Project Management and

Resource Allocation
Project defined

 An endeavor in which human, (or machine)

material and financial resources are organized in
a novel way, to
 Unique scope of work,

 Given specification,

 Within constraints of time and cost,

RESULT

deliver beneficial change defined by qualitative and

quantitative objectives. (Turner)
Project defined

 A sequence of unique, complex and connected

activities
 Having one goal or purpose and

 That must be completed by

 A specific time,

 Within budget, and

 According to specification. (Wysocki)

Project defined

 A unique set of coordinated activities,

 with definite starting and finishing points,
 undertaken by an individual or organization
 to meet specific objectives
 within defined schedule, Cost and performance
parameters
 Project is a temporary endeavor undertaken to produce a
unique out come. Projects have series of activities and
tasks that:
 Have specific objective to be completed within certain
specifications
 Have defined start and end time
 Have funding limits
 Consume human and nonhuman resources (money, people,
equipment)
 Are multifunctional (i,.e, cut across several functional lines).
(kerzner)…
 Project Management Defined

• Project management is the process of integrating

everything that needs to be done as the project
involves through its lifecycle (from concept to
handover) in order to meet the project’s
objectives (Morris)

• It is the application of knowledge, skills, tools

and techniques to project activities in order to
meet stakeholder’s needs and expectations from
a project. (Burke)

5
Project properties

• Based on the definitions, a project

 Unique output

 Complex

 Has one goal

 Interconnected activities

 Required to be completed within specified time

and cost
 Temporary and short
Summarizing the definitions
 Project management is the application of
 knowledge,

 skills,

 tools and techniques to project activities in order to

meet or exceed customer expectations

 A project management tries to balance competing

demands for
 Project scope

 Time and cost

 Quality level of the out come and requirements

Managing projects
Management of a project is the interaction
between
Predefined
technique of
accomplishment

D
D oer
fa i e t e s o f
C lure rmi the
o m / s u ne ac
m to

t io
ve o le e

p e cc
h a Wh e r a b i s t h

co n

t i t es s n
ut he
t h an d ?

ive
e
eo w
 l iv a t

ed
d e Wh

ge


s
Why management?

• Because of the scarce resources

• What is expected
 Planning

 Organizing

 Leading

 controlling
 Phases of Project Management
• Projects will generally be sub-divided into
several stages or phases to provide better
management control. Each project phase is
marked by completion of one or more
deliverables.
 A deliverable is a tangible, verifiable work product
(such as feasible study, a detail design or working
prototype).
• Collectively, these project phases are called the
Project Life Cycle. Along with the project life
cycle the other special project management
techniques which form part of the project
management integrative process are: Work
Breakdown Structure (WBS), Critical Path
Method (CPM), Resource smoothing, Earned 10
Value, Configuration Control
Phases of projects
 Phases of a project

1. Scoping the project

• State the
problem/opportunity 2. Planning the project
 Identify project activity
• Establish the project
goal.  Estimate activity
• Define the project duration.
objectives.  Determine resource
• Identify the success requirements.
criteria.  Construct/ analyze the
• List assumptions, risks, project network.
obstacles
 Prepare the project
proposal.
Phases of a project

3. Launching the plan

• Recruit and organize 4. Monitoring the progress

project team • Establish progress

• Establish team operating
rules.
• Level project resources.
• Schedule work packages.
• Document work packages
reporting system
• Install change control
tools/process.
• Define problem-escalation
process.
• Monitor project progress
versus plan.

• Revise project plans.

Phases a project

5. Close out the project

• Obtain client acceptance,

• Install project deliverables.

• Complete project documentation.

• Complete post-implementation audit

• Issue final project report.

