Leiden Institute of Advanced Computer Science            System s Development and Project            Management –         ...
Leiden Institute of Advanced Computer Science                           DatesFeb. 1               14:45 – 17:30           ...
Leiden Institute of Advanced Computer ScienceDeliverable Planning February 18, midnight                Assignment 1:      ...
Leiden Institute of Advanced Computer ScienceSTEP WISE overview      1. Identify project objectives           0. Select Pr...
Leiden Institute of Advanced Computer ScienceEvaluation  !   Not unusual to spend between 6-12 months      and 40% of tota...
Leiden Institute of Advanced Computer ScienceNature of risk  !   Describes non-desirable events or outcomes      (vs. oppo...
Leiden Institute of Advanced Computer ScienceTypes of risk  !   Caused by estimation difficulties     !    Some tasks are ...
Leiden Institute of Advanced Computer ScienceManaging risk  Boehm s risk engineering task breakdown                    Ris...
Leiden Institute of Advanced Computer ScienceManaging risk (cont d)  !   Risk analysis:     !    Risk identification - lis...
Leiden Institute of Advanced Computer ScienceManaging risk (cont d)  !   Risk management:    !    Risk planning – drawing ...
Leiden Institute of Advanced Computer ScienceHazard identification  !       Application factors  !       Staff factors  ! ...
Leiden Institute of Advanced Computer ScienceHazard analysis  !   Most favored ranking method is to calculate      risk ex...
Leiden Institute of Advanced Computer ScienceHazard analysis (cont d)  !   Risk prioritization     !    Reducing risk expo...
Leiden Institute of Advanced Computer ScienceRisk planning and control  !     Hazard prevention  !     Likelihood reductio...
Leiden Institute of Advanced Computer ScienceEvaluating schedule risks  !   In contrast to CPM, PERT requires three      e...
Leiden Institute of Advanced Computer ScienceNotation                   Event number                      Target date     ...
Leiden Institute of Advanced Computer ScienceEvaluating schedule risks (cont d)  1.  Use expected durations for forward pa...
Leiden Institute of Advanced Computer ScienceExample: Convert to activity-on-arrowdiagram!                                ...
Leiden Institute of Advanced Computer ScienceExample: (now activity on arrow!)                            3               ...
Leiden Institute of Advanced Computer Science                                     Optimistic time                         ...
Leiden Institute of Advanced Computer ScienceExample:t_e and standard deviations                                          ...
Leiden Institute of Advanced Computer Science                                                      (a+4m+b)/6Complete the ...
Leiden Institute of Advanced Computer ScienceExample: Expected dates                                                      ...
Leiden Institute of Advanced Computer ScienceExample: Cumulative standard deviations                                      ...
Leiden Institute of Advanced Computer ScienceEvaluating schedule risks (cont d)!   Monte Carlo simulation as an alternativ...
Leiden Institute of Advanced Computer ScienceICT project management runaways’…  !   Standish "Chaos" report    !    1994: ...
Leiden Institute of Advanced Computer ScienceProject Management & Success                                         !  Techn...
Leiden Institute of Advanced Computer ScienceProject Escalation  !   Continued commitment in the face of negative      inf...
Leiden Institute of Advanced Computer ScienceEscalation factors  Project factors:                                Risk of e...
Leiden Institute of Advanced Computer ScienceEscalation factors (cont d)  Psychological factors:                          ...
Leiden Institute of Advanced Computer ScienceEscalation factors (cont d)  Social factors:                                 ...
Leiden Institute of Advanced Computer ScienceEscalation factors (cont d)  Organizational factors:                         ...
Leiden Institute of Advanced Computer ScienceOrganizational contexts of whistle blowing                                   ...
Leiden Institute of Advanced Computer ScienceOrganizational contexts of whistle blowing(cont d)  !   Mum-effect (reluctanc...
Leiden Institute of Advanced Computer ScienceImplication for project managementpractice  !   IT managers:     !    Traditi...
Leiden Institute of Advanced Computer ScienceImplication for project managementpractice (cont d)  !   Organizations:     !...
