Buffl

Allgm.

OF
by Ole F.

However, project managers have to consider some

bias and detailed aspects inherent with the definition of performance indices.


(Book p. 139-140)

  • One is that during the first stages of a project, because of the little number of

    performed activities, the CI fluctuates and tends to stabilize by the time the project

    is 20% complete (Lipke 2005). Thus, the CI can be considered as a reliable source

    of performance information and future indication only from that date. Furthermore,

    the CI is likely to worsen from that point in time as the project progresses because

    of schedule delay, rescheduling and rework, which increase as more activities

    unfold

  • Another is about the SI calculation metrics (Eq. 8.5b): as far as the project

    progresses the SI tends to get close to 1 even if the project is behind schedule.

    Indeed, at the finish date when the work performed (WP) equals the work scheduled

    (WS), the schedule variance is nil and the schedule index is 1. As a result, the SI

    and the associated formulae are useful until the project is no more than 70–80%

    complete

  • In light of the consideration that growing expenditures involves declining control,

    it may be concluded that project monitoring is a valuable support to project

    control decisions and actions when the project is from 20 to approximately 70–80%

    complete, which is actually the most effective period to take project control actions.

    Earlier adjustments may rely on blind performance assessment, while later decisions

    may be ineffective, expensive and even get things worse.


Name the risk response strategies in the correct order


(Book p. 134)



Basically, responses to be used against risk may be drawn in four strategic directions. Avoidance and mitigation are typically risk preventive strategies that allow to minimize risk before it happens.

  • Avoid: Most simplistic and often the most practical method

  • Migitate

    • Mitigation involves a range of activities designed to reduce project risk. These activities include scheduling risky tasks out of the project critical path, allocating resources in order to minimize negative impacts, as well as holding frequent update meetings on important project aspects among others

  • Transfer

    • Transferring risk to other stakeholders

    • The use of insurance policies will transfer risk onto the insurer. The obvious downside is the risk premium, which represents the cost of the counter measure, as presented in the previous paragraph. Types of insurance common in the construction industry include general builder’s risk insurance as well as general liability insurance. Non-insurance transfers can be completed through the hiring of sub-contractors as well as through contract clauses.

  • Accept

    • The least desirable response is to accept full risk. Even though the risk is “accepted” there are still options available in order to minimize the impact from this risk. Monitoring plans devoted to those risky activities should be created. These plans should consider recovery and determined resources necessary to mitigate the impacts. For each risk an accurate probability of the risk occurring as well as its impact (financial or schedule) must be determined. Counter measures must be clearly defined—actions to be taken, responsible persons for initiating these actions, and the residual effects even after the actions are taken. In addition, contingency funds or materials, depending on the task, should be allocated to provide for a proper response. Finally, accepting risk may be an interesting option if a proper risk premium is paid to the party who- shoulders the risk


Author

Ole F.

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