Title: Planning & Budgeting with Risk Week 8 Discussion Question – Case study – Pleasant View Date: 20/01/2012 Case Study – Pleasant View Background Pleasant view project involves the design, erection and personalisation of individual dwellings based on land owned by Jim Staid of Staid and Son’s. This development of a Township will be called Pleasant View. Staid and Son’s has 35 years experience in the construction industry and has grown from what was once initially a 1 man firm run by Jim.
After earning a good reputation in the local residential construction market Jim brought his 2 sons on board and the company now operates with its own crews in a matrix organisational structure, with 5 functional managers and 5 project managers. The project is currently constructing its first property within the township; however the team has discovered new risks which will have an adverse effect on the project schedule.
Additionally the project is currently running behind schedule and over budget. There is also a request from the client to make changes to the layout and finishing of the rooms within the dwelling, the resources required to deliver the changes are not available from within the company, and the project sponsor has requested that the additional scope be included.
Measures and actions required to bring the project back on schedule and within budget The project team should convene a meeting which should issue tasks and areas of responsibility to each team member to be responsible for sections of the Project Plans, they should conduct a full investigation into the current status of project, and individuals should make recommendations to the team to implement appropriate risk responses and process improvements. The team have discovered new risks that they were found by accident and not planned for.
In order to ensure that there are no further surprises to be later discovered I’d recommend and full review of the Risk Management Plan to ensure identification of all risks. Furthermore the project is running behind schedule and over budget, in order to investigate and bring the project back on track the following documents and processes should be reviewed; •Risk Management plan •Activity cost estimates •Activity duration Estimates •Scope baseline •Cost baseline •Stakeholder register •Cost management plan •Schedule management plan •Project schedule •Quality management plan Human Resource plan •We should also review and reconsider; •Enterprise and environmental factors •Organisational process assets The Risk Management Plan should identify how to approach the risk management activities for this project, including how to plan and execute those management activities. Tools and techniques used to identify risks include; •Checklist analysis – lists based on information gathered •Diagramming techniques – cause and effect diagrams •information gathering such as SWOT analysis –, potential impact of risks by examining strengths, weaknesses, opportunities, threats
The additional risks should be analysed using either qualitative or quantitative techniques or both. Qualitative risk analysis; using the risk register and the risk management plan we can identify risk assumptions. The impact of the risk can be measured using tools such as Probability and Impact Matrix – where risks are rated according to probability and impact. Risk Urgency assessment – for prioritisation based on time urgent activities, Risk Categorisation – assigning risks to previously identified categories and expert judgement are all techniques which can also be used.
Further analysis may be required in the form of Quantitative analysis; this would involve more detailed methodical analysis to establish the effect of the probability in the form of data analysing and modelling techniques such as EMV – Expected Monetary value analysis to calculate the expected value of the outcome when different possibilities exist, Decision Tree analysis – to assist with choosing different options this can be used in conjunction with EMV, and modelling and simulation -uses predetermined rules to predict an output, expert judgement is also used.
We must then plan our responses to these risks, remembering that our risk responses must be Appropriate, Agreed, Realistic, Cost effective and Owned. Strategies for responding to risk include Avoidance, Mitigation and Transfer, whilst not all risks are negative we must take advantage of any opportunities which present themselves so we can Share, Enhance or Exploit them. We must update the risk register to include all newly identified risks, their responses, symptoms or warning signs, fall back plans, and any scheduling or budget planning required as a result.
The project management plan will now need to be updated to reflect any changes in the schedule, costing estimates, procurement and contract management plans, any changes identified with quality or tolerances should be updated in the quality management plan, and cost management plans should be updated to reflect the changes. Additional resource as a result of any risk mitigation will need to be reflected in the resource management plan as well as the cost management plan. Changes may also need to be reflected in the WBS and schedule and cost baseline.
If changes have affected assumptions this may lead to a change in the scope statement or assumptions log. Finally all changes should be communicated through an updated communications plan. Steps should be taken to ensure that the risks are monitored and controlled, through regular reassessment and audit, and that any new risks are identified and attended to. Reporting and measurement techniques such as Variance and trend analysis – analysing performance data to detect new risks, and reserve analysis – to compare the remaining reserve to the remaining risks determining whether the remaining reserve is adequate.
We must also establish effective performance reporting processes, status reports, progress reports and forecasts can all be used to monitor performance and are an early indicator if the project is not performing to plan. In order to manage the perceived cost increases and schedule slippage we will need to perform schedule and cost analysis. To understand the schedule delays we will measure the variance in the schedule against that which was planned. Variance analysis will identify the deviation of the actual start and finish dates of activities from that planned.
We will use this information to determine if any of the activities delayed are on the critical path to establish if schedule changes are required. Cost analysis using earned value management techniques will be used to measure cost baseline against cost of work scheduled, and the actual cost for work completed, from this we can forecast the cost of the remaining work still to be completed and determine if the reserve would be sufficient, or if additional resources would be required.
Change requests should be managed and monitored through the integrated change control process. Change requests should be initiated in a formal manner using the method and template established it the project plan. Expectations of the change request should be managed and not taken as agreed, the change request will have to be formerly accepted and approved. The written change request will be considered by the project management team and analysed to consider the impact on the project schedule, and cost, identifying any additional risks brought about by the change.
The additional resources required to fulfil the changes to the project scope will not be available in house, as a result of which we will contact procurement to initiate the procurement process to establish a supplier and obtain quotations to complete the work to scope. Once identified, we will request contracts department to negotiate the contract with the supplier to sub-contract the work, ensuring that any risks either financial or reputational are identified, and either mitigated or transferred.