Methods for Mitigating Project Risks

All project managers want to make certain that their projects are on the road to successful project completion. One way for project managers to accomplish this is to use a risk response strategy called mitigation. Mitigation attempts to reduce the probability and consequences of identified project risks to an acceptable threshold.

It is important to remember that taking early action to reduce the probability of a risk's occurrence or its consequences on critical project objectives is often more effective than trying to repair the adverse consequences after the risk has occurred. During the risk response planning process, every effort should be made to prepare for project risks in advance so that a project's completion will not be severely threatened by its identified risks.

Project managers use two primary strategies to mitigate identified risks. The first strategy is to reduce risk probability. The second is to reduce risk consequences.

1. Reduce risk probability.
   Reducing risk probability is a mitigation strategy that attempts to deal with a risk before it gets out of control. Since not every risk can be avoided, reducing its probability of occurrence to the lowest possible percentage may be the most effective and realistic option.
   
   The purpose of reducing the probability of a risk's occurrence is to minimize the potential threat to critical project objectives and outcomes. Examples of reducing risk probability include safety training, improved quality of project materials, cost control systems or marketing a more stable and sellable product.
   
   Reducing risk probability is a preventative approach and its corresponding risk responses are always implemented before a risk actually occurs.
   
   
2. Reduce risk consequences.
   In many instances, there will be no way for you to prevent or significantly reduce the probability of risk occurrence. As a result, reducing risk consequences will be the most effective mitigation strategy to use.
   
   Once you know that you can do little to prevent a risk from occurring, you will want to develop as many options as possible to reduce the consequences of that risk if it does occur.
   
   Developing options to prepare for uncontrollable elements such as weather or environmental disasters, increasing the probability of knowing that a risk is occurring, and formulating options to deal with the risk impact after it occurs are all examples of reducing risk consequences.
   
   While reducing risk probability is seen as more of a preventative approach to mitigation, reducing risk consequences can be described as a backup approach.
   
   Reducing risk consequences aims to minimize the impact of an identified project risk after its occurrence.
   
   Proposed risk responses may be put in place before or after a risk's occurrence.
   

Mitigation is an important strategy in the risk response planning process. Project managers can protect many of their critical project objectives by reducing the probability or consequences of risks identified in the risk identification or risk analysis processes.

As a project manager, you can use mitigation to prevent or minimize the probability and consequences of threatening project risks. This will help you ensure that your project outcomes are completed as planned.

Using Templates from Past Projects

Who was your role model when you were a child? Do you remember someone you used to emulate? Did you want to be like them? Did you try to copy that person's behavior to get the same results?

Templates for organizational planning work the same way. You can model your project according to similar successful projects from the past.

Using the successful elements of a former project will save you both time and money.

Although the details of each project are unique, the basic components are often similar. This helps you in your planning. For example, you can use the role and responsibility definitions, or reporting relationships, of a similar project to expedite the organizational planning process.

Peter, the project manager for a large insurance company, is preparing a responsibility chart for his team members. How does he decide how to do this? One effective method is to see how responsibility has been distributed in the past. Peter can do this by using the responsibility charts of other successful departments in his organization, or he can copy those of another successful company. Either way he chooses, he is using a past template to ensure the success of his project.

You can disassemble past templates and reassemble the plans you need for your own project. Possible plans you can use for your own project include:

• organizational structure
• Work Breakdown Structure
• company policies and practices

IRT is a successful IT consulting company. One of the services it offers is a Software Development Life Cycle Methodology. Within that methodology are predefined roles and responsibilities and organization charts. Before starting a project, the team members at IRT use their company's model as a starting point. By doing this, they are using templates of organizational structure and work breakdown structure. The team modifies its own template to suit its clients' needs, while building upon past success.

As a project manager, you will want to use templates to guide your organizational planning. Building on the success of others is a sure way of steering you toward your desired goal.

Statistical Sampling Methods for Project Quality Control

Statistical sampling is a way of identifying the quality of a service or product when it is impractical or too expensive to examine each item. Effective sampling is based on statistical probability theory which identifies the probability of error for a sample size. Using standard deviation and variance calculations, control charts can be constructed, which accurately predict the likelihood of a sample being representative of a population or lot size.

To be accurate, the sample size must be "representative" and "valid." Representative means that enough good and bad items must be included in the sample, so that it portrays the lot it is drawn from accurately. Validity is the measure, whereby the method of testing and the attributes measured are a true indication of what needs to be measured.

