IMPORTANT NOTICE:
THIS ARTICLE IS AN EXTRACT OF LINES FROM A REPORT SUBMITTED BY MUKESH PARTHASARATHY TO UNITEC NEW ZEALAND. PLAGIARISM IS A SEVERE OFFENCE. KINDLY USE CITATIONS IF YOU ARE REFERRING TO THIS ARTICLE IN YOUR PAPERS OR WEBSITES.
—
1. Executive Summary
This report is concerned with the conference project held by the Institute of Technology Management which was undertaken to increase its membership and visibility. The project has two deliverables- exhibition and conference plus the launch of a website. The report considers the risk aspects of this project and finds out that the risks can be easily mitigated. It also studies the feasibility of this project and concludes that this project is economically feasible if not feasible in other ways.
The opinions expressed in this report are supported by strong citations and references are respectfully acknowledged towards the end of the report.
2. Background
The project under consideration for risk analysis and feasibility analysis is the conference project that is to be held by ITM or the Institute of Technology Management. ITM is concerned with technology management and technology managers. More specifically it is concerned with leveraging business prospects through proper technology management practices. It attempts to create better technology managers for the future.
“The Institute of Technology Management (ITM) is a non-profit organization in the business of furthering the aims and objectives of technology management and increasing the professionalism of technology managers through ongoing education and training. It is affiliated to the International Institute of Technology Management (IITM). The Institute is managed by an Executive Council consisting of eight elected voluntary members and a full-time Executive Director. The Institute maintains contact with its members through regular meetings, newsletters and the publication of a bimonthly journal. Financing is obtained through membership subscriptions and payments for training.” (Frigenti, Comninos, 2002, p.246)
According to the case given, ITM has been in existence for 5 years and recently for the past 2 years has seen decline in its membership. The management is seeking the factors that made this decline possible and it is also actively looking for solutions to increase its membership. ITM has over 300 members currently and it is of immense concern to the management that there should be an increase in its membership. In order to solve the problem ITM management conducted a survey amongst its members and found out that the following factors were responsible for its declining performance:
“
1) a general lack of awareness of the ITM in industry
2) that members of the ITM felt the lack of an annual conference lessened the visibility of the Institute, and lowered the value of membership.” (Frigenti, Comninos, 2002, p.246)
On the basis of the outcomes of this survey, the management decided to revamp their business strategies.
“The council decided to review the Institute’s business strategies. They began by engaging a consultant who was experienced in helping organizations move from strategies to programmes to business outcomes. The consultant facilitated an executive one-day workshop, where the Institute’s overall strategies (the Strategic Wrapper) were elaborated into business objectives (the Business Wrapper). Following the workshop the Executive Director reviewed the list of programmes and projects identified, and reflected on whether they were in danger of launching too many or the incorrect projects up-front. Facing the dilemma of limited resources for many competing projects, a further planning workshop was held focusing on prioritization and selection, resulting in a prioritized list of projects. This analysis confirmed that a marketing strategy was an important stepping stone to achieving future goals. After the prioritization and selection workshop, the council decided to launch a marketing campaign. To kick off the campaign, the first Technology Management Conference and Exhibition is to be held over three days, which will generate funds to initiate the marketing campaign. As the conference will only deliver benefits down-stream, the Executive Director recommended that a Web site should run in parallel with the conference and exhibition. The conference and exhibition will also increase awareness of the Institute, and provide a forum for the exchange of ideas and developments. This should enhance the image of the ITM amongst its members and other interested parties. As the very existence of the ITM is at stake, the Council decided to minimize its risk and appoint a professional project manager to manage the conference and exhibition.” (Frigenti, Comninos, 2002, p.250)
Thus the outcome of the workshops resulted in the emergence of the conference project.
The conference project can be understood as a project that has the dual purpose of creating a website for ITM in addition to holding a conference and exhibition. The project is expected to boost the image of the organization and the website makes it all the more visible.
