Risk management

Project and Risk Management
Techniques in NPD
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What is Project Management?
“Project management is the
application of knowledge,
skills, tools, and techniques
to project activities in order
stakeholder needs and
Project Management Today
 Today, Modern Project Management has emerged as
a premier solution in business operations. Large and
small organizations recognize that a structured
approach to planning and controlling projects is a
necessary core competency for success.
 International organizations such as the Project
Management Institute(PMI) and the International
Project Management Association (IPMA) promote
project management by providing professional
development .
Project Characteristics
Has a goal/meets a need
Is a set of related activities that are nonrecurring
Has a definite beginning and end
Has clearly defined goals and deliverables
Consumes resources
Needs to be managed
Project Manager
“The person who is
responsible for the
project and will be held
accountable for its success
or failure.”
Balancing the “Project
Success Triangle”
 A clear understanding of
customer priorities
 “People” skills
 Thorough planning
 An organized,
 structured process
Work Breakdown Structure(WBS)
 The purpose of work breakdown structure (WBS) is to help
plan effectively for a project by breaking key tasks or
activities down in to more manageable and smaller units of
 WBS produces a detailed list of tasks to be performed for a
project, helping to deliver better costing, scheduling and
resource planning for a project.
 Cost breakdown structure (CBS) lists every item classified
and its expenditure for the project in order to get a more
detailed estimate of cost or expenditure.
Work Breakdown Structure(WBS)
Milestone Checklist
 This is one of the best tools the project manager can use to
determine whether he or she is on track in terms of the
project progress.The project manager does not have to use
expensive software to track this. The project manager can
use a simple Excel template to do this job.
 The milestone checklist should be a live document that
should be updated once or twice a week.
Examle of Milestone Checklist
Project Management Softwares
 With the introduction of computer technology, there have been a
number of software tools specifically developed for project
management purpose. MS Project is one such tool that has won
the hearts of project managers all over the world.
 MS Project can be used as a standalone tool for tracking project
progress or it can be used for tracking complex projects
distributed in many geographical areas and managed by a number
of project managers.
 There are many other software packages for project management
in addition to MS Project. Most of these new additions are online
portals for project management activities where the project
members have access to project details and progress from
Gantt Charts
 A time chart devised by Henry Gantt in 1917, an American
engineer. A Gantt chart is a horizontal bar chart used for
project scheduling. Each activity or task is depicted as a
block over time, actual performance is recorded in real
time and compared to planned deadlines necessary for
achieving completion.
 There are many other software packages for project
management in addition to MS Project. Most of these new
additions are online portals for project management
activities where the project members have access to
project details and progress from anywhere.
Visual of Gantt Chart
The Use of Gantt Charts as a Tool
 Can be used to plan time scale for a project
 Can be used to estimate resources required
 Graphical illustration of a schedule of tasks to complete
e.g. ideal wall chart for the office and easy to visualise and
interpret at meetings
 Helps to plan, coordinate, and track specific tasks for a
 Good for small projects when the number of tasks or
activities are small and not complex e.g. good for simple
Critical Path Analysis (CPA) or
Network Analysis
 Gantt charts are a poor time management tools when
projects are lengthy and complex. There often exists in
large projects a high interdependency between various
tasks e.g. some activities cannot start, until others have
been completed first, therefore many activities are
interrelated. Gantt charts in these circumstances are less
desirable because they do not display or indicate
interdependencies. Network (or critical path) analysis
can display more logically the sequence and timing of
each activity, they communicate interdependency and a
more effective time management tool for large and
complex projects.
What’s is the Critical Path?
 Path with least slack
 Path with longest duration
 Critical Path Method (CPM) is a project management
technique that analyzes what activities have the least
amount of scheduling flexibility (i.e., are the most
mission-critical) and then predicts project duration
schedule based on the activities that fall along the
“critical path.”
 Activities that lie along the critical path cannot be delayed
 without delaying the finish time for the entire project.
Advantages of critical path analysis (CPA)
 Identifies interrelationships between different tasks or activities
 Resources can be planned and allocated from using it e.g. staff
 Good communication and planning tool for time management
Disadvantages of critical path analysis (CPA)
 Assumes a trade off between time and money but most staff cost
could be a
 fixed not variable cost
 The complexity of the diagram will increase as more activities are
 Key uncertainties often exist when estimating the duration for
 therefore can be a poor prediction for elapsed time
PERT (Project Evaluation and Review
 The technique of PERT helps give better time estimation for a
project, by accounting for the uncertainty when predicting
task durations.
 As an illustration, the project manager could estimate the
worse, best and most probable duration of time for each
activity and then determine an ‘average’ completion time.
 This can be undertaken by assigning probabilities to the three
estimates and calculating an ‘expected value’.
 The average time of each activity would then be used to
configure the elapsed time of the project.
