Management Essay Example: PUMP and PMI/PMBOK Approaches to Project Risk Management

3 Topics (PUMP Approach to Project Risk Management, The Key Features of A PUMP Approach, Comparing These Features with The PMI PIMBOK Approach)

Part 1

Project risk management is the process of through which an organization ensures that any of its projects are accomplished within specified time frames, within a given budget and with requisite technical requirement and or performance (Dey 2001 & 2002; Ward 2005; Chapman 2002). Succinctly, a project is any endeavor that resources such as human, financial and material are organized in a novel way so as to undertake and accomplish a given task within given time and cost constraints so as to attain specific objectives thus meeting specific qualified and quantified objectives (Chapman & Ward 2011). The Performance Uncertainty Management Process (PUMP), PMI/PMBOK approach, the traditional sequential methods such as the Critical Path Method (CPM) and the Critical Chain Project Management (CCPM) approaches are among the major and common approaches used to manage project risks and uncertainties (APM Association for Project Management 2004; Shenhar & Dvir 2007). As shall be seen in this essay, the PUMP will be critically reviewed as an approach of project risk management. In illustration of the PUMP approach, the Samdo case study will be explored where part 1 of the essay will establish the basis of the project, part 2 will concentrate on conducting qualitative analysis of the project and part 3 will concentrate on providing an overview of the quantitative analysis for the project. Eventually, a comparison of the PUMP and the PMI/PMBOK approaches of risk management will be compared in a bid to showcase the uniqueness of the PUMP approach.

In order to shape the lifecycle of any given project from the execution to the delivery stages, the consideration of uncertainties through use of approaches such as the PUMP becomes paramount. The key feature of the PUMP approach is that one should greatly focus on managing the uncertainty associated with projects rather than managing the risks associated. In this case, the term uncertainty is taken to refer to the lack of assurance about something while the term risk refers to the would-be unfavorable outcome in a given scenario. The approach process entails three broad phases: developing basis of analysis, executing qualitative analysis and executing quantitative analysis. Developing the basis for analysis involves the detailed definition of the intended project and focusing on the process of developing and delivering the project. The execution of qualitative analysis is concerned with identification of every resource relevant for the project, specifying the structure of all uncertainties and clarifying the ownership of the whole project. Finally, the execution of the qualitative analysis for the project entails the numerical assigning of some uncertainty and the evaluation of each and every relevant implication.

In contrast, PMI or PMBOK Method of project risk management is an approach developed by Project Management Institute (PMI) and it entails the use of a guide to project management that can be classed into five Project Management Body of Knowledge (PMBOK) (PMI Project Management Institute 2012). The five classes include the initiating stage, the planning stage, the executing stage, the controlling stage and the closing stage. Specifically, the initiating stage involves the development of the project charter, the identification of the relevant stakeholders and the control of stakeholders engagements (Ward & Chapman, 2008). The planning stage encompasses all the activities ranging from creating and determining the budget, creation of the WBS, and definition of the scope of the project. The executing stage involves the implementation of the project whereby the managing communications are made, procurements are done, and the project team is managed. The controlling stage on the other hand entails the processes to do with tracking and overseeing the progress of the whole project through ensuring that the project sticks within the budget limits, the time constraints and yields the required quality. Finally, the closing stage entails all the processes ranging from ending the procurements and ultimately ending the whole project.

As can be seen from the contrast in definition of the PMI/PMBOK and the PUMP approaches, the PUMP approach concentrates mainly on uncertainties while the PMI/PMBOK approach concentrates on the management of risks accompanying the execution and running of the project. The major aim of the pump is therefore to pursue all the opportunities associated with the project through the consideration of all the relevant uncertainties and to some extent all the risks (Chapman & Ward 2002; Ward & Chapman 2008). Unlike PUMP approach, the PMI/PMBOK approach does not take into account the different uncertainties that a project faces.

Notably, the only similarity of the two approaches of project management is the fact that both approaches have a lifecycle that begins with the perception of the project to the end of the project. The PUMP lifecycle involves the conceptualization, planning, execution and delivery (E & D) and ends with utilization (OGC Office of Government Commerce 2010). A similar trend or lifecycle applies to the PMI/ PMBOK approach which begins with the initialization process, followed by the planning stage, the execution stage, the control stage and the closing process in respectively. As is clear from the terms used to define the stages, the two approaches basically follow the same line of steps. However, the PUMP approach forms a better ground for the purposes of project management.

