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Project Risk Management

Document a scope risk from a past or current project of yours and include the following:

• A description of the issue.
• Why it was a problem. Be specific on the details: days of slippage, money spent, overtime worked, scope dropped, or other consequences.
• Describe the root cause (or causes) of the problem.

PJM 6600 Project Risk Management

Assignment 2

Part 1: Identifying Project Scope Risk

Document a scope risk from a past or current project of yours and include the following:

A description of the issue. Why it was a problem. Be specific on the details: days of slippage,

money spent, overtime worked, scope dropped, or other consequences. Describe the root

cause (or causes) of the problem.

Project:

Raymond Baladi Jr. Project Manager Riviera Point Development Group

“New headquarter office of the Department of Veterans Affairs”

Project Objective: Construct the interior build out of the new 15.000 SQFT administrative offices

for the D.V.A, for $550,000.00 in 2 months.

The D.V.A is considered a Federal entity and by the moment that the company signed the contract

with them, they told us that by the power invested in them by the U.S Government, they do not

require any type of city/county inspections, or do not need to comply with any building code

regulation. At that time, the contract was made based on the D.V.A deadline, that was ruled by the

termination of their previous office’s lease in downtown. The lease term was over in January 2018,

so the moving in date to their future facilities was needed it to be before January 15, leaving the

project’s length to only 3 moths, design and construction.

The root cause (or causes) of the problem:

The schedule was prepared without any revision of the city time, and the construction

timing/process was estimated without any delay for city inspections, that for the city of Miramar

is based on a 4 days week (Fridays they are closet) . Now the construction has been stopped in the

framing and rough face waiting for the permits to come clear and the GC able to pullout a

construction permit. The delay in this schedule will generate an extra charge of two months of

penalty for a longer lease for the old office, and a month less in rent income for the company.

Money spent:

– two months of penalty (old office): 12.000 x 2: $24,000.00

– One month less of rent than estimated in the contract: $15,000.00

– Extra charges for catching up effort and change orders: $4.5 – $6 per SQFT : $66,000.00

Days of slippage:

In this case are related to the time that we have in delay: 45 Days

Other consequences:

Shows/exposes the lack of experience of the realtor and the project management department

working with federal entities, and the bad labor of the engineering manager of the federal

department due to the wrong information provided.

Part 2: Identifying Project Schedule Risk

Complete the requirements of the attached Calamari Project.

Using the “PERT” chart supplied and the information below, fill in pessimistic estimates and, if you wish,

optimistic estimates for the project tasks. The estimates already entered in the Gantt and PERT charts are

“most likely”.

1. The tasks assigned to Finance are all things they have done before and their estimates are usually accurate

to within a day.

2. There is a lot of data supporting the tasks of printing documents and preparing marketing materials. These

estimates are considered very accurate.

3. R&D is well-staffed with experienced people. You are confident of all the Development task estimates,

plus or minus 5%, except for electronic design. This project requires known software and controls, with

which the team is very familiar, but miniaturization of the hardware is a new challenge. This work may take

as much as an extra couple of weeks beyond the estimate given. © 2015 Tom Kendrick Project Risk

Management Page 6

4. Learning Products people are currently very busy completing work for the “TVDinner” product, which

is currently the highest priority project. Their estimates assume no higher priority work will conflict with

Calamari. Even so, the tasks assigned to them are very unlikely to be completed more than a day early, and

this group has a number of very inexperienced people. Slipping Development Phase LP estimates by as

much as a third is likely, but Investigation Phase estimates seem fine.

5. Marketing has already started the needed research and has made a firm commitment to completing all

market research and other Investigation-phase tasks on time. Market research may be completed a week

early.

6. All functional areas understand how important the review of LP output is to the success of Calamari,

and although no one has promised to take less time than the estimate, everyone believes the time for this

will be sufficient.

7. Manufacturing reports that they expect to have no difficulty in moving Calamari into production. Several

engineers from a division experienced in similar production are assigned to work on Calamari. The only

estimate that they are not too confident of is the time for ordering parts, as new suppliers will be used for

the infrared interface hardware. They think this task might take as much as an additional three weeks. All

the other estimates for the project seem accurate within a day or so.

8. The mini digital stepping motor research is the only task assigned to R&D in the Investigation phase

that seems risky. This may require an extra week, but the other estimates are good.

9. Marketing expects several other projects to start up during the Development phase of Calamari. They

report that their tasks of writing the marketing plan and product launch will not be finished earlier than

estimated and both of these tasks may take up to two extra weeks due to higher priority conflicts.

Given this information, identify the tasks off the critical path that are most likely to cause project slippage.

Consider any sequences of tasks that could cause the Manufacturing Release (MR) milestone to slip.

Document the risky tasks, and determine a worst case Calamari schedule. Provide a one page discussion on

your findings.

