PMAN 637- Summer Semester 2017 Mid-Term Examination

PMAN 637- Summer Semester 2017 Mid-Term Examination

Instructions: Do not
discuss the mid-term with your team members or anyone else. The mid-term is an
open book exam. When quoting a
reference, use proper APA style citations (Author, Year of publication, page#)
after any brief quote and then the full reference at the end of the exam. If you have a question of clarification,
post it in the whole class Session 7 discussion “Mid-Term Exam” area and I will
answer for all the class. There is a
seven page limit for this evaluation exam.
No discussion with your team or class members is permitted during exam
time. Your exam is due in your
Assignment Folder Monday morning 10am EST, July 10. Cite only references from our course readings,
sessions 1-6. Don’t forget to put your name on the top of the exam! No late exams accepted. Use double spacing and only 12 point font.

Thank you! This is a 20 point
examination

Question 1 (six points/2 points per question): On slide 23 of the PowerPoint assigned
Session 2 there is a list of risk analysis tools and techniques to be mastered
this semester (see
http://www.ashraf.co/attachments/article/74/PMP-CH09-Risk-Mgmt.pdf)

a) Each person
needs to be able to read a Probability & Impact scale. Drawing from the worldwide standards PMBOK
Guide scale, Figure 11-1 (PMI, 2013, p.318), what percentage is a high risk if
a project scope is reduced and “unacceptable to sponsor”?

b) On p.21 of the
PowerPoint presentation, risk “prioritization” is defined as part of the
overall qualitative risk analysis process.
How do the authors Baccarini & Archer (2001) describe this process
in the Australian case study they analyze?

c) Pareto charts
are method of plotting data by “frequency” of occurrence. In your words (the article on PERIL
databases will guide you with examples), why would such a bar chart be useful
for a PM reporting status of several project risk areas to their internal
stakeholders?

Question 2 (four points):
Review the Risk Register/probability and impact ratings below. There are several mistakes in “describing”
what a risk is, which would create flaws in rating these. Note that the color-coded risk rating scale
at the bottom of this table is correct!
In your one paragraph response, define risk correctly and cite two
readings which would aide a PM to correct this Risk Register and probability
& impact assessment.

Question Two continued.

Risk ID

Risk

Risk Type

Probability

Impact

Total Risk

Level

1

Secure finances

Origination.

4

12

2

Procure medication

PM

3

4

12

3

Recruit volunteers

PM and Org.

2

3

4

Procure medical equipment

Technical

3

3

9

5

Transport volunteers

Org. and PM

1

3

3

6

Establish 2 rural clinics and 1 treatment facility

Technical and PM

3

3

7

Train volunteers

Org and PM

2

3

RATING SCALE

Probability

4

4

8

12

16

0 – 5

Low

3

3

6

9

12

6 – 10

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Medium

2

2

4

6

8

10 – 16

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High

1

1

2

3

4

1

2

3

4

Impact

Question 3 (three points).
The “Practice Standard for Project Risk Management” (PMI, 2009) that you
were assigned to download shows “best practices” and provide clear definitions,
examples, and agree-upon approaches defining risk terminology used worldwide. In Chapter 7 (assigned session 5 of our
PMAN 637 class), the diagram below is displayed. Review this! Then, in 3 paragraphs, describe one element
(shaded grey) out of the 7 elements below (figure 7-2) and describe three risk
mgt. methods which could be used.

Question 4 (seven points).
A) Read the attached
“Mexi-Energy” case and format a Risk Register table. Identify the top four risks facing the
Project Management team which could be rated using the attached scale. Format a Probability & Impact table and
rate your risks using the scale provded at the end of the case. B) Since there will be expensive “penalty
clauses” in the contract for any delays, explain two methods to mitigate risks
to scheduling. Cite readings.

