IT8075 Software Project Management Department of IT 2021-2022

Unit-3 ACTIVITY PLANNING AND RISK MANAGEMENT

THE OBJECTIVES OF ACTIVITY PLANNING

Feasibility assessment
Is the project possible within required timescales and resource constraints? It is
not until we have constructed a detailed plan that we can forecast a completion date
with any reasonable knowledge of its achievability.
Resource allocation
What are the most effective ways of allocating resources to the project. When
should the resources be available? The project plan allows us to investigate the
relationship between timescales and resource availability
Detailed costing
How much will the project cost and when is that expenditure likely to take
place? After producing an activity plan and allocating specific resources, we can obtain
more detailed estimates of costs and their timing.
Motivation
Providing targets and being seen to monitor achievement against targets is an
effective way of motivating staff, particularly where they have been involved in setting
those targets in the first place.
Co-ordination
When do the staff in different departments need to be available to work on a
particular project and when do staff need to be transferred between projects? The
project plan, particularly with large projects involving more than a single project team,
provides an effective vehicle for communication and coordination among teams.

PROJECT SCHEDULE
A stage of a larger project, the project plan must be developed to the level of
showing dates when each activity should start and finish and when and how much of
each resource will be required. Once the plan has been refined to this level of detail we
call it a project schedule
Creating a project schedule comprises four main stages.

First step
The first step in producing the plan is to decide what activities need to be carried
out and in what order they are to be done_ From this we can construct an ideal
activity plan — that is, a plan of when each activity would ideally be undertaken
were resources not a constraint

Second step
The ideal activity plan will then be the subject of an activity risk analysis, aimed
at identifying potential problems. This might suggest alterations to the ideal
activity plan and will almost certainly have implications for resource allocation.

Third step
The third step is resource allocation. The expected availability of resources might
place constraints on when certain activities can be carried out

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Fourth step
The final step is schedule production. Once resources have been allocated to each
activity, we will be in a position to draw up and publish a project schedule which
indicates planned start and completion dates.

PROJECTS AND ACTIVITIES

Defining projects
• A project is composed of a number of interrelated activities.
• A project may start when at least one of its activities is ready to start.
• A project will be completed when all of the activities it encompasses have been
completed.

Defining activities
• If an activity must have a clearly defined start and a clearly defined end-point,
normally marked by the production of a tangible deliverable.
• An activity requires a resource (as most do) then that resource requirement must
be forecast able and is assumed to be required at a constant level throughout the
duration of the activity.
• The duration of an activity must be forecast able — assuming normal circum-
stances, and the reasonable availability of resources.
• Some activities might require that others are completed before they can begin
these are known as precedence requirements).

Identifying activities
Essentially there are three approaches to identifying the activities or tasks that
make up a project
o the activity-based approach,
o the product-based approach
o the hybrid approach.

The activity-based approach

• The activity-based approach consists of creating a list of all the activities that the
project is thought to involve.
• This might involve a brainstorming session involving the whole project team or
it might stern from an analysis of similar past projects.
• When listing activities, particularly for a large project, it might be helpful to sub-
divide the project into the main life-style stages and consider each of these
separately. Generating a task list is to create a Work Breakdown Structure
(WBS).
WBS involves
• identifying the main tasks
• break each main task down into subtasks

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• The subtasks can further be broken down into lower level tasks.
• Activities are added to a branch in the structure if they directly contribute to the
task immediately above — if they do not contribute to the parent task, then they
should not be added to that branch.
• The tasks at each level in any branch should include everything that is required
to complete the task at the higher level — if they are not a comprehensive
definition of the parent task, then something is missing. When preparing a WBS,
consideration must be given to the final level of detail

Advantages
 More likely to obtain a task catalogue that is complete and is composed of non-
overlapping tasks
 WBS represents a structure that can be refined as the project proceeds
 The structure already suggests the dependencies among the activities

Disadvantage
 Very likely to miss some activities if an unstructured activity list is used

The product-based approach

Product Breakdown Structure (PBS)

