Day 2 Revision

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1. Quality Management

4Quality vs Grade

Let's say you develop a cell phone which has a 6 Mega Pixel video camera, MP3 Player and Web Browser supporting 10 different applications. We will say grading of this phone is very high. Now, when we buy it and start using it, we find out that video camera is not taking clear pictures, voice quality is very low and web browser gets frozen after every few minutes because of application error. Now, we will say that the quality of cell phone is very low.

On the other hand if you have a cell phone which only supports voice communication and no additional features are available in it, we will call it a low grade phone. However, when you use it you do not face any voice drop or other issue. So, it will be ranked as high quality phone with low grading.

5BenchmarkingBenchmarking is the process of comparing one's business processes and performance metrics to industry best practices from other companies. Dimensions typically measured are quality, time and cost. In the process of best practice benchmarking, management identifies the best firms in their industry, or in another industry where similar processes exist, and compares the results and processes of those studied (the "targets") to one's own results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain why these firms are successful.

Benchmarking is used to measure performance using a specific indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others.

Also referred to as "best practice benchmarking" or "process benchmarking", this process is used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice companies' processes, usually within a peer group defined for the purposes of comparison. This then allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to improve their practices.

6Process of Benchmarking

7Cost of QualityThe "cost of quality" isn't the price of creating a quality product or service. It's the cost of NOT creating a quality product or service.

Every time work is redone, the cost of quality increases. Obvious examples include: The reworking of a manufactured item. The retesting of an assembly. The rebuilding of a tool. The correction of a bank statement. The reworking of a service

In short, any cost that would not have been expended if quality were perfect contributes to the cost of quality.

8Cost of Conformance & Non-conformance

9Cost of Poor Quality

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2. Human Resource Management

11Maslow’s Hierarchy of Needs

Madeline always feels like she is never included in group activities or social events. She has become depressed and lonely. According to Maslow, which category of needs has not been fulfilled?

Answer: Love/Belonging

12Herzberg’s Theory of Motivation

Jack’s company has a good working environment with a stable job security and plentiful staff benefits. However, he is still not motivated to work as his job is very monotonous. What should Jack’s manager do to increase Jack’s motivation?

Answer: Provide more challenging or stimulating work for Jack

13McGregor’s Theory X and Y

Kitara is an excellent team manager in the company. However, she cannot seem to understand why some workers do not show any interest in working and they tend to require a lot of guidance in in the working environment. Based on McGregor’s Theory X and Y, how can Kitara motivate that group of workers?

Answer: Introduce performance based incentive system and have them specialize their work on repetitive tasks

14Ouchi’s Theory Z

William Ouchi's theory is based on the participative management style of the Japanese. This theory states that workers are motivated by a sense of commitment, opportunity, and advancement. If a manager wishes to have highest loyalty and productivity level from the staff members, what should the manager introduce or implement?

Answer: Enhance people skills, assisting staff members in work life balance, simulating change and improve ethical behaviour

15Expectancy Theory

What are the 3 key motivational forces should a manager focus on to drive an employee towards achieving top performance.

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3. Communications Management

17Communications Channels

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4. Risk Management

19Cost of RiskCost of Risk (COR) is “the cost of actual losses sustained, administrative costs of the risk management program, costs of funding losses, cost of risk control efforts and other outside service costs

Four Major COR Components

Total cost of losses sustained Administrative costs of your risk management program Cost of funding losses Cost of risk control efforts

For example, lets assume that a project has a risk of schedule delay and the total cost of project members salary per man-day is $100,000. What is the Total Cost of Risk if the project was delayed for 10 days due to the trigger of an risk that requires additional funds up to $50,000 to resolve?

Total Cost of Risk = Administrative Cost + Cost of risk control efforts = (10 days * $100,000) + $50,000

= $1,050,000

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5. Procurement Management

21Contract TypeContract Type Question Answer Rationale

Fixed Price

The contract has the following characteristics:Target Cost: $130,000

How much profit would the seller gain, if the Actual Cost is $150,000?

-$20,000

Profit to Seller= Target Cost – Actual Cost= $130,000 - $150,000= -$20,000

Fixed Price Incentive Fee

The contract has the following characteristics:Target Cost: $130,000Target Fee: $15,000Share Ratio: 80/20 (Buyer/Seller)

How much profit would the seller gain, if the Actual Cost is $150,000?

$11,000

Profit to Seller= ((Target Cost – Actual Cost) * Seller Ratio) + Target Fee= (($130,000 - $150,000) * 20%) + $15,000= $11,000

22Contract TypeContract Type Question Answer Rationale

Cost Plus Fixed Fee

The contract has the following characteristics:Estimated Cost: $120,000Predetermined Fee: $15,000

How much will the seller be reimbursed if the Actual Cost is $95,000?

$110,000

Final Reimbursed Price = Actual Cost + Predetermined Fee= $95,000 + $15,000= $110,000

Cost Plus Percentage of Cost

The contract has the following characteristics:Estimated Cost: $120,000Agreed Profit: 20%

How much will the seller be reimbursed if the Actual Cost is $95,000?

$143,000Final Reimbursed Price = Actual Cost + Percentage of Actual Cost= $130,000 + (20% * $130,000)= $143,000

Cost Plus Incentive Fee

The contract has the following characteristics:Estimated Cost: $150,000Predetermined Fee: $15,000Share Ratio: 80/20 (Buyer/Seller)

How much profit would the seller gain, if the Actual Cost is $130,000?

$19,000

Profit to Seller= Predetermined Fee + (Share Ratio of Seller * Cost Savings)= $15,000 + (20% * $20,000)= $19,000

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6. Stakeholder Management

24Stakeholder EngagementThe Stakeholder Power/Interest Grid provides an analysis of the relation of stakeholder’s power and interest towards the project. Their awareness and involvement could be recorded into the Stakeholder Engagement Assessment Matrix which is further divided into Current (C) engagement level and the Desired (D) engagement level.

25Stakeholder EngagementCurrent

Engagement LevelDesired

Engagement Level Strategies Rationale

Unaware Supportive Push Communications

One-way engagement. Organisation may broadcast information to all stakeholders or target particular stakeholder groups using various channels e.g. email, letter, webcasts, podcasts, videos, leaflets.

Resistant Supportive Education Communicate progress updates to stakeholder. Introduce consequences if project fails to deliver.

Neutral Supportive ConsultationKept involved with updates. Limited two-way engagement: organisation asks questions, stakeholders answer.

Supportive Leading ParticipationPart of the team, engaged in delivering tasks or with responsibility for a particular area/activity. Two-way engagement within limits of responsibility.

Leading Leading PartnershipShared accountability and responsibility. Two-way engagement joint learning, decision making and actions

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