implementation of risk and opportunities management plan ... · management process followed by an...

Implementation of Risk and Opportunities Management Plan in a

medium sized company

Master Thesis

Mälardalen University

Department of Computer Science and Electronics

In cooperation with

Freezing AB, Sweden

Submitted by

Alina Torjescu Paduraru Supervisors: Bengt-Inge Andersson (Mälardalen Univeristy) Suzanne Ericsson (Freezing AB) Submission date: 07, January, 2007

Abstract

We are living in a business world in which requirements for quality and performance have increased significantly and a continuously control over the costs during execution of projects has become essential. Evaluating and updating uncertainties during the whole project duration has become an important part of the project management even for smaller companies. This master thesis is about implementing a procedure to evaluate risks and opportunities in a medium sized company in Nordic Europe. The company has extended lately its product area and consequently, will be able to deliver larger scope of supplies. That is why taking into account project uncertainties has become of bigger importance and using a well defined system has become a necessity. The master thesis consists of a theoretical part which describes the risk management process followed by an application part which describes the analysis done in a medium company, Freezing AB, working in the field of refrigeration contracting. The last part describes the proposed Risk and Opportunity Management Plan to be implemented in the company as well as recommendations for future work.

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Table of Contents 1. Background............................................................................................................................ 1 2. Company presentation ........................................................................................................... 1 3. Problem Description .............................................................................................................. 2 4. Methods Used ........................................................................................................................ 3 5. Relevant theory ...................................................................................................................... 3

5.1. Project Risk Management – part of Project Management .............................................. 3 Project Management Framework........................................................................................... 3 5.2. Project Management Processes....................................................................................... 5 5.3. Project Risk Management ............................................................................................... 6

5.3.1. Risk Management Planning ..................................................................................... 8 5.3.2. Risk Identification.................................................................................................... 9 5.3.3. Risk Assessment .................................................................................................... 11 5.3.4. Risk Response Planning......................................................................................... 15 5.3.5. Risk Monitoring and Control ................................................................................. 16

6. Study case of two finished contracts.................................................................................... 18 6.1. Description of Enjoy Food Supermarket project analysis ............................................ 18

6.1.1. Project data summary............................................................................................. 18 6.1.2. Planned and actual costs analysis .......................................................................... 20 6.1.3. Risks and opportunities (identification, describing, assessment, action list)......... 30

6.2. Description of Viktor Supermarket project analysis..................................................... 31 6.2.1. Project data summary............................................................................................. 31 6.2.2. Planned and actual costs analysis .......................................................................... 32 6.2.3. Risks and opportunities (identification, describing, assessment, action list)......... 34

7. Proposed Solution ................................................................................................................ 35 7.1. Risk Management Planning .......................................................................................... 36 7.2. Risk Identification......................................................................................................... 37 7.3. Risk Assessing .............................................................................................................. 39 7.4. Risk Response Planning................................................................................................ 39 7.5. Risk Monitoring and Control ........................................................................................ 40 7.6. Examples – Applying ROMP for two projects ............................................................. 40

7.6.1. Enjoy Food Supermarket ....................................................................................... 40 7.6.2. Viktor Supermarket................................................................................................ 41

8. Implementation Phase.......................................................................................................... 41 9. Future recommendations...................................................................................................... 42 10. Summary ............................................................................................................................ 44 11. References.......................................................................................................................... 46 12. Appendix............................................................................................................................ 47

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1. Background My previous work experience is related to project management in refrigeration field in Romania. Coming to Sweden I worked for a certain period of time to Freezing AB, so later on when I developed my knowledge in project management by studying this master program, it appeared as an interesting subject the proposal for implementation of a risk management system in a company such Freezing AB. Its activity was mainly consisting of executing contracting projects and working with several sub-suppliers and sub-contractors has always been a risky field full of unexpected events. Further more I was acquainted with the technical part, so I could take a deeper look in the project risk analysis. The company name used hereby – Freezing AB – is a pseudonym in order to protect its business interest. The company, at the time I contacted it, had fusion with another company in the field, enlarging its product range and potential customers, but now, after two years, the results showed were not as expected. Following the presentation of arguments for implementing a risk management system, the company began to show interest in this subject. The company succeeded to conclude many contracts and expanded its market, though the profit was not as expected. It was clear that a deeper look should be taken into the project management processes. Taking into account the company’s main field of activity, contracting, risk management can be considered as one of the most important aspects of project management and an early analysis when possibilities to influence are bigger, can spare money, time and other resources.