Producing Electricity via Steam-Powered Turbines: A Hypothetical Case Study

Sam Martinez is seeking to invest a portion of his
considerable assets in the “independent” electric power production industry in
California, a sector projected to experience very rapid growth in the 21st century.
He has set up a company “MexiEnergy Inc.” using his own funds and those of a
number of family and colleagues. The intention is to use the company to build
and operate an electric power plant, and then form a non-profit organization to
“donate” some of the power to social service agencies serving immigrant
families in L.A.

However, the large public-sector California Energy Resources
produces most of the power for California.
The main exceptions are co-generation plants associated with food processing,
timber and similar industries, some small hydro plants which generate
electricity for northern California via water, and purchased power from other
states. California Energy operates all
long distance distribution, selling electricity to municipal utilities for
local distribution; brokering power sales to large industrial customers, and
providing electricity wholesale to small rural customers.

California Energy wishes to increase its current significant
dependence upon Navo Valley nuclear power reactor, which is projected to
construct three more 880 megawatt units over the next twenty-five years. Should
this happen, “avoided cost” for base load power could be very low. However, there is strong political pressure
from a range of sources for publicly-declared prices well above current avoided
costs to encourage private co-generation of electrical power.

Privatization of California Energy is being argued by
leading environmental groups, with a view that increases in electricity cost
per unit which would decrease electricity consumption. These probabilities have been calculated as
part of California Energy’s financial forecasts but lack any risk management
plan.

Sam has identified what he believes to be his first big
opportunity. It would involve:

1. Producing base load electric power for sale to California
Energy in a northern California town using a CCGT (combined cycle gas turbine)
set of natural gas powered turbines driving generators with waste heat
producing high pressure steam to drive a steam turbine generator.

2. Providing (for sale) low pressure steam for manufacturing
organizations in the immediate vicinity of the CCGT plant.

The local city has a natural gas network and supply, but the
supply pipeline is not large enough to cope with the proposed CCGT type of
natural gas-run turbine. The gas supply
company will provide a new main and gas at a price per unit fixed for a
substantial period of time, but require a “take-or-pay” contract with any
buyers. If Mexi-Energy decides to contract to take gas from any given date,
they will have to pay for the contracted natural gas flow whether they use it or
not.

A range of established suppliers of CCGT plants would be
willing to sell Mexi-Energy its turbine-driven equipment.

A) New untested
design. Very high fuel efficiency. Initial reliability is uncertain. Likely to
be very reliable in the long run. Claimed very low maintenance costs. Low
capital cost to encourage purchase.

B) State of the
art tested design. High fuel efficiency, high reliability and low maintenance
costs. Very high capital cost.

C) Tried and true
design. Low fuel efficiency, moderate reliability and maintenance costs.
Moderate capital cost.

CCGT plant suppliers will install the major plant components
on a fixed price basis. MexiEnergy Inc.
has revised the scope and Contract, with stiff penalty clauses for 1) delays or
2) performance failures which the manufacturer must be responsible for.
However, such penalty clauses may not be operable, for example, if ground
conditions are not as tested environmentally or electrical grid connections are
not in place when required.

California Energy will provide grid connections, and will
not allow anyone else to do so. The plant could be delayed for weather reasons
and start-up delayed due to grid hook-ups or electrical black-out failures due
to ‘rolling black-outs’.

Water to turn the CCGT turbines will be taken from a river
which flows through the municipality. However, no legal environmental permits
have been granted to remove water from these rivers during the several drought
years in California. Permit fees
statewide are rumored to rise dramatically before construction begins.

Extraction of water requires municipal planning permits, and
also state gov’t. approval is required for the plant construction using water
pipelines, low pressure steam lines and power lines. All construction must be scheduled, of
course, dependent upon approvals from governmental agencies.

Scale to use in your answer to part A) of the question

Probability and Impact Matrix Scale

Probability ratings:

1% -39%: Unlikely

40%-69% May or may
not occur

70%-89%: Likely to occur

90%-100% Highly
probable

Impact ratings:

1 Minimal

2 Moderate

3 Significant

4 Catastrophic

Risk Score is calculated by multiplying

___ x ___

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