Case Study 02

Z3 Industries is in process of developing a product as a result of commercialization of a research project. High-tech product, if launched within next four months will provide the competitive advantage to Z3. This will enable Z3 to dominate the market for a year, before competitors will catchup. Product will be developed in six phases:

1. Preliminary planning,
2. Detailed planning
3. Execution/design selection
4. Prototyping
5. Testing
6. Production

At the conclusion of each phase, a stage gate review is held with all the major stakeholders. By the end of second stage (after Detailed Planning stage) a meeting is being held between the PM and sponsor to review the detailed plan and identify and potential problem areas which will require the attention of project sponsor

Meeting:

Sponsor: I am unable to understand the document sent by you titled Risk Management Plan. All I see in it is WBS (work breakdown structure) till level 5 and all the work packages with the associated risks. You have identified 200 risks in this document. Why there are so many risks? Furthermore they are not categorized in any manner. Should not they be categorized based on the methodology provided in the Risk Management Plan?

PM: All those risk will impact the design of the final product. We should be able to select the design with the lowest risk. Unfortunately our Project Management methodology does not provide any guidelines on how to develop RM Plan.

Sponsor: I do not see why one should perform in-depth analysis of 200 risks. This is too much of effort with regard to return. And where are the probabilities and impacts of the identified risks?

PM: My team will identify probabilities and impacts near the prototype development, which is due next month. By that time some of the risks will go away altogether.

Sponsor: if this is the case then why to spend all this energy and effort to identify the risks in the first place? You have spent too much time and resources on this step. If you keep spending same amount of efforts on all the RM steps, we will go over budget.

PM: I believe that remaining steps will require less efforts, rather 10% less than the allocate budget, and we will stay on budget.

Questions:

1. Is the document given to the sponsor was Risk Management Plan?
2. Did the project manager actually perform effective risk management? Provide reasons.
3. Was appropriate time and money spent on the risk identification?
4. Should one step be allowed to dominate in risk management process?
5. Is there any significant benefits of work already done under risk identification?
6. Is the identified risks should have been categorized? If so, how?
7. Can probabilities of occurrence and the impacts be accurately assigned to all the 200 risks?
8. Should Project Management methodology provide the guidance for development of Risk Management Plan?
9. What are your thoughts about the PM comment that, My team will identify probabilities and impacts near the prototype development, which is due next month.
10. At what stage Risk Management Plan should have been formulated and why?