Case Study 3

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Yale University *

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438A

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Management

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Nov 24, 2024

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Case Study 3: Probability and Impact • Weight 5% of the final grade • Due no later than 11:00 p.m. on Sunday of Unit 6 Objectives [CLO 1, CLO 2, CLO 3, CLO 4, CLO 5, CLO 6] On successful completion of this assignment, students should be able to: \ • outline in detail different facets of project execution, monitoring, controlling, and closing; • explain specific inputs, tools, techniques, and outputs that allow project managers to execute, control, and close projects effectively; • explore the entire range of key issues and fully articulate the potential pros and cons of the possible measures; and • make effective project management decisions and communicate succinctly. Textbook/Case Source Milosevic, D. Z., Patanakul, P., & Srivannaboon S. (2010). Probability and Impact. In Case studies in project, program, and organizational project management (pp. 245-246). Hoboken, NJ: John Wiley & Sons Inc. This probability and impact case study presents the use of probability and impact as a risk analysis procedure. The case discusses the development of appropriate risk thresholds for the nature of risk events during the execution of projects. This case shows how risk analysis procedures can be adjusted to address different types of risks. Description In your analysis of this case, you must ensure that you include the following: • An introductory paragraph and brief summary of what this case study is about. • An explanation the benefits of project risk management (provide at least three benefits), providing details as to how risk management was conducted in the case. • Explain the components of a robust Risk Management Plan and Risk Register and discuss how risk management was conducted in this case. • A short paragraph as conclusion. All submissions must be done through the online Turnitin portal in Moodle. Percentage similarity MUST NOT exceed 15%. Submission Instructions Read the Case Study associated with the specific unit carefully, then proceed as follows: 1. Prepare a response that is 750 words or maximum of 3 pages double-spaced (excluding title page and reference page) and should follow APA format and referencing style. WWW.YORKVILLEU.CA BUSI3633: PROJECT EXECUTION, MONITORING, CONTROL, AND CLOSING 8

2. While there is no “formula” for analyzing case studies, the following guidelines are recommended: a. Define the outcomes and objectives for your analysis. What questions are you trying to answer and what issues are you trying to resolve? b. Rapidly skim through the case study and get a sense for how the case study has been structured c. Read through the case study with paper and pencil and make notes as you go along 3. Structure the information in the case study: this is the key step. a. Whilst addressing the case questions, think of the information given in the case study as “raw data” that you have gathered to help you answer the questions and resolve the issues in Step 2a above. b. You need to structure this information in order to resolve the issues. Here are some useful dimensions along which you can structure the given information chronologically: i. evolution of the industry in which the enterprise operates (e.g., changes in technology, customer needs, competitive landscape) ii. evolution of strategy - business, technology, and market - of the enterprise iii. evolution of technology (including manufacturing), product platforms, and product lines of the enterprise iv. the technology, product, and process development process within the enterprise v. growth (or decline) of the enterprise with respect to market share, revenues, costs, profits, etc. vi. organizational structure of the enterprise vii. key decisions made at different stages in the life of enterprise, and the drivers for these decisions 4. Make extensive use of figures, tables, trees, etc. to shape your thinking during the structuring process. 5. Draw conclusions, answer questions, resolve issues, and make recommendations using the structured information in Step 3. Evaluation and Feedback Case Study 3 will be marked in its entirety out of 100. The following rubric indicates the criteria students are to adhere to, and their relative weights to the assignment overall. Professors will provide feedback within a week of submission.

Activity/Competencies Demonstrated % of Final Grade 1. Critical Analysis and Conclusions (70%) a. Outcomes and objectives effectively identified /30 b. Conclusions, solutions and recommendations are appropriate and supported /40 2. Communication (20%) a. Uses language clearly and effectively /10 b. Information organized intelligently and holistically /10 WWW.YORKVILLEU.CA BUSI3633: PROJECT EXECUTION, MONITORING, CONTROL, AND CLOSING 9 3. Attention to Detail (10%) a. APA Referencing and formatting of titles, headings & references (when used) /5 b. Spelling and grammar /5 Total /100 Case STUDY BELOW: Probability and Impact Jovana Riddle Salvatore Adamo was the head of Vintel Corp's Risk Management Department. His responsibility was to manage risks for many of the company's products. However, one particular product had major risk implications and mattered to Salvatore the most. It was Vintel's flagship product and had a very important risk event at stake. The risk at stake had a very low probability of occurring but had a huge potential impact on the company and its future. This was the first time in the company's history that a product with such a low probability risk event could lead to such enormous potential impact. This case presents how Salvatore adjusted Vintel's risk analysis procedure to address this type of risk. RISK ANALYSIS STEPS In order to effectively manage risk for Vintel's product, Salvatore typically followed the standard procedure. He started off with the identification of all potential risks. He then identified the probability and impact of each risk, using a 1-to-5-point scale. For each risk, the risk score was then calculated based on a set formula (Probability + 2 x Impact). He then used a Risk Rating table with predetermined thresholds to categorize risks into high (red), medium (yellow), and low (green) severity risks. Typically, the threshold for high risk is 12 and above. Medium risks have a score ranging from 8 to 11. Risks that score below 7 are considered low risks. Usually high risks will get more management attention and Vintel will perform further investiga- tion and come up with appropriate response plans. Medium and low risks will get less management oversight. The use of this procedure would ensure that risks are analyzed in a systematic manner based on their probability and impact. ADJUSTING THE THRESHOLDS Salvatore knew from past experience that in general a very low probability risk event does not have as high a potential impact or a severe outcome. In such a typical situation, using the Risk Rating table in Figure 11.1 should work fine. But for this flagship prod- uct, a lot of very low probability risks have a very high level of impact, and using his normal Risk Rating table may not be appropriate. "Am I right?" Salvatore thought. Figure 11.1 Example of Rating a Risk Impact on Schedule on a Five-Level Scale Scale 1 2 3 4 5

