Just Get PMP

In an organization or in a project, it is very important to understand the roles of each individual. The sponsor and the project manager have different roles to play in a project. In general, the sponsor authorizes the project while the project manager plans and executes the project. An understanding of the roles of the sponsor would help you in answering few questions in the PMP Certification exam. You, as a project manager, should be clear on the areas where the Sponsor's help is required. The following list gives a guidance on the roles of the sponsor:

RISK BREAKDOWN STRUCTURE (RBS)

What do you mean by risk categories? Risk categories are a group of potential causes of risk in a project.

And what is the use of categorizing risks? Risk categories generally provide a structure to systematically identify risks in a consistent manner. It helps the project manager and project team and contributes to the effectiveness and quality of the “Identify Risks” process. It provides a logical way to organize the project risks to better manage them and to determine the root causes of risk. Categorizing the risks also would be much beneficial while planning response actions for the identified risks.

Risks can be categorized in various ways like External, Internal, Technical or Project Management related risks. Risks can also be categorized based on the origin of the risk like Schedule Risk, Cost Risk, Quality Risk, Scope Risk or Resource Risk.

Depending on the project and the organization, the risk categories can be as simple as a list of categories or it might be structured into a detailed Risk Breakdown Structure (RBS) .

The following are the Inputs, Tools & Techniques and Outputs (ITTO) of the process "Plan Risk Management", which is the first project management process in the Project Risk Management knowledge area.


INPUTS:

1. Project scope statement
2. Cost management plan
3. Schedule management plan
4. Communications management plan
5. Enterprise environmental factors: Risk attitudes and tolerances that describe the degree of risk that an organization will withstand.
6. Organizational process assets: Risk categories, common definitions of terms and concepts, standard templates, authority levels for decision-making, lessons learned, stakeholder registers.

TOOLS & TECHNIQUES

1. Planning Meetings and Analysis:
   Project team hold planning meetings to develop risk management plan. Attendees may include project manager, selected team members and stakeholders, anyone with the responsibility to manage risk planning and execution activities. High level plans for conducting the risk management activities are  defined in these meetings. Risk management responsibilities will be assigned. Probability and impact matrix will be tailored to the specific project. If templates do not exist, they may be generated in these meetings.

OUTPUTS

1. Risk Management Plan:
   The only output of this process is risk management plan, which becomes a subset of the project management plan.. The risk management plan describes how risk management will be structured and performed on the project. It tells you how you are going to handle risk in the project. It defines how risk will be assessed, who will be responsible for doing it and how often you will do risk planning. Risk Management Plan includes the Methodology, Roles and responsibilities, Budgeting, Timing, Risk categories, Definitions of risk probability and impact, Probability and impact matrix, Revised stakeholders’ tolerances and Reporting formats.

Project Risk Management includes the following six project management processes:

1. Plan Risk Management : This is the first step in project risk management. It includes defining how to conduct risk management activities for a project.


2. Identify Risks: I would consider this as the most important process in the entire risk management. This is where you identify and determine which risks may affect the project and document their characteristics. The risk identification process must be comprehensive, as risks that have not been identified cannot be assessed or responses planned.


3. Perform Qualitative Risk Analysis: In this process, we assess the likelihood/ probability of each risk occurring and the likely impact of the risk on project objectives. We follow this up with prioritizing the identified risks for further analysis or action by combining their probability of occurrence and impact/ severity.


4. Perform Quantitative Risk Analysis: This process may or may not be included in all projects. Here, we numerically analyze the effect of prioritized risks on overall project objectives.


5. Plan Risk Responses: Developing options and actions to enhance opportunities and to reduce threats to project objectives.


6. Monitor and Control Risks: Implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project.

Project Risk Management includes the project management processes of conducting risk management planning, identification, analysis, response planning, and monitoring and control on a project. The main objectives of project risk management are as follows:

• To increase the probability and impact of positive events/ opportunities
• To decrease the probability and impact of negative events/ threats

In other words, project risk management is a part of the project management, which deals with uncertain events in a project in a proactive manner. It helps a project manager to ensure that the project is completed on time, within the budget and to the project requirements.

Risk Threshold means the amount of risk that is acceptable to an organization. Most organizations can accept minimal overruns in schedule or cost, or minor changes to the scope. For example, a company may have a policy that a risk that increases the project's cost by not more than 10% is acceptable, but anything more than 10% is not acceptable.

The customer, sponsor and other stakeholders all may have different perceptions and different risk thresholds. It is the project manager's responsibility to bring consensus on the acceptable threshold. Then, it forms the target against which the project team will analyze risks.

In general, negative risks or threats may be accepted by an organization if they are within tolerances and are in balance with the rewards that may be gained by taking the risks. For example, adopting a fast track schedule is a risk taken by a project manager to achieve the reward created by an earlier completion date.

