The risk management plan has been developed for the project after studying past projects of similar magnitude and contingency plans have been devised to mitigate the impact on project in case the event actually occurs. A risk assessment matrix has been developed and provided in this plan.
Project Objective and Description
The objective of this project is to develop the new razor scooter code named “Blue Zuma”. This code will be used in the future productions of racing scooters. The project must be completed by 1st February, 2009 and the project cost is expected to be less than $1.3 million.
Items Excluded
- Production of scooters will be a separate project and “Blue Zuma” is only limited to Installation of production equipment.
Requirements
Following are the requirements for the Blue Zuma project:
- Must be upgradable with the changing technology for production of racing scooters
Deliverables
Following are the deliverables that are expected at the completion of the project:
- Detailed plan to market the razor scooter
- Detailed design of the razor scooter
- Functioning production unit with production equipment installed
Project Priorities
Figure 1: Project priority matrix for Blue Zuma
Project Constraints
- Must be completed by 2/1/2009.
Project Assumptions
- Key assumption of the project is that ARC has in-house production capacity to produce razor scooter “Blue Zuma” within its premises.
Key Stakeholders
Following are the key stakeholders in this project
- Senior Management
- Portfolio Manager
- Project Team
Major Milestones
Following are the imposed milestones for the project:
- Project Start: 1/2/2008
- Project End: 2/1/2009
Following are the derived milestones for the project:
- Detailed Product Design Start – 05/01/08
- Finalized Product Design Complete – 08/25/08
- Detailed Marketing plan complete – 08/04/08
Communication Plan
A communication plan has been developed based on the specific needs of the project. The plan addresses the information to be provided, receiver of the information, means to transfer information, provider of information and time of communication of information.
Figure 2: Communication plan matrix for Blue Zuma
Responsibility Matrix
Below is the responsibility matrix for the project. The matrix is based upon the following allocation:
- Responsible
- Support
- Consult
- Notification
- Approval
Figure 3: Responsibility Matrix for Blue Zuma
Initial Schedule Planning
Initially (when we haven’t added the resources and done leveling to resolve the over-allocation of resources), the project is estimated to be completed by Monday, 22nd of December, 2008. In this case, the project will take 250 days to complete. This is shown in the schedule table below:
Figure 4: Schedule Table (Initial Schedule Planning)
The Critical path for the project is following as can be seen from the Gantt chart and Network Diagram:
Market Analysis → Product Design → Product Design Selection → Detailed Product Design → Test Prototype → Finalized Product Design → Order Production Equipment → Install Production Equipment → Celebrate
Figure 5: Gantt chart (Initial Schedule Planning)
Figure 6: Network Diagram (Initial schedule planning)
As evident from the schedule table, Detailed Marketing Plan has the greatest amount of slack, 159 days.
We can see that the network is not very sensitive as there is only one critical path for the project. Also, the non-critical activities are having good slack with the minimum being 20 days for manufacturing study. This also contributes towards making the project less sensitive.
As milestones, we would recommend the start of Detailed Product Design and finish of Finalized Product Design. These tasks are in the critical path of the project, and whereas detailed production design is a critical merge activity, finalized product design is a critical burst activity.
Advantages and disadvantages of displaying the schedule as a network versus a Gantt chart are compared in tabular form below:
Figure 7: Comparison between Network Diagrams and Gantt chart
Initial Resource Planning
As we allocated the resources to various activities, there was a problem of over-allocation of resources. The resources Marketing Specialist, Design Engineer, Industrial Engineer and Purchasing Agent were over-allocated.
Analyzing the resource usage of the activities and having a look at the Gantt chart, the activities that involved over-allocated resources were Product Design, Manufacturing Study, Detailed Marketing Plan, Manufacturing Process, Detailed Product Design, Order Components, Order Production Equipment and Install Production Equipment.
Trying to resolve the problem of over-allocation by leveling within slack, it was found that problem had been resolved for resources Marketing Specialist and Purchasing Agent. However, resources Design Engineer and Industrial Engineer were still over-allocated.
Maximum Slack period for non-critical path increases to 74 days (Detailed Marketing Plan), which increases the sensitivity of the network, and critical path of the network also changes. Detailed marketing plan and Order components show decrease in slack, whereas Manufacturing study and Manufacturing process are a part of critical path now. Gantt chart and schedule table below show these details.
Figure 8: Gantt chart (Leveling within slack)
Figure 9: Schedule Table (Leveling within slack)
Assuming that the project is resource constrained and no additional personnel are available, it is going to take 290 days for the project given the resources assigned.
