Chapter 7

Case Peak LAN

a. Peak LAN Risk

An important piece to any project is risk management. Risk management is a proactive
rather than reactive approach which:
 Reduces surprises and negative consequences
 Prepares the project manager to take advantage of appropriate risks
 Provides better control over the future
 Improves chances of reaching project performance objectives within budget and on
time
The first step of risk identification is to generate a list of possible risks through
brainstorming, problem identification and risk profiling. The initial emphasis should be on
Macro risks, then specific events. (Meredith, 2009)
 Technical Risks
 Constraints related to the networked sequence in which project activities must
occur
 Backup strategies if chosen technology fails and if required Windows
platforms are not available
 Assessing whether technical uncertainties can be resolved
 Schedule Risks
 Imposed duration dates (Hardware 22 Jan – Training complete of 16 Feb)
 Compression of project schedules due to a shortened project duration date
 Resource Constraints
 The absence, shortage, or unique interrelationship and interaction
characteristics of resources that require a particular sequencing of project
activities
 Manpower availability of two college interns could be affected by between
school session issues. i.e. grades, tuition payments, or personal issues
preventing return for spring semester
 Mardi Gras Event runs Jan 16 thru Feb 21 and could impact clients
personnel’s availability for training
  Costs Risks
 Time/cost dependency links: costs increase when problems take longer to
solve than expected.
 Price protection risks (a rise in input costs) increase if the duration of a project
is increased.
 Funding Risks
 Changes in the supply of funds for the project can dramatically affect the
likelihood of implementation or successful completion of a project.
 Meridian Social Services fall under the state of Louisiana and could be
impacted by state budget reduction.

b. Risk Assessment Matrix

RISK EVENT LIKELIHOOD IMPACT DETECTION WHEN

DIFFICULTY

Hardware Delay 4 5 3 Scheduled installation date

After installation users can

3 4 4
Backup Failures not access old system files
Intern schedule conflicts
Resource Constraints 3 3 3
during project installation.
Technical Malfunction of new
2 5 5 Occurs at installation.
Hardware
Unplanned costs or delays
2 2 4 create Budget overrun due to
Budget Cost Risk
time/cost dependency
State Agency has risk of
Funding 2 5 5
losing funding

The above matrix evaluates the risk, severity of the risk and the probability the risk will
occur and how difficult the detection is to discover. The project for Meridian Social Service
Agency included a fixed budget of $90,000 and a tight 30 day schedule. Both risks can be
managed with contingency plans; however they are interdependent upon each other. Simply
stated if delays occur, the more likely the budget could be impacted.
Risks need to be evaluated in terms of likelihood the event will occur and the impact or
consequences of the occurrence. (Meredith, 2009) In terms of the Peak LAN Project,
evaluating the risks proactively proved to be a challenge for the technical risks. Testing the
risks could not be completed prior to installation or deliver of the hardware. The project
manager would need to react to these situations and develop solutions that could result in
increased costs as well as schedule delays. In addition to technical delays, Peak LAN utilized
interns could lead to resource constraints during installation. The project manager could
eliminate this risk by obtaining schedule commitments from the interns so that additional
resources could be contracted to eliminate the shortage of resources.
c. Risk Response

RISK EVENT RESPONSE CONTINGENCY PLAN TRIGGER WHO IS

RESPONSIBLE

Prepare design and Identify the Critical Path and

installation of Local Area Avoid: Review Design make the necessary changes to Behind schedule Project Manager
Network(LAN) prepare for a delay
Monitors not
Review Hardware Mitigate: Select reliable working and
vendor Order replacement CPU’s not Two interns
Transfer: Warranty loading

Correct errors accordingly and Project Manager and

System Performance Mitigate: Test System work on issues until assistance Not solved within Peak professional
Monitoring is needed 48 hours

Mitigate: Review the Project Manager and

User Criticism Peak Systems training Create a troubleshooting logic Call from Director Peak Professional
methods for possible tree
tweaks

