1860 Module 9 Risk and Procurement.pdf

~ UNIVERSITY OF TORONTO ~ SC HOOL OF CON TI NU ING STUD IE! Course 1860 - Foundations of Project Management Module 9: Risk and Procurement ~ UNIVERSITY OF TORONTO ~ SC HOOL OF CON TI NU...

~ UNIVERSITY OF TORONTO ~ SC HOOL OF CON TI NU ING STUD IE! Course 1860 - Foundations of Project Management Module 9: Risk and Procurement ~ UNIVERSITY OF TORONTO ~ SC HOOL OF CON TI NU ING STUD IE! Module 9 - Section 1 Risk Identification  ~ Risk Assessment Process IC-1.2 Risk management Risk Qualitative Quantitative Risk response Implementation Monitor risks planning identification risk analysis risk analysis risk responses 9 UN IVERSIT Y OF TO RONTO ~ SC HOO L 0 1 CONT INU ING STU OIE~ 1. Document the approach to identify, assess, and respond to risk events to be used on the project 2. Identifying an uncertain event or condition that if it occurs has a positive or negative effect on the Project's objectives 3. Determining the probability and impact of a risk to create a prioritized list of identified risks 4. Doing a more detailed analysis of risks to gain a better understanding of the probability and impact 5. Developing a response to a risk that will reduce the impact and or probability 6. Implementing the selected risk response strategy 7. Monitoring the identified risks throughout the project looking for new risks and changes in the assessment and responses  Definitions Uncertainty - The possibility of unexpected events which will impact the project (Wideman) Risk - An uncertain event or condition that, if it occurs, has a positive or negative effect on a project's objectives Risk Event - A discrete occurrence that may affect the project for better or worse Threat - A negative risk event Opportunity - A positive risk event 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ @ Risk Management Plan (1) Risk strategy What does General approach for managing Al suggest? risk Met~eWjBQ)he approaches , tools and data sources used for management of risks Roles and responsibilities - Defines the lead, support, and risk management team for each type of activity and clarifies their responsibilities Funding - Identifies the funds needed to perform activities and establishes protocols for application of contingency and reserves Timing - Defines when and how processes will be performed and establishes risk management activities in project schedule Risk categories ; ~~~~~~ ;;:T~ ~~lltIDg of project risks. Most common is with a Risk Breakdown Structure 5 "' (RBS)  Risk Management Plan (2) Stakeholder risk appetite - Expressed as measurable risk thresholds, determine acceptable level of risk exposure Definitions of risk probability and impact - Specific to the project context, reflect risk appetite and threshold - May include scales with percentages, time limits, or high/medium/low Probability and impact matrix - Opportunities and threats represented in a table - Scores may be assigned established Reporting formats - Defines how outcomes documented , analyzed, communicated Tracking - Documents how risk activities will be recorded and audited 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ ~ i ~ Dimensions of Risk - Virtual Conference IC-2.1 Definitions Relationships Example Cause of Risk: Aspect Cause tJ of the project or its As the result of using environment a new computer ooeratinq svstem Risk Event: Uncertain situation that if it tJ Risk Event occurs can have an impact A computer virus may on the project's objectives occur tJ tJ Risk Effect: Contingent effect of risk Impact on project objectives Causing a delay to the oroiect 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 7  @) Identify Risks What does Al suggest? Process of identifying, discussing and understanding what potential events might hurt or enhance a particular project Brings together information so that the team can respond appropriately Process is performed throughout the project Considers both individual project risks and sources of overall project risk Presented in consistent format to ensure risk is understood Includes identifying: - Cause: Definite events or sets of circumstances that exist in the project or its environment - Trigger: A situation that indicates that a risk event is about to occur - Impact: The resulting effect on the project objectives 9UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ Trigger might be when a weather announcement happens  Identify Risks - Data Gathering Brainstorming: - Led by PM or facilitators and attended by team and external experts - Risk Breakdown Structure (RBS) and other tools used - Risks categorized by type and more clearly defined Checklists: - List of items, actions or points to be considered - May be based on historical information of similar projects (e.g., lessons learned) - Customized for current project Interviews: - Interviewing experienced project participants, stakeholders and SMEs - Conducted in an environment of trust and confidentiality to 9 encourage honest and unbiased contributions UN I VERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~  Identify Risks - Data Analysis Root cause identification: Examines root causes of risks and clarifies their definition Groups risks by their causes and develops potential responses based on these identified causes Assumption and constraint analysis : Explores validity of assumptions and constraints for consistency and completeness Analyzes their potential for becoming risk events if unmanaged SWOT analysis: Adaptation of a strategic management tool for risk management Helps identify the broad negative and positive risks that apply to a project Document analysis: - Structured review of project documents Prompt lists: ~ UN I VERSIT Y f?~e.d~rmined list of risk categories, framework to aid team ~ SCHOO L 01 CONT INU ING ST UOIE~ 1Q  Risk Categories by Knowledge Area IC-1.3 Knowledge Area Risk Conditions Inadequate planning ; poor resource allocation ; poor integration management: lack Integration of post-project review Poor definition of scope or work packages; incomplete definition of quality Scope requirements ; inadequate scope control Errors in estimating time or resource availability; poor allocations and management Schedule of float; early release of competitive products Estimating errors; inadequate productivity, cost, change , or contingency control; Cost poor maintenance, security, purchasing , etc. Poor attitude toward quality; sub-standard design/materials/workmanship ; Quality inadequate quality assurance program Poor conflict management; poor project organization and definition of Resource responsibilities ; absence of leadership Carelessness in planning or communicating ; lack of consultation with key Communications stakeholders Risk Ignoring risk ; unclear assignment or risk ; poor insurance management Procurement Unenforceable conditions or contract clauses ; adversarial relations Stakeholders Lack of consultation with stakeholder 9 UN I VERSITY OF TORONTO ~ SCH OOL 0 1 CONTI NUING STUOIE~ 11  Risk Categories by Source - Virtual Conference IC-1.4 External Internal Sources of Risk Outside the PM 's Within the PM 's Control Control Unknown Unknowns ,. - - I - - I ! Known Unknowns ,----- ----- Unpredictable Predictable Logistical Legal : Government Cost of Money , ,Virtual Conference :. Cancellations Regulations : Rooms t : ,Social Media _ _ _ _ Acts Resource Shortages t God (storms, earthquakes) 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 12  Risk Categories by WBS - Virtual Conference ·- "·· '" ea++e EH=iit ,...,, tH·+ -+;;+e Hiij.·11 ['◄l liiNI - M l IPII 1,.1l IM ++++@ - illl ·HH@E 111' 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 13  Risk Register Risk register Captures details of risks: List of identified risks Potential risk owners List of potential risk responses May include short risk title, risk categories, current status (e.g., new), one or more causes, potential effects on project and timing information May also include risk triggers: Risk symptoms that are indirectly related to risk events Indications that a risk has occurred or is about to occur May be specified as continuous or discrete Risk board - Used on Agile projects as a white board or software tool where current risks, obstacles, and issues are tracked and reviewed daily 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 14 ~ i ~ Risk Register - Virtual Conference (Partial) m+w+s1.m 44 1.0 Threat Risk Event App may not Cause A new version of Impact Delay the project IT Manager Feasibility handle the the survey to find question formats application is workarounds and increase cost released 21 1.0 Threat Inappropriate A