Key issues for ensuring accuracy are the proper determination of the sample size and the rejection level acceptable within the sample. Sampling methods include acceptance sample, attributes sampling, special attributes sampling, and variable sampling.

• acceptance sampling
  Acceptance sampling tests selected items against an agreed upon list of necessary criteria. The inspection can be conducted in a variety of ways including electronic, stress testing, sample destruction, reaction testing, and temperature testing.
  
  It is more convenient to conduct acceptance sampling with lots in a production run. This reduces overall costs by making the sample sizes smaller and more manageable. If a quality problem is discovered, it is easier to track down the lot. It is also cheaper to rework or throw out the lot. Lots are often naturally created by factors such as shift changes, raw material lot sizes, handling or packaging sizes, or shipment sizes. Random selection within the lot is also important to ensure sample validity.
  

• attributes sampling
  After the acceptance sampling method has been chosen, attributes sampling defines what exactly will be measured for quality control. This is often based upon past sample failure experience or customer feedback. The quality inspector merely checks the individual sample against the quality criteria. The attribute is measured by a simple "yes" or "no" that the item is acceptable. This method is often used in inspecting for size, color, finishing, marking, and packing. Data is recorded on a simple checklist sheet.
  
  The use of attributes sampling has some advantages and disadvantages. Attributes testing is simpler and less expensive than inspection by variables. Recordkeeping is simplified by having one quality level for a group of like attributes. However, attributes sampling also requires a large sample size to determine the acceptability of the parent lot, which makes the process time consuming and expensive.
  

• special attributes sampling
  Statisticians have various sampling methods that simplify the inspection process, reduce time and cost, yet still ensure accuracy in the inspection process. These methods are referred to as "special attributes sampling" and include continuous sampling, chain sampling, and skip-lot sampling.
  
  With continuous sampling, inspection occurs throughout production, like on an assembly line. This method is often used when storage facilities are inadequate or it is difficult to accumulate large lots for inspection.
  
  Chain sampling occurs when a product is produced as a lot for inclusion into another product. It is tested throughout the manufacturing process. This method is useful when sample sizes are small, and there is good quality history.
  
  Skip-lot sampling reduces inspection costs by inspecting certain lots. This increases the quality risk, therefore a history of high quality is a key consideration. This type of sampling is used after the maturation of a process.
  

• variable sampling
  Variables sampling collects data on possible variable items. When the error rate exceeds a combined level for several of the variables, the lot is rejected. The sample is rated on a scale against such criteria as time, distance, weight, strength, or purity.
  
  Instead of being tested as "acceptable" or "unacceptable," the sample is compared against historic values to determine problems. Variable sampling is used when the quality characteristic is measurable or quantifiable.
  
  Variables sampling allows a quality control team to accomplish more in its inspection and analysis process. Causal links can be explored as well, helping to determine the root problem in a product, process, or sub-process.
  
  The advantages include more data to compare to quality conformance criteria. It also requires smaller sample sizes, reducing cost while ensuring high quality.
  
  The disadvantages are that the quality inspectors need more training and that more sophisticated analysis is required to determine quality conformance.
  
  Acceptance and attributes testing can be tested separately or together. An item can be tested for one or several attributes and whether it achieves the desired specifications. Variables sampling is a more complex process requiring considerable thought in not only what is measured, but how it will be analyzed.
  

Any of the above sampling techniques can use special attributes testing to reduce the time spent sampling. In practice, many companies use all four sampling techniques together to ensure the highest possible quality control.

No matter what kind of sampling plan you choose, all require a sample of a particular size to ensure confidence in the results. The sample must be cost effective to conduct and accurate according to probability and acceptance theory. Sample sizes can be determined from the operating characteristic curve. The curve represents the historic results for a particular process and operating conditions. The curves change shape depending on the size of the sample. Formulas can be used to represent the diagram.

A major tire manufacturing company installed a new tire molding machine. A trial production run tested if the tires made with the new machinery were as strong as the old ones. In a production run of 10,000 tires, only one failed in a sample installation test of 100 tires. To confirm the accuracy of the test, two more test lots were produced with the same results. Since the old process experienced 1.5 failures per 100, this machine represented an improvement and the sample size continued to be valid.

Sampling techniques help ensure quality while controlling inspection costs. It is key that the proper kind of sampling is carried out to obtain the desired results. This ensures the sample will be accurate and valid. The proper determination of the sample size is also important. Representative is the other key consideration. Proper sampling techniques ensure other analysis methods are reliable indications of reality.