2. Company presentation Freezing Group is a Finish company acting in the field of refrigeration, offering a large range of products, refrigeration plants design, installation, commissioning and after market services. The company has its roots from 1946 when it was founded Finland and four years later, the company starts industrial production of refrigeration display cases, refrigeration and freezing room stores. Later on the company had expanded business activities in Scandinavian and other countries and enlarging its product range by acquiring other companies in the field. The company expands also on the Swedish market by acquiring other companies in the field. The clients and customers are to be found in the following sectors:

- Retail The Retail Business Line caters for a wide range of refrigeration needs relating to the warehouses and sales of retail organizations. The scale of deliveries ranges from individual display cabinets to ready-built cold stores of thousands of cubic meters.

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Preventive maintenance, repairs and other related maintenance services represent a significant portion of business activities.

- Industry The Industrial Business Line attends to supply of refrigeration solutions and maintenance services to industrial clients. In addition to chillers and cold rooms, typical projects include panel-structured warehouses, production facilities and clean rooms for companies operating in the food processing industry, logistics and the pharmaceutical industry. Cooling of production processes and air-conditioning also play an important role.

- Commercial kitchens, hotels, restaurants and catering (HoReCa) The HoReCa Business Lines provides refrigeration solutions and maintenance services to various commercial kitchens. The requirements of the clients are particularly focused on the reliability of operation and ergonomic considerations. Examples of product segments that are growing in importance include chillers, chest freezers and freezer rooms as well as serving lines. However the main activities of Freezing AB are:

- designing, installation and commissioning of different types of refrigeration and freezing plants

- service - products: cold store rooms, sandwich panels, insulated floors, refrigeration

doors alarms for cold store rooms, mobile refrigeration plants (containers), spare parts

The organization in Sweden is based on a central office located in Västerås and nine offices in other cities responsible for local customers and providing local installation and service.

3. Problem Description During the last 6 years Freezing AB has been marked by several re-organizing and re-structuring processes with impact on the company’s organizational relationships and responsibilities which reflect also in the financial figures. At the end of last year a joint venture between Freezing Solutions and Freezing rooms – both part of Freezing Group - took place, the new Freezing AB becoming one of the biggest Swedish refrigeration companies with around 170 employees. The new company struggled to expand its market within industrial refrigeration projects. This was partly done by hiring people with good contacts within industrial customers and partly by reducing the contract prices, which led to a significantly smaller gross margin. Consequently the management started to analyze the situation and think of measures to improve the income of the company. A further analysis showed that the company succeeded in expanding its market by concluding more contracts especially in industrial field, but on the other hand, the

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gross margin provided was too little and did not covered the company’s expenditures. At this point, I started to do my thesis in the company. The interest in implementation of the risk management tool could be justified by the larger projects concluded lately and by the need to improve the cost control both on quotations and project’s execution. The aim of the thesis consists of:

- the study of two finished projects with very low gross margin and analysis of the budgeted costs vs. actual costs (final costs);

- the identification of the loss source, i.e. the risks that threatened or could threat the project execution;

- the identification of the positive events and their consequences, i-e- the opportunities or possible opportunities;

- developing an effective risk management tool to be used by the sale and project managers during sale stage and project execution

4. Methods Used The thesis is based on qualitative research methods:

- literature research - case study - qualitative interviews and observations

The model used for the presentation of the results is mainly based on the risk management approach of PMBOKGuide. The elaboration of the Risk and Opportunities Management Plan file is mainly based on ABB materials which were adapted to suit the activity of Freezing AB. The file should be continuously updated with new risks or by extending the probability calculation (calculating a maximum, most likely or minimum value). This consideration should be made later on after the implementation process is finished, depending on the complexity of the projects and the need to take a deeper approach of the risk assessments.

5. Relevant theory

5.1. Project Risk Management – part of Project Management

Project Management Framework Due to a more demanding business environment, the way in which a project is conducted has become of utmost importance in order to ensure a continued profitable operation and growth. “Programs and projects are of great importance to all industrial, governmental, and other human organizations. They are the means by which companies, especially when delivering complex, advanced technology products or systems to their customers earn a major share of their profit.”1

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Not only is the process of selling products and projects important, but also the way in which the project is followed up from the initiating phase until the closing phase. This reflects not only in the financial figures of a company but also when evaluating customer satisfaction. In order to meet the project requirements, project managers must have the knowledge and skills to use a group of well defined tools and techniques. The work of project management refers to2:

- competing demands for: scope, time, cost, risk and quality; - stakeholders with different needs and expectations; - identified requirements

