Project Mgnt

8/9/2019 Project Mgnt

1/17

Slide 2.1

Projject ManagementChandana Unnithan

MSC756Project Management

Topic 5

P l a nni n

g

Slide 2.2


The Line Manager(s) ?The Project Manager ?

Both Parties ?

* Who plans the project?* Who executes the project?* Who is responsible for monitoring work and

controlling work?* Who is responsible for providing feedback

regarding the planning and execution phases of a project?

Planning Questions Often Asked

Slide 2.3


Project Managers Responsibility

Project Manager will define: Goals and objectives Major milestones Requirements Ground rules and assumptions

Time, cost, and performance constraints Operating procedures Administrative policy Reporting requirements

Slide 2.4


Line Managers Responsibility

Line manager will define: Detailed task descriptions to implement

objectives, requirements, and milestones Detailed schedules and manpower

allocations to support budget and schedule

Identification of areas of risk, uncertainty,and conflict

Slide 2.5


Senior Managements Responsibility

Senior management (project sponsor) will: Act as the negotiator for disagreements

between project and line management Provide clarification of critical issues Provide communication link with

customers senior management

Slide 2.6


Planning/Scheduling Tools

What to do?


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Slide 2.7


Defining Requirements

The statement of work (SOW) The project specifications The milestone schedule The work breakdown structure (WBS)

Slide 2.8


Points to Address When Developing an SOW

Purpose - objectives Exclusions - what should not be done Quantities - how many Schedule - when the work will be started/completed Deliverables (i.e... work done) Acceptance criteria - what method will be used to

accept deliverables Responsibility - department, office or person

responsible

Slide 2.9


Preparation of internal SOWs Project office and/or user groups

Preparation of external SOWs Dependent on situation, & complexity Project manager/ line managers and project sponsor Client who may have the capabilities Client may decide to contract out to an independent

body Client may contract your servicesPREPARATION OF A STATEMENT OF WORK REQUIRES

TRAINING RATHER THAN LUCK.

Who Prepares the SOW?

Slide 2.10


Statement of Work Elements

General scope of the work Objectives and related background Contractors tasks Contractor end-item performance requirements Reference to related studies, documentation, and

specifications

Data items (documentation) Support equipment for contract end-item

Slide 2.11


Statement of Work Elements (continued)

Customer-furnished property, facilities,equipment, and services

Customer-furnished documentation Schedule of performance Exhibits, attachments, and appendices

Slide 2.12


Purpose of WBS

Detailed planning can be performed

Costs and budgets can be established

Objectives can be linked to available resources ina logical manner

Specific authority and responsibility can beassigned

IT IS TO STRUCTURE AN ASSIGNED PROJECTINTO VARIOUS ACTIVITIES IN ORDER THAT:


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Slide 2.13


Work Breakdown Structure (WBS) The total program can be described as a summation of

subdivided elements Planning can be performed Costs and budgets can be established Time, cost, and performance can be tracked Objectives can be linked to company resources in a

logical manner Schedules and status-reporting procedures can be

established Network construction and control planning can be

initiated The responsibility assignments for each element can be

established

Slide 2.14


Have clearly defined start dates Have clearly defined end dates Must be able to be used as a

communicative tool in which you cancommunicate the expected results

Be estimated on a total time duration notwhen the individual activities start or end

Be structured so that a minimum of projectoffice control and documentation (i.e.forms) are necessary

In setting up the WBS the activitiesmust:

Slide 2.15


Most common type: Six-Level Indentured Structure

LEVEL DESCRIPTION 1 Total Program 2 Project(s) 3 Task(s)

4 Subtask(s) 5 Work Package(s) 6 Level of Effort

Work Breakdown Structure(WBS)

Slide 2.16


THE WBS BREAKS WORK DOWN INTO SMALLER ACTIVITIES THUS REDUCINGTHE RISK THAT ANY MAJOR OR MINOR ITEM WILL BE OMITTED

WBS: Six Level Structure

Usually specified by the client andmanaged the project manager

Generated by contractor for in-housecontrol and managed by thefunctional manager(s)