To show how a system can be broken down into different products for
development
Product Flow Diagram (PFD)
To indicate, for each product, which products are required as ‘inputs’

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A Product Breakdown Structure (an extract)

Inventory
Control

Inventory Item Management

Databases Processing Reporting

Item Vendor Item Item Item Sales

Database Database Purchasing Sales Reporting Reporting

Item Item Item Invoicing Sales Order

Addition Deletion Modification subsystem Processing

Advantages
Less likely to miss a product unexpectedly from a PBS

The hybrid approach

• A mix of the activity-based approach and the product-based approach
• More commonly used approach
• The WBS consists of
A list of the products of the project; and
A list of activities for each product

Software Project

System Installation Software component User manual User Training

Analyse requirements Review requirements Analyse requirements Design course

Detailed design Outline design Design manual Write materials

Integrate system Detailed design Document manual Print course materials

Test system Code software Capture screens Training

Deliver system Test software Print Manual

• IBM in its MITP methodology suggests 5 levels

Level 1: Project
Level 2: Deliverables (software, manuals etc)
Level 3: Components
Level 4: Work-packages
Level 5: Tasks (individual responsibility)

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SEQUENCING AND SCHEDULING ACTIVITIES

• Throughout a project, we will require a schedule that clearly indicates when each
of the project's activities is planned to occur and what resources it will need.

• The chart shown has been drawn up taking account of the nature of the
development process that is. certain tasks must be completed before others may
start) and the resources that are available (for example, activity C follows activity
B because Andy cannot work on both tasks at the same time).

• In drawing up the chart, we have therefore done two things — we have

sequenced the tasks (that is, identified the dependencies among activities
dictated by the development process) and scheduled them (that is, specified
when they should take place).

• The scheduling has had to take account of the availability of staff and the ways in
which the activities have been allocated to them.

• The schedule might look quite different were there a different number of staff or
were we to allocate the activities differently.

• In the case of small projects. this combined sequencing—scheduling approach

might be quite suitable, particularly where we wish to allocate individuals to
particular tasks at an early planning stage.

• However, on larger projects it is better to separate out these two activities: to

sequence the tasks according to their logical relationships and then to schedule
them taking into account resources and other factors.

• Approaches to scheduling that achieve this separation between the logical an the
physical use networks to model the project and it is these approaches that will
consider in subsequent sections of this chapter.

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NETWORK PLANNING MODEL

Formulating a network model
The first stage in creating a network model is to represent the activities and their
relationships as a graph. In activity-on-node we do this by representing activities as
nodes in the graph-the lines between nodes represent dependencies.

Constructing precedence networks:

 A project network should have only one start node.
 A project network should have only one end node.
 A node has duration.
 Links normally have no duration.
 Precedents are the immediate preceding activities.(Fig)

 Times moves from left to right

 A network may not contain loops.(Fig)

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 A network should not contain dangles.(Fig)

Representing lagged activities:

We might come across situations where we wished to undertake two activities in
parallel so long as there is a lag between the two. We might wish to document
amendments to a program as it was being tested - particularly if evaluating a prototype.
Where activities can occur in parallel with a time lag between them we represent the lag
with duration on the linking arrow as shown in Figure 6.13. This indicates that
documenting amendments can start one day after the start of prototype testing and will
be completed two days after prototype testing is completed.

Hammock activities:
A hammock activity (also hammock task) is a schedule or project planning term for a
grouping of tasks that "hang" between two end dates it is tied to. A hammock activity
can group tasks which are not related in the hierarchical sense of a Work Breakdown
Structure, or are not related in a logical sense of a task dependency where one task must
wait for another.

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Labeling conventions:

Earliest Estimated Earliest

Start Duration Finish

Activity Label, Activity Description

Latest Latest
Float
Start Finish

Forward pass
The forward pass is carried out to calculate the earliest dates on which each activity
may be started and completed.

The forward pass and the calculation of earliest start dates is calculated according to the
following reasoning.