change in the Must redo the Marketing Feasibility questions may be privacy law survey adding Manager included cost and time 7 1.0 Threat Computer virus A new computer Delay the project IT Manager Feasibility may occur operating system 4 1.0 Opportunity Previous survey Have done Implement survey Marketing Feasibility maybe reusable survey for in less time and Manager previous events cost 15 6.0 Close Threat New questions Change in Additional costs Marketing may need to be marketing and time to Manager added approach develop questions 32 2.0 Design Threat Marketing team New branding Additional Marketing may not be being introduced attendance at the Manager available event y UN I VERS IT Y OF TO RONTO ~ SCHOOL 0 1 CONT INUING STUOIE~ 15 ~i ~ Risk Canvas - Website A Risk Canvas is a risk identification tool used in adaptive projects It identifies major categories of risks and allows for a big picture view for all identified risks and response plans People People Value (Topic Relationship Customer. (Stakeholders) Stakeholder not available. (Resources) SMEs get sick or. Proposition) Password rules.(Relevance) Browser compatibility (Demographic/. Profile) Travel complaints restrictions Systems Channel (Types and. Technology) System crash.(Distribution) Internet down.Expense ($ Cost) Contractors increase price I Revenue($ Income) More ad revenue 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 16  Perform Qualitative Risk Analysis Used to prioritize risks according to their probability of occurrence and impact on project objectives (scope, time, cost, quality) Assess the likelihood and impact of identified risks to determine their magnitude and priority Prioritized risks lay the foundation for quantitative analysis and risk response planning Allows organizations to categorize and create a risk hierarchy and therefore focus on high-priority risks 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 17  Risk Score Probability: The likelihood of occurrence - The ratio on the number of chances that an event may happen, to the sum of the chances of it both happening and not happening Impact: The magnitude of consequences - The amount at stake; the extent of adverse, or positive consequences which might affect the project Risk Score = Probability x Impact 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 18 used to prioritize risks ~i ~ Probability and Impact Scales Probability Scale Low {l) Medium (2) High (3) Probability < 30% 30% to 70% >70% Impact Scale Objective Low (1) Medium (2) High (3) Cost No impact < $40,000 (10%) > $40,000 (10%) Time No impact 1 to 7 days > 7 days Scope None Minor Major Quality None < 10 complaints > 10 complaints 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 19  Probability and Impact Scores - Virtual Conference Risk Score = Probability x Impact Using the previously stated risks and the established risk scales for this project, the risk scores are below The risk threshold is 4 Any risk scoring 4 and above requires further action Any risk scoring 3 and below will not require further action m 44 Risk Event App may not handle the question formats Probability Low - 1 Mi,,l·hi4M Mi14·iii Low-1 21 Inappropriate questions may be included Medium - 2 Medium -2 4 7 Computer virus may occur Medium - 2 High -3 6 4 Previous survey maybe reusable Medium - 2 High -3 6 15 New questions may need to be added High - 3 High -3 9 32 Marketing team may not be available Medium - 2 Medium -2 4 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 20  Probability - Impact Matrix Impact - Threat Impact - Opportunity Probability H·hiili Medium (2) i=MWif:UQi Medium (2) +NIP High (3) 3 6 9 9 6 3 Medium (2) 2 4 6 6 4 2 Low (1) 1 2 3 3 2 1 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 21  Probability - Impact Matrix: Virtual Conference IC-2.2 Impact - Threat Impact - Opportunity Probability Low (1) Medium (2) High High (3) Medium (2) Low -H-ig-h-(3-) - -M-ed-iu-m -(2-) I Low (1) 9 UN IVERSIT Y OF TO RONTO i ~ SCHOO L 0 1 CONT INU ING STUOIE~ Risk Number 22  Quantitative Risk Analysis Further analysis for those risks over the threshold Uses sophisticated mathematical tools: - Monte Carlo Simulation - Expected Monetary Value - Tornado Diagrams Usually reserved for large projects in risk avoidance organizations 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 23 Q Risk Identification - Questions IC-3.1 IC-3.2 1. A project_ _ _is an uncertainty that can have a negative or positive effect on meeting project objectives. a. ris b. opportunity c. contingency plan d. fallback plan 2. Paul is reviewing the risk register for his project. The project has been going well and he is looking at the risk register to see what symptoms of risk events he should be looking for. Which column in the risk register should he be looking at? b. Category c. Responses d. Trigge~ e. Owners Answers available via Interactive Content on Quercus 29 ~ UNIVERSITY OF TORONTO ~ SC HOOL OF CON TI NU ING STUD IE!  