Planning accuracy is dependent on the WBS levelselected. The lower the level the greater is the planningaccuracy but the higher the management cost

LEVELS RESPONSIBILITY

123456

Slide 2.17


Developing a WBS

PROTOTYPEDEVELOPMENT

(1.1.0)

ADVANCEDDEVELOPMENT

(1.2.0)

PRE-PRODUCTION

QUALIFICATION(1.3.0)

FINALPRODUCTION

(1.4.0)

UTILITY CAR (1.00.00)

Slide 2.18


1.00.00

1.1.0 1.2.0 1.3.0 1.4.0

1.2.1 1.2.31.2.2

1.2.2.1 1.2.2.2 1.2.2.3

1.2.2.1.1 1.2.2.1.2 1.2.2.1.3 1.2.2.1.4

WBS ExampleWBS LEVELS

5

4

3

2

1 PROGRAM

PROJECT

TASK

SUBTASK

WORKPACKAGE


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Slide 2.19


WBS Controls

WORK

BREAKDOWN

STRUCTURE

MGT.

COORDIN.

ORGANIZ.

CHARTS

COSTSACCOUNT-

ABILITY

DECISIONTREES

SCHEDULES

Slide 2.20


WBS Interfacing Benefits

The responsibility assignment matrix Network scheduling Costing Risk analysis Organizational structure Coordination of objectives Control (including contract administration)

Slide 2.21


Work Package Control Point

WORK

PACKAGES

WBS

FUNCTIONAL

ORGANIZATION

Slide 2.22


WBS Work Packages Represents units of work at the level where

the work is performed Clearly distinguishes one work package from

all others assigned to a single functionalgroup

Contains clearly defined start and end datesthat are representative of physicalaccomplishment

Target is 80 hours and about two weeks, butdepends on size/nature of the project

Slide 2.23


WBS Packages (Continued)

Specifies a budget in terms of dollars, man-hours,or other measurable units

Limits the work to be performed to relativelyshort periods of time to minimize the work-in-process effort

Slide 2.24


Change Management YOU CANNOT MANAGE YOUR CUSTOMER

WITHOUT MANAGEMENT OF YOUR PROJECTMANAGEMENT PROCESS

WHEN YOUR CUSTOMER INITIATES A CHANGEREQUEST, YOU MUST BE ABLE TO PREDICTIMMEDIATELY THE IMPACT ON SCHEDULE ,COST AND TECHNICAL PERFORMANCE


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Slide 2.25


Unmanaged vs. Managed Changes

UnmanagedChange

Where TIMEis invested

HowENERGYis invested

WhichRESOURCES

are used

ManagedChange

Back-end

Front-end

Rework Enforcement Compliance Supervision

Education Communication Planning Improvements Value-Added

Senior Managementand keyplayers only

Stakeholders(internal)

Suppliers Customers

Slide 2.26


Definition

Cost of Corrections

$1

PreliminaryPlanning

$5 $25 $100 $1000

DetailedPlanning Execution

Implementation /Conversion

Slide 2.27


Scheduling Techniques Gantt or bar charts Milestone charts Line of balance Networks

Program Evaluation and Review Technique(PERT)

Arrow Diagram Method (ADM) [Sometimescalled the Critical Path Method (CPM)] Graphical Evaluation and Review Technique

(GERT) Precedence Diagram Method (PDM)

Slide 2.28


Bar (Gantt) Chart

TASKS 1 2 3 4 5

4

MONTHS AFTER GO-AHEAD

3

2

1

5

Slide 2.29


Milestone Chart

ACTIVITY

TESTINGANALYSISREPORTPRESENTATION

TIME

Slide 2.30


Simplified PERT Network

1 9

3

42 8765

LEGEND: (TIME = WEEKS)

EVENTACTIVITYCRITICAL PATH ACTIVITY


6/17

Slide 2.31


Slack Identification

C (8,10)2 (15,17)

