1. Planning for risks starts with the Project Charter.
2. Three general descriptors of Risk Tolerance:
2.1 Risk Averse – doesn’t like risk.
2.2 Risk Neutral – risk tolerance remains the same, independent of the potential loss value.
2.3 Risk Seeker – high risk tolerance.
3. Risk Breakdown Structure (RBS) is a hierarchically organized depiction of identified project risks, arranged by risk category and subcategory, that identifies the various areas and causes of potential risks.
4. Any assumption about any aspect of the project inherently contains a risk.
5. The Risk Statement – If—When—Then
6. Identified risks must be SMART.
Specific in the context and syntax.
Measurable in some context.
Assignable to someone, an owner.
Relevant to the project.
7. The Risk Register is the master document for everything risk.
8. SWOT analysis
Strengths – What are our strengths?
Weakness – Where are we lacking?
Opportunities – What do we gain?
Threats – What can stop us?
9. Influence diagrams are graphical representation of situations showing casual influences, time ordering of events, and other relationships among variables and outcomes.
10. Qualitative Risk Analysis is about examining the characteristics of the risk and prioritizing it based on its likelihood of occurring and the level of impact it may have on the project. Qualitative Analysis is subjective.
Probability and Impact Definition (PID) table – a tool used for Qualitative Risk Analysis. It is one of the guidelines specified in Risk Management Plan.
11. Quantitative Risk Analysis is the process of numerically analyzing the effect of a risk on the project objectives.
12. Expected Monetary Value (EMV) = Probability quotient * Total impact cost
Mitigation plan amount (if less than EMV) is added to the contingency reserve and only used if the trigger is met.
13. Net Path Value (NPV) on a decision tree can help us make decisions.
14. Four Risk Response strategies:
14.1 Avoid – Change the project plan/specific objective to eliminate the risk entirely.
14.2 Transfer – Transfer the negative impact of a threat and ownership to a third party. Transferring does not eliminate the risk.
14.3 Mitigate – Reduction in the probability and/or impact of a risk event.
14.4 Accept – No change in the plan.
15. Four Positive Risk (Opportunities) Response strategies:
15.1 Exploit – Ensure that the opportunity is realized, definitely happens.
15.2 Share – Allocating some or all of the ownership to a third party who is best able to capture the opportunity.
15.3 Enhance – Increase the probability and/or impact of the opportunity.
15.4 Accept – Take advantage if it comes, no active persuasion.
16. Risk register is the primary document for risk management. It is the central repository for all identified risks, their analysis, response handling and owners.
1. Make-or-Buy Analysis is a technique to decide whether to build in-house or outsource.
2. Three types of contract:
2.1 Fixed Price (FP)
2.1.1 Firm Fixed Price (FFP) or Lump Sum
2.1.2 Fixed Price Incentive Fee (FPIF) – Some incentive tied to achieving agreed to metrics
2.1.3 Fixed Price with Economic Price Adjustment (FP-EPA) – Price adjusted in accordance with a pre-determined and agreed to financial index
2.2 Cost Reimbursable (CR)
2.2.1 Cost Plus Fixed Fee (CPFF) – Allowable incurred cost + a fixed fee
2.2.2 Cost Plus Incentive Fee (CPIN) – Allowable incurred cost + an incentive fee based on one or more performance variables (scope, time, cost)
2.2.3 Cost Plus Award Fee (CPAF) – Allowable cost incurred + award fee based on subjective performance criteria
2.2.4 Cost Plus Percentage of Cost – Allowable cost incurred + a predetermined percentage of the cost.
2.3 Time and Material (T&M) – Hybrid of cost reimbursable and fixed price.
3. Contract cost terminology
Target Cost (TC) – The maximum amount of cost that can be incurred on a product.
Target Profit (TP) – The amount the seller wants to earn.
Taget Price = TC + TP
Ceiling Price (CP) – The maximum amount the buyer will pay.
Share Ratio (SR) – The ratio of the cost overruns or the saving shared between the buyer and the seller.
Point of Total Assumption (PTA) – The cost adjustable equivalent of CP.
PTA = ( (Ceiling Price – Target Price)/The Buyer’s Share ) + Target Cost
4. Three types of Statement of Work (SoW):
4.1 Performance SoW
4.2 Functional SoW
4.3 Design SoW
5. Procurement documents
5.1 Request for Quote (RFQ)
5.2 Request for Bid (RFB)
5.3 Request for Proposal (RFP)
5.4 Expression of Interest (EOI)
5.5 Request for Application (RFA)
5.6 Request for Documentation (RFD)
5.7 Request for Information (RFI)
5.8 Request for Offer (RFO)
5.9 Registration of Interest (ROI)
6. Proposal Evaluation techniques:
6.1 Weighted Criteria Matrix
6.2 Quality Function Deployment (QFD) Matrix – a method to transform qualitative items into quantitative items in the form of a matrix.
6.3 Independent Estimates – Get a proposal from an independent contractor who is not participating.
6.4 Screening Systems – Screen out vendors based on a base criteria.
6.5 Seller rating system – Seller rating based on the past experiences in the previous contracts, from strategic partners or even competitors.
6.6 Expert Judgement
7. When a procurement is complete, a formal closing must be run, even if the project is terminated early (before completion).
8. Procurement closure or contract closure has to happen before project/phase closure.
9. Project/phase closure is also called Administrative closure.
10. Procurement closure may happen multiple times but administrative is done only once per phase.
1. Salience Model can be developed and used to describe the classes of stakeholder and other attributes.