Work Breakdown Structure(WBS)
• A method of breaking down a project into
individual elements ( components,
subcomponents, activities and tasks) in a
hierarchical structure which can be scheduled and
cost
• It defines tasks that can be completed
independently of other tasks, facilitating resource
allocation, assignment of responsibilities and
measurement and control of the project
• It is foundation of project planning
• It is developed before identification of
dependencies and estimation of activity durations
• It can be used to identity the tasks in the CPM and
PERT
WBS
 Project
Organization
Possible structures
• There are two fundamentally different ways of
organizing projects within the parent organization

• Functional Project Organization:

• The project as part of the Functional Organization
• housed within a functional division; team members
remaining part of the functional units and typically
are not dedicated to the project

• Project Organization:
• The project is a free-standing part of the parent
organization
• A self-contained team works full-time on the
project

• A third type, called a Matrix Organization is a hybrid

of the two main types. The project uses people from
different function departments

• Each has advantages and disadvantages

 Functional Project Organization
• Project is a part of one specific functional
department of an organization
• Team members do project next to their regular work
CEO

VP Customer
VP Engineering VP Manufacturing VP IT
Support
Department Department Department
Department

Staff Staff Staff Staff

Project A Project B Project C Project D

Functional organization
Pros
 Reduce duplication of
activities
 Maximum flexibility in
the use of staff
 Logical, scientific and
time tested
 Facilitates specialization
 Easier supervision
 Easy control for the top
managements
Cons
 Loss of holistic picture
 Lack of development of general
managerial skill
 Less coordination and relationships
between different functions
 Development of conflicts resource
conflicts
 Delayed communication and decision
making
 Blame on each other
 Lacks customer focus
Project structure

Advantage Disadvantage
 Give all control to the project  Cost inefficient because of
manager  under utilization of resources,
 There is no conflict with other and
projects over resources or  Duplication of activities and
priorities resources in different projects
 The structure is highly  There is low level of knowledge
responsive to the customer, and transfer among projects
shortened communication line
 Team members have no
 Team pride, motivation, and functional area and worry about
commitment are high life after project end
 Organizational goal and policy
might be ignored
 Matrix Project Organization
• The matrix organization is a combination of functional and
project
• Staff of several departments is full or partly assigned to a project
manager out of several departments, but staff remains physically
in their department
• Assigned staff has two bosses, a dedicated project manager
decides which determines and schedules tasks but the functional
manager assigns people

CEO

VP Technical
VP Engineering VP Manufacturing VP IT
Support
Department Department Department
Department

Project Manager Staff Staff Staff Staff

Project A

Project Manager
Project B

Project Manager
Project C

Project C needs: 1½ staff members of Engineering , 2 of Manufacturing, 3 of IT and 1 of Technical

Support Department
Matrix Project Organization

• A matrix organization can take on a wide

variety of specific forms
1. The ”strong” matrix organization most
resembles the project organization
2. The ”weak” matrix organization most
resembles the functional form
3. The ”balanced” matrix organization lies in
between the others
• Different forms defines:
 The position of the Project Manager and the
Functional Manager
 which responsibilities and authorities the
Project Manager and the Functional Manager
have
 Matrix Project Organization
1. ”Weak” matrix organization
 PM is only a coordinator / spokesperson to higher
management
 Functional managers have authority and responsibility for
staff
 Responsibility for success of project is shared between the
departments

2. ”Balanced” matrix organization

• Balance power of project manager with that of functional
manager
• Managers work closely together to balance resources
• Both have project responsibility

3. ”Strong” matrix organization

 Project manager is principal authority and responsibility
 Controls of schedule, budget
 Acquires personnel, performs reviews
 Network
Scheduling
Introduction

• Schedule converts action plan into

operating time table
• Basis for monitoring and controlling
project
• Sometimes customer specified/approved
requirement
• Based on Work Breakdown Structure
(WBS)
The management procedure
The management procedure
• Activity definition: Identifying the specific activities that
the project team members and stakeholders must perform to
produce the project deliverables.
• Activity sequencing: Identifying and documenting the
relationships between project activities.
• Activity resource estimating: Estimating how many
resources a project team should use to perform project
activities.
• Activity duration estimating: Estimating the number of
work periods that are needed to complete individual
activities.
• Schedule development: Analyzing activity sequences,
activity resource estimates, and activity duration estimates
to create the project schedule.
• Schedule control: Controlling and managing changes to the
project schedule.
The network techniques

