data often
not included in the WBS.
1. Estimates of resources for each task
2. Estimates of the time for each task
3. Who has responsibility for each task
4. Sequence information for each task
• Increase its orientation toward planning and
administration.

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A Modified WBS for Improving
Staff Orientation

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 RACI Matrix
• RACI Matrix is a table
• Project tasks derived from the WBS listed in rows
and departments and individuals in the columns
• Helps organize the project team
• Foreach row in the RACI matrix, at least one “A”
and one “R” should be there.
• Mind Map is maybe considered as a preparatory
step for the WBS and RACI.

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The RACI Matrix

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 Risk Management
1. Risk identification
2. Risk analysis
3. Response to risk

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 Breakdown into Sub-processes
1. Risk management planning
2. Risk identification
3. Qualitative risk analysis
4. Quantitative risk analysis
5. Risk response planning
6. Risk monitoring and control

Slide on each
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 Risk Management Planning
• Like any other planning process
• Must ensure that the necessary resources
can be applied in a timely manner
• It is a continuous process
• The factors that cause uncertainty change
over time

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 Risk Identification and Qualitative
Risk Analysis
• Risk identification and analysis often carried out together
• Failure mode and effect analysis (FMEA)
1. List ways project might fail
2. List consequences and evaluate its severity
3. List cause and likelihood
4. Estimate the ability to detect each failure
5. Calculate the risk priority number
6. Sort the potential failures by their risk priority number

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 Quantitative Risk Analysis
• State outcomes as probability distribution and use
distributions to evaluate the desirability of certain
decisions
• Objective is to illustrate the risk profile of the
outcomes
• Risk profiles are one factor to consider in making
the decision
• Techniques for analysis include:
– Expected value
– Simulation

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 Risk Response Planning
• Deciding on which risks to prepare for and which
to ignore
• Main preparation is a risk response plan
• Risk response plan includes contingency plans and
logic charts detailing what to do
– Contingency plan is a backup for some emergency or
unplanned event (“plan B”)
– Logic chart shows the flow of activities once a backup
plan is initiated

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 Risk Monitoring and Control
• Monitoring and control are tasks for the
parent organization
– As well as the project
• Must keep records for future projects
• Also must continue to search for new risks

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