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Problem Narrative

Oct 12, 2017 | 0 comments

Oct 12, 2017 | Essays | 0 comments

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Problem Narrative

Process Brief: In our Organization, we had centralized project management team, for assigning projects, called Project Management Office (PMO). PMO conducts Risk to Reward analysis for selecting the projects and assigns the projects to different functional teams, based on the kind of projects undertaken. Each functional team had a Project Manager (PM). PMO assigns project to PM and PM is primarily responsible for all the project management activities during the project life cycle (snapshot of the primary responsibilities are provided below).

Problem: Risk Management process is performed as an add-on, rather than implementing as formal comprehensive risk management strategy. Risk management process is not implemented in coordinated fashion resulting in Scope creep, Procurement issues, Resource Allocation issues, inaccurate Scheduling and reduced project quality. There is no established infrastructure for supporting overall risk management process in the company. This is leading to lost opportunities, cost overruns and changes to corporate strategy.

Evidence for the problem: Risk management process was performed in the analysis phase of Project Life cycle. This involves identifying potential risks, their probability and impact and the possible solutions for the risks. Only one resource contact from each department is involved in these meetings. Expert opinion is taken, but input was restricted as fewer resources are involved in these discussions. Some of the issues that are arising due to informal risk management process are:

  1. Scope creep: Initial Risk analysis that is done in the inception phase doesn’t take into account the potential changes that architecture team may propose in the analysis phase. Since the Business Requirement Document in base lined in the analysis phase, there is greater chance for Architecture team to come up with added requirements or changes to the scope, based on the future end state (End state for our application was provided by architecture team, which on achieving, will result in performance, scalability, availability and reliability benefits, resulting in increased revenue and less maintenance costs for the company) requirements. This leads to increase scope thereby increasing the time taken by the architecture team to provide the design documents.
  2. Secondary risk: Due to increased scope, PM’s tend to mitigate risk by using automated tools and techniques, to complete the project on time and this is resulting in secondary risk like missing some of the requirements in the project scope. For example, we had a situation where unit testing was performed by using automated tool and that had resulted in not testing some of the test cases, due to limitations of the tool.
  3. Scheduling issues: Since the design documents are often delayed by the architecture team, as a result of scope changes, PM’s constants had issues with meeting the milestones in the schedule. Frequent changes to the schedule are performed, resulting in delays in project deadlines.
  4. Resource Allocation: PM’s always procure resources from different functional departments, for completing the projects. A lot of times, the resources are not immediately available due to their existing tasks and priorities and this is resulting in wastage of already assigned resources, as they wait until the other team resources join. This is causing poor resource allocation practices in the company.
  5. Cost Overruns: Cost and time overruns are common in major projects undertaken, due to scope creep, resource allocation issues and other unforeseen issues.
  6. Contract Procurement: Contractors for the project were provided by an external vendor. There are instances in the past where contractors left the job before the contract is completed. This resulted in project delays and sometimes, it takes more time than expected, to get the resources from vendors and learning curve for the new resources. This is due to unavailability of the needed resources in the market for the technologies used in the projects.
  7. Contingency reserves: For most of the projects, contingency reserves are set as a percentage of the initial Level1 estimates. Qualitative risk analysis was not performed to identify the potential risks that may arise during that particular phase in the life cycle. This had resulted in improper assignment of contingency reserves for the projects.
  8. Motivation: Since few members in the team will participate in the risk management meetings, the developers often complain about the issues that were not considered in the initial plan. This results in lack of motivation for the resources thereby reducing the morale of the developers and they are reluctant to commit to the deadlines.
  9. Project quality: Quality is reduced, as the PM’s try to complete the projects on time with increased scope, thereby reducing the testing phase timelines and this is resulting in more “production problems” (Issues that arise after the project is deployed in production environment) than normal.
  10. Reactive risk response: Most of the time, risks arise during the project development are handled using reactive response, rather than being proactive in responding to potential risks. This is resulting in failed risk responses for some of the risks and causing time and cost overruns. For example, we had project where technical risks are not performed in the outset and resulted in reaching maximum file size supported by the operating system. To resolve this during development phase, it was decided to add a new file to the application, for storing the data after the maximum file size is reached. This resulted in making changes to code in all systems that use that file.
  11. Corporate Strategy: For major projects in the organization, the business team often performs Return on Investment (ROI) analysis, to identify profitable projects. Profitable projects are always given priority for enhancements over the other projects, as they had direct influence on the corporate earnings and are aligned with the corporate strategy of “increasing revenues”. This resulted in slow down of some of the existing projects, as they are not performing as expected due to budget overruns and loss of business due to delays in deadlines.
  12. Direct costs for risk management: PM’s often complain that risk management performed is resulting in increased direct costs as it takes time and resources for Risk identification, Risk analysis, Risk response and Risk control for the projects undertaken. This was always performed by Subject Matter Experts (SME’s) that are assigned for the project. This involves documenting the potential risks, their impact and risk response strategies in excel spreadsheets and updating them during the course of the project.