PERT CPM
-Program Evaluation and Critical Path Method
Review Technique Developed by El Dupont
- developed by the US for Chemical Plant
Navy with Booz Shutdown Project- about
Hamilton Lockheed same time as PERT
- on the Polaris
Missile/Submarine
program 1958

Both use same calculations, almost similar

Main difference is probabilistic and deterministic in time
estimation
Gantt Chart also used in scheduling
The techniques
• Graphical portrayal of activities and event
• Shows dependency relationships between
tasks/activities in a project
• Clearly shows tasks that must precede
(precedence) or follow (succeeding) other
tasks in a logical manner
• Clear representation of plan – a powerful
tool for planning and controlling project
Critical path method

Definition:
• In CPM activities are shown as a network of
precedence relationships using either activity on
arrow or activity-on-node network construction

 Single estimate of activity time

 Deterministic activity times

USED IN : Production management - for the jobs

of repetitive in nature where the activity time
estimates can be predicted with considerable
certainty due to the existence of past experience.
Project evaluation and review
technique (PERT)

Definition:

• In PERT activities are shown as a network of

precedence relationships using activity-on-arrow
network construction

 Multiple time estimates

 Probabilistic activity times

USED IN : Project management - for non-

repetitive jobs (research and development work),
where the time and cost estimates tend to be quite
uncertain. This technique uses probabilistic time
estimates.
Gantt chart

Advantages Limitations
- Gantt charts are quite commonly  Do not clearly indicate details
used. They provide an easy regarding the progress of activities
graphical representation of when
activities (might) take place.  Do not give a clear indication
of interrelation ship between the
separate activities
Gantt chart
• Activity :any portions of project (tasks)
which required by
project, uses up resource
and consumes time – may involve
labor, paper
work, contractual
negotiations, machinery operations
Event : beginning or ending points
of one or more
activities, instantaneous point in
time, also called ‘nodes’
• Network :Combination of all project activities
and the events
SUCCESSOR
PRECEEDING
ACTIVITY

EVENT
Rules of networking
• Each activity must have a preceding
and a succeeding event. An activity is
numerically denoted by the pair of
preceding and succeeding events.
• Each event should have a distinct
number. The number given to an event
can be chosen in any way, provided
this condition is satisfied. In practice,
however, normally events are so
numbered that the number at the head
of the arrow is greater than that at its
tail
Rules of networking…….
• There should be no loops in the project network.
• Not more than one activity can have the same
preceding and succeeding events.
 This means that each activity is
represented by a uniquely numbered
arrow.
 To ensure that each activity is uniquely
numbered it may be necessary some
times to introduce dummy activities.
 A dummy activity is an imaginary
activity which can be accomplished in
zero time and which does not consume
resources. It is represented by a dashed
arrow.
Example

• Consider the list of four activities for making a

simple product:

Activity Description Immediate

predecessors
A Buy Plastic Body -
B Design Component -
C Make Component B
D Assemble product A,C

Immediate predecessors for a particular activity are

the activities that, when completed, enable the start of
the activity in question.
The network

Arrows indicate project activities

A D
1 3 4

B C

Nodes correspond to the beginning and

ending of activities
Develop the network for a project with following
activities and immediate predecessors:

Activity Immediate
predecessors
A -
B -
C B
D A, C
E C
F C
G D,E,F
Solution
• Note how the network correctly identifies D,
E, and F as the immediate predecessors for
activity G.
• Dummy activities is used to identify
precedence relationships correctly and to
eliminate possible confusion of two or more
activities having the same starting and ending
nodes
• Dummy activities have no resources (time,
labor, machinery, etc) – purpose is to
PRESERVE LOGIC of the network

1 A 3 D 4 G
7
dummy E
B
C 5 F
2 6
Benefits
• Identified activities with slacks that can be
delayed for specified periods without
penalty, or from which resources may be
temporarily borrowed
• Determines the dates on which tasks may
be started or must be started if the project is
to stay in schedule.
• Shows which tasks must be coordinated to
avoid resource or timing conflicts.
• Shows which tasks may run in parallel to
meet project completion date
Types of activity dependency

• Mandatory dependencies: Inherent in the nature

of the work being performed on a project;
sometimes referred to as hard logic.

