PMAN637 Fall Semester 2017 Mid-Term Examination

PMAN 637Fall Semester 2017 Mid-Term Examination

Worth 20 points

Instructions:Do not discuss the mid-term with your team members or anyone else. The mid-term is anopen book exam.When quoting a reference, use proper APA style citations (Author, Year ofpublication, 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 pagelimitfor this exam. Do not include the questions in yourresponses. No discussion with your team or class members is permitted during exam time. Your exam is due in your Assignment Folder Monday morning 9amEST, Oct.30. 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.

Question 1: Reading and Organizing Risk Data(six points/2 points per question):

a) Each person needs to be able to read a Probability & Impact scale. Drawing from the worldwide standards PMBOK Guide scale, Table 11-1 (PMI, 2013, p.318), what “risk rating” by numerical percentage can be a high risk if a project’s scope is experiencing many risks of expansion (called “scope creep” due to unauthorized add-ons) and “unacceptable to sponsor”?

b) 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)On p.22 of the PowerPoint presentation and p.25, risk “prioritization” is defined as part of the overall qualitative risk analysis process and updating of the Risk ter. How do the authors Baccarini & Archer (2001) describe this process of “risk ranking” in the Australian case study they analyze, as they make recommendations for prioritizing risks? One paragraph limit for your response.

c) Pareto charts are a useful visual method of plotting data by “frequency” of occurrence: how often they occur. In your words (the article on PERIL databases will guide you with examples), why would such a Pareto bar chart be useful for a PM reporting status of several project risk areas to their internal stakeholders? See the two articles by Kendrick (2008, 2009) assigned reading in session 3. One paragraph limit, with correct APA citation format.

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Question 2 Risk Mgt. Tools and Methods in Performing Quantitative Analysis(worth 6 points).Review the process “elements of risk analysis” illustrated in your Practice Standard for Risk Analysis (PMI, 2009, p.41) below. Describe three useful methodsto “perform quantitative analysis” and cite(no direct quotes: must be in your own words!) from methods described in 3 different readings from sessions 1-6. (Limit one paragraph per each method described – examples are encouraged from readings, exercises or discussions).

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Question 3 (Worth 8 points). A) Read the attached “Mexi-Energy” case and format a Risk ter table. Identify the top six risks facing the Project Management team which could be rated using the attached scale.Rate your risks using the scale provided at the end of thecase. B) Since there will be expensive “penalty clauses” in the contract for any delays, explain two methodsto 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 21^st century. He has set up and funded a company “MexiEnergy Inc.”. 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.

However, the large public-sector (hypothetical) 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 into steam, which turns “turbines” in the plant – thus electricity is produced. These “independents” are Mr. Martinez’ business models but also competition. 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.

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

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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.

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Use this scale when formatting your Risk ter and rating risks for part A) of this Mid-Term Exam question 3, case analysis.

Probability and	Probability		Impact ratings:	Risk Score is calculated by multiplying
Impact Matrix	ratings:	1	Minimal	___ x ___
Scale	1% -39%:	2 Moderate
	Unlikely	3	Significant
		4	Catastrophic
	40%-69% May
	or may not occur
	70%-89%:
	Likely to occur
	90%-100%
	Highly probable

A) Read the attached “Mexi-Energy” case and format a Risk ter table.

Identify the top six risks facing the Project Management team which could be rated using the attached scale. Rate your risks using the scale provided. You will need to format this in to your Risk ter.

B) Since there will be expensive “penalty clauses” in the contract for any delays, explain two methods to mitigate risks to scheduling that we have studied and discussed in PMAN 637. Cite readings

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