ITC4780 Unit V Mini Project

Unit V Mini ProjectAnalyze the Running Case on pages 456-457 of the textbook, The Recreation and Wellness Intranet Project.• Complete Tasks 1-3 of the case, and use Excel and/or screenshots as necessary to display your data.• Summarize your findings in a 700 word minimum, APA formatted, Word document.ITC 4780, Information Technology Evaluation and Implementation II 3• Any Excel documents and/or screenshots created to display your tasks need to be copied and pasted into the Word document at the end of the summary, and the assignment should be submitted as one document.

2. Review a document related to risk management, such as Microsoft’s Security Risk Manage-
ment Guide available from the companion Web site for this text. Does this guide address
most of the topics related to risk management planning as described in this text? Document
your analysis in a two-page paper.

3. Research risk management software. Are many products available? What are the main
advantages of using them in managing projects? What are the main disadvantages? Write
a two-page paper discussing your findings, and include at least three references.

4. Suppose your organization is deciding which of four projects to bid on. Information on each
is in the table below. Assume that all up-front investments are not recovered, so they are
shown as negative profits. Draw a diagram and calculate the EMV for each project. Write a
few paragraphs explaining which projects you would bid on. Be sure to use the EMV informa-

456 tion and your personal risk tolerance to justify your answer.

Chapter 11

Project 1 50 percent Sl20,000
50 percent -$50,000

Project 2 30 percent s 100′ 000
40 percent s 50,000
30 percent -860,000

Project 3 70 percent s 20,000
:10 percent -S 5,000

Project -l 30 percent s 40,000
JO percent s 30,000
20 percent $ 20,000

20 percent -850,000

5. Find an example of a company that took a big risk on an information technology project
and succeeded. In adrJition, lind an example of a company that took a big risk and
failed. Summarize each project and situation in a two-page paper where you should also
discuss whether you believe that anything besides luck makes a difference between suc-
cess and failure.

Tony and his team identified some risks during the first month of the Recreation and Well-
ness Intranet Project. However, all they did was document them in a list. They never ranked
them or developed any response strategies. Since several problems have been occurring
on the project, such as key team members leaving the company, users being uncooperative,
and team members not providing good status information, Tony has decided to be more pro-
active in managing risks. He also wants to address positive as well as negative risks.

i. Create a risk register for the project, using Table i 1-5 and the data below it as a guide.
Identity six potential risks, including risks related to the problems described above.
Include negative and positive risks.

Plot the six risks on a probability/impact matrix, using Figure 11-7. Also assign a numeric
value for the probability and impact of each risk on meeting the main project objective.
use a scale of 1 to 10 in assigning the values, with 1 being low and 10 being high. For
a simple risk factor calculation, multiply these two values (the probability score and the
impact score). Add a column to your risk register to the right of the impact column called
Risk Score. Enter the new data in the risk register. Write your rationale for how you
determined the scores for one of the negative risks and one of the positive risks.

Develop a response strategy for one of the negative risks and one of the positive risks.
Enter the information in the risk register. Also write a separate paragraph describing
what specific tasks would need to be done to implement the strategy. Include time and

cost estimates tor each strategy, as well.

ion Web Site

· the companion Web site for this text (www.cengage.com/mis/schwalbe) to access:

References cited in the text and additional suggested readings for each chapter

Template files

Lecture notes

Interactive quizzes

Pod casts
Links to general project management Web sites

And more
See the Preface of this text for additional information on accessing the companion Web site.

Key Terms
brainstorming -a technique by which a group attempts to generate ideas or find a solution for

a specific problem by amassing ideas spontaneously and without judgment
contingency allowances- provisions held by the project sponsor or organization to reduce the

risk of cost or schedule overruns to an acceptable level; also called contingency reserves

contingency plans – predefined actions that the project team will take if an identified risk

event occurs
contingency reserves- provisions held by the project sponsor or organization to reduce the

risk of cost or schedule overruns to an acceptable level; also called contingency

allowances
decision tree- a diagramming analysis technique used to help select the best course of action

in situations in which future outcomes are uncertain
Delphi technique- an approach used to derive a consensus among a panel of experts, to

make predictions about future developments
expected monetary value (EMV)- the product of the risk event probability and the risk

event’s monetary value
fallback plans- plans developed for risks that have a high impact on meeting project

objectives, to be implemented if attempts to reduce the risk are not effective
flowcharts – diagrams that show how various elements of a system relate to each other

457

Project Risk Management

consulting costs might be expanded in the description to say that the organiza-
tion might be able to negotiate lower-than-average costs for a particular consul-
tant because the consultant really e njoys working for that company in that
particular location.

