4E1 Project Management

1. 4E1 Project Management Risk, the Law and Wrap-Up

2. Key Concepts • Risk and cumulative risk • Ways in which contracts can go wrong • Risk management • Methods of risk identification • Risk management tools • Legal aspects of projects • Components of a contract • Closing a project • Sources of further training & professional certification

3. What is Risk?

4. Probability Likelihood of Detection Impact Assessment Preventative Actions Feedback/ Learning Remedial Actions A Common Risk Model Identify Event

5. Identifying Risks • Experience and history • Two common approaches are • Fishbone diagrams • Risk maps • Risk areas • Stage: startup, execution, handover • People: staff, suppliers, customers • External: legal, environmental, political

6. Mechanical Lubrication No oil Wrong oil Oil contaminated Oil pipe leak Oilways blocked Oil pump failed etc Broken connecting rod Damaged piston Burnt our valve Bearing failure Incorrect valve timing Blown gasket etc Coil open circuit Spark plugs dirty/worn Battery failed Timing fault Blown fuse Wiring fault Water in system No fuel Wrong fuel Fuel contaminated Fuel lines blocked Fuel filters dirty Etc Fuel Ignition Fishbone Diagrams (Ishikawa) Car Engine Stops and will not start Lock p 575

7. Risk Maps High Threatens Project Objectives Lurking Danger Impact Minor Irritants May Disrupt Operations Low Low High Probability

8. Cumulative Risk The tendency to underestimate cumulative risk A contraceptive pill is 99.5% reliable. If a woman taking it has sexual intercourse (say) 40 times a year while she is fertile, what is the chance of her getting pregnant over the next five years?

9. Cumulative Risk Implications

10. Revised Plans Determine Effect on Estimate or Plans Estimate (Contin- gency Reserves) Contin- gency Plans Strategy for This Risk? Risk Management Risk List or Register WBS Probability of Occurrence Identify Risks Assess Each Risk Rank Risks Risk Assessment Checklist Likely Impact?

11. Risk Probability Impact Management Risks Assessment (Software Project) Hardware delivery delay Tight contract; Penalty clauses Small (<0.05) Serious Package installation problems Training; Site visits; Supplier on site during installation Small (<0.02) Small Data conversion problems Pilot sample data; Quality checks Moderate High (~0.25) User resistance to change Sign on; Information Campaign; Training Moderate (0.10-0.15) High

12. Extended Risk Analysis Risk Probability Impact Likelihood Preventative Response of occurrence of detection actions actions Problem raising Low High High Well prepared Look for other Finance business plan sources Design Low Moderate Moderate Regular reviews Hire specialist Problems resources Strike Low High High Good IR Liaise Conciliation with unions Labour court Key component Moderate High Moderate Diversify sources Look for additional shortages Contract sources Modify design Quality problems Low High High QA at suppliers Additional with piping Over specify? sourcing Poor weather Low Low Low None None Subsidence Low High Moderate Bore tests Further piling Geological survey

13. Failure Mode and Effect Matrix Recommendedaction Item Cause Failure mode Effect Ensure good vehicle maintenance Have a back up car Project manager marooned at remote location Engine won’t start Poor Maintenance Project Manager’s car 1 Building collapses during installation of heavy machinery Errors in floor loading calculations Triple check key structural calculations Personal injuries, project delays Loss of reputation Main Building 2 Ensure operatives get good training and instruction Employ good site manager Floor slabs incorrectly poured Building collapses during installation of heavy machinery Personal injuries, project delays Loss of reputation 3 Lock p 577

14. FME Criticality Analysis Detect Difficut Total Ranking Item Failure mode Cause of failure Effect Chance Impact Project manager marooned at remote location Engine won’t start Poor Maintenance Project Manager’s car 1 2 1 3 6 Personal injuries, project delays Loss of reputation Building collapses during installation of heavy machinery Main Building Errors in floor loading calculations 2 1 5 3 15 Personal injuries, project delays Loss of reputation Building collapses during installation of heavy machinery Floor slabs incorrectly poured 3 1 5 2 10 Limitations of this type of ranking? Lock p 581

15. Response to Risk • Avoid it • Anticipate and try to eliminate it • Share it (with contractors/customer/Government) • Accept it and react if it occurs • Limit it (e.g. “belt and braces”) • Insure against it

16. Contracts • Objectives • Scope • Deliverables • Deadlines • Contractor obligations • Client obligations • Financial arrangements • Escalation procedures • Arbitration procedures • Property rights • Confidentiality • Warranties • Indemnities • Limitations of liability

17. Contract Finance • Types of contract • Fixed price • Fixed price • Target price • Guaranteed maximum price • Time and materials • Schedule of rates with bill of quantities • Cost reimbursement, “cost plus” • Balancing risks and incentives • Contract design is critical • People play the game by the rules

18. Contract Characteristics Principal Degree of Accuracy Contractor’s Contractor’s basis of vigilance of project compared to incentive to payment needed by definition customer’s meet budget customer required risk & timescale Type of contract Fixed price BoQ with Rates Reimburse with fee Reimburse with % profit Achieve- Lowest Highest Highest Highest ment Time/cost Highest Lowest Lowest Lowest incurred

19. Closing the Project • Complete the work • Verifying all components, snag lists, extensions • Handover • Legal formalities, documentation, training • Ceremonial • Sign off • Acceptance tests, quality checks, formal acceptance • Documentation • Tidy up, archive

20. Closing the Project (cont.) • Getting paid • Stage payments, final payment, additional costs • Dispersing the team • Closing project office, saying well done, thank you • Post-implementation review • Lessons learned • Knowledge management • Retaining skills

21. The photo opportunity And Most Important…

22. Developing Your PM Skills… www.projectmanagement.ie

23. Skill Levels Complexity Risk Size

24. Developing Your PM Skills

25. Clear objectives Precise specification Proven feasibility Ample justification Clear ownership A good project manager Appropriate organisation Good procedures Proper planning Adequate resources Good contract Excellent communications Attention to detail Prompt action Ability to take the hard decisions when needed Closing when the job is done Good Project Management