PROJECT CONTROL &

RISK
■ Purpose of Control
■ Control Process
■ Cost/Schedule/Technical Control
■ Introduction to Earned Value

■ Project Changes and Change Control

■ Importance of Managing Risk

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 Purpose of Control
■ To make the actual meet the plan

■ The Process
■ 1. Key performance areas
■ 2. Set standards
■ 3. Measure performance
■ 4. Compare
■ 5. Fix

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 A Question of Balance
■ Too little control?
■ Too much control?

C
Control

C
Mistakes

Amount of Control
3
 What Forms do these
“Standards” Take?
■ Cost

■ Schedule

■ Performance

4
 A Control Example
■ You’retwo months into a three
month project. You’ve spent 90%
of your budget.

Defend yourself.

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 Three Important Terms
■ BCWS: The plan, integrating schedule
and budget

■ BCWP: What you planned to spend for

work actually done

■ ACWP: Actual dollars spent at a point

in time, for the work actually done

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 More Terms
■ BAC: Original budget at completion

■ TAC: Original time at completion

■ ECAC: Estimated cost at completion

■ ETAC: Estimated time at completion

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 Four Relationships
■ Cost Variance = BCWP - ACWP
■ Schedule Variance = BCWP - BCWS
■ ECAC = ACWP X BAC
BCWP
■ ETAC = BCWS X TAC
BCWP

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 Changes and Change
Control
■ Thelast step of the control
process: FIX

■ TwoTypes: Business and

Technical Changes

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 Business Changes (aka
CCPs)
■ Business related
■ Driven by such things as:
■ Spec relief
■ Deliverables changes
■ Funding shifts
■ Schedule changes
■ Acts of God
■ Subcontractor changes

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 Technical Changes (aka
ECPs)
■ Technological issues, such as:
■ New technologies
■ Laws of physics
■ Competitor response
■ Threat changes
■ Changes in user requirements (real
or political)

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 Change Control
■ Changes cost $, usually big $
■ So they need control
■ PM responsibility
■ Signed baselines
■ High levels of authority

■ Some tools:
■ Zero sum/DTC/caps

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 PROJECT RISK
MANAGEMENT

■ Risk defined
■ A brief history
■ Types of project risk
■ The PMBOK sequence
■ Tools

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 RISK DEFINED
■ The likelihood (probability) and
the impact of an undesirable
event
“Fear of harm ought to be proportional not
only to the gravity of the harm, but also to
the probability of the event.” (Antoine
Arnauld, 1665)
■ Bothmatter
■ Examples

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 A BRIEF HISTORY
■ The management of risk forms the
boundary between the old world
and modern times
■ Old world
■ Fates and gods
■ Short time horizons
■ Man’s role: accept, maybe react

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 SO WHAT CHANGED?
■ Rise of rational man
■ Man can plan and influence the future
■ Development of math, probability,
forecasting
■ Multiply XII times VIII
■ Rise of zero and Arabic numerals
■ Rise of trade, business, shipping
■ Longer time horizons
■ Large commercial ventures mean more at stake

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 THE CRITICAL QUESTIONS
■ To what extent does the past foretell
the future?
■ Can we extrapolate from the past to
predict a future event?
“Nature has established patterns originating in the
return of events, but only for the most part.”

(von Leibnitz to Bernoulli, who then developed the

Law of Large Numbers, 1703)

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 TYPES OF PROJECT RISK

People
Time

Political Financial

Technical

A Question: Is “Risk Reduction” really possible?

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 THE PMBOK RISK
MANAGEMENT SEQUENCE
■ Risk identification
■ Risk quantification
■ Risk response development
■ Risk response control

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 TOOLS FOR RISK
MANAGEMENT (more or
less in order)
■ Expert opinion
■ Simulation
■ Historical Analysis/ “Lessons Learned”
■ “Risk Reduction”
■ Contracting/Procurement Strategy
■ CPFF, FFP, “Make or Buy,” Sole Source, etc.
■ Insurance, bonding
■ Multiple paths
■ Management attention (e.g., “Top 10” Lists)
■ Workarounds
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