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PROJECT CONTROL & RISK Purpose of Control

Control Process

Cost/Schedule/Technical Control Introduction to Earned Value

Project Changes and Change Control

Importance of Managing Risk

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Purpose of Control

To make the actual meet the plan

The Process 1. Key performance areas 2. Set standards 3. Measure performance 4. Compare 5. Fix

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A Question of Balance Too little control? Too much control?

$

Amount of Control

CControl

CMistakes

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What Forms do these “Standards” Take?

Cost

Schedule

Performance

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A Control Example

You’re two months into a three month project. You’ve spent 90% of your budget.

Defend yourself.

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Three Important Terms BCWS: The plan, integrating schedule

and budget

BCWP: What you planned to spend for work actually done

ACWP: Actual dollars spent at a point in time, for the work actually done

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More Terms BAC: Original budget at completion

TAC: Original time at completion

ECAC: Estimated cost at completion

ETAC: Estimated time at completion

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Four Relationships Cost Variance = BCWP - ACWP

Schedule Variance = BCWP - BCWS

ECAC = ACWP X BAC BCWP

ETAC = BCWS X TAC BCWP

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Changes and Change Control

The last step of the control process: FIX

Two Types: Business and Technical Changes

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Business Changes (aka CCPs) Business related Driven by such things as:

Spec relief Deliverables changes Funding shifts Schedule changes Acts of God Subcontractor changes

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Technical Changes (aka ECPs)

Technological issues, such as: New technologies Laws of physics Competitor response Threat changes Changes in user requirements (real

or political)

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Change Control

Changes cost $, usually big $ So they need control

PM responsibility Signed baselines High levels of authority

Some tools: Zero sum/DTC/caps

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PROJECT RISK MANAGEMENT

Risk defined A brief history Types of project risk The PMBOK sequence Tools

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RISK DEFINED

The likelihood (probability) and the impact of an undesirable event

“Fear of harm ought to be proportional not only to the gravity of the harm, but also to the probability of the event.” (Antoine Arnauld, 1665)

Both matter Examples

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A BRIEF HISTORY

The management of risk forms the boundary between the old world and modern times

Old world Fates and gods Short time horizons Man’s role: accept, maybe react

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SO WHAT CHANGED? Rise of rational man

Man can plan and influence the future

Development of math, probability, forecasting

Multiply XII times VIII Rise of zero and Arabic numerals

Rise of trade, business, shipping Longer time horizons Large commercial ventures mean more at stake

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THE CRITICAL QUESTIONS To what extent does the past foretell

the future? Can we extrapolate from the past to

predict a future event?“Nature has established patterns originating in the

return of events, but only for the most part.”

(von Leibnitz to Bernoulli, who then developed the Law of Large Numbers, 1703)

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TYPES OF PROJECT RISK

PeopleTime

Political Financial

Technical

A Question: Is “Risk Reduction” really possible?

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THE PMBOK RISK MANAGEMENT SEQUENCE

Risk identification Risk quantification Risk response development Risk response control

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TOOLS FOR RISK MANAGEMENT (more or less in order) Expert opinion Simulation Historical Analysis/ “Lessons Learned” “Risk Reduction” Contracting/Procurement Strategy

CPFF, FFP, “Make or Buy,” Sole Source, etc.

Insurance, bonding Multiple paths Management attention (e.g., “Top 10” Lists) Workarounds