It is important to understand that projects and project management take place in a certain environment that influences them and there are also consequences on the environment, too. A review of the results of hundreds of World Bank projects indicates that success or failure often depend on factors in the general environment outside the direct control of the project manager. Therefore, project management must look outside the project to define potential problems and must adapt relevant forces upon which the project’s success depends, also realizing that the environment is changing rapidly3. If we refer to project life cycle, effects of these influences reflect in: - costs that are low at the start, becoming higher and higher towards the end - the probability of successfully completing the project the project that is lowest in the beginning, due to the fact that the risks and uncertainties are highest - on the contrary, the ability of stakeholders to influence the project factors is very high in the beginning, decreasing towards the end of the project. An important category with impact on the project are the stakeholders, that is why it is essential that the project team identifies them in the initial phase as they can influence requirements to ensure a successful project. A challenge for the project manager might be to manage the stakeholders’ expectations as they have different objectives that sometimes may come into conflict. Organizational influences must also be taken into account as projects are part of an organization with relations to other organizations, so the project will be influenced by organizational systems, cultures and structures. The efficiency of the project management depends also on the key general skills of the project manager concerning:

- leading; leadership is a set of processes that creates organizations in the first place or adapts them to significantly changing circumstances4. The project manager must have the ability to inspire and motivate the project team to overcome obstacles and to align them by communicating the project strategy

- communicating, as managing of a project involves exchanging of information; it is important the way one communicates and understands the messages from project participants

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- negotiating, as during project, it might become necessary to change the scope, cost, schedule objectives, contract terms and conditions, resources and assignments

- problem solving, as managing projects is an active process that implies interactions that need to be identified and responded

- influencing the organization in order to get things done One must take into account also the today’s broad socio-economic environment that affects the carrying on of a project: new standards and regulations are being developed, organization’s activities expands often behind the national environment, and as a consequence, cultural influence of the people involved in the organization affects the way of work and the last, but not the least, socio-economical-environmental sustainability as organizational activities can have impacts on the environment long after the project has been completed.

5.2. Project Management Processes These processes describe, organize and complete the work of the project. According to PMBOKGuide, these processes have been organized into nine knowledge areas as described in the figure 1.

Project Integration Management

Project Scope Management

Project Time Management

Project Cost Management

Project Quality Management

Project Human Resource Management

Project Communications Management

Project Risk Management 1. Risk Management Planning 2. Risk Idenitification 3. Qualitative Risk Analysis 4. Quantitative Risk Analysis5. Risk Response Planning 6. Risk Monitoring and Control

Project Procurement Management

PROJECT MANAGEMENT

Figure 1 – Overview of Project Management Knowledge Areas and Risk management Processes5

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The knowledge areas refer to characteristically processes needed to ensure that the activities of project management are conducted in the most efficient way to complete the project successfully. On the other side, each process inside the knowledge area can be divided into the phases:

Initiating Processes

Planning Processes

ControllingProcesses

Executing Processes

Closing Processes

Figure 2 - Process Phases6 These processes may not only overlap but also they are linked by the results they produce.

5.3. Project Risk Management It is important to notice that the area of risk management refers not only to risks that can have a negative impact representing a deviation from the project objectives, but also to opportunities – chances to improve a project objective. The only certain thing we know about the future is that it is uncertain. However by preparing and planning the risk management, it is possible to reduce the negative impacts and to profit at maximum of opportunities. The successful organizations plan their work by foreseeing problems while the unsuccessful organizations work with unforeseen problems. The way uncertainties will be handled represents a big challenge for the project manager. Project Risk Management describes the processes concerned with identifying, analyzing and responding to project risk. It includes maximizing the probability and

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consequences of positive events and minimizing the probability and consequences of adverse events to project objectives5. Referring to the above mentioned phases, risk management knowledge area can be divided as following:

Process Phase Knowledge Area Initiating Planning Executing Controlling Closing

Risk Project Management

• Risk Management Planning • Risk Identification • Qualitative Risk Analysis • Quantitative Risk Analysis • Risk Response Planning

• Risk Monitoring and Control

Figure 3 – Mapping of Risk Management Processes to the process phases7 Looking now in detail, each process contains the following activities:

PROJECT RISK MANAGEMENT Risk Management Planning Inputs Project charter Organization’s risk policies Defined roles and responsibilities Stakeholder risk tolerances Template for the organization’s risk management plan Work breakdown structure Tools and Techniques Planning meetings Outputs Risk management plan

Risk Identification Inputs Risk management plan Project planning outputs Risk categories Historical information Tools and Techniques Documentation reviews Information-gathering techniques Checklists Assumption analysis Diagramming techniques Outputs Risks Triggers Inputs to other processes

Qualitative Risk Analysis Inputs Risk management plan Identified risks Project status Project type Data precision Scales of probability and impact Assumptions Tools and Techniques Risk probability and impact Probability/impact risk rating matrix Project assumptions testing Data precision ranking Outputs Overall risk ranking List of prioritized risks List of risks for additional analysis Trends in qualitative risk analysis results

Qualitative Risk Analysis Inputs Risk management plan Identified risks List of prioritized risks List of risks for additional analysis Historical information Expert judgement Other planning outputs Tools and Techniques Interviewing