Before the resources were assigned, project duration was 250 days. After the allocation of resources it has gone up to 290 days. This shows that resources are critical towards the completion of the project and unavailability of them may result in project not meeting schedule, as in this case, we found that available resources were not sufficient to complete the project on schedule we had designed during initial schedule planning. The Gantt chart and Schedule Table for this are as shown below.
Figure 10: Schedule Table (Resources and no Leveling)
Figure 11: Gantt chart (Resources and No Leveling)
Revised Planning
Since it has been promised that the project will be completed before February 1, 2009, one of the options that are available if the project is not resource constrained is to allocate more resources to critical activities in order to reduce the duration of the entire project.
However, if the project is time constrained, it would not be feasible to meet the deadline of February 1, 2009 as the already available resources have been fully allocated towards the project.
In this context, the project is not being completed within the deadline of February 1, 2009 even after assigning additional resources to the activities that they have been assigned for. The primary reason for this is that of the activities provided that will be impacted by the additional resources (Detailed Marketing Plan, Detailed Product Design and Install Production Equipment), only Install production equipment activity is a critical activity and therefore adding additional resources to this activity reduces the total duration of the project. Adding additional resources to other two activities does not reduce the total duration of the project.
Therefore, under the assumption that additional resource Marketing is available throughout the project and we can add it to any activity in order to reduce the duration of the project, the additional Marketing resource is being allocated to activity Market Analysis. Therefore, following are the additional personnel assignments chosen to complete the project within the original deadline:
- Install Production Equipment: Industrial (1) Development (1)
- Market Analysis: Marketing (2)
Other options are not chosen because adding additional resources to non-critical activities would be unproductive in terms of reducing the duration of the project while adding additional cost overheads for the project.
As a result of these additional resource allocations, though Critical path does not change, slack for the rest of the activities reduces by small amount, making the network slightly more sensitive.
Gantt chart and schedule table below depicts the changes that have occurred in the schedule as a result of above allocation of additional resources.
Figure 12: Schedule Table with additional resources to meet the deadline
Figure 13: Gantt chart with additional resources to meet the deadline
Cost
The project with schedule developed in revised planning is estimated to cost $1,255,787. The activity Detailed Product Design is estimated to cost the most to complete with the cost estimated to be $317,000. The table containing estimated cost for each activity is shown in the table below.
Figure 14: Schedule Table with estimated cost for each activity
Amongst resources, design engineers command the greatest total cost at $401,040 as shown by the below resource sheet.
Figure 15: Resource Sheet with total cost for each resource
The highest cost is expected during the month of July 2008 and it is $171,480. The lowest cost is expected to occur in the month of October $8,267. The detailed cash flow schedule on a monthly basis is as shown in the cash flow reports below.
Figure 16: Cash Flow Schedule for each month of project (January 2008-July 2008)
Figure 17: Cash Flow schedule for each month of the project (August 2008-January 2009)
The likely costs that may not be contained in the budget are a few operating costs like utilities, conveyance for the resources. In addition to these, there may be possible failure costs or delay costs that are not included in the budget.
Risk Management
In development of the risk response plan, various past projects of this magnitude have been studied and from their experiences, this risk response plan has been designed. For example, the first risk highlights the occurrence of a terrorist attacks near the office site of the project. This happened for many projects during the 9/11. This may hinder the project considerably and thus a mitigation plan for such a risk should be in place, although the probability of this happening is very little, going by the number of terrorist attacks that have taken place in the vicinity of the project location.
There may be cases where important human resources leave the company amidst project, as has happened for plenty of projects during the past. Although this has a good chance of happening, the mitigation plan for this would be to ensure that knowledge is transferred from the leaving resources and the employees should be legally bound to serve a notice period, wherein the replacements should be ready to take over.
Also, some inexperienced resources may not follow the quality standards that we have set during the development and documentation phases. To mitigate this risk, there should be constant quality control measures to ensure that such a lapse at one point in time is detected very early and not carried forward to much later stage.
Similarly, during the Product design phase, product design selection phase, detailed product design phase etc., when more than one teams may have to collaborate with each other in order to produce the expected results, there may be a lack of communication across various teams which may make the project run behind schedule. It needs to be ensured that various tools are in place to communicate across teams to mitigate this risk.
In addition to this, since the project is of huge magnitude, there is a risk of underestimating the number of resources required for this project. This risk can be mitigated by having sufficient backup of people with similar skillset within the organization. A detailed risk matrix is provided below. A detailed risk matrix is provided below.
Figure 18: Risk Assessment Matrix, 'Blue Zuma' Project
