Question 1: Organizing Risk Data
In section 6.4.3 of the PMBOK Guide of worldwide management standards (PMI, 2017), entitled "Estimate Activity Durations: Basis of Estimates" , we read that estimating durations is a quantitative assessment of the "likely" (which is the same term for "probable") number of time periods "that are required to complete an activity, phase or a project" (PMI, 2017, p.204). If there is a low probability (15%) that a project will exceed 3 weeks, what is the probability that the activity will take 3 weeks or less?
Question 2 Risk Mgt. Tools and Methods. (Limit one paragraph per each method described - examples are encouraged from readings, exercises or discussions).
a. Your team MPP has a schedule of upcoming dates for March and April. Add one risk relating to your final Team Project "scope" in your group's MPP Risk Register and phrase it here
b. In section 11.5.3.2 "Project Risk Management Plan Updates", the authors of the PMBOK Guide (PMI, 2017) affirm change control processes to any Project Plan. In section 11.5.3.3 (PMI, 2017, p.448), project updates may include cost forecasts, a "lessons learned" register, and a Risk Register. There are eight bullet point "updates" that a PM could add to any Risk Register in this PMBOK Guide section from your assigned reading. Describe two of these and how they would be useful to any team.
Question 3.
A) Read the attached "Mexi-Energy" case and format a Risk Register table. Identify the top six risks facing the Project Management team which could be rated using the attached scale. Rate your risks using the scale provided at the end of the case. B) Since there will be expensive "penalty clauses" in the hypothetical electricity generating plant contract for any delays, explain two methods to mitigate risks to scheduling. Cite readings.
Producing Electricity via Steam-Powered Turbines: A Hypothetical Case Study
Sam Martinez is seeking to invest a portion of his considerable assets in the "independent" electric power production industry in California, a sector projected to experience very rapid growth in the 21st century. He and a Board have set up and funded a company "MexiEnergy Inc.". The intention is to use the company to build and operate an electric power-generation plant, and then form a non-profit organization to "donate" some of the power to social service agencies.
However, the large public-sector (hypothetical) California Energy produces most of the power for California. The main exceptions are co-generation plants associated with food processing, timber and similar industries, some small hydro plants which generate electricity via water into steam, which turns large turbines- thus electricity is produced. These "independents" are Mr. Martinez' business models but also competition.
California Energy operates all long distance distribution, selling electricity to municipal utilities for local distribution; brokering electricity sales to large industrial customers, and providing electricity wholesale to small rural customers.
Privatization of California Energy is being argued by leading environmental groups, with a view that increases in electricity cost per unit which would decrease electricity consumption. Not everyone agrees with such reasoning, since it may risk much higher costs for consumers. These probabilities have been calculated as part of California Energy's financial forecasts but lack any risk management plan.
Sam has identified what he believes to be his technical opportunity. It would involve:
1. Producing base load electric power for sale to California Energy in a northern California town using a CCGT (combined cycle gas turbine) plant. This package deal would include a set of natural gas powered turbines driving generators, and the heat producing high pressure steam to drive a steam turbine generator: a high yield of electricity would be produced.
2. Providing (for sale) low pressure steam for local manufacturing organizations in the immediate vicinity of the CCGT plant, and generating more of this when supply and demand increase.
The local city has a natural gas network and supply, but the supply pipeline is not large enough to cope with the proposed CCGT type of natural gas-run turbine. The gas supply company will provide a new main and gas at a price per unit fixed for a substantial period of time, but require a "take-or-pay" contract with any buyers. If Mexi-Energy decides to contract to take gas from any given date, they will have to pay for the contracted natural gas flow whether they use it or not. Weather impacts the gas hook-ups as well from large plants, since this must be done under extremely dry conditions.
A range of established suppliers of CCGT plants would be willing to sell Mexi-Energy its turbine-driven equipment. The Board must decide upon risks in purchasing one of the following three options:
A. New untested design. Very high fuel efficiency. Initial reliability uncertain. Likely to be very reliable in the long run. Claimed very low maintenance costs. Low capital cost to encourage purchase.
B) State of the art tested design. High fuel efficiency, high reliability and low maintenance costs. Very high initial capital cost.
C) Tried and true design. Low fuel efficiency, moderate reliability and mid-range maintenance costs, depending on reliability of natural gas hook-ups. Moderate capital cost.
CCGT plant suppliers will install the major plant components on a fixed price basis. MexiEnergy Inc. has revised the scope and Contract, with stiff penalty clauses for 1) delays or 2) performance failures which the manufacturer must be responsible for. However, such penalty clauses may not be operable, for example, if ground conditions are not as tested environmentally or electrical grid connections are not in place when required.
California Energy will provide grid connections, and will not allow anyone else to do so. The plant could be delayed for weather reasons and start-up delayed due to grid hook-ups or electrical black-out failures due to ‘rolling black-outs'.
Water to turn the CCGT turbines will be taken from a river which flows through the municipality. However, no legal environmental permits have been granted to remove water from these rivers during the several drought years in California. Permit fees statewide are rumored to rise dramatically before construction begins.
Extraction of water requires municipal planning permits, and also state gov't. approval is required for the plant construction using water pipelines, low pressure steam lines and power lines. All construction must be scheduled, of course, dependent upon approvals from governmental agencies.
You have been hired to present a Risk Analysis report by next week to the Board.