Risk Response Planning Inputs Risk management plan List of prioritized risks Risk ranking for the project Prioritized list of quantified risks Probabilistic analysis of the project Probability of achieving the cost and time objectives List of potential responses Risk thresholds

Risk Monitoring and Control Inputs Risk management plan Risk response plan Project communication Additional risk identification and analysis Scope changes Tools and Techniques Project risk response audits Periodic project risk reviews Earned value analysis

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Sensitivity analysis Decision tree analysis Simulation Outputs Prioritized list of quantified risks Probabilistic analysis of the project Probability of achieving the cost and time objectives Trends in quantitative risk analysis results

Risk owners Common risk causes Trends in qualitative and quantitative risk analysis results Tools and Techniques Avoidance Transference Mitigation Acceptance Outputs Risk response plan Residual risks Secondary risks Contractual agreements Contingency reserve needed Inputs to other processes Inputs to a revised project plan

Technical performance measurement Additional risk response planning Outputs Workaround plans Corrective action Project change requests Updates to the risk response plan Risk database Updates to risk identification checklists

Figure 4 – Project Risk Management Overview8

5.3.1. Risk Management Planning It is important to plan the risk management, to decide the type of approaching for its activities in order to ensure that these are the suitable for the type of the project and its importance for the organization. a) Inputs Project charter The project charter is a document that formally authorizes a project, usually the signed contract, describing the business need and the description of the products to be delivered. Organization’s risk management policies Bigger organizations have usually a defined risk approach that should be tailored to the existing project. Defined roles and responsibilities One must consider the responsibilities and authority levels of different people in the organization who influence the decision-making process. Stakeholder risk tolerances Risk tolerances are important when deciding if the organization is going to assume a certain risk and in what measure. Template for the organization’s risk management plan Some organizations have templates that can be used to start risk planning. They should be updated continuously based on the gained experience. Work breakdown structure (WBS) WBS is an exhaustive tree structure, grouping the project deliverables and tasks needed to be performed to complete a project. WBS documents the scope of the project; work not in WBS is outside the scope of the project. A WBS is usually illustrated in a chart, see figure 5.

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Figure 5 – Example of WBS9 The items at the lowest level of WBS are called work packages that can be further decomposed in subproject work breakdown structure. WBS is a main tool for different activities of the project management such as creating the time schedule, cost budgeting and control. b) Tools and Techniques Planning meetings Project team members, risk managers, key stakeholders meet to develop the risk management plan. c) Outputs Risk Management Plan This describes how the four stages of risk management will be performed and will contain:

- Methodology – approaches, tools, sources to be used - Roles and responsibilities – defines risk management team for each type of

action in the risk management plan - Budgeting – defines a budget for risk management - Timing – defines how often the risk management process will be performed

during the project life - Scoring and interpretation – these refers to type and timing of the performed

qualitative and quantitative risk analysis - Thresholds – defines the thresholds criteria for risks to be acted upon, by

whom and in what manner - Reporting formats – describes the content and format of risk response plan - Tracking – establish how the risk activities will be recorded in order to be used

for future projects

5.3.2. Risk Identification Risk identification involves determining which risks might affect the project and documenting their characteristics. The identification process is iterative: it will be performed first by the project team, then by other stakeholders.

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a) Inputs Risk management plan The identification process will follow the approaches indicated in the risk management plan. Project planning outputs The base for the identification process shall be: project charter (contract, technical descriptions, contractual terms and conditions), WBS, time schedule and cost estimates, resource plan (including subcontractors), procurement plan (sub-suppliers), and assumptions and constraints. Risk categories Risks can be many. It is very important to categorize them in order to avoid counting twice the same type of risk. The identification process should focus on the following main risk areas:

- Project/Contract Structure (sequence in the contract documents, wording in contract, time schedule – internal delivery times, delivery extent – boundaries against customer)

- Technical (new product/solutions, norms, definition of tests/approval, documentation system)

- Customer (decision and approval process, financial status, experience, how does the customer use the contract)

- Execution (communication with the customer, subcontractor – competence, capacity, resources – competence, capacity)

The identification process should also clarify who or what primarily controls the various risks and opportunities: the client, the organization, the sub-suppliers/contractors, side parties or if it is out of control of any of the above. Historical information Information from previous projects saved in project files or published information can also be used in the identification process. b) Tools and Techniques Documentation reviews Review of project plans, assumptions, and scope is the first step in the identification process. Information-gathering techniques Examples of such techniques are: brainstorming, Delphi technique, interviewing, strengths, weaknesses, opportunities and threats (SWOT) analysis. Checklists Some organizations have developed risk checklists based on the experience from previous projects. Assumptions analysis The project team must check the validity of the assumptions, hypothesis, and scenarios. Diagramming techniques Examples of diagramming techniques are: cause-and-effect diagrams, system or process flow charts, influence diagrams. c) Outputs Risks Triggers Triggers represent warning signs that a risk has occurred or is about to occur. Inputs to other processes

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Information gathered during the identification process can be used as inputs for other areas (a more detailed WBS is necessary, incomplete time schedule).