 Activities A, B and F may start immediately, so the earliest date for their start is
zero.
 Activity A will take 6 weeks, so the earliest it can finish is week 6.
 Activity B will take 4 weeks, so the earliest it can finish is week 4.
 Activity F will take 10 weeks, so the earliest it can finish is week 10.
 Activity C can start as soon as A has finished so its earliest start date is week 6. It
will take 3 weeks so the earliest it can finish is week 9.
 Activities D and E can start as soon as B is complete so the earliest they can each
start is week 4. Activity D, which will take 4 weeks, can therefore finish by week
8 and activity E, which will take 3 weeks, can therefore finish by week 7.
 Activity G cannot start until both E and F have been completed. It cannot
therefore start until week 10 — the later of weeks 7 (for activity E) and 10 (for
activity F). It takes 3 weeks and finishes in week 13.

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 Similarly, Activity H cannot start until week 9 — the later of the two earliest fin-
ished dates for the preceding activities C and a
 The project will be complete when both activities H and G have been completed.
Thus the earliest project completion date will be the later of weeks 11 and 13—
that is, week 13.
 The results of the forward pass are shown in Figure 6.15.

Backward pass
The second stage in the analysis of a critical path network is to carry out a backward
pass to calculate the latest date at which each activity may be started and finished
without delaying the end date of the project. In calculating the latest dates, we assume
that the latest finish date for the project is the same as the earliest finish date — that is,
we wish to complete the project as early as possible.

Figure 6.16 illustrates our network alter carrying out the backward pass.

The latest activity dates are calculated as follows.

 The latest completion date for activities G and 1-1 is assumed to be week 13.
 Activity H must therefore start at week 11 at the latest (13-2) and the latest start
date for activity G is week 10 (13-3).
 The latest completion date for activities C and D is the latest date at which
activity H must start — that is. Week 11. They therefore have latest start dates of
week 8 (11-3) and week 7 (11-4) respectively.
 Activities E and F must be completed by week 10 so their earliest start dates are
weeks 7 (10-3) and 0 (10-10 respectively.
 Activity B must be completed by week 7 the latest start date for both activities D
and El so its latest start is week 3 (7-4).
 Activity A must be completed by week 8 (the latest start date for activity C) so its
latest start is week 2 (8-6).
 The latest start date for the project start is the earliest of the latest start dates for
activities A. B and F. This is week zero. This is, of course, not very surprising
since it tells vi that if the project does not start on time it won't finish on time.

Activity float
The difference between an activity’s earliest start date and its latest start date (or
difference between an activity’s earliest and latest finish dates) is known as the
activity’s float-it is measure of how much the start or completion of an activity may be
delayed without affecting the end date of the project. Any activity with a float of zero is
critical (any delay in carrying out the activity delay the completion date of the project as
a whole.

Although the total float is shown for each activity, it really 'belongs' to a path through
the network. Activities A and C in Figure 6.16 each have 2 weeks' total float. If,

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however, activity A uses up its float (that is, it is not completed until week 8) then
activity B will have zero float (it will have become critical). In such circumstances it may
be misleading and detrimental to the project's success to publicize total float!

There are a number of other measures of activity float, including the following:

 Free float: the time by which an activity may be delayed without affecting any
subsequent activity. It is calculated as the difference between the earliest
completion date for the activity and the earliest start date of the succeeding
activity. This might be considered a more satisfactory measure of float for
publicizing to the staff involved in undertaking the activities.
 Interfering float: the difference between total float and free float. This is quite
commonly used, particularly in association with the free float. Once the free
float has been used (or if it is zero), the interfering float tells us by how much the
activity may be delayed without delaying the project end date - even though it
will delay the start of subsequent activities.