Methods for Evaluating Project Performance

Author Thomas S. Monson said: "When performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates."

In the area of project management, performance measurement techniques are used to assess the magnitude of deviations from the original project plan. As such, they are an important aspect of project schedule control, allowing the project team to determine whether a schedule variance requires corrective action.

There are four basic performance measurement techniques: performance reviews, trend analysis, earned value analysis, and information distribution.

1. Performance reviews
   Performance reviews are meetings held to assess project status. Most project managers schedule weekly, bi-weekly, or monthly reviews to keep the management team abreast of the project's status. By conducting frequent performance reviews, variances are more readily detected and can be addressed sooner which prevents further deviation from the plan.
   
   
2. Trend analysis
   Trend analysis involves examining project results over several reporting periods to determine if performance is improving or deteriorating. By plotting report results on a graph, management can determine whether schedule performance is progressing or regressing.
   
   Companies use trend analysis for long-term projects, to compare status over several periods. Either a three-month, four-month, or six-month moving average is used to predict project trends. Trending provides management with advance warning of adverse trends, and allows for corrective action to be taken to rectify the situation. Companies also use trend analysis data to plan future projects that are similar in nature.
   
   
3. Earned value analysis
   Earned value analysis is the most commonly used method of performance measurement. It integrates scope, cost, and schedule measures to assist the management team in assessing project performance.
   
   Earned value analysis compares the amount of planned work to what was actually accomplished. This involves calculating three key values for each activity that is performed.
   

- The planned value in a project is the approved estimate of cost planned to be spent on an activity during a given time period. - The actual cost in a project is the total costs involved in completing the work for an activity in a given time period. - The earned value for a project is the value of the work actually completed during a period of time. These calculations allow project managers to see whether cost and schedule performance is proceeding as planned.

4. Information distribution tools and techniques
   Information distribution tools and techniques make necessary information available to project stakeholders in a timely manner.
   
   Information regarding a project's performance is essential to bring about project success. Too little or incorrect information could lead to misunderstandings and changes that are not really necessary.
   
   Clear communication and shared information retrieval and distribution methods are the basic tools and techniques for ensuring that important information is distributed.
   
   Communication skills are used to exchange information. Whether communication is written, oral, internal, external, formal, informal, vertical, or horizontal—the sender must ensure that the information is clear and complete while the receiver confirms that it is properly understood.
   
   Information retrieval systems allow information to be shared by project team members and stakeholders. Such systems may include project management software, electronic databases, and manual filing systems.
   
   Information distribution methods ensure that important project information is distributed to the stakeholders. Project meetings, voice mail, electronic mail, fax, videoconferencing, project intranet, hard-copy documentation, and shared databases are all effective distribution methods.
   

Performance reviews, trend analysis, earned value analysis, and information distribution tools and techniques are important in assessing the magnitude of any project variations. Using these techniques to determine whether a project is performing as planned will help you maintain a concise and controlled project schedule.

Project Activity Sequencing Outputs

Project activity sequencing consists of the methods and tools used to set the stage for the most efficient and trouble-free project plan. Project activity sequencing has several outputs, including the project network diagram and activity lists.

The project network diagram
One output that results from activity sequencing is the project network diagram. This diagram may be produced manually or on a computer.

The project network diagram includes full project details, including clear, concise, self-explanatory names for all project activities.

Full project details include "hammock activities" as well. For example, an auto parts manufacturer inspects all the parts it produces. Rather than repeat the inspect activity in the project network diagram, the manufacturing company rolls all inspection into a single summary or hammock activity.

Overall start and finish dates are then associated with the single hammock activity. One or more summary or hammock activities often make up part of full project details.

The project network diagram includes a summary narrative. The summary narrative outlines the basic activity sequencing approach used in the network. The summary narrative provides details about the use of dependencies, sequencing assumptions and leads and lags.

The summary narrative outlines how dependencies are included in the project, how outside dependencies will be handled, and which dependencies are mandatory or optional.

The summary narrative also includes assumptions about sequencing. It may be assumed, for example, that testing can start after 25 percent of development has taken place.

In addition to assumption, the summary narrative outlines how leads and lags will be handled. In a finish-to-start relationship, an activity with a lead of five days may start five days before its predecessor has finished. An activity with a lag of five days cannot start until five days after its predecessor activity has finished.