• The categor:y under which the risk event falls: For example, defective server
might fall under the broader category of technology or hardware technology.

• The root cause of the risk: The root cause of the defective server might be a
defective power supply.

• Triggers for each risk: Triggers are indicators or symptoms of actual risk
events. For example, cost overruns on early activities may be symptoms of poor
cost estimates . Defective products may be symptoms of a low-quality supplier.
Documenting potential risk symptoms for projects also helps the project team
identify more potential risk events .

• Potential responses to each risk: A potential response to the risk event of a
defective server might be the. inclusion of a clause in a contract with the supplier
to replace a defective server within a certain time period at a negotiated cost.

• The risk owner or person who will own or take responsibility for the risk: For
example, a certain person might be in charge of any server-related risk events
and managing response strategies.

• The probability of the risk occurring: There might be a high, medium, or low
probability of a certain risk event occurring. For example, the risk might be low
that the server would actually be defective .

• The impact to the project if the risk occurs: There might be a high , medium,
or low impact to project success if the risk event actually occurs. A defective
server might have a high impact on successfully completing a project on time.

• The status of the 1isk: Did the risk event occur? Was the response strategy com-
pleted? Is the risk no longer relevant to the project? For example , a contract
clause may have been completed to address the risk of a defective server.

TABLE 11-5 Sample risk register

437

No. Rank R1sk Description Category Root Tnggers Potential Risk Probability Impact Status

R44 1

R21 2

R7 3

Cause Responses Owner

For example, the following data might be entered for the first risk in the register as fol-
lows. Notice that Cliffs team is taking a very proactive approach in managing this risk.

• No.: R44
• Rank: 1
• Risk: New customer
• Description: We have never done a project for this organization before and

don’t know too much about them. One of our company’s strengths is building

Project Risk Management

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Probability (P) times Outcome = EMV

P=.20

*

< P=.80 $300,000 = +$60,000

-$40,000 = -$32,000

-$50,000 = -$10,000

-$ 20,000 = – $2,000

$60, 000 = $42,000
~

*

Project 2 *

P= .70

Project 1 ‘s EMV = $60,000- $32, 000 = $28, 000
Proj ect 2’s EMV = -$10,000- $2,000 + $42, 000 = $30,000

FIGURE 11-7 Expected monetary value (EMV) example

no reimburse ment if it is not awarded the contract. The sum of the probabilities for
outcomes for each project must equal one (for Project 1, 20 percent plus 80 percent) .
Probabilities are normally determined based on expert judgme nt. Cliff or other people
in his firm should have some sense of their likelihood of winning certain projects.

Figure 11-7 also shows probabilities and outcomes for Project 2. Suppose there is a
20 percent probability that Cliffs firm will lose $ 50,000 on Project 2, a 10 percent probabili-
ty that it will lose $20,000, and a 70 percent probability that it will earn $60,000. Again,
experts would ne ed to estimate these dollar amounts and probabilities.

To calculate the expected monetary value (EJvfV) for each proj ect, multiply the proba-
bility by the outcome value (or each potential outcome for each project and sum the results.
To calculate expected monetary value for Project 1, going from left to right, multiply the
probability by the outcome for each branch and sum the results. In this example, the EMV
for Proj ect 1 is $28, 000.

.2($300 ,000) + .8( -$40 ,000) = $60,000- $32,000 = $28 ,000

The EMV for Project 2 is $30,000 .

.2 ( -$50 ,000 ) + .1(-$20 ,000) + .7($60,000) = -$1 0 ,000-$2 ,000 + .$42,000
= $30,000

Beca use the EMV provides an estimate for the total dollar value of a decision , you wa nt
to have a pos itive number; the higher the EMV, the bette r. Since the EJvfV is positive for
both Projects 1 and 2 , Clift”s firm would expec t a positive outcome from eac h and could bid
0n both proj ects. If it had to choose between the two proj ects , perhaps because of limited
resources , Clift”s firm should bid on Project 2 because it has a higher EMV.

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Project Risk Management