EARLIEST START TIME

EARLIEST FINISH TIME

LATEST FINISH TIME

LATEST START TIME

ACTIVITY

TIME

Slide 2.32


Types Of Slack

[ 20, 26 ]

[ 24, 30 ]

[ 30, 36 ]

[ 24, 30 ]

POSITIVE SLACK NEGATIVE SLACK

Slide 2.33


Schedule Compression

Elimination of some parts of the project Addition of more resources Substitution of less time-consuming components

or activities Parallelization of activities Shortening critical path activities Shortening early activities Shortening longest activities

Slide 2.34


Schedule Compression (Continued) Shortening easiest activities Shortening activities that are least costly to

speed up Shortening activities for which you have more

resources Increasing the number of work hours per day

Slide 2.35


Resource Leveling Resource leveling is an attempt to eliminate the

manpower peaks and valleys by smoothing outthe period-to-period resource requirements. Theideal situation is to do this without changing theend date. However, in reality, the end date movesout and additional costs are incurred.

Slide 2.36


Resource Allocation Resource allocation (or resource limited

planning) is an attempt to find the shortestpossible critical path based upon the available or fixed resources. The problem with this approachis that the employees may not be qualifiedtechnically to perform work on more than oneactivity in a network


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Slide 2.37


Types Of Precedence Charts

ACTIVITY 1

ACTIVITY 1

ACTIVITY 2

ACTIVITY 2FINISH-TO-START

START-TO-START

FINISH START

START

START

Slide 2.38


Types Of Precedence Charts

ACTIVITY 1

ACTIVITY 1

ACTIVITY 2

ACTIVITY 2

FINISH-TO-FINISH

PERCENT COMPLETE

FINISHFINISH

20 %

50 %

Slide 2.39


Pricing and Estimating Many managers regard this as an art !

Information available to one bidder isgenerally available to others

This is an essential part of the planningprocess

Forms the basis for establishing standardsfor budgets, man-hours, material costs,

contingencies, etc. Specific pricing strategies must be

developed for each situation

Slide 2.40


Two Types Of Acquisition PoliciesType I acquisition:

One-of-a-kind contract with little or no follow-on potential Objective:- Win the contract- Execute it profitably

Type II Acquisition: One of many contracts

An entry point to larger follow-up project contractsObjective:- Win the contract- Perform with excellence

Slide 2.41


Cost/Hour Estimates

EstimatingMethod

GenericType WBSRelationship

Accuracy Time toPrepare

Parametric

Analogy

Engineering(Grass Roots)

ROM*

Budget

Definitive

Top Down

Top Down

Bottom Up

-25% to +75%

-10% to +25%

-5% to +10%

Days

Weeks

Months

* Rough Order of Magnitude

Slide 2.42


Types Of Estimates Order of magnitude estimates

- Made without any detailed engineering data- May use past experience- Accuracy +- 35% within the scope of the project

Approximate (rule of thumb) estimates- Made without any detailed engineering data- May use previous similar projects --- Accuracy +- 15%

Definitive (or detailed) estimates- Prepared from well-defined engineering data, vendor

quotes, unit prices, etc. Accuracy +- 5% Estimating manual

- Developed over time- Use to price out effort. Accuracy +-10%


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Slide 2.43


Additional Estimating Methods Direct Estimate

- Estimate/experienced person- Requires judgement

Estimate by analogy - Compare with similar activities- Requires judgement

Factored method - Based on historical data- Requires equipment lists, sizes- Starts with equipment quotes

Gross proration method - Based on historical data- Near duplicate information

Slide 2.44


Detailed estimate- Uses the WBS - Takes the WBS down several levels

Quotation method - Compare three quotations- Select the best quotation

Handbook manuals Learning curves

Additional Estimating Methods (continued)

Slide 2.45


Do project managers controlcosts, monitor costs or both?