• Discretionary dependencies: Defined by the

project team; sometimes referred to as soft logic
and should be used with care because they may
limit later scheduling options.

• External dependencies: Involve relationships

between project and non-project activities
Important questions
• What is the total time to complete the project?

• What are the scheduled start and completion times for

each activity?

 ES, EF, LS, LF are given for each activity.

• What activities are critical and must be completed as

scheduled in order to keep the project on time?

• How long can non-critical activities be delayed before

they cause a delay in the project’s completion time

 Slack time available for all activities are

given
CRITICAL PATH METHOD (CPM)

CRITICAL PATH METHOD (CPM)

 Deterministic model

 Single time estimate for each activity

 No uncertainty is considered

 No determination of success/failure probability

CPM
• CPM is a network diagramming technique used to
predict total project duration.

• A critical path for a project is the series of

activities that determines the earliest time by
which the project can be completed.

• The critical path is the longest path through the

network diagram and has the least amount of
slack or float.

• Slack or float is the amount of time an activity

can be delayed without delaying a succeeding
activity or the project finish date.
Procedure (procedure)

• Determine the activities of the project

• Identify the predecessors and successor activities

• Allocate resource and time for each activity

• Draw the network diagram

• Find the critical path

• Determine the early start and finish times

• Determine the latest start and finish times

• Find the slack time for each non-critical activities

Example

f, 15 5

2 h, 9
g, 17
a, 6
6 i, 6

1 b, 8 8
d, 13 j, 12
3

c, 5 7
e, 9

4
Critical path

• The possible paths from the starting to the

finishing node are
 1-2-5-8…………………..6+15+9=30

 1-2-6-8…………………..6+17+6=29

 1-3-7-8……………8+13+12=33 …CP

 1-4-7-8…………………..5+9+12=26
Critical path
f, 15

g, 17 h, 9
a, 6
i, 6

b, 8

d, 13 j, 12

c, 5
e, 9
Earliest start and finish time

• Forward pass
• Determine early occurrence time of a events

EOT= Max(EOT(i) + D(I,j))

• EOT of starting node is assumed to be zero

• The early start of the next activity is given by

ES(I,j)=EOT(i)
• The early finish time of an activity given by
EF (i.j)=EOT (i) +D(I,j)
Latest start and finish times

• Back ward pass

• Assume that the LOT of the last event is equal

to EOT of the same node

• The LOT of the other Events is given by

 LOT(i)=Min(LOT(j)-D(i,j)
• Therefore,

 LF(i,j)=LOT (j)

 LS(I,j)=LF(i,j)-D(i,j)
The EOT and LOT of nodes

21 24
6 9 f, 15 5

2 h, 9
g, 17 23 27
a, 6
6 i, 6

1 b, 8 8 8 8
3 d, 13 j, 12
0 0 33 33
c, 5 7
e, 9
21 21
5 12 4
Early start and finish times….
f, 15
5
6 21
2 h, 9
g, 17
a, 6
21 30
0 6 6 23 6 i, 6
23 29
1 8
0 8 d, 13 j, 12
3
8 21 21 33
c, 5 7
0 5 e, 9

5 14
4
 21 24
6 9 f, 15 5

2 h, 9
g, 17 23 27
a, 6
6 i, 6

1 b, 8 8 8 8

3 d, 13 j, 12
33 33
0 0
c, 5 7
e, 9
21 21

5 12 4
The latest times
f, 15
5
6 21
h, 9
2 18 24
21 30
a, 6 g, 17
24 33
0 6 6 23 6 i, 6
4 10 10 27 23 29
1 b, 8 27 33 8
0 8 d, 13 j, 12
3
0 8 8 21
21 33
c, 5 8 21 7 21 33
0 5
7 12 5 14
4
12 21
Activity slack
f, 15
5
6 21
3 h, 9
2 9 24
21 30
a, 6 g, 17 3
24 33
0 6 6 23 6 i, 6
3 4
3 9 10 27 23 29
4
1 27 33 8
0 8 d, 13 j, 12
0 3
0 8 8 21 21 33
0 0
c, 5 8 21 7 21 33
0 5 e, 9
7
7 12 5 14
4 7
12 21
Project evaluation and review technique (PERT)
 Probabilistic model