Risk Responses After identifying and analyzing risks, determine actions to address them Focus on minimizing threats, maximizing opportunities and reducing overall risk exposure Plans should be appropriate based on significance and cost May be a mix of strategies 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 26  Risk Response Strategies / - ~ Escalate \ )... - - - 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 27  Risk Responses - Threats (1) Avoid Transfer - Eliminate a specific threat, - Transfer the impact of a risk usually by eliminating its and ownership of its causes response to a third party - Change project scope - Use insurance, and/or plan to: performance bonds, Eliminate the risk warranties, guarantees to condition transfer risks Protect project objectives Use of appropriate contract from the impact types (fixed price) to - Example: Remove the transfer liability to seller scope item from the project - Creates secondary risks - Example: Buy insurance 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 28  Risk Responses - Threats (2) Mitigate - Reduce the consequences of a risk by reducing its probability and/or its impact to an acceptable threshold - Act early, use proven technology or simple processes - There is residual risk, the risk is not eliminated - Example: Select a proven supplier, and test samples of supplies 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 29  Risk Responses - Threats and Opportunities Escalate Accept Outside scope of the project Accepting the or if proposed response consequences should a risk exceeds project manager's occur authority - No changes are made to Project Manager determines the project plan who should be notified and communicates details Escalated threats should be accepted by relevant person within the organization Example: Major market change (e.g., Surprise price drop and launch of new product by largest competitor) 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 30  Risk Responses - Opportunities (1) Exploit Share - Eliminate uncertainty that - Tearn up with a third party may hinder an opportunity in a joint venture to realize to be realized an opportunity and reap the - Example: Change the time benefit of a project to take - Example: Develop advantage of better market partnership with a seller conditions 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 31  Risk Responses - Opportunities (2) Enhance - Increase the probability and/or impact by identifying and maximizing key drivers of the risk to ensure it occurs. - Example: Hire cutting edge software game developer to be the first on the market to introduce an interactive new game 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 32  Strategies for Responses Threat Opportunity Probability Impact l...0a, CJ Cl) ~ ti) ~ I 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 33  Impact of Risk Responses A threat response strategy An opportunity response should lower the strategy should probability or impact increase the - Accept: No change probability or impact - Avoid and Escalate: - Accept: No change Probability and Impact go - Exploit and Escalate: to O for the project Probability and Impact go to - Transfer: Introduces 0 for the project secondary risks, such as - Share: Increases the bankruptcy, for the project probability and/or impact - Mitigation: Decreases Enhance: Increase probability and/or impact probability and/or impact 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 34 ~i ~ Risk Responses - Virtual Conference IC-2.3 I Risk Event New questions iHM-lll-d1+i:i1tMM-- 15 may need to be 3 3 9 Avoid 0 0 0 added Computer virus 7 2 3 6 Transfer may occur Previous survey 4 2 3 6 Enhance 3 