Cost

Slide 2.46


Cost Management Cost estimating Cost accounting Project cash flow Company cash flow Direct labor costing Overhead rate costing

Others, such as incentives, penalties, and profit-sharing

Slide 2.47


Cost And Control System

PLANNING

WORK

AUTHORIZATION

AND RELEASE

DATA

COLLECTION

AND REPORTING

COST

ACCOUNTING

CUSTOMER AND

MANAGEMENT

REPORTING

PHASE I PHASE II PHASE III PHASE IV PHASE V

OPERATING CYCLECYCLE

PLANNING

Slide 2.48


Cost Control Requirements Measure resources consumed Measure status and accomplishments Compare measurements to projections and

standards Provide the basis for diagnosis and re-planning


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Slide 2.49


Cost Control Requirements

Thorough planning of the work to be performed tocomplete the project Good estimating of time, labor, and costs Clear communication of the scope of required tasks A disciplined budget and authorizations of expenditures Timely accounting of physical progress and cost

expenditures Periodic re-estimation of time and cost to complete

remaining work Frequent, periodic comparison of actual progress and

expenditures to schedules and budgets, both at the timeof comparison and at project completion

Slide 2.50


When to implement a costmanagement system?

CONCLUSIONA cost management system should be implemented right at the

beginning of the life cycle of the project

Possible costreductions

Cost of change

PROJECTCOSTS

PROJECT LIFE CYCLE PHASES

Slide 2.51


Work Authorization Form

Description Cost Work WorkCenters Hours Cost Starts Ends

- Test Material 2400 150 R4500 1 Aug 15 Sept- Processing 2610 160 R7500- Final inspection 2621 140 R3500- Packaging 2623 46 R 750- Delivery 2624 R 350

Project office authorization signature:________________

WBS: 31.03.02 Work order no: D1385

Date of original release: 03 Feb 97Date of revision: 18 March 97Revision number: C

Slide 2.52


Planning and Budgeting

Work packages

WBS Element

MGR

Org

Org

Org

Work PackageWP______ORG_______ Description of task_____

____________________ Sched: Start____Stop__ Budget:______________

Slide 2.53


CACN No. _____________ Revision to Cost Account No. ____________ Date ________

DESCRIPTION OF CHANGE: ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________

REASON FOR CHANGE: ____________________________________________________________________________________ ____________________________________________________________________________________ ___________________________________________________________________________________ _________________________________________________________________________________

Requested Budget Authorized BudgetLabor Hours ________ _________ _________________ Period of performa nceMaterials _________________ _________________ From _____________ ODCS _________________ _________________ To _____________

BUDGET SOURCE:Funded Contract ChangeManagement ReserveUndistributed BudgetOther _________________

INITIATED BY: __________________ __________ APPROVALS: Program Mgr. ________ Prog. Control ____ ____

Cost Account Change Notice (CACN)Slide 2.54


Sources Of Additional Funding Funded contract change

Management reserve

Undistributed budget

Other (e.g. profits)


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Slide 2.55


Cost data collation and reporting flowchart

Actuals

Labor

ACWP

InventoryAccounts

BCWP

Computer

BCWS

Monthly TotalProgram Effort

Weekly Labor Reports

MCCS C omparisonreports To All Execs

Variance Report

Slide 2.56


Cost Data

Labor Material Other direct charges Overhead

Slide 2.57


Types of Budgets

Distributed budget Management budget Undistributed budget Contract changes

Slide 2.58


Variance Analyses

Slide 2.59


Variables for Variance Analysis

BUDGETED COST FOR WORKED SCHEDULED (BCWS) IS THEBUDGETED AMOUNT OF COST FOR WORD SCHEDULED TO BEACCOMPLISHED PLUS THE AMOUNT OF LEVEL OF EFFORT ORAPPORTIONED EFFORT SCHEDULED TO BE ACCOMPLISHED IN AGIVEN TIME PERIOD.

BUDGETED COST FOR WORK PERFORMED (BCWP) IS THEBUDGETED AMOUNT OF COST FOR COMPLETED WORD, PLUSBUDGETED FOR LEVEL OF EFFORT OR APPORTIONED EFFORTACTIVITY COMPLETED WITHIN A GIVEN TIME PERIOD. THIS ISSOMETIMES REFERRED TO AS AN EARNED VALUE.