Project Management Lessons learned: Implementing comprehensive Risk management approach will assist Project teams manage risk in a more proactive manner. Having a formal process will enforce consistency in the Risk management process, by providing the stages needed to complete risk management plan. Common risk management process consists of five basic steps (Pinto, Morris, 2004):

  1. Risk Strategy: This should set out how risk management will be undertaken on a project. The resultant Risk strategy plan has to be integrated with the Project strategy as well as the wider project management process. This plan should also describe how the risk management process would contribute to project evaluation exercise that might take place at the completion of the project. The plan consists of scope and objectives of risk process, roles and responsibilities of the participants, deliverables of the process, review and reporting cycle and tools to be used in the process.
  2. Risk Identification: This should take place in the inception phase and must include the classification scheme for likely risks (Pinto, 2007). According to classification scheme, primary categories of risk are Technical risk, Financial Risk, Commercial Risk, Contractual risk and Execution risk. Using this classification will assist in grouping the risks identified and enable to resolve them in a coordinated manner, by analyzing possible solutions for each kind of risk.

Several risk identification techniques are provided to use in this stage like Research, Structured interviews, Checklists and Brainstorming sessions. PM has to select the techniques that are needed for the project, based on the resources available and time allocated to perform the risk management process.

Risk registers can be maintained in the organization, to document all the risks in the projects, how they are resolved and their impact on the projects. This will enable easier access to project teams and makes it easier for conducting risk response, based on historical performance of similar risks.

  1. Risk Analysis: This phase will help in achieving better understanding of the risks identified in the above phase. Risks can be compared like-for-like basis and this will assist in selecting best approach to follow, to manage risk in the project. This phase is divided into two parts:
  2. Qualitative risk analysis: Risks can be analyzed by using probability and impact scale and building a matrix for all the risks identified. When fewer resources are available, this matrix will allow attention to be focused on those risks that sit in the high-risk category of the matrix. The probability/impact matrix will assist in developing risk profile for a project. If most of the risks fall in high-risk category of matrix, then that project is considered as high risk. This will assist management in deciding if the project should be undertaken or not. This analysis chiefly relies on subjective data provided by the participants.
  3. Quantitative risk analysis: This will allow project risks to be modeled by applying statistical theory to risk management process. There are several simulation techniques available to perform these complex calculations. Some of them are Decision trees, Monte Carlo simulation etc. Several software packages (Example: Microsoft Project) are available in market to perform these techniques.
  4. Risk Response: In this phase, appropriate course of action has to chosen, based on available information. Risk responses will generally fall into Avoid, Transfer, Mitigate or Control categories. Caution should be taken to ascertain the full implications of response strategy. There is potential scope for secondary risk to arise, due to risk response implementation.

There are several risk response tools and techniques that can be primarily integrated with Project management process. Some of them are Contract acquisition plan that ensures responses to risk are placed in relevant work packages, Contingency management that ensures money is released only if a predefined event occurs, Project controls that allow the project to react to changing circumstances.

Risk Control: This process will make sure the risk management process is effectively implemented. This involves performing iterative process of all the four stages described above, in various phases of the project life cycle.

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