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Very Low Low Medium High Very High Risk Impact on schedule Slight Schedule delay Overall project delay <5% Overall project delay 5-14% Overall project delay 15- 25% Overall project delay > 25% Probability Risk Score P+2*I Key: NC = 5 7 9 11 13 15 HL = 4 6 8 10 12 14 High Severity Medium Severity L= 3 5 7 9 11 13 Low Severity

LL = 2 4 6 8 10 12 VU = 1 3 5 7 9 11 VL = 1 L = 2 M = 3 H=4 VH = 5 IMPACT Probability Key VU Very Unlikely LL Low Likelihood L = Likely HL Highly Likely Near Certain NC Impact Key VL Very Low Impact L = Low Impact M = Medium Impact H = High Impact

VH Very High Impact "I think I am," Salvatore talked to himself. He knew that he had to adjust his risk thresholds, such that those risks are in the category of high risk. Salvatore had a flashback to his experience with Ford Australia. Several years ago when Salvatore visited Ford Australia for technical exchange, he participated in risk analysis training. One of the risk events they discussed was the SUV tire explosion. Typically, tire explosion is a very low probability risk event. But when it happens, it can cause the vehicles to rollover, which can lead to the severe injury or death of the passengers in the SUV. Besides the safety of the passengers at stake, tire explosion should impact the sales of the SUV by as much as $5 billion. This was definitely a high risk. This flashback assured Salvatore that the risk thresholds needed to be adjusted. If not for this flagship product, a risk event like "tire explosion" would always end up being a medium-level risk and would never get as much manage- ment attention as it should. No management attention means no further analysis and no support. Then, if the risk happens, he could not imagine how huge the impact would be. "Probably not $5 billion but it would definitely be ugly and no more future for me at Vintel," thought Salvatore. Discussion items 1. Would adjusting the threshold be the right move for Salvatore? If it is, what should the new threshold be to account for the very low probability and very high impact risks? 2. Would adjusting the thresholds be the only solution? What else should Salvatore introduce to Vintel such that risks get proper management attention? ANSWER This probability and impact case study illustrates how probability and impact may be used as a risk analysis technique. The scenario demonstrates how to establish suitable risk levels based on the various risk occurrences seen throughout project execution. This case shows how risk analysis techniques can be adjusted to address different risks. Project risk management helps to prevent project failure or conflict by predicting and minimising risks. Designing, sustaining, and enhancing a project risk management plan has the following advantages on overall the company: • Identification and assessment of the problem : A thorough understanding of the project and any potential issues will be provided through a strong project risk management plan. In order to maintain project performance, the organisation will be able to pay close attention to the project's weak connections and carry out periodic status checks, peer reviews, and audits. • Less Surprise : Risk management strategies alert to prospective risks or issues. This makes it possible for the team to prepare for and take action to address problems before they get out of hand and cause irreversible damage.

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• Better Decision Making : Top management can make judgments that are better and more effective if they have a thorough awareness of risks. Through a dashboard that is frequently updated with the newest data, they will receive real-time risk information. • Improved Communication : Communication flow is boosted by effective risk management. When the risks are known ahead of time, the whole team starts communicating about them. The teams should get together and discuss the problems and potential solutions rather than criticising one another after the fact. • Accurate Budget Estimates: One may anticipate any issues by including project risk management into company schedule and cost planning. This will enable companies to set up a contingency budget or margin for each area, such as resources, time and costs. • Enhanced Project Success Rate : The entire team's attitude is enhanced by integrating an effective risk management plan into project management since they are aware that risks are being managed and that failure is unlikely to happen. • Focused Approach : Teams are able to concentrate more on their assigned responsibilities since they know risks are continuously tracked and mitigated. Additionally, risk management identifies problem areas in a project so that teams may address them right away, ensuring project success. • Improved Risk Management : A systematic risk management plan can help to decide when to elevate a risk to a higher level for guidance and action, which will improve the risk management. This will assist in educating the relevant parties at the appropriate time to analyse and address the issue.

Case Study 3

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