The project manager has been assigned the responsibilities of managing the conference and delivery of the website.
Thus the project uses IT driven solutions to achieve its purpose.
“A web design organization, managed by the conference project manager, is to be appointed to develop and deliver the Web site. Initially the Web site will be used to market the conference and exhibition, and then be handed over to the organization for further development and maintenance. As the site would benefit the ITM as a whole, the sponsor agreed to fund this work from ITM’s central fund.” (Frigenti, Comninos, 2002, p.254)
Finally it is important to have a project brief that puts everything in a nutshell. Given below are some of the important details that will be put into practice for the project:
“
The project start date is 1 February and it is estimated to take 11 months
ITM has contracted a project manager to handle this project
The institute has allocated an amount of $10,000 for initial expenditure
Sponsorship worth $15,000 has been raised
Expected net profit is $50,000
A minimum of 20 new members are expected to enrol as result of the proceedings
Over the three-day period, approximately 2,500 visitors are expected to visit the exhibition.” (Frigenti, Comninos, 2002, pp 250-253)
Thus the scene for the project gets ready.
The management at ITM has taken up this project to improve its positioning in the industry and to enrol more members. The decision to take up this project certainly has been based upon feasibility analysis study and risk analysis study. The results of these studies have been the motivating and guiding factors into this project. This report will look into the feasibility and the risk aspects of this particular project. A detailed report will be presented on these aspects.
3. Approach taken to identify risks
Before we discuss the approach to identify risks, it is imperative to first define the terms project risk and business risk.
Project risk is defined as “the factors inherent to a project that may cause it to fail.” (Thomsett, 2002, p.159)
Business risk is defined as “the exposure of the organization if and when the project fails.” (Thomsett, 2002, p.159)
Thus we can see that business risk is determined by project risks. Hence managing projects effectively is the first step to minimize risks. By minimising the project risks involved in our project we minimise our business risks.
“In projects, there are two different but completely related risk considerations. The first is the inherent risk of the project that is being planned, or project risk. The second is the exposure or impact that the company undertaking the project faces on project failure, or business risk. Higher the project risk, the higher the probability that the project will fail and that the organization will be exposed to business risks. In addition, the higher either the business or project risks associated with the project are, the higher the level of governance should be.” (Thomsett, 2002, pp 159-160)
Now let us consider the approaches to identify risks.
The first approach is using the risk items identified by Boehm who was one of the first people to do work in this area.
“Boehm’s “top 10 list of software risk items” was built upon his experiences in the defense industry in the 1980s. The projects and environments that were the basis of Boehm’s work might not, however, be representative of those in typical business enterprises. Furthermore, both the organizational and technological landscape has changed considerably since Boehm’s work appeared; new organizational forms and systems development environments have emerged, new mechanisms have evolved for acquiring systems( for example, outsourcing and strategic alliances), and the centralized, mainframe-centric, systems architecture has given way to distributed computing.” (Keil, Cule, Lyytinen, Schmidt, 1998)
The Boehm approach however as we can see is outdated in today’s contemporary industry where there is continuous change. Moreover Boehm’s background is in the defense industry which has nothing or very little to do with the software industry. Hence we can use the Boehm approach as only a starting point in our journey to identify risks.
A second approach is a process model-based approach which identifies risk in software projects. This approach consists of two techniques:
“
• Metrics of process structure
• Comparison to the referential model
The first technique uses metrics of process structure to focus analyst’s attention on the most important and most risky elements of the process. The second technique focuses on the differences between the actual and the referential models.
The two techniques are dedicated to different situations, but they can also be used complementarily. The first does not require having any referential model, which makes it easier and more universal to apply. The second technique works better in case of having a high-quality referential model.” (Miler, Gorski, 2004)
The first technique considers the artifacts and activities associated with the process and uses mathematical calculations (which is beyond the scope of this report) to arrive at risk identification. Negative answers in these calculations indicate a risk factor involved.