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SDPM - Lecture 6 - Risk management and project escalation

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SDPM - Lecture 6 - Risk management and project escalation

  1. 1. Leiden Institute of Advanced Computer Science System s Development and Project Management – Risk management and project escalation Prof. Dr. Thomas Bäck 1
  2. 2. Leiden Institute of Advanced Computer Science DatesFeb. 1 14:45 – 17:30 Introduction, Project DescriptionFeb. 2 13:45 – 16:30 STEP WISE Approach to Project PlanningFeb. 9 13:10 – 15:45 STEP WISE Approach to Project Planning, SAVE ENERGY CaseFeb. 15 14:45 – 17:30 Selecting an Appropriate Software Dev. ApproachFeb. 16 15:15 – 18:00 Activity Planning and Resource AllocationFeb. 22 14:45 – 17:30 Software Effort EstimationFeb. 23 13:15 – 15:45 Risk management, project escalationMar. 1 14:45 – 17:00 ExamMar. 2 13:45 – 16:30 Risk Management, Project monitoring and controlMar. 8 14:45 – 17:30 Software Quality AssuranceMar. 9 13:45 – 16:30 Managing People; Contract ManagementMar. 18 15:00 – 17:00 Trade Fair 2
  3. 3. Leiden Institute of Advanced Computer ScienceDeliverable Planning February 18, midnight Assignment 1: Project proposal ( bid ) February 25, midnight Assignment 2: Project Plan including functional specification March 7, midnight Assignment 3: Deutsche Bank case, 5 ppt slides March 1 (14:45 – 17:00) Exam March 18 (15:00 – 17:00) Trade fair, Plantsoen 97, Leiden (setup from 14:00) March 18, midnight Assignment 4: Personal reflection paper on project management 3
  4. 4. Leiden Institute of Advanced Computer ScienceSTEP WISE overview 1. Identify project objectives 0. Select Project 2. Identify project infrastructure 3. Analyze pr. characteristics 4. Identify products and activities Review lower level detail 5. Estimate effort for activity For each activity 6. Identify activity risks 10. Lower level planning 7. Allocate resources 9. Execute plan 8. Review / publicize plan 4
  5. 5. Leiden Institute of Advanced Computer ScienceEvaluation !   Not unusual to spend between 6-12 months and 40% of total acquisition and implementation cost on package evaluation with major customers. !   Make or buy? !  Buying is attractive when money available but other resources are short. !  Hazards, because staff time and attention is needed to manage such projects successfully. 5
  6. 6. Leiden Institute of Advanced Computer ScienceNature of risk !   Describes non-desirable events or outcomes (vs. opportunities) !   Risk management concerned with: !  Events or hazards !  Outcomes or problems !  Action plans !   Includes assessment of likelihoods, seriousness, costs and effectiveness of action 6
  7. 7. Leiden Institute of Advanced Computer ScienceTypes of risk !   Caused by estimation difficulties !  Some tasks are more difficult to estimate !   Caused by assumptions made during planning process !  Important to continuously list all assumptions and their likely effects !   Eventualities: Unforeseen hazards occurring !  Reduction through sound planning 7
  8. 8. Leiden Institute of Advanced Computer ScienceManaging risk Boehm s risk engineering task breakdown Risk engineering Risk Risk analysis management Risk Risk estimation Risk evaluation identification Risk planning Risk control Risk monitoring Risk directing Risk staffing 8
  9. 9. Leiden Institute of Advanced Computer ScienceManaging risk (cont d) !   Risk analysis: !  Risk identification - listing all hazards which could affect project !  Risk estimation - likelihood and severeness of hazards !  Risk evaluation - ranking and determination of risk aversion strategies 9
  10. 10. Leiden Institute of Advanced Computer ScienceManaging risk (cont d) !   Risk management: !  Risk planning – drawing up contingency plans !  Risk control – quality control and dealing with emergent problems !  Risk monitoring – an ongoing activity !  Risk directing Day-to-day risk management !  Risk staffing 10
