Incorporating Risk Management in Telecom Project by hko20175

VIEWS: 769 PAGES: 29

More Info
									    MS4801 Project Management

Week #6

    Estimating (continued), Risk Analysis &
                Schedule Control

                        Great deeds are usually
                         wrought at great risk.
                               - Herodotus, Greek historian
Macro vs. Micro Estimating
                          Macro (top-down)   Micro (bottom-up)

Strategic decision-             XX
Cost/time important                                 XX
High uncertainty                XX
Internal, small project         XX

Fixed price                                         XX
Customer wants detail                               XX

Unstable scope                  XX

                 Best approach is to do both
    Estimating Time and Costs

Macro Approaches
  1) Ratio methods – e.g., 2,700 sq ft @ $100

  2) Apportion methods – historical dependency, time/costs
     apportioned to deliverables (e.g., slide 8)

  3) Function point methods – software industry, # inputs, #
     outputs, # inquiries, # files, # interfaces

  4) Learning curves – repeated tasks weighted more heavily when
     initially completed
See learning curve tables
            $50 to manufacture ONE
              flying pig (5 pigs = $250)

            60% learning curve

            5th = .3054 x $50=$15.27

            Cost to manufacture five
              flying pigs =

               $50 x 2.71=$135.50
       Norwegian Satellite Development Company

Cost estimates for World Satellite Telephone Exchange
Project $12,000
NSDC has a contract to produce eight satellites to support a
     Materials $6,000
worldwide telephone system ( for Alaska Telecom, Inc.) that allows
     Labor 5346x$30 = $160,380
individuals to use a single, portable telephone in any location on earth
to call in and out. NSDC will develop and produced the eight units.
NSDC has estimated that the R&D costs will be $12,000. Material
costs are expected to be $6,000. They have estimated the design and
     25% PROFIT=$44,595
production of the first satellite will require 1,000 labor hours and an
     TOTAL hourscurve =ESTIMATE: $222,975 unit
      improvement x.512 expected. Skilled the 8th
80%1000 laborPROJECTis 512 labor hours for labor cost is $30 per
hour. Desired profit for all projects is 25% of total costs.
    1000 many labor hours should the eighth for 8 units
A. How labor hours for per unit x 5.346 = 5346 totalsatellite require?
B. How many labor hours for the whole project of eight
 C. What should NSCD estimate as the total cost for this project?
    Estimating Time and Costs
Micro approaches
  1) Template method – use when project is similar to
    past project
  2) Parametric procedures applied to specific tasks
    – like the macro ratio method, but applied to individual
  3) Detailed estimates for the WBS – most reliable
    method (go to example)
  4) Phase estimating – begins with macro approach
    then refines as phases of project completed (go to
            Refining estimates
Some PMs adjust project costs up by 20% because:
   Interaction costs are hidden

   “Normal conditions” are a starting point, but seldom
   Things go wrong on projects

   Changes in project scope and plans occur
                   Return to Slide 3

Apportion Method
                   Return to Slide 6

Phase Estimating
               Return to Slide 6

WBS Estimate
           Risk Assessment Process                   •Use

                                                     •Do not focus on
  Step 1:
•Risk        Risk identification                     consequences,
                                                     rather focus on
FormsStep 2: Risk assessment                         events that cause
GO TO 13                                             •Focus on whole
    Step 3: Risk response development               project rather than
•Mitigating Contingency
                          planning                  parts of the
Risk – reduce                                        project
likelihood /  Contingency funding
reduce impact                                        •Use WBS to be
    Step 4: Risk response control
•Transfer Risk                                       sure nothing is
– costs $                                           missed
              Change control management
•Share Risk
•Retain Risk
                                          Go to Response Control
GO TO 14
     Risk Assessment Form
                   MS Office 97 to XP

Go to next slide
Risk Severity Matrix

               Return to Slide 12
Risk Response Matrix
Step 4: Risk Response Control
    Alaska Fly-Fishing Expedition
   See handout
Schedule Control

   WEEK 6, Chapter 7
          Project Control Process
   The key to effective project control is to measure
    actual progress and compare it to planned progress
    on a timely and regular basis and to take necessary
    corrective action immediately.
   Establish a regular reporting period.
   During each reporting period, collect:
      data on actual performance
      information on any changes to project scope,
        schedule and budget.
   If changes are incorporated, a new plan must be

    Effects of Actual Schedule Performance
   Actual finish times (AFT) of completed activities will
    determine the earliest start and earliest finish times for
    the remaining activities.

15 days
Incorporating Project Changes
      into the Schedule
   Changes might be initiated by the customer or the
    project team, or they might be the result of an
    unanticipated occurrence.
   The degree of impact may depend on when the
    changes are requested.
   When the customer requests a change, additional
    costs might need to be charged.

    Updating the Project Schedule
   An updated project schedule can be calculated based on
    actual finish times of completed activities

     Approaches to Schedule Control
              Four Steps
1.    Analyze the schedule
2.    Decide what corrective actions should be taken,
      if any
3.    Revise the plan
4.    Recalculate the schedule

    Approaches to Schedule Control

   A change in the estimated duration of any
    activity will cause a corresponding change in
    the slack for that path.

   When a path of activities has negative slack,
    focus on:
      Activities that are near term.

      Activities that have long estimated durations.

         Reducing the Estimated
   Apply more resources.
   Assign a person with greater expertise to perform or
    help with the activity.
   Reduce the scope or requirements for an activity.
   Totally eliminate some activities.
   Increase productivity through improved methods or

    Approaches to Schedule Control
   Reducing durations of activities usually results in an
    increase in costs or a reduction in scope.

   The key is to effectively address paths with negative or
    deteriorating slack values as soon as they are identified.


To top