 Three time estimates

 Consideration of success/failure probability

PERT
• PERT is based on the assumption that an
activity’s duration follows a probability
distribution instead of being a single value
• Three time estimates are required to compute the
parameters of an activity’s duration distribution:
 pessimistic time (tp ) - the time the activity would
take if things did not go well
 most likely time (tm ) - the consensus best
estimate of the activity’s duration
 optimistic time (to ) - the time the activity would
take if things did go well
Mean (expected time): te = tp + 4 tm + to
6

Variance: Vt =2 = tp - to
6
PERT analysis
• Draw the network.

• Find the expected time of each activity

• Analyze the paths through the network and find the critical
path.

• The length of the critical path is the mean of the project

duration probability distribution which is assumed to be normal

• The standard deviation of the project duration probability

distribution is computed by adding the variances of the critical
activities (all of the activities that make up the critical path) and
taking the square root of that sum

• Probability computations can now be made using the normal

distribution table.
Probability computation

Determine probability that project is completed

within specified time

D-T
Z=


where T= Critical path duration

D= (proposed ) specified time
 = project standard mean time
 D
2 5

A E H J

4
1 C 7
B
I K
F

G
3 6
 Activity Expected Time Variance
A 6 4/9
B 4 4/9
C 3 0
D 5 1/9
E 1 1/36
F 4 1/9
G 2 4/9
H 6 1/9
I 5 1
J 3 1/9
K 5 4/9
 Activity ES EF LS LF Slack
A 0 6 0 6 0
*critical
B 0 4 5 9 5
C 6 9 6 9 0*
D 6 11 15 20 9
E 6 7 12 13 6
F 9 13 9 13 0*
G 9 11 16 18 7
H 13 19 14 20 1
I 13 18 13 18 0*
J 19 22 20 23 1
K 18 23 18 23 0*
PROBABILITY COMPUTETION

Vpath = VA + VC + VF + VI + VK

= 4/9 + 0 + 1/9 + 1 + 4/9

= 2

path = 1.414

z = (24 - 23)/(24-23)/1.414
= .71

From the Standard Normal Distribution

table:

P(z < .71) = .5 + .2612 = .7612

Activity floats
The total float:-
 The extra time available to complete the activity if
it is started as early as possible, without delaying
the completion of the project.
 The total float represents float under most
favorable conditions. This so because the activity
can be started at the earliest (the EOT of the
preceding event) and completed at the latest (the
LOT of its succeeding event).

TF( i, j ) = LOT(j )-EOT( i ) - D( i, j )

Activity floats….

 The free float of an activity is the extra time

available to complete the activity when the activity
is started at the EOT of its preceding event and
completed by the EOT of its succeeding event.

FF ( i, j ) = EOT(j )- EOT( i) - D ( i, j )
 The independent float of an activity is the extra
time available to complete the activity when the
activity is started at the LOT of its preceding event
and completed by the EOT of its succeeding event.

IF ( i, j ) = EOT(j )- LOT( i )- D ( i, j )
Resource allocation
• It is usually wise to maintain relatively stable
employment levels and to utilize resources at a
more constant rate.

• In such situations resource leveling programs are

most appropriate.

• We know that activity slack is a measure of

flexibility in the assignment of activity start times.

• The scheduler may use activity slack as a means of

smoothing peak resources requirements.
Steps in Allocation

• Allocate resources serially in time. It means, start

on the first day and schedule all jobs that are
possible, then do the same for the second day, and
so on.

• When several jobs compete for the same

resources, give preference to the jobs with the
least slack.

• Schedule non-critical jobs, if possible, to free

resources for scheduling critical or non-slack jobs.
Risk Analysis
75
• With increasing market competition, increasing
technology and an increasing rate of change,
risk management is gaining significance and
importance. The risk continuum indicates the
boundaries of risk management between
certainty and uncertainty.

