course materials chapter 5 winter 2014

UCLA Extension Risk Analysis & PM

Winter 2014 POLA 1

Chapter 5

Identifying Project Resource

Risk

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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

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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.

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Winter 2014 POLA

Sources of Resource Risk

The major sources are:

Human Resources

Outsourcing

Money

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Winter 2014 POLA

Human Resource RisksPeople:

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,…

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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

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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

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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

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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

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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

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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

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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

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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.

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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.

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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

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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

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Winter 2014 POLA

Summary and Risk Situationscontd.

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

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Winter 2014 POLA

Summary and Risk Situationscontd.

Long Distance Team Members

Impact of the Work Environment: Unions,

Government Laws, etc.

Budget Requirements that Exceed the

Project Budget Constraint

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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

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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

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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.

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Winter 2014 POLA

End of Chapter 5

course materials chapter 5 winter 2014

Business

project staff

sources of staff

polahuman resource riskspeople

plan procurement

conduct procurement

motivation loss of team

best skills

best resources