Identifying critical path

There will be at least one path through the network that defines the duration of
the project. This is known as critical path. Any delay to any activity on this critical path
will delay the completion of the project.
Significance of critical path
 In managing the project, we must pay particular attention to monitoring
activities on the critical path so that the effects of any delay or resource
unavailability are detected at the earliest opportunities.
 In planning the project, it is the critical path that we must shorten if we are
to reduce the overall duration of the project.
SOME DEFINITIONS OF RISK
1. An uncertain event or condition that if it occurs has a positive or negative effect on a
project objectives
2. The chance of exposure to the adverse consequences of future events’
• Project plans have to be based on assumptions
• Risk is the possibility that an assumption is wrong
• When the risk happens it becomes a problem or an issue
Key elements of risks
• It relates to the future
• It involves cause and effect
CATEGORIES OF RISKS:

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Tasks: the types of task to be undertaken

Structure: the communication systems, management structures, work flows etc
Actor: the people involved in the project
Technology: the methods, techniques and tools to be used

Brief notes on various types of risks;

Financial risk is the loss of key resources like funding, etc. In this case the company will
not have adequate cash flow to meet financial obligations. Credit risk, liquidity risk,
market risk, operational risk are different types of financial risks.
When the borrower becomes default and was unable to make payments as promised it
is said to be Credit risk, also called default risk.
Investment risk was associated with this where the investor losses his principal and
interest too.
Sometimes due to lack of liquidity in the market an asset cannot be sold to make the
profit or to prevent a loss this is what called as Liquidity risk.
Due to the change in value of the market risk factors value of investment portfolio or
the value of a trading portfolio will decrease. Foreign exchange rates, stock prices,
interest rates, and commodity prices are the standard Market risk factors.
A risk arising from execution of an organisation's business functions is Operational
risk. Risks arising from the people, systems and processes through which an
organisation operates. Fraud risks, legal risks, physical or environmental risks are other
categories included under this.
Risky business processes that could lead to project failure are Process risks.
Those risks that are often associated with damage to the reputation of an organisation
or its brand are Intangible risks.
Risks which often involve things connected to time are Time risks.
Loss of critical employees or knowledge which are connected to man power are Human
risks.
Losses include government regulations and the same having an impact on the
operations of the company are Legal Risks.
Physical risks are those lose of physical resources such as equipment, buildings, land,
etc due to natural disasters or manmade.
Risk management process begins when somebody asks what kind of events can damage
the business and how much damage can be done. Identifying and measuring the
potential loss exposures, choosing the most efficient methods of controlling and
financing loss exposure and implementing them and finally Monitoring all the out
comes are the main steps involved in Risk Management.

A FRAMEWORK FOR DEALING WITH RISK

The planning for risk includes these steps:
• Risk identification – what risks might there be?
• Risk analysis and prioritization – which are the most serious risks?
• Risk planning – what are we going to do about them?
• Risk monitoring – what is the current state of the risk?

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Risk identification
Approaches to identifying risks include:
• Use of checklists – usually based on the experience of past projects
• Brainstorming – getting knowledgeable stakeholders together to pool concerns
• Causal mapping – identifying possible chains of cause and effect
Boehm’s top 10 development risks

Risk Risk reduction techniques

Personnel shortfalls Staffing with top talent; job matching; teambuilding;

training and career development; early scheduling of key
personnel
Unrealistic time and cost Multiple estimation techniques; design to cost; incremental
estimates development; recording and analysis of past projects;
standardization of methods
Developing the wrong software Improved software evaluation; formal specification
functions methods; user surveys; prototyping; early user manuals

Developing the wrong user Prototyping; task analysis; user involvement

interface

Gold plating Requirements scrubbing, prototyping,

design to cost

Late changes to requirements Change control, incremental development

Shortfalls in externally supplied Benchmarking, inspections, formal specifications,

components contractual agreements, quality controls

Shortfalls in externally Quality assurance procedures, competitive design etc

performed tasks

Real time performance Simulation, prototyping, tuning

problems

Development technically too Technical analysis, cost-benefit analysis, prototyping ,

difficult training

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Causal mapping

Risk Analysis

Risk exposure (RE)= (potential damage) x (probability of occurrence)

IdeallyPotential damage: a money value e.g. a flood would cause £0.5 millions of
damage
Probability 0.00 (absolutely no chance) to 1.00 (absolutely certain) e.g. 0.01 (one in
hundred chance)
RE = £0.5m x 0.01 = £5,000
Crudely analogous to the amount needed for an insurance premium

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Risk probability: qualitative descriptors

Probability level Range

High Greater than 50% chance of happening

Significant 30-50% chance of happening

Moderate 10-29% chance of happening

Low Less than 10% chance of happening

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Qualitative descriptors of impact on cost and associated range values

Impact level Range

High Greater than 30% above budgeted expenditure

Significant 20 to 29% above budgeted expenditure

Moderate 10 to 19% above budgeted expenditure

Low Within 10% of budgeted expenditure.