ACTUAL COST FOR WORK PERFORMED (ACWP) IS THE AMOUNTREPORTED AS ACTUALLY EXPENDED IN COMPLETING THE WORKACCOMPLISHED WITHIN A GIVEN TIME PERIOD.

COST VARIANCE = BCWP ACWP SCHEDULE/PERFORMANCE VARIANCE = BCWP - BCWS

Slide 2.60


Variances The cost variance compares deviations only from

the budget and does not provide a measure of comparison between work scheduled and workaccomplished

The scheduling variance provides a comparisonbetween planned and actual performance but doesnot include costs


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Slide 2.61


Measurements Measurable efforts : discrete increments of work

with a definable schedule for accomplishment,whose completion produces tangible results

Level of effort : work that does not lend itself tosubdivision into discrete scheduled incrementsof work, such as project support and projectcontrol

Slide 2.62


Cost Variance Calculation

A NEGATIVE VARIANCEINDICATES A COST OVERRUN

CV = BCWP - ACWP

Slide 2.63


Schedule Variance Calculation

SV = BCWP - BCWS

A NEGATIVE VARIANCE INDICATESA BEHIND SCHEDULE CONDITION

Slide 2.64


Variance Percents

SCHEDULE VARIANCE % =(SVP)

COST VARIANCE % =(CVP)

SVBCWS X 100

CVBCWP X 100

Slide 2.65


Project Variance Analysis

R&D QUALIFICATION DEVELOPMENTPHASE I PHASE II PHASE III

VARIANCE LOWER BOUNDARY

ACTUAL COST VARIANCE

PROJECTED COST

VARIANCE UPPER BOUNDARY

TIME

$

Slide 2.66


Management Reserve

CONTRACTED COST

RELEASED BUDGET

ACTUAL COST

TIME

MANAGEMENTRESERVE

$


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Slide 2.67


Information Requirements

Budgeted cost for work scheduled (BCWS) Budgeted cost for work performed (BCWP) Actual cost for work performed (ACWP) Estimated cost at completion Budgeted cost at completion Cost and schedule variances/explanations Traceability

Slide 2.68


Variance Analysis Questions

What is the problem causing the variance? What is the impact on time, cost, and

performance? What is the impact on other efforts, if any? What corrective action is planned or under

way? What are the expected results of the

corrective action?

Slide 2.69


Variance Reporting

Variance reporting is accomplished ateach reporting interval. However, thevariance threshold reports areexception reports and occur onlywhen the variances exceed the upper and lower boundaries of the projectvariances envelope.

Slide 2.70


Reporting Intervals

Depends on the type of organization andcharacteristics of the projects.

Project-driven organization - weekly. Non-project-driven organization -

monthly

Slide 2.71


The 50/50 rule

HALF OF THE BUDGET FOR EACH ELEMENT ISRECORDED AT THE TIME THAT THE WORK ISSCHEDULED TO BEGIN AND THE OTHER HALF AT THETIME THE WORK IS SCHEDULED TO BE COMPLETED

FOR A PROJECT WITH A LARGE NUMBER OFELEMENTS THE AMOUNT OF DISTORTION FROM SUCHA PROCEDURE IS MINIMAL

Slide 2.72

Projject ManagementChandana UnnithanJ F M A M J J A S O N D

ANALYSIS

Budgeted cost for work Scheduled (BCWS)Performed (BCWP)

Budget - 6

8

14

12

10

12

8

12

10

8

Work packages

Cost account budget = 100(thousands)

BCWS = 38BCWP = 49SCHED. VARIANCE = +11

50-50 rule used for work in process


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Slide 2.73


Using The 50-50 Rule

4,000

10,000

12,000

4,000

6,000

6,000

10,000

TIME

TIME LINE

COMPLETED

NOT COMPLETED

LEGEND

BCWS = 34,000BCWP = 33,000BAC = 52,000

Slide 2.74


Earned Value Status Reporting

SV

CV

BCWS

BCWP

ACWP

TIME LINE

C U M M U L A T I V E C O S T

, $

TIME

Slide 2.75


ESTIMATE AT COMPLETION(EAC)

EAC = ACWPBCWP X

Budget at completion

The estimate at completion is the best estimate of the total cost at the completion of the project.