Finally, the project network diagram contains a description of unusual sequencing. Unusual sequences occur in a network to allow for things like client preferences or specific resource availability. For example, in setting up a computer network, it may seem logical to configure the servers before configuring the workstations. The customer, however, may stipulate that employees are to begin training and work on their workstations immediately. As a result, the configure workstations activity takes place in the project network diagram before the configure servers activity.

Activity list updates
The second output from activity sequencing is activity list updates. Network diagram preparation may reveal instances where an activity must be divided or redefined in order to diagram the correct relationships.

As an example, consider the initial activity list for installing a computer network. Attempts to construct a network for this project reveal that there is overlap between the build and test activities. Computer tower components must be tested at intermediary intervals.

If the build and test activities have been defined at too high a level, the sequencing diagram may not show this overlap. The solution is to break the build and test activities down into their component parts, and indicate their dependencies on other activities. Based on this, a new project network diagram can be constructed.

The outputs from activity sequencing are the project network diagram and the activity list. These two outputs are important components in the creation of the project schedule. The project network diagram reflects project activities and their dependencies. After initially diagramming the network, the activity list may remain the same or change based on the diagram.

Conditional Diagramming Method (CDM)

A third technique for constructing network diagrams is the conditional diagramming method (CDM).

Like other diagramming methods, the CDM uses nodes and arrows to represent the activities and dependencies in a project network. However, this method is distinguishable from other diagramming techniques by its loops and conditional branches.

Loops seen in the CDM indicate the repetition of activities in the activity network.

Conditional branches indicate options in a CDM diagram. The truth or falsity of a condition determines whether contingent activities will happen next.

For example, one phase of auto manufacturing involves painting the auto body. The activities that make up this phase may be outlined in the CDM diagram. In this case, the pass or fail condition of the painted auto body determines whether the auto body is delivered or redone. Delivering the auto body or redoing it are conditional branches or options dependent on the outcome of the pass/fail test.

In project management, the diagramming technique known as Graphical Evaluation and Review Technique (GERT) uses the CDM.

The conditional diagramming method is a technique that represents a network and shows the repeating and conditional activities in the project. This technique is valuable for helping you visualize and plan an activity's schedule. Using the CDM will help you to stay in control of the schedule which, in turn, will increase your chances of a successful project.

Understanding Cooperative Resolution

Conflict occurs in every organization.

Organizations that successfully manage conflict can do so by resolving it cooperatively.

There are two means that effective leaders use to reach cooperative conflict resolution. They:

• set preconditions to a cooperative resolution
• follow the steps to a cooperative resolution.

Set preconditions to a cooperative resolution
Whenever there is a conflict between your employees, it's important to set the preconditions for cooperative resolution before any attempt is made to resolve the conflict.

This will help both parties in a conflict to separate the problem from the people involved, and work together for a mutually beneficial solution. Begin by meeting separately with each side and establishing the following preconditions for cooperative resolution.

Make certain that both parties understand that they can meet their own interests by helping others meet theirs.

Encourage both parties to come up with an alternate plan. It's important that neither side enter negotiations with a rigid mindset.

Make sure that both parties separate the people involved in the dispute from the dispute itself. Work-related problems that become personal disputes are more difficult to resolve.

Follow the steps to a cooperative resolution
Once the preconditions for a cooperative resolution are set, a leader should get the parties in a conflict to sit down together and follow the steps for a cooperative resolution. These are the four steps that a leader should follow:

• Conflicts often arise over simple misunderstandings. Taking time to eliminate all misunderstandings between parties in a conflict can make it much easier to reach a cooperative resolution.
• The second step is identifying and analyzing all issues and interests. This is an important step because it is easy to overlook issues in a conflict, yet difficult to find solutions if all issues are not identified.
• In the third step of the cooperative resolution process, leaders should help employees find integrative solutions. This type of solution allows both parties to win. As you negotiate for a mutually beneficial solution, you should make sure that neither party dominates and that both remain flexible.
• If unable to find a successful integrative solution, a leader should proceed to the fourth step. This involves revisiting each of the steps in an attempt to find a solution. If still unsuccessful, the leader makes the final decision.

To resolve conflicts between employees, it is important to follow the steps for reaching a cooperative resolution. To do this, you should eliminate misunderstandings, analyze the issues and interests of both sides, and find solutions that benefit both parties.

If a cooperative resolution is not found after following these steps, you should revisit the previous steps. If a solution is still not reached after revisiting all the steps, you will have to make the decision yourself.

By applying a variety of methods, you can resolve the conflicts between your employees cooperatively. How could these skills contribute to your own leadership abilities and to the success of your organization?