Probability impact matrix

Risk planning.

Risk planning consists of drawing up contingency plans and where appropriate, adding
these to the project’s task structure. With small projects, risk planning is likely to be the
responsibility of the project manager, but medium or large projects will benefit from the
appointments of a full-time risk manager.

Risk Acceptance: This is deciding to do nothing about the risk. This means you will
accept its consequences. In order to concentrate on the more likely or damaging risks.
The damage that those risks could cause would be less than the costs needed to act
towards reducing their probability of occurrence.

Risk Avoidance: Some activities are so prone to accident that it is best to avoid them
altogether.
Example to avoid all the problems associated with developing software solutions from
scratch, a solution could be to: Buy an off-the-shelf product.

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Risk Reduction and Mitigation:

Risk Reduction: attempts to reduce the likelihood of the risk occurring. For example,
consider the following risk: developers leaving a company in the middle of a project
for a better paid job. In order to reduce the probability of such a risk occurring: the
developers could be promised to be paid generous bonuses on successful completion of
the project.
Risk Mitigation: is the action taken to ensure that the impact of the risk is reduced
when it occurs. Taking regular backups of data storage, is it a risk mitigation measure
or a risk reduction measure. Since it would reduce the impact of data corruption not its
likelihood of happening, in this sense it is a data mitigation measure.
Risk Transfer: In this case the risk is transferred to another person or organization. For
Example, a software development task is outsourced for a fixed fee. Another example
is when you buy insurance
Risk reduction leverage
Risk reduction leverage =
(REbefore- REafter)/ (cost of risk reduction)
REbeforeis risk exposure before risk reduction e.g. 1% chance of a fire causing £200k
damage
REafter is risk exposure after risk reduction e.g. fire alarm costing £500 reduces
probability of fire damage to 0.5%
RRL = (1% of £200k)-(0.5% of £200k)/£500 = 2
RRL > 1.00 therefore worth doing

PERT Technique
Project Evaluation and Review Technique (PERT) is a project management tool used to
schedule, organize, and coordinate tasks within a project. It estimation considers three values: the
most optimistic estimate (O), a most likely estimate (M), and a pessimistic estimate (least likely
estimate (L)).
Evaluate the pert techniques:
Three estimates are produced for each activity  Most likely time (m)
Optimistic time (a)
Pessimistic (b)
Expected time’ te = (a + 4m +b) / 6 Activity standard deviation’
S = (b-a)/6
Expected time: Helps to carry out a forward pass through a network similar to CPM
Activity standard deviation: Used as ranking measure of the degree of uncertainty or risk for
each activity

Advantages of PERT Technique.

 Useful at many stages of project management

 Mathematically simple
 Give critical path and slack time
 Provide project documentation
 Useful in monitoring costs

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Pert Labeling Convention

Event Number Target Date

Expected Date Standard deviation

Activity Description Precedents Optimis Most Pessimistic(

tic (a) likely b)
(m)

A Hardware Selection 5 6 8

B Software Design 3 4 5

C Install Hardware A 2 3 3

D Code & test software B 3.5 4 5

E File take-on B 1 3 4

F Write user manuals 8 10 15

G User training E, F 2 3 4

H Install and test C,D 2 2 2.5

Activity Optimistic (a) Most Pessimistic(b) Expected Standard

likely deviation s
te
(m)

A 5 6 8 6.17 0.5

B 3 4 5 4.00 0.33

C 2 3 3 2.83 0.17

D 3.5 4 5 4.08 0.25

E 1 3 4 2.83 0.5

F 8 10 15 10.50 1.17

G 2 3 4 3.00 0.33

H 2 2 2.5 2.08 0.08

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Monte Carlo Simulation

A Monte Carlo method is a technique that involves using random numbers and
probability to solve problems. Monte Carlo simulation is a method
for iteratively evaluating a deterministic model using sets of random numbers as
inputs. This method is often used when the model is complex, nonlinear, or involves
more than just a couple uncertain parameters. A simulation can typically involve over
10,000 evaluations of the model, a task which in the past was only practical using super
computers.