The EAC is a periodic evaluation of the statusof the project - usually on a monthly basis or until a significant change has been identified

(BAC)

Slide 2.76


Progress Reporting

Progress reporting needs to answer four fundamental questions:

1. Where are we today (time and cost)?

2. Where will we end up (time and cost)?

3. What are the present and future risks?

4. Are there any special problems that needto be addressed and what can

management do to help?

Slide 2.77


1. VARIANCE ANALYSIS (Cost in Thousands) 1 June 1997

Budgeted Budgeted CostMilestone Cost Work Work Actual Variance, %

Subtask Status Scheduled Performed Cost Schedule Cost1 Completed 100 100 100 0 02 Completed 50 50 55 0 -103 Completed 50 50 40 0 204 Not Started 70 0 0 -100 --5 Completed 90 90 140 0 -55.56 Not started 40 0 0 -100 --7 Started 50 50 25 0 508 Not started 0 0 0 -- --

Total 450 340 360 -24.4 -5.9

Monthly Project Report

Slide 2.78


2. ESTIMATE AT COMPLETION (EAC)EAC = (360/340) X 579,000 = $613,059Overrun = 613,059 - 579,000 = $34,059

3. COST SUMMARYCosts are running approximately 5.9% over budget due to higher salaried labor.

4. SCHEDULE SUMMARYThe 24.4% behind schedule condition is due to subtasks 4 and 6 which havenot yet begun due to lack of raw materials and the 50/50 method for bookingcosts. Overtime will get us back on schedule but at an additional cost of 2.5% of direct labor costs.

Monthly Project Report (Continued)


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Slide 2.79


5. MILESTONE REPORTMilestone/ Scheduled Projected ActualSubtask Completion Completion Completion

1 4/1/97 4/1/972 5/1/97 5/1/973 5/1/97 4/23/974 7/1/97 7/1/975 6/1/97 6/1/976 8/1/97 8/1/977 9/1/97 9/1/978 10/1/97 10/1/97

Monthly Project Report(Continued)

Slide 2.80


Monthly Project Report(Continued)

6. ACTIVITY REPORTCurrent Potential Corrective

Problem Impact Action(a) Lack of raw Cost overruns and Overtime is scheduled.

materials . behind schedule We wil l t ry to use lower condition. salaried staff. Raw

materials areexpected to be onnext week.

(b) Customer un- May need add- Customer will providehappy with test results itional planning. us with revised

statementof work on 6/15/97.

Slide 2.81


RISK

Risk management focuses on: Known unknowns Proactive management

The alternative to proactive management is

reactive management, also called crisismanagement. This requires significantly more

resources and takes longer for problems tosurface.

Slide 2.82


Definition Of Risk

Risk = f ( Likelihood, Impact )

Likelihood is the probability of occurrence

Impact is the amount at stake

event

Slide 2.83


Tolerance For Risk and Decision-MakingCategories

Tolerance for Risk Risk Avoider Risk Neutral Risk Lover

Decision MakingCategories

CompleteUncertainty

Relative Uncertainty(Partial information)

Complete Certainty

Slide 2.84


Risk Management Risk Management focuses on the future Risk and information are inversely related Historically, we focused our attentions on

schedule and cost risk managements Today, our primary emphasis is on

technological risk management CAN WE DESIGN IT AND BUILD IT? WHAT IS THE RISK OF

OBSOLESCENCE?