  11. 11. Leiden Institute of Advanced Computer ScienceHazard identification !   Application factors !   Staff factors !   Project factors Factors should be !   Project methods considered for each !   Hardware/software activity individually, factors involving the whole !   Changeover factors project team !   Supplier factors !   Environment factors !   Health and safety factors 11
  12. 12. Leiden Institute of Advanced Computer ScienceHazard analysis !   Most favored ranking method is to calculate risk exposure !  Risk exposure RE = risk likelihood * risk impact !   Alternative - scoring methods: !  Likelihood !  Impact !  Timeframe 12
  13. 13. Leiden Institute of Advanced Computer ScienceHazard analysis (cont d) !   Risk prioritization !  Reducing risk exposure by decreasing likelihood and/or impact !  Contingency plans !   Risk reduction leverage (RRL) !  RRL=(REbefore-REafter)/risk reduction cost !  Monetary values recommended !  RRL > 1: We can gain from implementing the risk reduction plan 13
  14. 14. Leiden Institute of Advanced Computer ScienceRisk planning and control !   Hazard prevention !   Likelihood reduction !   Risk avoidance !   Risk transfer !   Contingency planning 14
  15. 15. Leiden Institute of Advanced Computer ScienceEvaluating schedule risks !   In contrast to CPM, PERT requires three estimates: !  Most likely time (m) !  Optimistic time (a) !  Pessimistic time (b) !   Activity-on-arrow diagram !   te=(a+4m+b)/6, s=(b-a)/6, z=(T- te)/s !   Expected duration te, s-dev s., no. of s-dev.s between target and expected date z 15
  16. 16. Leiden Institute of Advanced Computer ScienceNotation Event number Target date Standard Expected date deviation 16
  17. 17. Leiden Institute of Advanced Computer ScienceEvaluating schedule risks (cont d) 1.  Use expected durations for forward pass 2.  Calculate standard deviations for each project event (add squares and find square root of sum) 3.  Calculate z-values - number of standard deviations between expected and target dates If there are several possible 4.  Convert z-values to probabilities largest standard Paths: take deviation 17
  18. 18. Leiden Institute of Advanced Computer ScienceExample: Convert to activity-on-arrowdiagram! B E Duration 6 Duration 8 A C G Duration 5 Duration 10 F Duration 4 D Duration 3 ES = day 0 Duration 9 18
  19. 19. Leiden Institute of Advanced Computer ScienceExample: (now activity on arrow!) 3 B=6 6 E 8 8 10 G 11 1 A 2 C 4 0 5 10 4 7 F 9 D=9 3 5 19
  20. 20. Leiden Institute of Advanced Computer Science Optimistic time Most likely timeComplete the table Pessimistic timeActivity   a   m   b   te   s   z   T   Prob.  A   4   5   6            B   4   6   8            C   9   10   12            D   8   9   10            E   5   8   11            F   1   3   4            G   3   4   5             20
  21. 21. Leiden Institute of Advanced Computer ScienceExample:t_e and standard deviations E 3 t=8 B G A t=6 s=1 t=4 t=5 s=0.67 6 8 s=0.33 s=0.33 1 2 10 11 C 4 t=10.17 0 s=0.5 7 9 5 F D t=2.83 9 s=0.5 s=0.33 21
  22. 22. Leiden Institute of Advanced Computer Science (a+4m+b)/6Complete the table (b-a)/6 Activit a m b te s z T Prob y . A 4 5 6 5 0.33 B 4 6 8 6 0.67 C 9 10 12 10.17 0.5 D 8 9 10 9 0.33 E 5 8 11 8 1 F 1 3 4 2.83 0.5 G 3 4 5 4 0.33 22
  23. 23. Leiden Institute of Advanced Computer ScienceExample: Expected dates E 3 t=8 B G A t=6 s=1 t=4 11 t=5 s=0.67 6 8 s=0.33 s=0.33 15.17 23.17 10 11 1 2 C 4 t=10.17 23.17 27.17 0 5 15.17 s=0.5 7 9 14 16.83 5 F D t=2.83 9 14 s=0.5 s=0.33 23
  24. 24. Leiden Institute of Advanced Computer ScienceExample: Cumulative standard deviations E 3 t=8 B G A t=6 s=1 t=4 11 0.75 t=5 s=0.67 6 8 s=0.33 s=0.33 15.17 0.75 23.17 1.25 10 11 1 2 C 4 t=10.17 23.17 1.25 27.17 1.29 0 5 0.33 15.17 0.6 s=0.5 7 9 14 0.75 16.83 0.9 5 F D t=2.83 9 14 0.47 s=0.5 s=0.33 24
  25. 25. Leiden Institute of Advanced Computer ScienceEvaluating schedule risks (cont d)!   Monte Carlo simulation as an alternative !  Calculates large number of activity completion dates !  Random selection of activity times from set of estimates !  Input depending on available information, e.g. historic project information !  Output can take form of graphs and summaries!   Specialized software packages available !  Interfaces to project planning and spreadsheet software !  Cost, resource, and duration estimates 25
