Project case study New Kitchen Heaven Retail store

Ricardo knocks on your office door and asks whether you have a few minutes to talk. "Of course," you reply, and he takes a seat on one of the comfy chairs at the conference table. You have a feeling this might take a while.

"I think you should know that I'm concerned about the availability of the T1 line. I've already put in the call to get us on the list because, as I said last week, there's a 30- to 45-day lead time on these orders."

"We're only part way through the Planning processes. Do you need to order the T1 so soon? We don't even know the store location yet," you say.

"Even though they say lead time is 30 to 45 days, I've waited as long as five or six months to get a T1 installed in the past. I know we're really pushing for the early February store opening, so I thought I'd get the ball rolling now. What I need from you is the location address, and I'll need that pretty quick."

"We're narrowing down the choices between a couple of properties, so I should have that for you within the next couple of weeks. Is that soon enough?"

"The sooner, the better," Ricardo replies.

"Great. I'm glad you stopped by, Ricardo. I wanted to talk with you about risk anyway, and you led us right into the discussion. Let me ask you, what probability would you assign to the T1 line installation happening six months from now?"

"I'd say the probability for six months is low. It's more likely that if there is a delay, it would be within a three- to four-month time frame."

"If they didn't get to it for six months, would it be a showstopper? In other words, is there some other way we could transfer Jill's data until the T1 did get installed?"

"Sure, we could use other methods. Jill won't want to do that for very long, but workarounds are available."

"Good. Now, what about the risk for contractor availability and hardware availability and delivery schedules?" you ask.

You and Ricardo go on to discuss the risks associated with the IT tasks. Later, you ask Jill and Jake the same kinds of questions and compile a list of risks. In addition, you review the project information for the Atlanta store opening because it's similar in size and scope to this store. You add the risks from that store opening to your list as well. You divide some of the risks into the following categories: IT, Facilities, and Retail. A sample portion of your list appears as follows, with overall assignments made based on Perform Qualitative Risk Analysis and the probability and impact matrix:

■ T1 line availability and installation. Risk score: Low

■ Contractor availability for Ethernet installation. Risk score: Medium

■ POS and server hardware availability. Risk score: Medium

■ category: Facilities

■ Desirable location in the right price range. Risk score: High

■ Contractor availability for build-out. Risk score: Low

■ Availability of fixtures and shelving. Risk score: Low

■ category: Retail

■ Product availability. Risk score: Medium

■ Shipment dates for product. Risk score: Medium

After examining the risks, you decide that response plans should be developed for the last two items listed under the IT source, the first item under Facilities, and both of the risks listed under Retail.

Ricardo has already mitigated the T1 connection and installation risk by signing up several months ahead of the date when the installation is needed. The contractor availability can be handled with a contingency plan that specifies a backup contractor should the first choice not be available. For the POS terminals and hardware, you decide to use the transfer strategy. As part of the contract, you'll require these vendors to deliver on time, and if they cannot, they'll be required to provide and pay for rental equipment until they can get your gear delivered.

The Facilities risk and Retail risks will be handled with a combination of acceptance, contingency plans, and mitigation.

You've calculated the expected monetary value for several potential risk events. Two of them are detailed here.

Desirable location has an expected monetary value of $780,000. The probability of choosing an incorrect or less than desirable location is 60 percent. The potential loss in sales is the difference between $2.5 million in sales per year that a high-producing store generates versus $1.2 million in sales per year that an average store generates.

The expected monetary value of the product availability event is $50,000. The probability of the event occurring is 40 percent. The potential loss in sales is $125,000 for not opening the store in conjunction with the Garden and Home Show.

Project Case Study Checklist

■ Plan Risk Management

■ Identify Risks

■ Documentation reviews

■ Information-gathering techniques

■ Perform Qualitative Risk Analysis

■ Risk probability and impact

■ Probability and impact rating

■ List of prioritized risks

■ Perform Quantitative Risk Analysis

■ Interviewing

■ Expected monetary value

■ Plan Risk Responses

■ Avoidance, transference, mitigation, and acceptance strategies

■ Risk response plans documented

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Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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