3 9 maybe reusable Inappropriate 21 questions may be 2 2 4 Mitigate 2 2 included Marketing team 32 may not be 2 2 4 Escalate 0 0 0 available App may not 44 handle the Accept question formats 9 UN IVERSIT Y OF TO RONTO ~ SC HOO L 0 1 CONT INU ING STU OIE~ 35  Risk Register - Virtual Conference 1111111-1-Niii·IE---BIIIIIIIBIIIIIIIIIRIIII New Change m Additional questions marketrng costs and 60 Marketing 15 Threat approach t1meto Avoid Design may need to de,elop Manager be added questions 1.0 Computer A new computer Delay the FeasibiM Virus may operating project IT Threat Transfer Manager sys1em Previous Have done Implement 10 survey survey for survey m less Marketing Feas1b1l1I Opportunity time and cost Enhance maybe previous events Manager reusable lnappropnate Achange mthe Must redo the 1.0 questions pnvacy law survey Feas1bil1t Marketing 21 Threat may be addmg cost Mitigate Manager included and time Marketing New branding Additional 20 team may not bemg introduced attendance at Mark.elJng 32 Threat Escalate Design the event Manager be available App may not A new version of Delay the 1.0 the survey project to find handle the IT 44 Feas1b1III Threat applrcation 1s workarounds Accept question Manager and increase formats released coS1 9 UNIVERSITY OF TORONTO ~ SCHOO L 01 CONT INU ING STUOIE~ 36 r ?! Risk Register - Virtual Conference - Al For the virtual conference project, please create a risk register with four threats and one opportunity. The risk register should contain the following columns : Risk event, cause, impact, ® " threat or opportunity, initial probability (using Low, Medium , or High), initial impact (using Low, Medium , or High), Risk score (ranging from 1 to 9), Response strategy (avoid, transfer, mitigate, accept escalate, enhance, exploit, or share) , revised probability, revised impact, and owner. ~ '- I Risk Event Cause Impact Threat or Opportunity Initial Probability Initial Impact Risk Score Response Strategy Revised Probability Revised Impact Owner ' Technical Mitigate by High: Disruption Issues with Insufficient load conducting of conference Threat High High 9 comprehensive load Medium Medium IT Team Virtual testing activities Platform testing MediLm Low limited marketing Reduced Enhance marketing Marketing Registration and promotion Threat Medi um Medi001 6 Low Low revenue and and outreach efforts Team Numbers efforts participation Unforeseen Mediooi: Impact Develop a backup Speaker personal or Event on program Threat Medium Medi001 6 speaker plan and Low Low Cancellations scheduling Manager quality communication plan conflicts Insufficient Improve High: Loss of Data Security cybersecurity cybersecurity trust and legal Threat Medium High 9 Low Medium IT Team Breach measures and protocols and staff issues training training Strong corporate Sponsorship Actively seek and interest in event High: Increased Sponsorship Revenue Opportunity Medium High 9 engage potential Low Low sponsorship financial support Coordinator Increase sponsors opportunities.... I 9 UN I VERSIT Y OF TO RONTO ~ SCHOO L 01 CONT INU ING STUOIE~ 37 Q Risk Response - Questions 1. You are reviewing your qualitative risk analysis. You have established that the risk threshold for your project is 5. On the list of identified risks, three have a risk score of 2, three have a risk score of 4, five have a risk score of 6, and two have a risk score of 9. How many risks should be accepted? a. 3 b. 6 C. 7 d. 10 2. _ _ _ _ _involves minimizing the risk score by reducing the probability of its occurrence. a. Risk avoidance b. Risk acceptance c. Risk transference d. Risk mitigation Answers available via Interactive Content on Quercus 44 ~ UNIVERSITY OF TORONTO ~ SC HOOL OF CON TI NU ING STUD IE! Contingency Reserve Contingency Reserve: "Time or money allocated in the schedule or cost baseline for known risks active response strategies." (PMBOK® Guide) Remember Module 7 Can be calculated by: - Adding a specified percentage, for example, add 10% to the cost baseline - Reviewing risk register and determining an appropriate amount per risk - Using Quantitative methods, such as Monte Carlo simulation Should be included in the project's cost and schedule baselines 9 UNIV ~ )i,,J) F" RONTO ~~9 ~~, ~ ~dp.Jq.t_M. P,rt}e1f 64,Qna&w.!"1liQI (PMBOKeGu,dfJ) - Seventh Ed1t1on, Protect Management ~ sc1-100~ I:~~~ STUD1Ef tSii.fe ,~ ltll~ ghUalJ allollll!S' ree-p.