Organizations and stakeholders are willing to accept varying degrees of risk. Risk Tolerance means whether the risk can be tolerated or not. It is the willingness of the organization or a project team to accept or avoid a risk. For example, a company might have a policy that any risk that impacts their customer relationship will not be tolerated.

A project manager should understand his risk tolerance level as well as that of the project team and the organization as a whole.

Risk is an uncertain event or condition that, if occurs, has an effect on at least one project objective. 

Examples

From the above examples, it should be clear what a risk means. How does it affect a project? Risk exists the moment a project is conceived. If you have the idea that risks only appear during execution, please change your mind. You have to start looking for the risks from the commencement of the project.

Please take note that project risk is always in the future. If a project risk has occurred, then it will be called as an ISSUE.

Most of us look at risks as negative and feel that they are always dangerous to the project. It is not true. Risks that have an adverse impact on the project are known as THREATS. And not all risks are negative; some events or conditions can help the project; we call them OPPORTUNITIES. 

Abraham Maslow proposed a theory in psychology, which is popularly known as "Maslow's Hierarchy of Needs". One of the many interesting things Maslow noticed was that some needs take precedence over others.

He laid out five broader layers of needs: the physiological needs, the needs for safety and security, the needs for love and belonging, the needs for esteem, and the need to actualize the self, in that order.

Deficit Needs and Being Needs

Maslow's hierarchy of needs is often portrayed in the shape of a pyramid, with the largest and most fundamental levels of needs at the bottom, and the need for self-actualization at the top. Maslow calls the bottom four levels as deficit needs, or D-needs. He has called the top layer as being needs or B-needs.

Needs identified in Maslow's Hierarchy

Physiological needs are obvious; they are the literal requirements for human survival. If these requirements are not met, people will not be interested in any higher order needs like social needs or esteem needs.

When the physiological needs are largely taken care of, the second layer of needs (Safety Needs) comes into play. You will become increasingly interested in finding safe circumstances, stability, protection; the individual's safety needs take precedence and dominate behaviour.

After physiological and safety needs are fulfilled, the third layer of human needs are social needs and involve feelings of belongingness. The individual begins to feel the need for friends, family, relationships and a sense of community.

Next, we begin to look for self-esteem. Esteem presents the normal human desire to be accepted and valued by others.

The last level of need is Self-actualization. This level of need pertains to what a person's full potential is and realizing that potential.


As a project manager, it is important to understand Maslow's hierarchy of needs. Maslow's theory suggests that the most basic level of needs must be met before the individual will strongly desire the secondary or higher level needs. This concept is important in managing and developing human resources in an organization.

In the last article, we had seen the assumptions of McGregor's Theory X . In this article, I am going to discuss McGregor's Theory Y, the other extreme set of assumptions about employees.

McGregor promoted Theory Y as the basis of good management practice. Theory Y represents the democratic approach and gives the employees scope for creativity and responsibility.

You may also be interested in:

It should be an essential task of the management to unleash the potential in individuals. In supervising human resources, Theory Y offers a better description of people than Theory X.

Of course, we cannot deny that there may be some lazy individuals who may have to be threatened, controlled and prodded strictly. But, it is obvious that far more people respond better to a project manager who applies a management style based on Theory Y.

In projects managed by managers who believe in Theory Y, team members at lower levels of the organization are involved in decision making and have more responsibility.

Final Note

Authoritarian management style is adopted in Theory X organizations with centralized control while in Theory Y, the management style is participative and inclusive. Although Theory X management style is widely accepted as inferior to Theory Y, it has its place in large scale production and operations that involve largely unskilled workers.

Prof. Douglas McGregor has proposed two opposite sets of theories about individuals at work. They are known as McGregor's Theory X and Theory Y.

McGregor's ideas suggest that there are two fundamental approaches to managing people. In this post, we are going to see what are the assumptions made in McGregor's Theory X.

You may also be interested in:

As you can see, Theory X generally represents standard bureaucratic and authoritarian attitudes towards employees. Managers who accept the assumptions of Theory X attempt to structure, control and closely monitor and supervise their project team members.

Many managers tend towards Theory X, which leads to poor results. On the contrary, managers using Theory Y produces better performance and results, and allow people to grow and develop.

We will see what are the assumptions made in Theory Y in our next article.

Note : This article is old. PMI has increased the knowledge areas to ten with the release of PMBOK Fifth Edition. Please refer to the latest article on 10 Knowledge Areas.

Knowledge areas bring together processes with common characteristics. The 9 knowledge areas in project management are as follows:

1. Project Integration Management
2. Project Scope Management
3. Project Time Management
4. Project Cost Management
5. Project Quality Management
6. Project Human Resources Management
7. Project Communications Management
8. Project Risk Management and
9. Project Procurement Management

While knowledge areas group processes based on common characteristics, process groups group processes based on the various stages they appear in the project management life cycle.