“Negative answer suggests increased risk related to a given model element and indicates a risk factor for the entire project. To clearly specify the context of risk, the risk factor may be expressed with risk patterns.” (Miler, Gorski, 2004)
The second technique, i.e., Comparison to the referential model takes into consideration the analysed model and the referential model and maps the respective elements among these two. The differences and contradictions that come as a result of this comparative study are considered as the risk factors.
“All elements and relationships of both analysed and referential model are examined. Identified differences are collected on the following lists:
• List of missing activities, artifacts, roles, practices, features and capabilities,
• List of missing relationships between model elements,
• List of superfluous activities, artifacts, roles, practices, features and capabilities,
• List of superfluous relationships between model elements.
The differences noted in the lists indicate the potential project risk factors. Analogously to the technique of risk identification based on metrics, the context of risk may be detailed with risk patterns.” (Miler, Gorski, 2004)
The third approach is a variation on the traditional Delphi survey approach. Here a survey is conducted among a panel of experienced project managers from different countries. This approach “developed by Schmidt which provides a statistical measure of consensus within the panel and allows comparisons to be made across multiple panels. The Delphi survey consisted of three phases. In the first phase, a brainstorming round was conducted to elicit as many risk factors as possible from each of the panels. The output of all three panels was then consolidated to produce a list of 53 risk factors. The consolidated process ensured the three panels had access to a common list of factors with common definitions. During subsequent phases, the panels were allowed to operate independently, each one selecting (and later ranking and rating) the most important risk factors from this common pool of factors. The purpose of the second phase was to narrow the list of items to a manageable number that could be meaningfully ranked and rated. This was done by having each panellist select the 20 risks deemed to be most important. For each country panel, risk factors that were selected by 50% or more of the panelists in that country were retained for the next phase of the study. The risk factors retained included a set of 11 risk factors common to all three panels. The third and final phase of the study involved the actual ranking and rating of risk factors. Ranking and rating rounds were conducted until each panel reached an acceptable level of consensus. Kendall’s Coefficient of Concordance was used to measure the degree of consensus among panelists for each country. Rounds of ranking were repeated until either the panelists reached strong consensus or consensus did not change from one round to the next.” (Keil, Cule, Lyytinen, Schmidt, 1998)
Thus the identification of risk factors happens through identifying risks through brainstorming, then narrowing down the risks specific to each country, and finally arriving at a consensus for ranking the risk factors.
4. Risk analysis
Risk analysis is the analysis of risks occurring in the project under consideration.
“Risk is analysed by estimating the likelihood of the event occurring and the consequences or impact of the event if it does occur, within the context of the project criteria and control measures. The aims of the analysis are to prioritize the risks- separating the minor, acceptable risks from the major risks- and to provide data to assist in the evaluation and treatment of risks.” (Frigenti, Comninos, 2002, p.288)
A risk analysis typically consists of a risk report, risk register, an analysis of likelihood of the risks occurring, mitigation strategies, and contingency plans. Risk analysis is useful in effective risk management.
Let us first define the terms risk report, risk register, mitigation strategies, likelihood of risks occurring, contingency plans before we consider them in the context of our conference project.
Risk report consists of reporting the risks identified in the project under consideration.
A risk register can be understood as follows:
“The Risk Register records details of all the risks identified at the beginning and during the life of the project, their grading in terms of likelihood of occurring and seriousness of impact on the project, initial plans for mitigating each high level risk and subsequent results.” (projectmanagement.tas.gov.au, 2006)
Thus we can see that the risk register contains the entire history of all the risks that have occurred in a project. It also grades each and every risk.
Mitigation strategies are a set of strategies developed to lessen or weaken the risks or the impact of risks in a project.
Likelihood of risks occurring is defined as the probability of the risks occurring in the project under consideration.
Contingency plans take care of the unpredictable events that may occur in the future. These unpredictable events may bring in unknown risks that the management has been unaware of hitherto. Contingency plans bring with them alternative solutions to problems and bottle necks that may occur in the project.