The Monte Carlo method is just one of many methods for analyzing uncertainty
propagation, where the goal is to determine how random variation, lack of knowledge,
or error affects the sensitivity, performance, or reliability of the system that is being
modeled.

Monte Carlo simulation is categorized as a sampling method because the inputs are
randomly generated from probability distributions to simulate the process of sampling
from an actual population. So, we try to choose a distribution for the inputs that most
closely matches data we already have, or best represents our current state of
knowledge.

The data generated from the simulation can be represented as probability distributions
(or histograms) or converted to error bars, reliability predictions, tolerance zones,
and confidence intervals.

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The steps in Monte Carlo simulation corresponding to the uncertainty propagation

shown in Figure 2 are fairly simple, and can be easily implemented in Excel for simple
models. All we need to do is follow the five simple steps listed below:

Step 1: Create a parametric model, y = f(x1, x2, ..., xq).

Step 2: Generate a set of random inputs, xi1, xi2, ..., xiq.

Step 3: Evaluate the model and store the results as yi.

Step 4: Repeat steps 2 and 3 for i = 1 to n.

Step 5: Analyze the results using histograms, summary statistics, confidence intervals,
etc.

Resource Allocation
Resource allocation is the assignment of available resources to various uses. In the
context of an entire economy, resources can be allocated by various means, such as
markets or central planning. In project management, resource allocation or resource
management is the scheduling of activities and the resources required by those
activities while taking into consideration both the resource availability and the project
time.
Nature of Resources
 Labour – Members of the project team
 Equipment – Workstations and other communicating and office equipments
 Material – Items that are consumed
 Space – Office space

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 Services – Some specialist services telecommunicating

 Time – Offset against the other primary resource
Identifying Resource Requirements
 What resources are required along with the expected level of demand
 Consider each activity
 Identify required resources.

Scheduling Resources
Allocating resources for one activity limits flexibility for resource allocation and
scheduling of other activities
Priorities resource allocation
 Total float priority
Activities are ordered according to their total float .Those with the smallest float are
assigned the highest priority
Ordered list priority
 Ordered according to predefined criteria
 Shortest critical path – Critical activities
 Shortest non-critical activity
 Non-critical activity with least float
 Non-critical activities
 Map on activity plan to assess the distribution of resources required over the
duration of the project Recruiting staff has cost
 Smooth the histogram by delaying the start of some activities.

Cost Schedules
Calculating cost is straightforward where organization has standard cost figures for
staff and other resources. Staff costs includes not just salary, but also social security
contributions by the employer, holiday pay etc.

Timesheets are often used to record actual hours spent on each project by an individual.
One issue can be how time when a staff member is allocated and available to the
project, but is not actually working on the project, is dealt with. Overheads e.g. space
rental, service charges etc. Some overheads might be directly attributable to the project,
in other cases a percentage of departmental overheads may be allocated to project costs.
Usage charges are some charges can be on a ‘pay as you go’ basis e.g. telephone
charges, postage, car mileage – at the planning stage an estimate of these may have to
be made.

Cost can be categorized :

 Staff Costs-include staff salaries as well as the other direct costs of employment
such as the employer’s contribution to social security funds, pension scheme
contributions, holiday pay and sickness benefit.

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 Overheads-represents expenditure that an organization

 Usage Charges-projects are charged directly for use of resources such as
computer time.

Cost profile

This shows how much is going to be spent in each week. This could be important where
an organization allocates project budgets by financial year or quarter and the project
straddles more than one of these financial periods

Balancing concerns
Successful project scheduling is not a simple sequence. Because of the inter-linking of
different concerns project planning will need to be iterative. The consequences of
decisions will need to carefully assessed and plans adjusted accordingly.

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