5.3.3. Risk Assessment Most identified risks and opportunities can be expressed in money and sometimes in time. The most used assessment methods are probability – impact and Lichtenberg’s method. In this master thesis the chosen method for the risk assessment is probability – impact. Qualitative Risk Analysis Qualitative risk analysis is the process of assessing the impact and likelihood of identified risks. a) Inputs Risk Management Plan Identified Risks Project status The uncertainty of a risk depends on the project’s progress through its life cycle. At the beginning of the project, project team does not have the complete detailed information about the project activities. On the other hand, the power to influence the effects of risks on the project is highest at the beginning of the project.

Power to influence costs

Offer stageContract

negotiation

Project development Purchasing Termination

Total Project Life Cycle

TimeDeciding process

Total cost

Costs

When should risk management be done?

Figure 6 – Power to influence costs during the project life cycle10

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Project type Projects that use standard solutions tend to have better understood of probability of occurrence of risk events than those using state-of-the-art or first-of-its-kind technology. Data precision The data source used to identify the risk must be evaluated. Scales of probability and impact These are used to assess the probability and impact of risks. Assumptions b) Tools and Techniques Risk probability and impact Risk probability is the likelihood that a risk will occur. Impacts are the risk consequences, the effect on project objectives if the risk event occurs. Probability/impact risk rating matrix Probability scale falls between 0.0 (no probability) and 1.0 (certainty). Alternatively percentage scale may be used (20%, 50%, 80%). Assessing risk probability may be difficult, one must have experience. Impact scale reflects the severity of risk effect on the project objective. Impact may be expressed in ordinal (very low, low, moderate, high, very high) or cardinal scales (0.1, 0.3, 0.5 etc). The probability/impact matrix represents the multiplication of the two values (exposure). Depending on the obtained value an organization can establish acceptable or unacceptable risk thresholds in order to prioritize later between risks. In the matrix illustrated below, the dark-grey values represents the thresholds for the low risks, the light-grey thresholds for moderate risks and the black the thresholds for the high risks. Project assumptions testing The assumptions must be tested if they are stable during the project’s life and what the consequences on the project are in case they are false. Data precision ranking This is a technique to evaluate the degree to which the data about risks is useful for risk management. This is done by examining the extent of understanding of the risk, data available, quality of the data, reliability and integrity of the data. If the data used have low precision, they are of little help for the project manager. c) Outputs Overall risk ranking for the project The result of the assessment is an overall figure about the project risks. The extent of the project risk can be compared by probability/impact score to other projects in order to recommend for project initiation, continuation or cancellation. List of prioritized risks The consequences of a risk may vary with time according to the stage in the project life cycle. Risks may be grouped by those who need an immediate response and those that can be handled later so that the capacities can be concentrated on the major risks. Using a porto folio as a visual aid to present the assessed risks has proved to be helpful in project team meetings.

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Treat as matter of priority, initiate measures

R7

R3 R6Ad hoc treatement, observation

R4R1

Treat as low priority, ignore R5 R2

Figure 7 – Porto folio used for graphic presentation of assessed opportunities and risks11 List of risks for additional analysis and management Risks classified as high or moderate must be further analyzed in detail (quantitative analysis) and decide action. Trends in qualitative risk analysis results By repeating the risk analysis a trend of results may become apparent, helping to decide the severity of risks. Quantitative Risk Analysis The quantitative risk analysis aims to analyze numerically the probability and consequence of each risk. Generally the quantitative analysis follows the qualitative analysis but they can be also used together. a) Inputs Risk Management Plan Identified risks, List of prioritized risks List of risks for additional analysis and management Historical information Expert judgment Other planning outputs As the quantitative analysis may have consequences on the time schedule and budget costs, WBS listing with cost elements and estimates and duration estimates may be used as inputs to this process. b) Tools and Techniques Interviewing Project stakeholders and subject-matter experts can be interviewed and costs for each risk can be assessed in three cases: lowest costs, most likely and highest costs reflecting an optimistic, realistic and respectively a pessimistic view. On another

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hand, in this way we realize that the probability allocation is a dynamic process and probabilities must be constantly revised as the project progresses. In this way the overall costs and probability of each risk are entered on an Opportunity and Risk List see example below. No Activity Extent

(local currency)

Probability (%)

Opportunity/Risk assessed (local currency) (5 = 3 x 4)