• It can be seen that risk, uncertainty and

opportunity are closely related. When a risk
occurs, with some ingenuity, this may open up
an opportunity, and conversely when pursuing
an opportunity there will be associated risks.
Risks are generally deemed acceptable if the
76
possible gains exceed the possible losses.
Cont.

• Project Risk Management is defined by the project

management body of knowledge (PMBOK) as: "the
processes concerned with identifying, analyzing and
responding to uncertainty [throughout the project
life-cycle]. It includes maximizing the results of
positive events and minimizing the consequences of
adverse events".

77
Cont.

• A project risk may be defined as any event that

prevents or limits the achievement of your
objectives as defined at the outset of the project,
and these objectives may be revised and changed
as the project progresses through the project life-
cycle.

• The generally accepted risk management model

sub-divides the risk management process into the
following headings:

78
Cont.
• Define Objectives: define the context of your work
and your plan for success. This defines what you have
to achieve to be successful and establishes a basis for
dealing with risk and future decisions.

• Identify Risk: identify areas of risk and uncertainty

which may limit or prevent you achieving your
objectives.

• Quantify Risk: evaluate and prioritize the level of risk

and uncertainty and quantify frequency of occurrence
and impact.
79
 Cont.

• Develop Response: define how you are going to respond

to the identified risks; eliminate, mitigate, deflect or accept.

• Document: the risk management plan documents how you

propose to tackle risk on your project.

• Risk Control: the risk control function implements the risk

management plan. This may involve training and
communication. And as the risks and the work environment
are continually changing, it is essential to continually
monitor and review the level of risk and your ability to
effectively respond..
80
 Risk Through the Project Life-Cycle

• Risk and opportunity are high at the outset of the project

(during the concept and design phases), when there is
the greatest degree of uncertainty about the future. As
the project progresses these parameters reduce as
decisions are made, design freezes are implemented, and
the remaining unknowns are translated into known.
These unknowns are eventually zero when the project
has been successfully completed. The amount at stake
(investment cash flow), on the other hand, starts low and
steadily rises as capital is invested to complete the
project.
81
Cont.

• The period of highest vulnerability to risk occurring

is during the last two phases (implementation and
commissioning). During these phases, adverse
conditions may be discovered, particularly during
commissioning and start-up. This is also when the
level of influence is low and the cost to change is
high..

82
 Risk Management Responsibility
• Who is responsible for managing risk? The general manager
and managing director are ultimately responsible to the
board of directors and the shareholders for managing risk
within the company. However, this responsibility is usually
delegated through the corporate hierarchy with the project
managers responsible for project risk and the functional
managers responsible for their department's risks. This
process of pushing risk responsibility down the hierarchy is
consistent with risk management being a company wide
issue (empowerment).

83
Cont.

• The respective managers would then be responsible

for developing a risk management plan to identify,
quantify, respond and control risks that affect their
scope of work. As with other management techniques,
it should be the managers’ responsibility to ensure
that their team members have a working
understanding of risk within the context of their scope
of work and feel accountable for the consequences of
their actions..

84
Define Objectives

• A risk may be defined as any event that prevents

you achieving the project's goals and objectives. It
is therefore necessary at the outset to define these
goals and objectives in some detail

• Develop Risk Assessment Criteria against which

risks can be assessed and decisions made. These
criteria may be based on operational, technical,
financial, legal, social and humanitarian
requirements. There will be internal and external
constraints which set your boundaries. It is
important to understand the environment of the
project or the nature of the problem..
85
Risk Identification

• Risk identification should be a systematic process

to ensure nothing significant is over looked.

• Techniques for identifying risk include:

analyzing historical records

(closeout reports)

structured questionnaires

86
Cont.

• structured interviews

• brainstorming

• structured checklists

• flow charts

• judgment based on knowledge and experience

• system analysis

• scenario analysis (what-if)..