  26. 26. Leiden Institute of Advanced Computer ScienceICT project management runaways’… !   Standish "Chaos" report !  1994: •  16% success, •  31% cancelled •  53% challenged !  2000: •  34% successful •  15% cancelled •  51% challenged 26
  27. 27. Leiden Institute of Advanced Computer ScienceProject Management & Success !  Technical issueschallenged !   Hardware/software/telecommunications systems 51% dont work !   Frequent failure/errors in operation cancelled 15% !  Economic issues !   Time or budget overrun success !   Low/no ROI ( productivity paradox ) 34% !  Organizational (implementation) issues !   Resulting system fails to achieve desired benefit !   Users reject system
  28. 28. Leiden Institute of Advanced Computer ScienceProject Escalation !   Continued commitment in the face of negative information about prior resource allocations coupled with uncertainty surrounding the likelihood of goal attainment (Brockner, 1992) Project Social Factors Factors Project Escalation Psychol. Organiz. Factors Factors 28
  29. 29. Leiden Institute of Advanced Computer ScienceEscalation factors Project factors: Risk of escalation: !   Objective features of !   Large potential payoff the project !   Long-term investment !   Perception by to reap gains management !   Setbacks perceived as !   Costs and benefits temporary problems associated with the project !   Difficulties (risk) and duration 29
  30. 30. Leiden Institute of Advanced Computer ScienceEscalation factors (cont d) Psychological factors: Risk of escalation: !   „Things do not look that !   Errors in processing bad information !   Continuation will !  Throwing good money after bad eventually lead to !  Self-justification success !   Project manager s previous experience !   Emotional attachment 30
  31. 31. Leiden Institute of Advanced Computer ScienceEscalation factors (cont d) Social factors: Risk of escalation: !   Competitive rivalry with !   Competition between other social groups decision-making groups !   Needs for external !   Staying the course justification !   Norms for consistency 31
  32. 32. Leiden Institute of Advanced Computer ScienceEscalation factors (cont d) Organizational factors: Risk of escalation: !   Structural environment !   Strong top management !   Political environment, support i.e. top management !   Institutionalization support !   Institutionalization with organizational goals and values 32
  33. 33. Leiden Institute of Advanced Computer ScienceOrganizational contexts of whistle blowing Deaf effect Weak Strong Weak Healthy Ostrich Mum effect organization organization Strong Cover-up Deaf-dumb-blind organization organization 33
  34. 34. Leiden Institute of Advanced Computer ScienceOrganizational contexts of whistle blowing(cont d) !   Mum-effect (reluctance !   Deaf-effect (reluctance to blow the whistle) to hear the whistle) !  Risks to own career !  Organizational !  Fear of reprisals leapfrogging as a remedy !  Critical audit may !  Executives insulate contradict best judgment themselves from dealing and vested interest of with non-urgent problems powerful people !  Disassociating from failing endeavor 34
  35. 35. Leiden Institute of Advanced Computer ScienceImplication for project managementpractice !   IT managers: !  Traditional project management approaches build on rational philosophy !  Expand with behavioral and organizational perspective !  Recognize tendency to over-commitment !  Alternative courses of action 35
  36. 36. Leiden Institute of Advanced Computer ScienceImplication for project managementpractice (cont d) !   Organizations: !  Match project management with development stage !  Continuous risk assessment •  Probability of technical success •  Probability of customer acceptance !  Serious project audits, e.g. review boards with appointed members !  Reduce need for self-justification, e.g. by dividing initial and subsequent decision-making 36
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