Measure/ action

1 2 3 4 5 6 1 Pipe

installation 200 70 80 90 140 160 180

Figure 8 – Example of an entry on the Opportunity and Risk List The most important aspect of a risk interview is documenting the rationality of the risk ranges as this influences the risk response strategy and also the fact that it enables access to knowledge the project manager does not yet possess. There are also other assessment methods, some of which are mentioned below. However these methods involve considerably time and effort and are only economically efficient in exceptional situations, e.g. if the project features a high level of novelty or if the products are technically extremely complex12. Sensitivity analysis This analysis which risks have the most potential impact on the project. All the uncertain elements are held at their baseline values while it examines the extent to which the uncertainty of each project element affects the objective. Decision tree analysis This is a diagram that describes a decision under consideration and the implications of choosing one or another of the available alternatives. It implicates assessing probability of risks and costs of rewards and determining the greatest expected value to the decision maker. Simulation This method uses a model that translates the uncertainties specified at a detailed level into their potential impact on objectives that are expressed at the level of the total project. c) Outputs Prioritized list of quantified risks Probabilistic analysis of the project This refers to forecasts of the time schedule, including the possible completions dates and cost results. Probability of achieving the cost and time objectives Trends in quantitative risk analysis results

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5.3.4. Risk Response Planning Risk response planning is the process of developing and selecting measures for avoiding or reducing the risks and exploiting the opportunities. a) Inputs Risk management plan List of prioritized risks Risk ranking of the project Prioritized list of quantified risks Probabilistic analysis of the project Probability of achieving the cost and time objectives List of potential responses During the identification process potential actions might be identified. Risk thresholds set up by the company Risk owners among the stakeholders Risk owners must be involved in developing the risk responses. Common risk causes By detecting common causes, several risks may be reduced/eliminated by an action. Trends in qualitative and quantitative risk analysis results b) Tools and techniques There are several strategies available, depending on factors such as: project phase and application, size, priority, complexity, cost, time available, cost of technique, required level of detail, ease of use, resource availability, project manager and team commitment. Strategies for opportunities • Avoidance: the event must not occur since the potential effects are too negative. Examples: reducing scope to avoid high-risk activities, adding resources or time, avoiding an unfamiliar subcontractor. • Transference: a way is sough of passing the whole risk onto a third party. Risk transfer nearly always involves payment of a risk premium to the party taking the risk, so an economically efficient analysis should be made. Examples: insurance, performance bonds, guarantees. • Mitigation: a way of reducing the likelihood of the event occurring and/or reducing the extent of the risk is sough. Examples: adopting less complex processes, choosing a more stable seller. • Division: the aim is to find ways of dividing the risk among clients, suppliers, associates on the basis of stipulations in the contract. • Acceptance with reserves: if the risk should arise, the consequences are accepted, but contingency reserves formed and, if necessary emergency measures prepared. Usually a contingency allowance is established, including amounts for money, time or resources. This measure should be incorporated in the project plan with the time schedules and responsibilities. • Acceptance without reserves: the risk and its consequences are accepted passive without anything being done at this stage. Strategies for risks • Improving: measures are sought that will increase the likelihood of exploitation. Examples: customer changes the time schedule, additional functions, spare parts, contract service

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• Ignoring: opportunities with a poor cost-benefit ratio or opportunities which are not beneficial to the company are not pursued further. c) Outputs Risk response plan The list of Opportunities and Risks mentioned above is part of risk response plan. The risk response plan should include some or all of the following: identified risks, how they may affect project objectives, risk owners and assigned responsibilities, results from the qualitative and quantitative analysis, agreed responses to risks and opportunities, the level of residual risk remaining after the strategy is implemented, actions to implement the strategy, budget and time for responses, contingency plans. Residual risks These are risks that remain after responses have been taken. Secondary risks An action can have as result a new risk (or opportunity) called secondary risk. These should also be identified and responses planned. Contractual agreements Contingency reserve amounts needed Inputs to other processes Inputs to revised project plan

5.3.5. Risk Monitoring and Control All types of changes may occur while the project is running having as effect changing of probabilities of identified risks. The project is “living” having its own dynamics. That is why the opportunities and risks and the associated planned measures must be reassessed regularly, in the event of major changes and before important milestones are reached. a) Inputs Risk management plan Risk response plan Project communication Reports commonly used to monitor and control risks include issues logs, action lists, jeopardy warnings, escalation notes. Additional risk identification and analysis Potential risks not identified before may surface. Scope changes This implies the need of new risk analysis and response plans. b) Tools and techniques Project risk response audits The scope is to examine and document the effectiveness of the risk response. Periodic project risk reviews These should be periodically scheduled, in the event of major changes and before important milestones. Earned value analysis This is used for monitoring overall project performance against the baseline plan. When a project deviates significantly from the baseline updated risk identification and analysis should be performed. Technical performance measurement