-.letil from this ptblicahon has been reproduced with the permission 46.:r- of PMI. lossary Page 237  Contingent Risk Response Strategies Contingent responses are done after the risk events occurs All identified risks should have a contingent response that is documented before the risk occurs, but no investment is made Contingent risk response strategies: - Contingency plans Predefined actions that the project team will take if an identified risk event occurs - Fallback plans Include an alternative set of actions and tasks available in the event that the primary plan needs to be abandoned because of issues, risks, or other causes (PMBOK® Guide) - Workarounds Unplanned responses to risk events, when there is no contingency 9 uN rvERSIT Y OF n ffl, I ~ SCH OOL CONT I NU!St '! ~1n pace 41  Monitoring Risks Risks should be monitored throughout the project for: - New risk events due to changes in the project and environment - Changes in the risk score due to probability or impact changes - Appropriateness of response strategies - Changes in the timing of the risk If a risk event occurs, then: - Determine if the risk response plan was appropriate - Do the contingent response work - Document in the lessons learned The contingency should be monitored to see if it is still sufficient Ensure the risk register is updated after each review 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 42  Risk over the Proiect Life Cycle As a project progresses, the number of risks usually go down - The time for the risk event has past - The probability of the risk event lowers However, the impact Feasibilty Design Build Test Deploy Close of the risk event - Number of Risks - Risk Impact may increase - More ability to influence and absorb risks earlier in the project 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 43  Risk Monitoring Tools Technical performance analysis: - Did the risk response work? - Was the risk assessment of the impact, correct? - Has the time for the risk passed? Reserve analysis: - Review impact of changes in the risk register, there can be positive or negative impact - Confirm if the contingency balance is adequate Audits: - Routinely done during meetings 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 44  Risks on Adaptive Proiects By the nature of adaptive projects, many traditional risks go away: - Short iterations, less unknowns about resources - Focus on working software - Frequent customer feedback - Re-prioritized for every iteration, adapting to a changing environment But there are still risks Use of a risk board for transparency and collaboration Risk-adjusted backlog: - Include items related to risk reduction in the backlog - Consider adding risk to the prioritization of the backlog Track using a risk burndown chart - A risk burndown chart can be used for predictive projects as well 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 45  Risk Burndown Chart Identify key project risks, the most important ones Complete a risk qualitative risk analysis identifying the probability and impact: - Probability as a percentage of the occurrence - Impact of the risk in days or dollars Calculate the risk score for each risk and sum to get the total risk exposure Analyze during Sprint Planning Meeting and calculate the total risk exposure 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 46 ~i ~ Risk Analysis - Website Risk analysis for Sprint 0 Risk Exposure = Probability x Impact Risk Probability Mi::i+HN Risk Exposure Password rules complaints 80% 1 day.8 Browser compatibility 10% 2 days.2 Stakeholders not available 80% 10 days 8 SMEs get sick 60% 5 days 3 Internet down 30% 10 days 3 Total 15 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 47 ~ i ~ Risk Board - Website IC-2.4 - - High.. Probability - - 9 Low UN IVERSIT Y OF TO RONTO Low ~ SCHOO L 0 1 CONT INU ING STUOIE~ - Impact 48  Risk Burndown Chart - Website Risk Exposure 16 14 12 10 8 Sprint o Sprint 1 Sprint 2 Sprint 3 Sprint 4 Sprint 5 Sprint 6 Sprint 7 Sprint 8 Sprint 9 Sprint 10 - - Ideal Exposure - - current Exposure ll1l'!l'ffl'!li~ll1ffllll'!El~~~fflffllilRl!ffl!IJl1l'ffl!l'llilRl!ffl'llil~ Ideal Exposure 15 13.5 12 10.5 9 7.5 6 4.5 1.5 0 Current Exposure 15 14.2 11.2 7.2 7 10 Password rules comQlaints 0.8 2 2 0 0 0 