Master of Business Administration- MBA Semester 2

MB0049 Project Management

Assignment Set 2
Q1. Define risk management? Explain the components of risk management. Ans. Risk Management Risks are those events or conditions that may occur and whose occurrence has a harmful or negative impact on a project. Risk management aims to identify the risks and then take actions to minimise their effect on the project. Risk management entails additional cost. Hence risk management can be considered cost-effective only if the cost of risk management is considerably less than the cost incurred if the risk materialises. Components

Important components in risk management

Risk management components

a) Risk Assessment Identify the possible risks and assess the consequences by means of checklists of possible risks, surveys, meetings and brainstorming and reviews of plans, processes and products. The project manager can also use the process database to get information about risks and risk management on similar projects. b) Risk Control Identify the actions needed to minimise the risk consequences. This is also known as risk mitigation. Develop a risk management plan. Focus on the highest prioritised risks. Prioritisation requires analysing the possible effects of the risk event in case it actually occurs. This approach requires a quantitative assessment of the risk probability and the risk consequences. For each risk, determine the rate of its occurrence and indicate whether the risk is low, medium or of high category. If necessary, assign probability values in the ranges as prescribed based upon experience. If necessary assign a weight on a scale of 1 to 10. c) Risk Ranking Rank the risk based on the probability and effects on the project; for example, a high probability, high impact item will have higher rank than a risk item with a medium probability and high impact. In case of conflict, use judgment.

d) Risk Mitigation Select the top few risk items for mitigation and tracking. Refer to a list of commonly used risk mitigation steps for various risks from the previous risk logs maintained by the project manager and select suitable risk mitigation step. The risk mitigation step must be properly executed by incorporating them into the project schedule. In addition to monitoring the progress of the planned risk mitigation steps, periodically revisit the risk perception for the entire project. The results of this review are reported in each milestone analysis report. To prepare this report, make fresh risk analysis to determine whether the priorities have changed. Q2. What are the various phases of project management life cycle? Explain Ans. The Project Life Cycle refers to a logical sequence of activities to accomplish the Projects goals or objectives. Irrespective of the complexities of the project, a life cycle of a project consists of a) Understanding the scope and objectives of the project b) Formulating and planning various activities d) Executing the project d) Monitoring the project and controlling the project resources Phases of Project Management Life Cycle The various phases in project management life cycle are Analysis and evaluation Marketing Design Inspecting, testing and delivery Post completion analysis

Analysis and Evaluation Phase It starts with receiving a request to analyse the problem from the customer. The project manager conducts the analysis of the problem and submits a detailed report to the top management. The report should consist of what the problem is, ways of solving the problem, the objectives to be achieved, and the success rate of achieving the goal. Marketing Phase A project proposal is prepared by a group of people including the project manager. This proposal has to contain the strategies adopted to market the product to the customers. Design Phase Based on the inputs received in the form of project feasibility study, preliminary project

Phases of project management life cycle

evaluation, project proposal and customer interviews, following outputs are produced: System design specification Program functional specification Program design specification Project plan Inspecting, Testing and Delivery Phase During this phase, the project team works under the guidance of the project manager. The project manager has to ensure that the team working under him implements the project designs accurately. The project has to be tracked or monitored through its cost, manpower and schedule. The tasks involved in these phases are: Managing the customer Marketing the future work Performing quality control work Post Completion Analysis Phase After delivery or completion of the project, the staff performance has to be evaluated. The tasks involved in this phase are: Documenting the lessons learnt from the project Analysing project feedback Preparing project execution report Analysing the problems encountered during the project Q3. What is Return on Investment (ROI)? Explain its importance Ans. Each Project Management Review meeting starts with an introduction of the members along with the agenda and guidelines of the meeting. The remainder of the review meeting focuses on six categories of information general overview, status of action items from prior review, project status, product status, issues and risks, project unique information. The project status category focuses on the management approach used for the project. This includes schedule, cost, decision, points, ROI, funding status among others. ROI Return on Investment (ROI) is the calculated benefit that an organisation is projected to receive in return for investing money, time and resources in a project. Within the context of the review process, the investment would be in an information system development or enhancement project. ROI information is used to assess the status of the business viability of the project at key checkpoints throughout the projects life-cycle. ROI may include the benefits associated with improved mission performance, reduced cost, increased quality, speed, or flexibility, and increased customer and employee satisfaction. ROI should reflect such risk factors as the projects technical complexity, the agencys management capacity, the likelihood of cost overruns, and the consequences of under or non-performance.

Where appropriate, ROI should reflect actual returns observed through pilot projects and prototypes. ROI should be quantified in terms of money and should include a calculation of the break-even point (BEP), which is the time (point in time) when the investment begins to generate a positive return. ROI should be re-calculated at every major checkpoint of a project to see if the BEP is still on schedule, based on project spending and accomplishments to date. If the project is behind schedule or over budget, the BEP may move out in time; if the project is ahead of schedule or under budget the BEP may occur earlier. In either case, the information is important for decision-making based on the value of the investment throughout the project lifecycle. Any project that has developed a business case is expected to refresh the ROI at each key project decision point (that is, stage exit) or at least yearly.