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Deviation from the technical schedule can imply a risk to achieving the project’s scope. Additional risk response planning Risks not anticipated in the risk response plan it is necessary to perform additional response planning. c) Outputs Workaround plans Workarounds are unplanned responses to emerging risks that were previously unidentified or accepted. Corrective action This consists in performing the contingency plan or workaround. Project change requests The implementing of contingency plans or workarounds results often in a requirement to change the project plan. Consequences resulted from changes and potential claims initiated by others can affect customer satisfaction. This can be improved by early detection and professional handling of risks. Updates to the risk response plan The plan should be updated by documenting both the risks that did not occur and those that did occur. Risk database Both risk response plan and project closeout report represent important sources for the project team for future work and improvement, being the basis of risk lessons learned. Updates to risk identification checklists Checklists updated from experience will help risk management of future projects. The overall view of the risk management process during the project life cycle can be visualized in the following figures.

Overall View of Risk Management Process (a)

Risk Analysis

Proposalsubmission

Contractsigning

Takingover

Pre-Offerstage Offer Proposal Negotiation Execution

Offer/No Offer

Risk identificationRisk assessment

Inputs to:• Prioritize project

•Decide riskcontingency amount

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Overall View of Risk Management Process (b)

Risk Analysis

Proposalsubmision

Contractsigning

Takingover

Offer stage Offer Negotiations Execution

Offer/No offer

Risk IdentificationRisk assessment

Risk response plan

Assessing of the totalproject’ risks

Time and moneycontingencies for

remaining risks

Risk Respons Plan:Turn risk into opportunity

AvoidTransferDivideInsure

ReduceAccept with reserves

Accept without reserves

Documenting in ROMP

Figure 9 – Overall view of risk management process

6. Study case of two finished contracts Two bigger finished projects were chosen to be studied:

1.1. The delivery, installation and start-up of the refrigeration plant for Enjoy Food Supermarket (commercial project)

1.2. The dismantling of the existing refrigeration plant and delivery, installation and start-up of the new refrigeration plant for Viktor Supermarket (industrial

project) The criterion behind choosing these two contracts was first the contract price and second the small or even negative gross margin obtained at the end of the project. During the first part I analyzed the reasons that generated the final result in order to create a check list of most probable risks and opportunities specific to the area of activity of Freezing AB. “All organizations have problems! The successful organization work with foreseeable problems; the unsuccessful organizations work with unforeseeable problems.”13

6.1. Description of Enjoy Food Supermarket project analysis

6.1.1. Project data summary • Enjoy Food Supermarket is the most important and biggest customer for Freezing AB. The customer has a very good financial status and Freezing AB has been

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provided service to the company for more than 20 years. There are good traditional relations established between the two companies. • The sub-contracting structure, according to the project contract, is illustrated in the figure 10:

• Contracting structure

Risks and Opportunities Management Plan(ROMP)

Enjoy Food Supermarket

Mehanical workSubcontractor

DL Subcontractors(civil work, sanitary,

electrical inst.)

Freezing AB

Electrical workSubcontractor

ComponentsSubsuppliers

Figure 10 - The sub-contracting structure, Enjoy Food Supermarket project • According to the contract specifications the responsibility between Freezing AB, Enjoy Food Supermarket and the display cases supplier (DL) is divided in the following way: - After ordering and document revising Freezing AB takes the responsibility from the buyer for ensuring the display cases delivery; - After the approval of the DL’s subcontracting work, Freezing AB takes the responsibility for ensuring the guaranty of the equipment delivered by DL against the buyer. • Regarding the commercial terms: - The work is to be done according to ABT94 (Swedish General Conditions for building contracting work) - Guaranty time: 2 years - Consequential damages in case of delay delivery: no - Penalties due to delay delivery: 1% of the contract amount for each beginning week; no penalty limit. - Changing of the project duration (delivery time): increasing of the contracting work accordingly to an increasing of the contract amount with up to 10% will not cause any change of the finish date of the project. - The client does not ask for bank guaranties - Paying plan: according to ABT94; 5% of the contract amount will be paid after the measures resulted from the final inspection are fulfilled.