Browser compatibility 0.2 0 0 Stakeholder not available 8 1 SM E's get sick 3 3 3 Internet down 3 3 3 9 UN IVERS IT Y OF TO RONTO ~ SC HOOL 01 CONT INUING STUOIE~ 49 1. Sprint zero in the Sprint planning meeting the team reviews the risks 2. start of Sprint 1 the team notes that the stakeholders are engaged and lowers the probability to 30% 3. start of Sprint 2 the probability is lowered to 10% as the stakeholder showed up for the Sprint demo session 4. start of Sprint to the team noted that there were issues with the internet during Sprint 1 probability has increased to 50% stakeholders attended the demo in Sprint zero. in Sprint one, stakeholders are engaged = lower risk from 8 to 6 Internet no longer stable; probability going down is higher; risk increase from three to five Q Risk Monitoring - Questions 1. You are reviewing the risk register when preparing your weekly progress report. You notice that potential triggers for some of the risks have come and gone. How should these be handled? a. Record them in your progress report. b. Immediately notify the project sponsor. c. Update the roject risk register. d. Leave as is, they still may happen. 2. Your team member has just informed you that a risk event has occurred. The risk event was in the risk register and was accepted. However, you know exactly what must be done, because you have _ __ a. expert judgement b. a workaround plan c. a tailback plan d. a contingency plan Answers available via Interactive Content on Quercus 56 ~ UNIVERSITY OF TORONTO ~ SC HOOL OF CON TI NU ING STUD IE!  The Buyer-Seller Relationship When Buyer and Seller are independent organizations RFP / RFP / Proposal Proposal Customer/Client Performing Organization Sub-Contractor Project Team Sub- Vendor Contract Contract - Buyer $$$$ - Seller/Buyer $$$$ - Seller Product Product / 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 52  ~ Procurement Process IC-1.5 Procurement Make-or-buy Bid Seller Finalize Manage management decision documents selection contract procurement plan 9 UN IVERSIT Y OF TO RONTO ~ SC HOO L 0 1 CONT INU ING STU OIE~ 53 1. Determine what goods and services to purchase / buy for the project and which to make with internal resources 2. Develop the plan to buy the goods and services 3. Prepare the document that is issued to potential sellers 4. Based on the responses you receive from potential sellers, select the seller you would award the work to 5. Finalize the contract with the seller 6. Manage the contract to ensure the work is getting done and resolve any disputes  Why Procure? Make or Buy Organizations may procure for a number reasons: - - Lack of skills internally Resources are busy on I other projects - To transfer risk to a third party - More cost effective - Time 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 54 knowledge, experience, lessons learned dont happen if you buy  Why Procure? Make or Buy - Virtual Conference IC-2.5 Make-in-House Criteria Buy Criteria Do we have the necessary Is the project component an human resources? off-the-shelf item and is it available when needed? Do we have the technical How closely does it match and management the requirements? competencies and skills? What and how long would it Are they available for this take to customize it? project when they are What is the reputation of, needed? and how reliable is (are) the Are they cost effective? sellers(s)? Is there potential for long- term relationships in...._ UN I VERS IT Y OF TO RONTO ~ SCHOOL 01 CONT INUING STUOIE~ other projects? 55 ~ i ~ Make or Buy - Virtual Conference - Al (1) The PMExpo team asked ChatGPT: For the virtual project, the team has to decide whether to use internal staff or outsource the recording of the presentations. The conference is going to start in 6 months. To outsource, there would be a fixed cost of $10,000 and a cost of $300 per presentation. There are 50 presentations. For internal staff, you would need one person for 4 months at $3000 per month , who is not available for at least 2 months, and 6 additional resources for 1 month at $2000 per month during the conference. Should the team outsource or use the internal resources? 