Now let us create the risk register first. Here we take the help of the risk evaluation matrix provided in the appendix section (see Table A.9) of this report for the project.
From the risk evaluation matrix we can identify the following risks:
• Quality of speakers not excellent
• Conference venue could be unsuitable
• Competing conference or exhibitions
• Website not launched on time
• Cancellation by keynote speaker
• Conference administration fails
These are some of the main risks identified that can occur in the execution of the conference project.
These risks will be taken into consideration to construct our risk register.
The generic template for the risk register would look like this:
Occurrence: AC-Almost Certain, L-Likely, M-Moderate, U-Unlikely
Impact: Maj-Major, Hi-High, Mo-Moderate, L-Low
Severity Level: H-High risk, S-Significant risk, L-Low risk
Table1: Example of project risk register (Frigenti, Comninos, 2002, p.292)
The risks that have been mentioned earlier will be used to build this table.
Taking the help of table A.9 provided in the appendix section of this report we can fill up the columns for risk, occurrence, impact, and severity level. However before we do that we must also rank our risk based on the risk scores provided in table A.9. In case of two risks getting the same risk score, the risk that requires higher level of risk treatment is ranked above the rest of its peers. Using this rationale the ranking of the risks is as below:
Table2: Ranking of the risks identified
In the above table we can see that there are three risks that have the same score of 15, however using table A.9 given in the appendix of this report we can see that the risk treatment is least for the risk web site not launched on time. Hence it is ranked last amongst the three risks. The risk Competing conference or exhibition is ranked above the other two risks as it requires more risk treatment than the other two risks.
Now our risk register built with the help of table A.9 in the appendix would look like this:
Occurrence: AC-Almost Certain, L-Likely, M-Moderate, U-Unlikely
Impact: Maj-Major, Hi-High, Mo-Moderate, L-Low
Severity Level: H-High risk, S-Significant risk, L-Low risk
Table3: Risk register
The reader of this report must note that the letter ‘L’ has different meanings in the different columns in the above table.
Also the reader is to be aware of the fact that we have substituted the following letters for our risk register as against the corresponding ones given in table A.9 of the appendix as shown below:
Occurrence: L instead of H, U instead of L
Impact: Hi instead of H, Mo instead of M
The prior rank column in the risk register table can be left blank as this project has been undertaken by ITM for the very first time. Hence there are no measurements for that.
Existing controls are rated as poor, good, average.
Existing controls say how well a particular risk is currently controlled. This can be determined by taking a look at table A.5 in the appendix section of this report which tells what is tangible, what is not tangible in the project. It also tells the assumptions made in the project. This tells the scope for the project and how well a risk can be controlled.
• Existing control for the risk Quality of speakers not excellent is Good as from table A.5 we can see that at least one speaker out of nearly 16-20 in the conference will be an international speaker. This ensures that the quality of speakers will be excellent. This is within the project scope.
• Existing control for the risk Competing conference or exhibition is Average as no information is provided in the project scope about this risk. Also no information is provided about the competitors of ITM.
• Existing control for the risk Conference venue could be unsuitable is Good as from the table A.5 we can see that the venue for the conference will be no more than a hour’s travel from capital city. This makes the venue very suitable and also this is within the scope of the project.
• Existing control for the risk Web site not launched on time is Good as according to table A.5 it is within the scope that the web site will be developed to assist the conference and exhibition marketing.
• Existing control for the risk Cancellation by keynote speaker is Good as there will be nearly 16-20 speakers which is within the scope according to table A.5. This makes the probability of one speaker not turning up as 1/16 or 1/20, which is between 0.05-0.0625.
Thus the % chances of a speaker not turning up is 5 to 6.25
Or in other words the chance of no speaker cancelling the event is 93.75% to 95% which is a healthy reliable probability percentage.
