Important Terms and Definitions - Planning for Quality & Risk Management

The important terms and definitions we learnt in the previous set of chapters on planning for quality and risk are:

• Assumptions analysis - A technique used to examine the validity of an assumption and thereby identify the risk resulting from the inaccuracy, inconsistency, or incompleteness of each assumption.
• Benchmarking - Comparing practices, products, or services of a project with those of some reference projects for the purposes of learning, improvement, and creating the basis for measuring performance.
• Confidence level - A statistical term that refers to the certainty attached to an estimate and is often represented in percentage form, such as a 95% confidence level.
• Contingency - A future event or condition that is possible but cannot be predicted with certainty. In this case, an action will be contingent upon the condition—that is, the action will be executed only if the condition happens.
• Contingency reserve - The amount of funds, time, or both needed in addition to the estimates in order to meet the organizations and stakeholders? Risk tolerances and thresholds.
• COQ - Cost of quality; the total cost of quality related efforts throughout the product lifecycle.
• Decision tree analysis - A technique that uses a decision tree diagram to choose from different options available; each option is represented by a branch of the tree. EMV analysis is done along each branch, which helps to make a decision about which option to choose.
• Delphi technique - An information gathering technique used for experts to reach a consensus while sharing their ideas and preferences anonymously.
• Expected Monetary Value (EMV) analysis - A statistical technique used to calculate the expected outcome when there are multiple possible outcome values with probabilities assigned to them.
• Experiment design - A statistical method that can be used to identify the factors that can influence a set of specific variables of a product or a process under development or in production.
• Methodology - A system of procedures and techniques practiced in a discipline to accomplish a task. For example, risk management methodology is used in the discipline of project management to determine how risk management processes will be performed.
• Mitigation - The process of taking actions to reduce or prevent the impact of a disaster that is expected to occur.
• Model - A set of rules to describe how something works, which takes input and makes predictions as output.
• Monte Carlo simulation - An analysis technique that randomly generates values for uncertain elements (that is, variables) and takes them as input to a model to generate output. In other words, it simulates a model by feeding randomly selected input values.
• Performance measurement baseline - An approved integrated plan for the project specifying some parameters to be included in the performance measurements, such as scope, schedule, and cost. The performance of the project is measured against this baseline. Some technical and quality parameters can also become part of this baseline.
• Qualitative risk analysis - A process used to prioritize risks by estimating the probability of their occurrence and their impact on the project.
• Quality - The degree to which a set of characteristics of project deliverables and objectives fulfills the project requirements.
• Quality baseline - A criterion that specifies the quality objectives for the project and thereby makes the basis for measuring and reporting the quality performance.
• Quality management plan - A management plan that describes how the project management team will implement the quality policy of the performing organization for the specific project.
• Quality metrics - An operational criterion that defines in specific terms what something (such as a characteristic or a feature) is and how the quality control process measures it.
• Quality planning - The process of identifying the quality standards relevant to the project at hand and determining how to satisfy these standards.
• Quality policy - Overall intentions and high-level direction of an organization with respect to quality, established by management at the executive level.
• Quantitative risk analysis - A process used to perform numerical analysis to estimate the effect of each identified risk on the overall project objectives and deliverables.
• Residual risk - A risk that remains after the risk response has been performed.
• Risk - An uncertain event or condition that, if it occurs, has a positive or negative effect on meeting the project objectives.
• Risk breakdown structure (RBS) - A hierarchical structure that breaks down the identified risk categories into subcategories. In developing this structure, you will end up identifying various areas and causes of potential risks.
• Risk identification - A process used to identify the risks for a given project and record their characteristics in a document called the risk register.
• Risk management plan - A document that describes how risk management will be structured and performed for the project at hand. It becomes part of the project management plan.
• Risk management planning - A process used to determine how to approach, plan, and execute risk management activities for a given project. This process produces the risk management plan.
• Risk register - A document that contains the results of risk analysis and risk response planning.
• Secondary risk - A risk that arises as a result of implementing a risk response.
• Simulation - Any analytical method used to imitate a real-life system.
• Strengths, weaknesses, opportunities, and threats (SWOT) analysis - A technique used to gather information for risk identification by examining a given project from the perspectives of its strengths, weaknesses, opportunities, and threats.

Prev: Summary - Planning for Risk & Quality Management

Next: Introduction to Project Execution

Summary - Planning for Quality & Risk Management

Let us summarize the important things we have learnt in the preceding chapters on Quality and Risk Planning.