“In a systematic process of project risk management, after risk assessment is

implemented, the risk analysts encounter the phase of assessment and selection of the project
risk response actions (RA) (Seyedhoseini, Noori & Hatefi, 2009).” Within the realm of
project management, there are many challenges that will be encountered. The Risk response
matrix assists project managers by, “summarizing how the project team plans to manage risks
that have been identified (Larson & Gray, 2011).” In assessing the risks associated with this
project, the team will have to address the contingency plan that will be implemented for each
risk. The design stage involves how Peak Systems will install a local area network (LAN) for
the Meridian Social Service Agency. The one trigger that the project manager is concerned
about in this stage is falling behind on schedule. The project manager has determined that to
avoid this issue, identifying the critical paths and making all the necessary changes to prepare
for a delay will ensure that the project moves along smoothly.
 The next risk event revolves around the hardware. The contract for this project
includes the delivery of twenty workstations, twenty laptops, one server, and two color laser
printers. The project manager understands that when this much hardware is involved in any
contract the chance of receiving faulty equipment will increase. In order to mitigate this risk,
the two interns will track the delivery of the hardware from beginning to end. This will allow
the team to know in advance, if any, flaws within the delivery logistics of the hardware is
present. If an event of this nature should occur, the team will immediately arrange for the
hardware to be delivered by another company. The project manager understands that this
could possibly cause some delay, but the team would be able to save half of the delay time
depending on how soon the delivery problem is assessed.
“Although it is impossible to eliminate all risk events, some specific risks may be
avoided before you launch the project (Larson & Gray, 2011).” The simplest way to avoid
certain risks is to ensure that the team purchases proven technology. In the same respect, the
project manager has to keep a keen eye on the budget allotted. This is where project
managers earn their money, because they understand that some phase of the project has to be
compromised to keep within budget, and the question then becomes, what gets
compromised? Within the scope of this project, the project manager has purchased proven
equipment and limited the system maintenance and repair to one month.
During the system performance monitoring, the in-house whole network testing could
be affected by the system freezing, which could cause a delay. Another issue that the team
could run in to is the inability to provide secure external access to field workers. The project
manager and the peak professional have decided that they will work on any errors that may
occur accordingly, and if they get to the point where they can’t figure the problem out, they
will bring in outside assistance. This logic allows the team to troubleshoot the problem, and
if they can’t correct it, they know exactly who to contact and what to get a price quote for.
Throughout this course, we have discussed organizational culture and office politics,
and both can become evident in this project if the team does not properly prepare for it. The
final risk event of this project will involve training. The risk of red tape when setting user
priorities and authorizations is going to be dependent upon the culture of the organization.
Even though it is spelled out in the contract that the client will be responsible for any
additional time allotted for training, the team has decided to create a troubleshooting logic
tree as a contingency plan for any delays within this task. The team will make the training as
user friendly as possible to allow for those employees with a slower learning curve.
 Conclusion
Peak Systems, LAN project consisted of a tight schedule and a fixed budget. The
team addressed Risk Matrix and Risk Response in order to help mitigate any issues that may
come up in the project plan. Technical installation project such as this project provide an
even bigger challenges than other projects as many of the risks cannot be identified until the
actual software and hardware are installed.

Chapter 7

Excercise
1. Given the project information below, what is the probability of completing the National
Holiday Toy project in 93 time units?

Act Optm. Most Press Act Variance

Description Predecessor Critical
.ID (a) likely (m) . (b) time te [(b-a)/6]^2
1 Design package None 6 12 24
2 Design product 1 16 19 28
3 Build package 1 4 7 10
4 Secure patent 2 21 30 39
5 Build product 2 17 29 47
6 Paint 3,4,5 4 7 10
7 Test market 6 13 16 19

Jawab
𝑂𝑇+4 ×𝑀𝑇+𝑃𝑇
AT = 6
Dimana,
AT : Actual time
OT : Optimum time
MT : Most probable time
PT : Presimistic time

Contoh perhitungan pada ativitas 1:

6+4 ×12 +24
AT = = 13
6

𝑏−𝑎 2
Varians = ( )
6
Dimana,
b : Presimistic time
a : Optimum time
Contoh perhitungan pada ativitas 1:
24−6 2
Varians = ( ) =9
6

Act Predecess Optm. Most Press Act time Variance

Description Critical
.ID or (a) likely (m) . (b) te [(b-a)/6]^2

1 Design package None 6 12 24 13 9 Iya

2 Design product 1 16 19 28 20 4 Iya
3 Build package 1 4 7 10 7 1 Tidak
4 Secure patent 2 21 30 39 30 9 Iya
5 Build product 2 17 29 47 30 25 Iya
6 Paint 3,4,5 4 7 10 7 1 Iya
7 Test market 6 13 16 19 16 1 Iya

AON Network

Critical path : 1,2,4,5,6,7

Te : 86
Ts :93

𝑇𝑠−𝑇𝑒
Z=
√∑ 𝜎𝑡𝑒²
93−86
Z=
√9+4+9+25+1+1
7
Z= =1
√49

P didapatkan dari tabel statistic Standart normal probabilities yaitu 0,84. Dengan nilai z = 1,
maka probabilitasnya adalah 0,84 yang berarti terdapat peluang 84% menyelesaikan proyek
sebelum 86 unit waktu.
 2. The Global Tea and Organic Juice companies have merged. The following information
has been collected for the “Consolidation Project.”