• Existing control for the risk Conference administration fails is Good as according to table A.5 we can see that the project manager and the four staff will always be available throughout the duration of the project. This is within the scope.
Now let us analyse the likelihood of the risks occurring.
• The likelihood of the risk Quality of speakers not excellent is L from our risk register. This is because out of 16 to 20 speakers most of them are not speakers at the international level. This is according to the project scope. Hence this risk is likely.
• The likelihood of the risk Competing conference or exhibition is M from our risk register. This is because of the fact that the market situations most of the times pose this as an average risk. In fact this remains the same for any organization who wants to start a similar conference. Moreover, nothing has been mentioned about this risk in table A.5 of the project. Hence the likelihood of this risk occurring is moderate.
• The likelihood of the risk Conference venue could be unsuitable is M from our risk register. Although it is within the scope of the project that the venue is close to the capital, the suitability should also take into consideration how much well known IT is in that particular venue and its nearby places. More people will attend the conference and exhibition if there is awareness of IT at the place and its neighbouring places. Hence the likelihood of this risk occurring is moderate.
• The likelihood of the risk Web site not launched on time is M as although this risk is contained by the project scope, there is every possibility that the party to whom the contract was outsourced may not complete the web design by the scheduled date. There may be too many projects for the developing organization which may delay the progress on the ITM web site. Hence this makes the likelihood of this risk occurring as moderate.
• The likelihood of the risk Cancellation by keynote speaker is U as the speaker’s expenses will be borne by ITM according to the project scope. Also as calculated earlier in the report, the probability of this risk occurring is very less or negligible. Hence this makes the likelihood of this risk occurring as Unlikely.
• The likelihood of the risk Conference administration fails is U as this risk is covered by the scope and also because of the fact that the council of ITM is convinced of the fact that this project is feasible and tangible. Hence this makes the likelihood of this risk occurring as Unlikely.
Having analysed the likelihood of the risk occurring; now it is only appropriate to consider the mitigation strategies and contingency plans.
Mitigation strategies can be defined as:
“Planned actions to reduce the likelihood a risk will occur and/or reduce the seriousness should it occur. (What should you do now?)” (projectmanagement.tas.gov.au, 2006)
Contingency plans can be defined as:
“Planned actions to reduce the immediate seriousness of the risk when it does occur. (What should you do when?)” (projectmanagement.tas.gov.au, 2006)
Thus we can see that mitigation strategies are concerned with the present whereas the contingency plans are concerned with the future.
There are two ways to combat risk:
• Reduce the likelihood of the risk occurring-the risk has not yet and may occur in the future. So we can reduce the probability of the risk occurring.
• Reduce the possible impact of the risk- the risk is definitely going to occur but at least we can try to reduce its impact on the project.
“Reducing the impact of the risk events is more focused on mitigation and containment of the consequences. This can include contingency planning, contractual conditions and arrangements, disaster recovery plans, minimizing the exposure to the sources of risk, portfolio planning, stakeholder relations and design features. Examples are standby equipment, additional personnel, increasing time and cost, and accepting a lower level of quality.” (Frigenti, Comninos, 2002, p.294)
The mitigation strategies and contingency plans for each and every risk in this project are provided in table A.9 in the appendix of this report. These are some of the ways of coping with these risks. It is important to note here that the ITM executive director has approved these approaches.
5. Feasibility analysis
Now let us do the feasibility analysis for this project. First let us define the terms feasibility and feasibility analysis.
Feasibility is “the measure of how beneficial or practical an information system will be to an organization.”(Whitten, Bentley, Dittman, 2004, p.402)
Feasibility analysis is “the process by which feasibility is measured.” (Whitten, Bentley, Dittman, 2004, p.402)
As we can see from the above definitions, feasibility in raw terms means whether the project will work or not. To find this out we do a feasibility analysis.
There are four aspects of feasibility- schedule feasibility, cost feasibility or economic feasibility, operational feasibility, and technical feasibility.
“Schedule feasibility is a measure of how reasonable the project timetable is.
