BUS 528 Summary of Chapter 5&6

Chapter 5 Risk Management

A good decision is subjected to well organize planning techniques. A good plan has well balance on costs, schedule, and quality that allow the project manager to achieve the desired goal. Such a plan should also consider all the risks could have occurred. Risk management is to list all the possible “what-if” risk scenarios into the consideration, prioritize the risks, and develop a response strategy in advance to increase the project successful rate.

Risk management process as follows: Identify risks àDevelop a response à Establish reserves (i.e., back up plan) àContinuous risk management.

Following are 5 strategies commonly used on reducing the risk:

prevention (avoidance), backup solution (contingency plan), pass-over the risk (such as paying for insurance or outsourcing to contractor), and risk mitigation (remove unnecessary errors thru systematic approach).

Table 5.5 from the book illustrates the example of how to monitor risks using a risk log, which is very effective on tracking the risk status. “The expected value of risk” is the way to quantify the risk (expected value of contingency = cost of contingency X probability of risk event). We can use the “matrix of negative impact verse risk probability” to prioritize those with high value of risks and then further allocating budget or strategies to manage them.

Chapter 6 Work Breakdown Structure

The purpose of WBS is to break the project into small, functional-wise meaningful and executable unit of work. Therefore as a project manager can fully track and control the project.

Building a WBS allow a project manager to:

Provide a detailed of project scope

Monitor progress of project at each stage

Generate estimation on cost and schedule of delivery

Build project teams

The WBS breaks all the work in the project into separate tasks. There are two kinds of tasks on a WBS: summary tasks and work packages.

The work packages are the ones that are actually executed. Understanding the relationship and structure between summary tasks and work packages is essential on establishing a good WBS. Work packages refer to any particular routine functions, while summary tasks are related to any of system integration which may combine two or more work packages. Besides, a WBS must be broken down starting at the top.

Three criteria are essential for a successful WBS.

Work packages must include into the summary task.

Each summary task and work package must be named

The 8/80 rules. No task should be smaller than 8 labor hours or larger than 80.

If a project employs contractors or vendors to do some of the work, WBS can be used as a reporting requirement for the winning bidder.