The Seventh Dimension of Project Management ________ by Michael Singer Dobson, PMP Risk and the...
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The Seventh Dimension of Project Management
________
by Michael Singer Dobson, PMP
Risk and the Triple Constraints
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The Triple Constraints
How long do we have? (Time Constraint)
How much (of what) can we spend? (Cost Constraint)
What exactly does this puppy have to do, anyway? (Performance Criteria)
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The Six Dimensions
Time/Performance/Cost
Time/Cost/Performance
Performance/Time/Cost
Performance/Cost/Time
Cost/Performance/Time
Cost/Time/Performance
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Time
Specific Deadline
Event Triggered
Degree of Urgency
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Cost
Cash
Personnel
Equipment
Supplies
Overhead
Intangibles
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PerformanceFunctional/Technical Requirements
Purpose/Desired End-State
Evaluation Criteria
Establishment of the “Good Enough” Point
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Know Where “Good Enough” Lives
Continuous Improvement inside projects
“Exceeds customer expectations”
Quality and Time/Cost
Value
It ain’t dog food if the dogs don’t eat it.
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Six Possible Outcomes
Outstanding
Exceeds Expectations
Fully Satisfactory
Barely Adequate
Failure
Catastrophe
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Using Triple Constraints in Risk
ProcessesRisk Identification
Risk Analysis
Risk Response
Risk Monitoring and Control
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The Hierarchy of Constraints
Driver
Middle Constraint
Weak Constraint
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Risk #1—Getting the Hierarchy Wrong
• The most overlooked question in project management is
__________“WHY?”
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Classical Risk vs. Project Management
Risk
Limited use of the Law of Large Numbers
Evaluating impact on project objectives
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New Risk Response Categories
Leverage
Relax
Absorb
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Threat Risk and the Triple Constraints
Take More Time
Consume More Resources
Degrade Performance
THREATTHREAT
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Oppportunity Risk and the Triple ConstraintsSave Time
Lower Resource Consumption
Improve or Increase Performance
OPPORTUNITYOPPORTUNITY
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Known Knowns, Known Unknowns,
and Unknown Unknowns
Contingency/reserve
Dig deeper
Think backward
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The Fine Art of Bad Decision-Making
Butch Cassidy, the Sundance Kid, and Etta Place
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QuickTime™ and a decompressor
are needed to see this picture.
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Elements of Decision-Making
Frame the problem
Generate alternatives
Evaluate alternatives
Make a choice
Test and evaluate
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Decision Matrix
Fight Give Up
Go to JailStart a Rock
Slide
Go for Position and Shoot Us
Starve Us Out
Surrender to Us
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Bad is Better Than Worse
Fight Give Up
Go to JailDie Jump
Likely to Die “I Can’t Swim!”Possible
Survival and Escape
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UpgradUpgradee
BuildBuildWeak Weak
DemandDemand(35% Likely)(35% Likely)
Strong Strong DemandDemand
(65% Likely)(65% Likely)
Cost $120M
Cost $50M
Revenue $90MNet -$30M
Revenue $200MNet $80M
Weak Weak DemandDemand
(35% Likely)(35% Likely)
Strong Strong DemandDemand
(65% Likely)(65% Likely)
Revenue $60MNet $10M
Revenue $120MNet $70M
Value of the Decision(.65*$80M)+(.35*$30M)
=$41.5M
Value of the Decision(.65*$70M)+
(.35*$10M)=$49M
Build or Build or Upgrade?Upgrade?
Decision=UPGRADE$49M
Numbers Aren’t Decisions!
Adapted from PMBOK® Guide
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Decision Options
Correct Action
Correct Rejectionof Action
Failure to Act(Type I Error)
InappropriateChoice
(Type II Error)
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When Cost is WeakIs cash a flexible resource?
Do you have contingency funds?
Is there an acceptable degree of budget overrun?
Can you go back to the well?
Can someone else pay part of the bill?
Are there flexible resources available?
Can you borrow staff/equipment/consumables?
Can you borrow from other client deliverables?
Are there resources whose costs aren’t charged to your project?
Can you exploit intangible resources (call in favors, etc.)?
Do you have project sponsors or key stakeholders who can help?
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When Time is WeakCan you delay to acquire out-year budget authority?
Can you use delay to promote quality or solve problems?
Can you schedule delay to coincide with resource availability?
Could delay lead to lower resource consumption during critical time periods?
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When Performance is Weak
Can you change grade?
Can you cut, modify, or substitute features?
Can you cut, modify, or adjust scope?
Can you cut -ilities?
PS—Cutting quality is usually a bad idea
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Risk in 3D
Always a function of the Triple Constraints
Risks to the driver are always serious
Use the Weak Constraint as a resource
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Michael Dobson, PMP