15/17

Slide 2.85


Developing and Using Payoff Tables

Maximin ApproachMaximax ApproachMinimax regret ApproachInsufficient Reason Approach

Establishing the

procedure to follow

Construct thePayoff table

Decision-makingunder certainty

Decision-makingunder completeuncertainty

Decision-makingunder risk

Expected Monetary Value (EMV) ApproachExpected Opportunity Loss (EOL) ApproachExpected Value of Perfect Information (EVPI) Approach

Slide 2.86


Five Steps to develop Pay Off Table

List all the alternatives List the future consequences of each

alternative Identify the payoffs associated with each

combination Assess the degree of certainty that these

combinations will materialize Decide on a decision criterion

Slide 2.87


Risk Management Processes

Risk planning Risk assessment

Risk identification Risk analysis/quantification

Risk handling Risk monitoring Developing Contingency Plans

Slide 2.88


Types Of Risks (General)

Business risks Insurable (pure) risk

Direct property damage Indirect consequential loss Legal liability Personnel

Slide 2.89


Types Of Risk (PMI Method)

External unpredictable External predictable Internal non-technical Internal technical Legal

Slide 2.90


Risk QuantificationSTAGE I STAGE II GUID-

ANCEWARHEAD

COST

MANU.

TEST

DESIGN

HIGH

MEDIUM

LOW

LEGEND

PROGRAMSUMMARY


16/17

Slide 2.91


Risk Handling

Assumption (retention) Avoidance Control (mitigation) Transfer Risk Problem Solving

Idea generation - brainstorming

Slide 2.92


How Much Risk Is Acceptable?

High tolerance for risk

Medium tolerance for risk

Low tolerance for risk

Slide 2.93


Prioritization of Risks

Schedule CostTechnical

Performanceor Quality

First(Highest )Priority

SecondPriority

ThirdPriority

Slide 2.94


P r o

j e c t P r o c e

d u r a

l

D o c u m e n

t a t i o n

GuidelinesHigh Low

Tolerance for Risk

RigidPolicies/

Procedures

Assumption

Reduction

Transfer

Avoidance

Which Method to Use?

Slide 2.95


The Risk-Reward Matrix

Low High Reward

Medium

Risk

High

Low

Medium

Q u a l i t

y o f

R e s o u r

c e s N e

e d e d

L o w

M e d i u

m H i g h

Slide 2.96


Poor Risk Management

Risk Planning

TechnicalInability C u

s t o m e

r E x p e

c t a t i o n

s

A c t u a l P e r f

o r m a n c e P

e r f o r m a n c e

Time


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Slide 2.97


Quality Why is it important?

You are buying a house take a home loan What service level do you expect?

Want to buy a new car? A bank is willing to give you100% finance. How much documentation would you tolerate? How many phone calls? What if a credit card company calls you every week for

cross selling a new product? Acceptable?

How much are you willing to accept and how criticalis it? 100 mistakes in your monthly repayments? A phone call every week?

Slide 2.98


Six Sigma

Pioneered by Motorola Improve product and services quality 100 fold by a

set period of time, with an ultimate goal of zerodefects.

Six Sigma translates to 99.99966 defect freeperformance

GE Capital The best practices of a branch in which a customer

nearly every time got answered from an employeeinstead of voice mail was applied to 41 branches.

Result: 99.9 percent chances of a customer getting arepresentative online

Slide 2.99


The SEI-CMM Assessment Software Engineering Institute (Carnegie Mellon) model known as

Capability Maturity Model, used by organisations worldwide for identifying best practices useful in helping them increase thematurity of their processes

There are 5 levels of maturity, the fifth level is the people level Capability Maturity Model? Integration (CMMI) is a process

improvement approach that provides organizations with theessential elements of effective processes. It can be used to guide

process improvement across a project, a division, or an entireorganization. CMMI helps integrate traditionally separateorganizational functions, set process improvement goals and

priorities, provide guidance for quality processes, and provide a point of reference for appraising current processes .- CMMI, SEI,2006

Used for maintaining and implementing quality in organisations

Slide 2.100


Cause and Effect Diagrams

Slide 2.101


Data Tables

Slide 2.102


Comparative Pareto Analysis

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