Business & CommercialAwareness 6BUS0279

Lecture 11: Project and Risk Managementj.a.g.willard@herts.ac.uk3BUS0279

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Learning OutcomesTo understand the role and importance of project management in business activityTo be able to use basic project management techniques in business situationsTo understand the importance of risk assessment and action planning in business venturesTo be able to use basic risk techniques*3BUS0279

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Project and Risk Managementtheir roles in business ventures*3BUS0279

Project ManagementAn investment in a new product is a one-off, goal focussed activity ie: a projectDiverse resources: money, people, offices and factories, equipment, IT, stakeholdersRequirement for:ControlCoordinationMonitoring of progressCorrective action in the event of change or unforeseen eventsReporting on progress to ownersFormal PM techniques allow tried and tested, professional skills to be used to ensure the optimum delivery

Risk ManagementMost business activity involves uncertaintyBusiness environments changeProduct requirements changeResources change (especially people)Many uncertainties can be accommodated as part of daily routineSome are potentially serious or project threatening and need managementIt is better to manage proactively than after the risk event has happenedRisk management techniques allow effective & professional control of risk

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Projects: characteristics3BUS0279*goal and purposeuniquenessinter-dependencieslife-cycle(start and end)conflictsingle point of responsibilityminimum scalebut no maximum Based on Meredith and Mantel 2000

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3BUS0279*PROJECT MANAGERcommunicationteam buildinghandling changeleadershiporganisationproblem solvingskillsself motivationsense of humourself esteemdecisivenessdelegationtoughnesstraitssingle point of responsibility

Do we need a professional PM?YESNOLarge scale projectMany stakeholdersDiverse departmentsHigh risks/uncertaintyConflict within companySmall scale projectSingle departmentRepeated projectRequires detailed:Company knowledgePeople knowledge

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Basic PM techniques3BUS0279*Stakeholder Analysis *RiskAssessment* We have already looked at this in an earlier lecture

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moneytimequalityUnbalance

By reducing money the time and/or the quality must be stretchedThe Balanced Triangleessential to keep in mind when change happens3BUS0279*moneytimequalityIDEAL or TARGET balance

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Gantt Charts - basic3BUS0279*A simple bar chart:Activities listed down the sideHorizontal bars indicating the duration of the activity (in days here)The start and end points required to hit deadline are seen from the bars

Student Group X: Investment Case AssignmentDay12345678910111213TaskRead briefDiscussAllocate tasksResearchGenerate ideasEvaluate ideasWrite reportHand in report

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Gantt Charts - progress3BUS0279*For each activity a bar running parallel to the activity bar shows progressLength of bar shows when activity started and stoppedA vertical line shows where we currently are

Student Group X: Investment Case AssignmentDay12345678910111213TaskRead briefDiscussAllocate tasksResearchGenerate ideasEvaluate ideasWrite reportHand in report

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Gantt Charts - dependencies3BUS0279*Arrows at the start and end of each activity show:Which activities must end before that activity can startWhich activities are dependent on that activity before they can start

for clarity, not all the dependencies are shown

Student Group X: Investment Case AssignmentDay12345678910111213TaskRead briefDiscussAllocate tasksResearchGenerate ideasEvaluate ideasWrite reportHand in report

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Gantt Charts critical path3BUS0279*There are always activities which are linked one to another And which represent the quickest route through the project Delay to any one of these will delay the whole project These activities are collectively called The Critical PathProject Managers are obsessed with ensuring these start and finish on time

Student Group X: Investment Case AssignmentDay12345678910111213TaskRead briefDiscussAllocate tasksResearchGenerate ideasEvaluate ideasWrite reportHand in report

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Gantt charts - commentary3BUS0279*Many extended featuresEarliest and latest startsEarliest and latest finishesSpare time before starts (slack)Resource levels required . . .and used so farIt can get very complicatedSpecialist software existsUse Microsoft Project

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Pareto analysis: the 80/20 rule3BUS0279*TYPICALLY80% of the results can be generated by 20% of the effort80% of the symptoms of a problem are caused by 20% of the causesThe law of diminishing returns it is not worth chasing those last few %20%effortresults80%Customers will not pay for total perfection

Businesses cannot afford to provide total perfection

Businesses must determine what is required to satisfy and deliver only what is required . . . . it is called sufficing

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Pareto analysis: example3BUS0279*

Customer wantsCustomers wanting this featureCost to provideRain sensing wipers65%150Steerable headlights30%200Folding mirrors25%150Heated seats35%400Parking sensors50%200Electric sunroof30%350Rear seat DVD player15%350Cruise control55%250

All 8 will cost over 2000 and make the product unmarketableWhat do we include?

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Pareto analysis: method3BUS0279*

Customer wantsCustomers wanting this featureCost to provideCumulative demandPareto %Rain sensing wipers65%15065%21%Cruise control55%250120%39%Parking sensors50%200170%56%Heated seats35%400205%67%Steerable headlights30%200235%77%Electric sunroof30%350265%87%Folding mirrors25%150290%95%Rear seat DVD15%350305%100%

(A) Rank the features in descending order of popularity(B) Calculate cumulative demand(C) Represent this out of 100%(D) Plot a column chart of the Pareto % and provide those features up to 80%

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Pareto: results3BUS0279*Conclusion: provide everything below the 80% cumulative line (* items) . . . . but remember the 80/20 rule is only a guideline . . . . so think about each situation and use your judgment

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Chart1

0.21

0.393442623

0.5573770492

0.6721311475

0.7704918033

0.868852459

0.9508196721

1

Series 1

Sheet1

Series 1

* Rain sensing wipers21%$150

* Cruise control39%$250

* Parking sensors56%$200

* Heated seats67%$400

* Steerable headlights77%$200

Electric sunroof87%$350

Folding mirrors95%$150

Rear seat DVD100%$350

To resize chart data range, drag lower right corner of range.

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Risk identification3BUS0279*

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Risk evaluation3BUS0279*Assess each of the brainstormed risks against 3 criteriaMultiply scores (scored out of 10)Highest scores = priority risks

RiskMagnitude1 = low10 = highLikelihood1 = unlikely10 = likelyForeseeability1 = see it coming10 = out of the blueTotal Scoremultiply all 3Rank1 = worst1. Computer crashyou lose all work102918012. Deadline brought forward 2 weeks91109033. Illness82914424. Other module coursework due on the same day452404

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Risk mitigation and monitoring3BUS0279*

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3BUS0279*In this lecture we have learned:Why project management and risk management both need to be managed on investment projectsThe characteristics that are common to all projectsThe role, skills and personal characteristics required from PMs and. . . . whether a professional PM is requiredAbout 4 key techniques commonly used in project managementThe Balanced TriangleGantt chartsStakeholder analysisPareto analysisHow to identify and manage major risks that can kill your project

Summary

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