The beginning of the development phase would be the tasks off the critical path that are most likely to cause

project slippage

Sequences of tasks that could cause the Manufacturing Release (MR) milestone to slice

In this case, the final end of the product would depend of writing the software, because would be the final

product (after polishing it). And moreover, it is the task that request the most on the development phase of

the schedule. Also, the critical path is determined by that task because after the business decision “Task 14”

passing the production phase, the next milestone is the manufacture release.

After analyzing the schedule, we could mention three important milestones The end of the investigation

phase, the beginning and the end of the development phase and finally the manufacturing release, being all

these three involved in the critical path, leaving as a consequence a process extremely divided in two routes,

as we can see after the breakdown on the task 14 , the development path and the marketing path are complete

independent one of each other, so the risk could be focused on the phase that has more time involved ( the

development phase).

Part 3: Identifying Project Resource Risk

Critical Path

Document a resource risk from a past or current project of yours and include the following:

Project:

Raymond Baladi Jr. Project Manager A&R Bal LLC

“Furniture wall and cabinets for the Yaloskouy restorant in North Miami Beach” .

Project Objective: Provide and installing the millwork portion of the FF&E for the Yaloskouy

restaurant.

Project size: Millwork portion of the FF&E design of a Restaurant’s interior renovation of a 8500

SQFT, for less than $55,000.00. The scope of work included 50 chairs, 30 tables (different sizes)

, 20 booths , 10 modular/corner booths , 1 bar/cabinets & counter top.

The price gave was taking in consideration an estimate of $15/Sq

Inch of millwork, including standard finishes, shipping and an allowance extra of $150/Sq inch

for countertop, and was based on the 50% CD;s Plan. After the first quote , the contract was signed

and the first part of the payment was received with the idea of starting the production. The term

Standard was not clear on the contract , and the set of plans used for the quote was not remarked

in any exhibit, leaving a difference in the plans used 50% for the contractor (me) and 100%Cds

for the client (rest.Owner). As a result the Formica (cabinets wood finish cover) and the granite (

countertop) samples provided by the Contractor where different than the ones that the interior

designer chose in the 100 CD’s. Ending in a change order of almost $16.500, that was

denied/rejected by the owner. By the time that the owner did not accept the change order, all rough

millwork was done waiting just for the cover and installation, leaving the refund and cancelation

of the contract as a non-viable solution.

Why it was a problem: The most common resource risk in the construction industry would be the

“financial, In this case the problem it’s obviously a resource/financial problem. To say it in another

words, the potential risk that sufficient resources (money) won’t be available to meet a goal. In this

case, the amount of money quoted wasn’t enough to cover the changes between the 50 CD’s and

100% construction documents, were the finishes where changed by the interior designer and the

subcontractors (me) assumed, partially, the losses. The changes in the Formica where almost

$6,500.00 and two weeks of delay due to “special order delivery”, and the extra charge for the

countertop was assumed by the owner because it was represented in the contract as an allowance.

To summary, the “REAL” profit of a regular construction company (millwork) it’s between 10-

20% , been the contract $55,000.00 the profit was close to $8,250.00 less taxes , so the millwork

company was working without any profit and almost reaching red numbers due to the change

order. The only reason why the company decided to end the job was the compromise and the

goodwill of being responsible.

DATA: Original Contract: $55,000.00 + Change Order: $16,500.00 = Final Amount: $71,500.00

Change Order: $6,500.00 ( extra Formica) + $10,000.00 ( Extra in Marbel)

Cost: losses of $6,500.00 for the sub-contractor and $10,000.00 for the owner.

Timing: All special order for Formica involved two to four weeks of delay on the schedule. On

the other hand, the marble selected has a delay of almost 3 months because was imported from

Italy.

Consequences of the risk of not having the money for the finishes:

– The possible break of the contract, and the losses of the down payment ( rough millwork

was done).

– Losing the client that has the potential of build more than 3 restaurants a year.

– Losing the working license due to a breach of contract

Describe the root cause of the problem.

The problem was with the original contract that should include an exhibit that determine the plans

used for the quote, because the original plans had different finishes for the tables and bar, than the

ones that were selected on the 100%CDs.

For the future the risk treatments to be implemented in the company are:

Avoid : Do not sign any contract without a well-defined scope of work.

Reduce: Do not start any work (rough) to save some time without having the result in mind

(finishes)

Transfer: Contacting and stabling a better link between the interior designer, the owner and the

subcontractor in order to be able to canalize the “blame” to the right stakeholder.

Accept: Accepting the losses if the contract was signed with the idea of maintaining the image and

honor of the company.https://simplicable.com/new/risk-avoidancehttps://simplicable.com/new/risk-reductionhttps://simplicable.com/new/risk-transferhttps://simplicable.com/new/risk-acceptance