9 UN I VERSIT Y OF TO RONTO ~ SC HOO L 0 1 CONT INU ING STU OIE~ 56  Make or Buy Virtual Conference - Al (2) To decide whether to outsource the recording of presentations or use internal resources, let's calculate the cost for each option and consider the availability of internal staff: Outsourcing: Fi xed Cost: $10,000 - Cost per Presentation: $300 - Number of Presentations: 50 - Total Cost for Recording: $10,000 + ($300 50) = $25,000 Internal Resources: - One person for 4 months at $3,000 per month: Total Cost: 4 months $3,000 = $12,000 Six add iti onal resources for 1 month at $2,000 per month each: To ta l Cost: 6 resou rces $2,000 = $12,000 - Total Cost for Internal Resources : $12,000 + $12,000 = $24,000 - Additionally, you mentioned that the person required for 4 months is not available for at least 2 months, which means they can only work for 2 months. Let's calculate the revised cost: One person for 2 months at $3,000 per month: Total Cost: 2 months $3,000 = $6,000 - Tota l Revised Cost for Internal Resources: $6,000 + $12,000 = $18,000 Now, let's compare the costs: - Outsourcing Cost: $25,000 - Internal Resources Cost : $18,000 Ba sed on cost alone, it is more cost-effective to use internal resources, which would cost $18,000 compared to outsourcing at $25,000. However, it's essential to consider other factors, such as the expertise of internal staff, their availability, and the quality of work. If the internal team can meet the quality and timing 9 UN I VERSIT Y OF TO RONTO ~ SCH OOL 0 1 CONT INUING STUOIE~ 57 @) Procurement Management Plan Documenting project purchasing decisions Preparing high-cost estimate to determine the budget Advertising the opportunity Identifying potential sellers Preparing and issuing bid documents Preparing and submitting proposals by sellers Conducting a technical evaluation of proposals Performing a cost evaluation of proposals Finalizing negotiations and signing contracts - r------... ~ Whatdoes l Al suggest? 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 58 ~ Bid Documents IC-1.6 Request for Information (RFI) - Sellers are invited to submit information about their firm and services Request for Proposal (RFP) - Sellers prepare and present proposals on how they will meet project requirements Request for Quote (RFQ) - Items to be purchased or procured clearly identified by buyer - Quote or bid submissions - Sellers then quote or bids submitted 9 UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 59 @ Seller Selection What does Al suggest? Weighted scoring analysis: - Weighted scoring models can be used to evaluate seller responses - Steps to create a weighted scoring model Determine the criteria to be used for evaluation Assign a weight to each criterion, the total weight must equal 100% Determine the scoring method for each criterion - Score the seller responses to determine the best response Bidder conferences: - Also called "contractor conferences", "vendor conferences" and "pre-bid conferences" - Conducted at the project site, at the buyer's offices, on the telephone, or via electronic submission - Done to ensure all potential sellers have a clear and common understanding of the procurement 9 UN I VERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 60  Selection - Virtual Conference: 1.1 Survey IC-2.6 Evaluation and Criteria for Member Survey App Criteria F¥bMNMMi·WMMM1=MMMMI◄ Fit with requirements 20% 70 90 70 Customization effort 15% 90 60 30 Reputation of organization 20% 70 60 100 Time to implement 15% 90 60 50 Cost 30% 80 75 30 Weighted Score 79 71 55 Two envelop process: Evaluation on technique criteria first, no price information For those over the threshold, in this example 70 , review the price Best and final offer (BAFO) Lowest price wins, in this case, App A is selected Include in weighted score 9UN IVERSIT Y OF TO RONTO ~ SCHOO L 0 1 CONT INU ING STUOIE~ 61 Weighted Scoring Evaluation Which option would you pick? Use Weighted Score. - Pre-recorded.... ►19♦11◄ Data Score Cost 30% $110 ,000 0 $60 ,000 1 ( 1*30%=0.3) Member 40% High Medium 1 (1*40%=0.4) 2 benefits Staff skills 20% None 0 Some 1 ( 1*20%=0.2) Risk score 10% Over5 0 3 1 (1* 10%=0.1) Total 100% 0.8 1.0 C1110,lo u lng o O 1 2 Scolo O 1, 2 Coll Over s100,ooo Between $60.000 Undo< $50,000 and $100,000 Weighted Member benefits.......... Vefy klw, no new Somt, up lo 5" new-. Hlgh. over5% newmemllefl Score - PMAstafflkllS No wll, need lo Some........ Requi1ed 5ka1s on 10 Invest In starr. nwwnai ""''™" IIMWlg0