Project management review categories

Q4. Discuss the role of effective data management in the success of project management. Ans The Role of Effective Data Management in the Success of Project Management Data management consists of conducting activities which facilitate acquiring data, processing it and distributing it. Acquisition of data is the primary function. To be useful, data should have three important characteristics timeliness, sufficiency and relevancy (as shown in figure). Management of acquisition lies in ensuring that these are satisfied before they are stored for processing and decisions taken on the analysis.

Characteristics of useful data

There should be data about customers, suppliers, market conditions, new technology, opportunities, human resources, economic activities, government regulations, political upheavals, all of which affect the way you function. Most of the data go on changing because the aforesaid sources have uncertainty inherent in them. So updating data is a very important aspect of their management. Storing what is relevant in a form that is available to concerned persons is also important. When a project is underway dataflow from all members of the team will be flowing with the progress of activities. The data may be about some shortfalls for which the member is seeking instructions. A project manager will have to analyse them, discover further data from other sources and see how he can use them and take decisions. Many times he will have to inform and seek sanction from top management. The management will have to study the impact on the overall organisational goals and strategies and convey their decisions to the manager for implementation. For example, Bill of Materials is a very important document in Project Management. It contains details about all materials that go into the project at various stages and has to be continuously updated as all members of the project depend upon it for providing materials for their apportioned areas of execution. Since information is shared by all members, there is an opportunity for utilising some of them when others do not need them. To ascertain availability at some future point of time, information about orders placed, backlogs, lead times are important for all the members. A proper MIS will take care of all these aspects. ERP packages too help in integrating data from all sources and present them to individual members in the way they require. When all these are done efficiently the project will have no hold ups an assure success. Measuring and Managing Success Project Managers are the key persons on whom top management depend upon for accurate periodic reports about the project. So the managers are continually concerned about the

measurable aspects of the project in progress. Not all facts will show a measure of success of a project. The facts reported may not mean anything to the management. Therefore metrics used should be answering fundamental questions, the answers to which will be responsive to the needs of the top management. Metrics are important when predicting and controlling the outcome is important. We know what to correct, when to correct and how much to correct the factors that affect the measurement. Measuring is for the purpose of effecting corrections as project is progressing. Both the end deliverables and the execution process have to be measured. The former is done to make sure that they support the business objectives. The latter is performed to make sure that the processes are running as predicted. Let us now look at some metrics and find out their meanings, measurements and benefits: On the same lines we have the following metrics for the project execution: Schedule Estimate Cost estimates Staff productivity Average time to repair The top management may determine which of the metrics they would like to use to measure efficiency, which they can communicate to the client also. Then the project manager will set up suitable reporting systems and analyse the progress accordingly. Success is the culmination of all measuring activities which brings satisfaction to all stakeholders. Lessons learnt should be the guiding factors for future projects. Q5. Write short notes on re-engineering. Reengineering: This is a process by which managers redesign a bundle of tasks into roles and functions so that organisational effectiveness is achieved. By doing so dramatic improvements in critical measures of performance like cost, quality and service are expected. There will be a radical rethink about the business processes adopted. A business process may be of any activity like inventory control, product design, orders processing, and delivery systems. No reference is taken to the existing process and an entirely new process is adopted. The following rules for reengineering are effective: i) Make changes with the outcome in mind not the tasks that result in them. ii) Make the users of the results of the process effect the change. iii) Let the people on the spot decide on the solution decentralise.

Q6. Write brief note on project management application software. Ans:The Microsoft Project family of products offers tools to work on a project from management point of view. Microsoft Project is designed for people who manage projects independently and dont require the capability to manage resources from a central repository. Microsoft has a team project management

solution that enables project managers and their teams to collaborate on projects. After creating a fairly complete final project plan it is a good idea to create a baseline version to compare the original project plan with actual events and achievements. The following is the typical process followed for project management through this software as shown as under:

Reviewing the Baseline: The Baseline created can be used to compare the original project plan with actual events and achievements. This will display the days required for each task and project phase. For actual operating instructions please refer the Microsoft Project User Handbook. 20 Tracking Progress: After creating a baseline, if the project has begun, it is necessary to enter actual dates for the tasks that are being completed and the resource utilization used to complete them. Again review different views and the cost and summary tables before proceeding to the next section. Return to the Entry view of the Gantt chart before proceeding. Balancing Workloads: At times people and equipment may be assigned more work than they can complete in normal working hours. This is called over allocation. Project can test for this condition and reschedule (or level) their workload to accommodate completing tasks during a normal day. Monitoring Variances: After a baseline has been established and the project has begun, it is desirable to determine if tasks are being accomplished on time and /or if cost over runs are occurring. We also need to keep monitoring the performance to detect early deviations. Creating Reports:

Project has many different built-in reports and has the capability building custom reports and exporting data to other MS Office applications for integration into other reporting venues. These are often intelligent reports.