Act Description Predecessor a opt m ml b pess

1 Codify accounts None 16 19 28

2 File articles of unification None 30 30 30
3 Unify price and credit policy None 60 72 90
4 Unify personnel policies None 18 27 30
5 Unify data processing 1 17 29 47
6 Train accounting staff 1 4 7 10
7 Pilot run data processing 5 12 15 18
8 Calculate P & L and balance sheet 6,7 6 12 24
9 Transfer real property
2 18 27 30
10 Train salesforce 3 20 35 50
11 Negotiate with unions 4 40 55 100
12 Determine capital needs 8 11 20 29
13 Explain personnel policies 11 14 23 26
14 Secure line of credit 9,12 13 16 19
15 End 10,12,14 0 0 0

a. Compute the expected time for each activity.

𝑂𝑇+4 ×𝑀𝑇+𝑃𝑇
AT = 6
Contoh perhitungan pada ativitas 1:
16+4 ×19 +28
AT = = 20
6

Act time
Act Description Predecessor a opt m ml b pess
te

1 Codify accounts None 16 19 28 20

2 File articles of unification None 30 30 30 30
3 Unify price and credit policy None 60 72 90 73
4 Unify personnel policies None 18 27 30 26
5 Unify data processing 1 17 29 47 30
6 Train accounting staff 1 4 7 10 7
7 Pilot run data processing 5 12 15 18 15
8 Calculate P & L and balance sheet 6,7 6 12 24 13
9 Transfer real property 2 18 27 30 26
10 Train salesforce 3 20 35 50 35
11 Negotiate with unions 4 40 55 100 60
12 Determine capital needs 8 11 20 29 20
13 Explain personnel policies 11 14 23 26 22
14 Secure line of credit 9,12 13 16 19 16
15 End 10,12,14 0 0 0 0
 b. Compute the variance for each activity
𝑏−𝑎 2
Varians = ( )
6
Contoh perhitungan pada ativitas 1:
28−16 2
Varians = ( ) =4
6

Act Variance
Act Description Predecessor a opt m ml b pess
time te [(b-a)/6]^2

1 Codify accounts None 16 19 28 20 4

2 File articles of unification None 30 30 30 30 0
3 Unify price and credit policy None 60 72 90 73 25
4 Unify personnel policies None 18 27 30 26 4
5 Unify data processing 1 17 29 47 30 25
6 Train accounting staff 1 4 7 10 7 1
7 Pilot run data processing 5 12 15 18 15 1
8 Calculate P & L and balance sheet 6,7 6 12 24 13 9
9 Transfer real property 2 18 27 30 26 4
10 Train salesforce 3 20 35 50 35 25
11 Negotiate with unions 4 40 55 100 60 100
12 Determine capital needs 8 11 20 29 20 9
13 Explain personnel policies 11 14 23 26 22 4
14 Secure line of credit 9,12 13 16 19 16 1
15 End 10,12,14 0 0 0 0 0

c. Compute the expected project duration.

AON Network

Te = 114
Critical path = 1,5,6,8,12,14,15
 d. What is the probability of completing the project by day 112? Within 116 days?
𝑇𝑠−𝑇𝑒
Z=
√∑ 𝜎𝑡𝑒²
112−114
Z=
√4+25+1+9+9+1
−2
Z= = -0,28
√49
P didapatkan dari tabel statistic Standart normal probabilities yaitu 0,39. Dengan nilai z = -
0,28, maka probabilitasnya adalah 0,39 yang berarti terdapat peluang 39% menyelesaikan
proyek sebelum 114 unit waktu.

𝑇𝑠−𝑇𝑒
Z=
√∑ 𝜎𝑡𝑒²
116−114
Z=
√4+25+1+9+9+1
+2
Z= = +0.28
√49
P didapatkan dari tabel statistic Standart normal probabilities yaitu 0,61. Dengan nilai z =
+0,28, maka probabilitasnya adalah 0,61 yang berarti terdapat peluang 61% menyelesaikan
proyek sebelum 114 unit waktu.

e. What is the probability of completing “Negotiate with Unions” by day 90?

Critical path duration = 86 hari
𝑇𝑠−𝑇𝑒
Z=
√∑ 𝜎𝑡𝑒²
90−86
Z=
√4+100
+4
Z= = +0.4
√104
P didapatkan dari tabel statistic Standart normal probabilities yaitu 0,65. Dengan nilai z =
+0,4, maka probabilitasnya adalah 0,65 yang berarti terdapat peluang 65% menyelesaikan
proyek sebelum 86 unit waktu.
Chapter 8

Excercise