Responsibility Assignment
Matrix (RAM) — Purpose
 A Responsibility Assignment Matrix (RAM) uses the Work Breakdown
Structure (WBS) and the organizational structure to link deliverables
and/or activities to resources. The RAM provides a realistic picture of the
resources needed and can identify if you have enough resources for the
project. Additionally, it clearly shows who is responsible for what; if it is
associated with the schedule it can identify when the deliverable is
needed. By creating a RAM; deliverables are assigned a responsible party,
who will review or add input and the appropriate approval authority is
 The RAM can be as simple as placing a check mark in a matrix to assign
the deliverables or activities.
 Ensure that all tasks are assigned to people
 Show levels of involvement of people to work
Network Diagram Methods
 Arrow Diagram Method(Activity on arc)
 Precedence Diagram Method(Activity on node)
 A project manager cannot execute his/her job without a
proper set of tools. These tools do not have to be renowned
software or something, but it can pretty well be simple and
proven techniques to manage project work.
 Having a solid set of project management tools always makes
project managers' work pleasurable and productive.
What is Risk?
With the probability of
occurrence of a hazard, if
you happen
to be
severity of the outcome
will lead to. The risk must
be expressed as a function
of the severity of the
possibility of danger.
Risk Management
 Risk management is the identification,
assessment, and prioritization of risk followed
by coordinated and economical application of
resources to minimize, monitor, and control
the probability and/or impact of unfortunate
events or to maximize the realization of
Risk Management
If you don’t actively attack risks, they will actively attack you.
— Tom Gilb
Project risks
 budget, schedule, resources, size, personnel, morale ...
Technical risks
 implementation technology, verification, maintenance ...
Business risks
 market, sales, management, commitment ...
Hazard and Risk Perception
 Risk is the amount of the
possible loss
 Risk is a function and
expressed multiplied by a of
the level of loss and
 Losing of part of or all of
personal assets against the
a particular hazard is risk
The Process Of Risk Management
Definition of
List of
Risk analysis
Risks are ranked
according to
risks in the
removal of
the break
Risk estimation
Human in Risk Management
Four Techniques of Risk Management
 Comprehensive
risk management is a multistage process that will vary
depending on the needs
and requirements of each
The first stage is to determine exactly what the risks
facing your business are, in order to assess the likely
and potential impact of each incident occurring.
Once this process has been completed, you can get
down to evaluating the technique which will best suit
your business and maximize your risk management
moving forward.
Here are the four key potential risk treatments to
Obviously one of the easiest
ways to mitigate risk is to put a
stop to any activities that might
put your business in jeopardy.
However it's important to
remember that with nothing
gained, and therefore this is
often not a realistic option for
many business.
The second risk management technique
is reduction - essentially, taking the steps
required to minimize the potential that
an incident will occur.
Risk reduction strategies need to be
weighed up in terms of their potential
return on investment. If the cost of risk
reduction outweighs the potential cost of
an incident occurring, you will need to
decide whether it is really worthwhile.
One of the best methods of risk
management is transferring that
risk to another party. An example
of this would be purchasing
comprehensive business insurance.
Risk transfer is a realistic approach
to risk management as it accepts
that sometimes incidents do occur,
yet ensures that your business will
be prepared to cope with the
impact of that even
Finally, risk acceptance involves 'taking it
on the chin', so to speak, and weathering
the impact of an event. This option is
often chosen by those who consider the
cost of risk transfer or reduction to be
Risk acceptance is a dangerous strategy
as your business runs the risk of
underestimating potential losses, and
therefore will be particularly vulnerable
in the event that an incident occurs.
Risk Identification
 Risk identification is the process of understanding what
potential events might hurt or enhance a particular
 Risk identification tools and techniques include:
 Brainstorming
 The Delphi Technique
 Interviewing
 SWOT analysis
Sample Risk Register
INSE 6230
Risk Prioritized
Example of Top Ten Risk Item Tracking
M o n th ly R a n k in g
R isk Ite m
T h is
L a st
N um ber
o f M o n th s
R isk R eso lu tio n
P ro g re ss
M o n th
M o n th
Inad eq u ate
p la n n in g
W o rk ing o n rev is in g the
ent ire p ro ject p la n
P o o r d efin it io n
o f sco p e
H o ld in g m e eting s w ith
p ro ject cu sto m er and
sp o nso r to c lar ify sco p e
A b se nce o f
lead er s h ip
Ju st ass ig ned a new
p ro ject m a n ag er to le ad
the p ro ject a fter o ld o ne
q u it
P o o r co st
estim ates
R e v is in g co st estim ates
P o o r tim e
estim ates
R e v is in g sc hed u le
estim ates
Risk Groups
Diagramming Techniques
Cause and Effect Diagrams
Also known as Ishikawa or fishbone
Bad Specs
Potential Causes
Quantitative Risk Analysis
Decision Trees and Expected Monetary Value (EMV)
Sample Monte Carlo Simulation Results for Project Schedule
Sample Sensitivity Analysis for Determining BreakEven Point
Thank you

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