QUESTION ONE [25] Read the excerpt below and answer the questions that follow: Internal and external risks in project management The most critical phase in the project life cycle is the conceptual phase or bidding process, since only scarce information is available, and nevertheless, the project baseline has to be determined, which more or less becomes a constraint for the project in terms of time and cost and product performance. In other words, the proposal manager faces an obvious, but not easy to loose, tradeoff: the more competitive the bid in terms of offered price and nonprice factors, the greater may be the probability of winning, but, conversely, the higher may be the probability of deviation from the planned project baseline. Three main problems should be addressed: How to estimate the bid competitive value and measure the probability of winning. How to estimate the project baseline and measure the probability of meeting the related constraints. How to integrate both estimates, trading off bid competitive value and project baseline constraints with the related uncertainty levels. The competitive value of a bid is estimated using competitive factors (such as price, delivery time, technical assistance, process safety, training service, plant dependability, etc.), which have to be defined, following a top-down approach. Since these factors may be either qualitative or quantitative it is necessary to use, together with the limited set of factors available, a suitable ranking model. The ranking is related to the influence of each competitive factor on the overall bid competitive value. Obviously, the point of view of the owner is quite different from the contractor's one (in the latter case all the data should be estimated through educated guess). Competitive factors may be structured in different ways, depending on the availability of external information (client, competitor, market) and the possibility to identify the cognitive process of experts on the domain as a: Simple list Hierarchical structure and taxonomy of factors Semantic network Database or knowledge base 1 A global performance indicator for the bid competitive value is calculated using the competitive factors as parametric variables. The calculation algorithm depends on the number of parameters, the type of ranking or the knowledge structure complexity. This problem may be effectively approached by a Multi-Attribute Decision Making model, such as, for instance, Saaty's Analytic Hierarchy Process, which is in fact a prioritization technique. Source: https://www.pmi.org/learning/library/external-internal-risks-project-early-phase-1135

Questions:

1.1 With regard to the excerpt, distinguish between project risk associated with key performance criteria and other performance criteria. (14)

1.2 Discuss the various types of internal and external risks a project could face. (11)