• Quality and risk are two interrelated aspects of any project and need to be managed.
• While quality refers to the degree to which a set of characteristics of project deliverables and objectives fulfill the requirements, risk refers to an uncertain event or condition that, if it occurs, has a positive or negative effect on meeting the project objectives.
• Quality management includes quality planning, quality assurance, and quality control.
• The quality management plan, quality metrics, quality checklist, and process improvement plan are the major output items of the quality planning process called Plan Quality.
• The only output of risk management planning is the risk management plan, which includes elements such as a list of tools and approaches to be used for risk management, identification and assignment of resources for risk management, risk categories, risk probabilities and impacts, and the format of risk reporting and tracking.
• This information is used in the remaining processes of risk management; Identify Risks, Perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis, and Plan Risk Responses.
• The risk management plan is an input item to the risk identification process.
• Its only output is the risk register, which includes a list of identified risks, a list of the root causes of the risks, and an initial list of potential responses.
• The risk register, initially prepared during the risk identification process, is updated during the following processes: Perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis, Plan Risk Responses, and Monitor and Control Risks.
• The main output of qualitative risk analysis is the prioritization of risks based on a probability and impact matrix for each objective. Each objective might have its own prioritized list of risks. However, the emphasis in quantitative analysis is on two things; assessing the probability of meeting each project objective and prioritizing the risks based on the total effect of each risk on the overall project objectives.
• Subsequently, the resultant prioritized list of risks can be used to prepare the risk response plan.
• Depending upon the priority of the risk, you can choose one of the three options—taking no action, taking an action if some event happens, or taking an action.
• When you decide to take an action, there are three ways to plan it: avoid, transfer, or mitigate in case of a negative risk; and share, exploit, or enhance in case of a positive risk.

Prev: Big Picture of Quality & Risk Management

Next: Important Terms & Definitions - Planning for Quality & Risk Management

Chapter 56: The Big Picture of Quality and Risk Management

In the previous few chapters, we have covered the processes used in managing the quality and risks of a project. In this chapter, we are going to take a high level look at these 2 entities.

So, lets get started!!!

The Big Picture

Look at the picture below to understand the whole idea better.

As shown above, quality management and risk management can begin after project scope planning, schedule planning, and cost planning have been performed.

Note that the picture above presents a general and high-level view of the relationships between different processes used to manage quality and risk, and not all the interactions and data flow are shown. For example, depending on the nature of the risk and the experience of the risk management team, a risk might move directly from the identification process to quantitative risk analysis or even to the risk response planning process. (Remember, we had spoken about skipping the analysis part depending on the project teams experience in the previous chapters?)

The following is a summary of the items that we may use as inputs to the various processes.

• The scope statement is an input to quality planning, risk management planning, identifying risks, and performing qualitative risk analysis. You can realize this only if you remember that the scope statement is a component of the scope baseline.
• The risk management plan, generated during the Plan Risk Management process, is an input to all other risk planning processes.
• The risk register is initiated by the risk identification process and is an input item to, and is updated by, the following risk management processes: Perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis, and Plan Risk Responses. It will also be updated by the Monitor and Control Risks process, which we will explore in an upcoming chapter.

To Summarize this, look at the table below:

Input Items	Processes Involved
	Plan Quality	Plan Risk	Perform Management Identify Risks	Perform Qualitative Risk Analysis	Quantitative Risk Analysis	Plan Risk Responses
Enterprise environmental factors	Yes	Yes	Yes	No	No	No
Organizational process assets	Yes	Yes	Yes	Yes	Yes	No
Project scope statement	Yes	Yes	Yes	Yes	No	No
Schedule management plan	No	Yes	Yes	No	Yes	No
Cost management plan	No	Yes	Yes	No	Yes	No
Risk management plan	No	No	Yes	Yes	Yes	Yes
Risk register	Yes	No	No	Yes	Yes	Yes
Stakeholder register	Yes	No	Yes	No	No	No

With this, we have successfully completed the section on Quality and Risk Planning. Lets us wrap up this section with the usual summary and important terms and move on to the next section.

Prev: Planning Risk Response

Next: Summary - Risk & Quality Planning

Chapter 46: Introduction to Quality & Risk Management

Till now we have covered how to plan for a project scope, project resources and project procurement. The next planning we need to do is “Planning the Projects Quality & Risk”. In the next few chapters, we will be covering these in details.

So, lets get started!!!

Why Quality & Risk Management is Essential?

Quality and risk are two important interrelated aspects of any project that need to be managed. While quality refers to the degree to which a set of characteristics of project deliverables and objectives fulfill the project requirements, risk refers to an uncertain event or condition that, if it occurs, has a positive or negative effect on meeting the project objectives.

Consider the following two scenarios:

Scenario 1:

Your project just went live. You have created an online banking website for some bank in America and the website is live. As soon as customers start using the website, it is frequently crashing, customers are not able to view their account balance or perform fund transfer. All in all, the website isn’t meeting its required objectives. What went wrong here?

There was no quality management done. The quality of the work product delivered to the customer isn’t up to expectations and hence it’s a total disaster.

Scenario 2:

Lets say, you are on your way to deliver a major online banking website for a large bank in America. You are midway through the project and suddenly your Technical Lead has resigned. He was the center point for all technical discussions in the project and his departure is going to leave a big void and now people are worried that we may not be able to finish the project. What went wrong here?

There was no risk management done. Every project has its own set of inherent risks that may delay the project delivery and if we fail to plan for such risks, the project will be a total disaster.

After you have planned the project scope to the WBS level, as discussed in the previous chapters, you are ready to plan the quality and risk management. After the project starts executing, you will not have enough time to plan a response to a risk if it occurs, so you need to plan risk responses before the project starts executing. To do that, you need to identify the risks and analyze them.

So, the main things we will learn in this section are:
1. How do you plan for quality and risk management?
2. Learn how to plan quality
3. Identify and analyze risks
4. Plan risk responses.

This chapter is just an introduction and we will jump into the details in the subsequent chapters.

Prev: Important Terms - Project Resource Planning

Next: Big Picture of Quality Management