87
Common reasons for project failure:

• Misinterpreting the scope of work

• Mixing and confusing tasks, specifications, approvals,

and special instructions

• Using imprecise or vague language, for example;

nearly, optimum, about or approximately can lead to
confusion, ambiguity or misinterpretation.

• No pattern, structure, or chronological order. The WBS

and CPM techniques have not been used.

88
 Cont.

• Wide variation in size of tasks and work packages, again

caused by not using the WBS to sub-divide all the work
packages to a common level of detail.

• Wide variation in how to describe work details.

• Failing to get third-party review or verification from the

client, sub-contractors and suppliers.

• Not working closely with the client.

• Poor estimating.

89
 Cont.

• Inadequate planning.

• Insufficient reviews and control.

• Lack of commitment : gain commitment by involving the

responsible people in the planning.

• Incomplete information, for example, during the tendering

process the contractor is attempting to assess the correct
market price for a project not yet built, for a design which is
subject to revision, on a site about which there is little
information and a labor force not yet recruited..

90
Risk Quantification

• Risk quantification is primarily concerned with

determining what areas of risk warrant a response
and where resources are limited, a risk priority will
identify the areas of risk that should be addressed
first.

• Probability / Impact Matrix: This matrix plots the

probability of the risk occurring against the impact on
the project. They are quantified as high, medium, or
low- this will give a matrix of nine possibilities..

91
Risk Response
• Develop a risk response plan which defines ways to
address adverse risk and enhance opportunities before
they occur. The levels of risk should be compared
against pre-established criteria, then ranked to
establish management priorities. There are a range of
responses which should be developed in advance during
the planning phase:

• Eliminate risk Mitigate/reduce risk

• Deflect/transfer risk Accept risk

92
Cont.

• These are not mutually exclusive - your response may

use a combination of them all. A natural sequence
would be to first try and eliminate the risk completely
- failing that, at least mitigate it. And for the
remaining risk the options are to try and deflect it and
/ or accept it with a contingency. All these responses
cost money, so a cost-benefit analysis should be
performed as it may be more cost effective to accept
a risk rather than taking expensive steps to eliminate
it..

93
Risk Control

• The risk control function implements the risk

management plan to make it happen- this is the most
important part which is often neglected! The risk
management plan needs to be communicated to all
the project participants and where necessary followed
up with appropriate training and practice runs. The
training should not only ensure that the risk
management plan is understood, but also develop a
company wide risk management culture and attitude.

94
Cont.

• The risk management plan should be monitored and

updated on a regular basis to ensure you learn from
recurring risks and that it is relevant to changing
circumstances:

changes in the scope of work

changes in the build method

changes in the team members

changes in the suppliers..

95
 Disaster Recovery Planning

• A disaster is a sudden, unplanned catastrophe that

prevents your company providing its critical business
functions for a period of time and could result in significant
damage or loss. The time factor will determine whether a
problem or service interruption is an inconvenience or a
disaster - losing power for a few hours may be an
inconvenience but losing power for a few weeks/months
could be a financial disaster. The objective of disaster
recovery management is to reduce the consequence of a
disaster to an acceptable level. This is the ultimate
contingency plan. 96
 Cont.

• For the ultimate unplanned catastrophe that prevents

your company providing its critical business functions
for a period of time, and results in significant damage
or loss, your company needs to develop a disaster
recovery plan. The objective of disaster recovery
planning is to reduce the consequence of a disaster to
an acceptable level. The responsibility for developing
and implementing the disaster recovery plan should
be assigned to a particular manager as part of your
company's risk management plan. Therefore, in the
event of a disaster the plans will have been
developed, updated and a functioning team will be
ready to implement them.
97
Cont.

• Disaster recovery planning is essentially a contingency

response from your risk management planning, but due
to the unique nature and size of the problems it is
probably best managed separately - as a project. The
management of the disaster recovery plan should be
assigned to a manager with responsibility to set up a
team to:

• develop the disaster recovery plan

• control the disaster recovery plan

• and when the time comes - implement the disaster

recovery plan quickly and effectively!!. 98
Reading assignment

PROJECT CRASHING
( Compromising cost and project duration)
THANK
YOU !!