Dobson Michael Singer - Project Risk and Cost Analysis

Project Risk and Cost Analysis

Project Risk and Cost Analysis

Michael S. Dobson, PMP
Deborah S. Dobson, M.Ed.

Chapter 8 contains material on preparing a network diagram and scheduling that was originally published in a slightly different form in Chapter 5 of Managing Multiple Projects, Dobson and Dobson (New York: American Management Association, 2011).

Reprinted by permission of the publisher. www.amacombooks.org.

2012 American Management Association. All rights reserved. This material may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher.

ISBN-13: 978-0-7612-1492-2

ISBN-10: 0-7612-1492-5

Printed in the United States of America.

AMACOM Self Study Program

http://www.amaselfstudy.org/

AMERICAN MANAGEMENT ASSOCIATION

http://www.amanet.org

10 9 8 7 6 5 4 3 2 1

List of Exercises

List of Exhibits

In this new Self-Study course, Project Risk and Cost Analysis, we focus on risk in the context of project management, primarily in the area of risks effects on project costs, with emphasis on the many modern tools that help you and your organization quantify and manage project risk. You will learn how to perform a formal risk and cost analysis, apply the Earned Value Method to risk management, and adjust schedule and budget reserves appropriately for your project conditions.

We will follow the basic project risk management approach as laid out in A Guide to the Project Management Body of Knowledge (PMBOK Guide), 4th Edition, popularly known as the PMBOK Guide, along with other sources listed in the bibliography and suggested reading. Risk cuts across many disciplines, not merely project management, and we strongly encourage you to read and study widely. In the wise words of the classic science fiction film Plan 9 from Outer Space (1959), We are all interested in the future, for that is where you and I are going to spend the rest of our lives.

Michael S. Dobson, PMP, is an internationally known authority on project management and author of 22 previous books, including The Jugglers Guide to Managing Multiple Projects (PMI, 1999). As principal of Dobson Solutions (www.dobsonsolutions.com) and the Sidewise Institute (www.sidewiseinsights.com), Michael consults, speaks, and trains on project management topics throughout the world. His clients range from the U.S. Navys nuclear propulsion program to Calvin klein Cosmetics. As an operating executive and project manager, Michael has been vice president, Discovery Software International; vice president, Games Workshop; and director of marketing and games development, TSR, Inc. He was part of the team that built the Smithsonian Institutions National Air and Space Museum in the 1970s. He holds a bachelors degree from the University of North Carolina at Charlotte.

Deborah S. Dobson, M.Ed., is assistant vice president/director of leadership and organizational development for Science Applications International Corporation (SAIC), a 44,000-person Fortune 500 scientific, engineering, and technology applications company. She was previously a senior vice president with broadline foodservice distributor US Foodservice, and division vice president of GATX Terminals. She is the co-author of Enlightened Office Politics (AMACOM, 2001), Managing UP! (AMACOM, 2000), and Coping with Supervisory Nightmares (SkillPath, 1997), and most recently a contributing author to the International Society for Performance Improvements Handbook of Improving Performance in the Workplace (Volume 1: Instructional Design and Training Delivery) (Pfeiffer, 2010). She holds a masters degree in Education from Loyola University Maryland and completed her undergraduate degree at Towson State University, also in Maryland.

The Dobsons live in Bethesda, Maryland.

This course consists of text material for you to read and three types of activities (the pre/post tests, in-text exercises, and end-of-chapter review questions) for you to complete. These activities are designed to reinforce the concepts brought out in the text portion of the course and to enable you to evaluate your progress.

A pre-test and post-test are included in this course. Take the pre-test before you study any of the course material to determine the amount of prior knowledge you have on the subject matter. Submit one of the scannable answer forms enclosed with this course for grading. On return of the graded pre-test, complete the course material. Take the post-test after you have completed all the course material. By comparing results of the pre-test and the post-test, you can measure how effective the course has been for you.

To have your pre-test and post-test graded, please mail your answer forms to:

American Management Association

Educational Services

P. O. Box 133

Florida, NY 10921

All tests are reviewed thoroughly by our instructors and will be returned to you promptly.

If you are viewing the course digitally, the scannable forms enclosed in the hard copy of AMA Self-Study titles are not available digitally. If you would like to take the course for credit, you will need to either purchase a hard copy of the course from www.amaselfstudy.org or you can purchase an online version of the course from www.flexstudy.com.

The most important component of this course is the text, for it is here that the concepts and methods are first presented. Reading each chapter twice will increase the likelihood of your understanding the text fully.

We recommend that you work on this course in a systematic way. Only by reading the text and working through the exercises at a regular and steady pace will you get the most out of this course and retain what you have learned.

In your first reading, concentrate on getting an overview of the chapters contents. Read the learning objectives at the beginning of each chapter first. They serve as guidelines to the major topics of the chapter and enumerate the skills you should master as you study the text. As you read the chapter, pay attention to the headings and subheadings. Find the general theme of the section and see how that theme relates to others. Dont let yourself get bogged down with details during the first reading; simply concentrate on remembering and understanding the major themes.

In your second reading, look for the details that underlie the themes. Read the entire chapter carefully and methodically, underlining key points, working out the details of the examples, and making marginal notations as you go. Complete the exercises.

Interspersed with the text in each chapter you will find numbered exercises. These take a variety of forms, including brief essay, short answer, charts, and questionnaires. Answers to many of the exercises can be found in the back of the book in the section titled Answers to Exercises and Case Studies.

After reading a chapter and before going on to the next, work through the review questions. By answering the questions and comparing your own answers to the answers provided, you will find it easier to grasp the major ideas of that chapter. If you perform these self-check exercises conscientiously, you will develop a framework in which to place material presented in later chapters.