Economic feasibility is a measure of the cost-effectiveness of a project or solution.
Operational feasibility is a measure of how well the solution will work in an organization. It is also a measure of how people feel about the system/project.
Technical feasibility is a measure of the practicality of a specific technical solution and the availability of technical resources and expertise.” (Whitten, Bentley, Dittman, 2004, pp 404-405)
Cost feasibility is done through a cost-benefit analysis.
Schedule feasibility is done using a Gantt chart.
Cost feasibility
Let us perform a cost-benefit analysis for this project
First let us consider the costs:
We do this with the help of the costing information provided in the appendix section of this report. (Frigenti, Comninos, 2002, p.263) (Frigenti, Comninos, 2002, p.268)
And with the help of the information provided in page 19 of the site http://www.edemocratie.ro/publicatii/Cost-Benefit.pdf
Table 4: total estimated cost for the project for 3days
Now let us consider the benefits:
Very little help is provided for benefits estimation for this project in the appendix section of this report. Table A.13 in appendix shows that the total estimated revenue as $182,500 and total cost as $113,350. Clearly the benefits overweigh the costs. However they have not included the benefits for the website. Hence no attempt is made to quantify the benefits and calculate ROI here. Nor does this writer want to make any guess works. However it is worthwhile to list the benefits for this entire project.
• Registration fee collected from around 100 delegates who will be attending the conference
• Revenue from the entry fee charged for the visitors to the exhibition
• Revenue from those who hold exhibitions
• More visibility of ITM because of online presence
• Increase in membership because of the exhibition and because of the website
• Increase in the number of sponsors for ITM’s future projects
• Advance booking and bargaining of sponsors
• Increased confidence of the stakeholders
• More revenue through web advertisements and web sponsors
• Online registrations
• Online website reduces the time taken to handle routine tasks.
• Reduction in the workload on staff because of website.
In this context we must observe that the risk analysis we had undertaken in the previous section revealed that the risks of this project are well controlled. This one fact helps us to assert with confidence that the benefits of this project will definitely overweigh the costs.
Hence we can conclude that this project is economically feasible or cost feasible.
Schedule feasibility
This is done with the help of a Gantt chart which shows the different tasks/activities identified by a unique task id/activity id against time/duration represented as a bar graph in time.
The complete progressed Gantt chart (without the bar graph which was done for months February to August) is shown in the table below:
Table5: Progressed Gantt chart (Frigenti, Comninos, 2002, p.311)
We can easily observe from this table that only 4 tasks out of 15 were actually completed before august.
Hence we can safely conclude that the conference project was not schedule feasible.
Operational feasibility
Two things we need to be concerned here are:
“
1. Is the problem worth solving, or will the solution to the problem work?
2. How do the end users and management feel about the problem (solution)?” (Whitten, Bentley, Dittman, 2004, p.405)
The problem is certainly worth solving as the membership of ITM has gone down in the recent years.
The solution to the problem will work as the risks can easily be mitigated as analysed in the previous section of this report.
To get a feel of how the end users and management feel about the problem or the solution, we can see from the table A.5 of the appendix that there is an opinion that this project is not a complete marketing strategy. This opinion is outside the project scope.
Hence we get a mixed feeling about the operational feasibility of this project.
Hence it is best to conclude that we cannot say a yes or a no about the operational feasibility of this project.
Technical feasibility
The website development is being outsourced to another company. And according to table A.5 in the appendix, we can see that the continued development and maintenance of the web site is out of the project scope. This means that even after the web site gets launched there is going to problems with the running of the web site.
Hence we can safely conclude that the project is not technically feasible.
6. Conclusion
Thus we can see through the risk analysis that the risks in this project can easily be mitigated. This encourages us to assume that the project is feasible as well. However paradoxically we find that this project is only economically feasible if not feasible in other ways. This writer would like to conclude that better scheduling and better resourcing of the project will remove any associated bottlenecks.