As an example, the PUMP approach can be used in establishing a credible and efficient project management framework for Samdo Case Study. To develop the basis of the project, it is good to first define the project. In this case, the project aims at establishing an expansion in the operations of Ontario Hydro Company through the sourcing of funds from Samdo Company. Samdo is determined to invest within the Ontario Hydro which requires the development of the State of the art tested design project. The focus of the whole process, therefore, is developing a project that has the optimal margin that incurs the least cost of implementation and operation and add in the maximal possible revenue.

Specifically, in defining the project, it is required that there be a hired process manager who should come from Samdo. Under the process manager, Samdo should hire an assistant project manager from the Ontario Company so that the assistant manager can help manage the whole process as he/she will be having first-hand information pertaining operations and projected growth for Ontario Hydro. Such information will help in the making informed decisions through the process of implementing and running the project. Every step of the project definition should be well documented, verified, assessed routinely and reported to the Sam and other stakeholders involved in the project. The project definition will help tell exactly when, why, who, which way, what, wherewithal and where the project will operate. The major plans to see the project through will be successfully made at this point. The major aspect when it comes to focusing on the project is ensuring that there is proper communication among every personnel involved in the project. With clear objectives as already stipulated and clear assigning of the roles, targets, commitments and expectations of each and every personnel of the project, the project will be executed well and effectively. Again, the project definition will play a major role in ensuring that focusing on the processes of the project is effective thus developing the basis for the project.

Part 2

As already mentioned earlier on, the PUMP entails an important stage of conducting qualitative analysis. The stage entails identification of all the relevant resources, conditions and responses for the project, the structure of all uncertainty is identified, and the ownership of the project defined (van Wyk, Bowen & Akintoye 2008). In Samdo case study, the identification of all the relevant resources entails the identification of the financial sources needed, the human resources and the technical resources. The financial sources are well defined; they have the Ontario Hydro as a major stakeholder and Sam is also a major finance source for the company as he has gathered enough capital for the anticipated project. These financial resources will offer enough cash to cater for the high capital cost. The technical resources include the combined cycle gas turbine which is readily available from Ontario Hydro. The turbines and the whole design has also been produced through the state of art tested design. The fuel needed for the whole design is not as substantial as the design shows high fuel efficiency.

The conditions for the project on the other hand, will involve adhering to the municipality laws and requirements and also engaging in environmentally sustainable operations. The fact that the project is highly fuel efficient marks the environmental sustainability through the reduction of pollution. For the responses of the project, the company should ensure that they develop contingency plans for compensating unexpected occurrences such as failure of functioning if the set turbines. Further, the company should adopt open option response which goes hand in hand with the development of contingency plans. For instance, the project manager should brainstorm and raise answers to questions such as; if the Ontario Hydro company fails to supply power, what then? Finally, the company should employ the response that enables them to modify the consequences of variations that should occur in the course of the project. Specifically, for instance, modifying consequences is a relevant response for ensuring that the company is able to have full power testing grid connections prior to the CCGT plant supply. This will help avoid the stiff penalty clause that the CCGT suppliers have put forth in their turnkey fixed price basis.

Figure SEQ Figure \* ARABIC 1: Source-Response Diagram

To identify the sources of uncertainty, Samdo have to come up with the list of all the project definitive aspects. That is to say, the company has to go back to the drawing board and identify the definition of the project. As already highlighted, the definition will entail stipulating the seven Ws of a successful project: Who? What? Where? Why? When? Whichway? And Wherewithal? Along with this, the company will need to restate the focus of the processes: what concept and design will they use? The skills that each stage and task within the project will require and which resources will be used for each stage of the project (Chapman, Ward and Harwood 2006). In other words, the mishaps that would be associated with all this stages of the PUMP approach are critically studied and proper recommendations made. In short a major question is asked: what would happen... if the financing arrangements fail to go as planned? If the logistics fail? If the preset conditions for the installations and implementation fail? If the estimated resources are insufficient? If the industrial relations are distorted? If the communications are ineffective within the project management? If the whole organization of the project is distorted? Getting answers to this questions will help curb the uncertainties and adhere to the relevant responses all through the project. Identifying the dependencies is key to identifying all uncertainties as it helps create relevant escape routes and avoid crashing of the pr...