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• Project budget (planned costs) Material costs: 1 704 624 SEK Installation time costs: 478 008 SEK Sub-contractors costs: 1 150 000 SEK TOTAL Budget (planned costs) 3 461 294 SEK • Early experience: Freezing AB has done many projects for the customer before • Technical solution: New solution with CO2 direct expansion system

6.1.2. Planned and actual costs analysis In order to identify the reasons for losses, I analyzed first the planned and actual costs calculations. There is a different routine of calculating and following the costs between commercial and industrial projects. Regarding commercial projects, the sale engineer makes a calculation for presentation the offer to the client and for negotiating. The contract is concluded based on this price. Unfortunately during this stage, some prices are approximated based on similar projects and previous experience, not on offers from sub-suppliers or sub-contractors. After concluding the contract, the project manager asks for quotations from sub-suppliers and sub-contractors. That is why the second calculation is done after concluding the contract, called budget calculation. The costs are gathered in the company’s Navision system (for offer calculation and costs following up) by inserting the invoices under the specific project. In Navision the costs are grouped in different categories: panel accessories, transport, mechanical work, installation accessories, refrigeration material, electrical work, civil work, other costs, Freezing AB work costs. I made a comparison between the three types of calculations, the offer calculation and the budget calculation and respectively, the final costs. a) Comparison between calculation and final costs Many of the invoices were not placed in the right category in Navision program and some of the invoices were not clear to what category should they belong. The former project manager for this project was not longer working in the company, but I got support by the chief of the project managers. However care should be taken when inserting the invoices by categories as this may be a major disadvantage if one wants to use the system Navision for following the costs during the project. It is important that the invoices are placed in the right category. The column “Comments” includes explanations to the differences between the analyzed costs. The table includes also proposals for measures to be taken before signing the contract and during the project execution. As showed before, most of the measures can be taken during the first stages when the influence on cost, scope and dates is bigger. In the following tables it is presented the summary table of comparison between calculation, budget calculation and final costs. Tabel 1 – Calculation – Final Costs Analysis

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Nr. Description Calculation

SEK

Final costs SEK

Difference Final costs - Calculation

SEK

% from Calcu- lation Comments

Measures to be taken before

signing the contract

(proposal)

Measures to be taken

during the project

execution (proposal)

1 Panel accessories 0 2 893 -2 893 -

New order; should not be included in the calculation

2 Transport 59 662 46 067 13 595 22,79%

• Approximated as percentage of refrigeration material; • According to the calculation the refrigeration unit should come from Italy; later on it came from refrigeration unit supplier, Sweden; • Anyway the final costs were higher than in the calculation.

3 Mechanical work 750 000 948 000 -198 000 -26,40%

• The calculation was not based on an offer; • A small amount of refrigeration material was included in the offer from MW.

The calculation should be based on an offer.

Ask for at least 2 offers in order to have control on the price and to negotiate.

4 Installation accessories 22 000 41 980 -19 980 -90,82%

Improve the installation time; the on site leader must have control on this; plan the hiring of the tools in advance on a detailed time schedule.

5 Refrigeration material 1 704 624 1 726 004 -21 380 -1,25%

• The prices are taken from the database, so the price estimation was good. • Part of refrigeration material was included in the offer from MW, so the final costs were higher than in the calculation.

6 Electrical work 400 000 393 593 6 407 1,60%

• The calculation is not based on an offer; • After signing of the contract, the PM had two offers and could negotiate the price.



7 Civil work 0 0 0 -

21

8 Other costs 47 000 114 361 -67 361 -143,32%

Final costs higher because of: • In the calculation the costs for automation and control panel was only estimated (35 000 kr); the final costs became higher because help from the supplier company was used for 2 weeks during the start-up of the plant (49 000 kr); • In the calculation the costs for extra insulation were approximated as 15000 kr, while the final costs only for a part of insulation material was 17 160 kr; • The costs for CE-marks and additional inspection were 2 000 kr in the calculation, while the final costs were 20 000 kr; bad communication between Freezing AB and the unit sub-supplier; • In the calculation there were no costs provided for the taking over responsibility for DL; Freezing AB got wrong installation documents for connection of the pipes to display cases.

• Automation and control panel should be based on an offer, including technical support for start-up (specially in this case when it was new solution); • One can take support for improving of the insulation cost estimation from a similar project in Växjö and ask for quotations for what is not included in the Freezing AB work; • The costs for CE-marks and inspection should be included in the calculation; • The costs for taking over the responsibility for DL should be included in the calculation.

• Freezing AB received wrong technical drawings for connection of the pipes to the display cases; Freezing AB should recuperate costs from DL. • The guarantee contract between Freezing AB and DL should contain higher prices in order to cover up a part of the costs during the installation.

9 Freezing AB work 478 008 447 044 30 964 6,48%

Good estimation! But when Freezing AB decided to get support for start-up, the costs should have been included in the calculation (see calculation - budget calculation analysis).

When Freezing AB decided to get support for start-up, the costs should have been included in the calculation (see calculation - budget calculation analysis).

Improving the control of installation time for workers.

TOTAL COSTS 3 461 294 3 719 942 -258 648 -7,47%

PRICE 4 050 000 4 009 500 -40 500 -1,00%

Enjoy Food Supermarket has 1% discount to Freezing AB; this was not taken into account in the calculation.

One should include all discounts from the beginning in the calculation.

GROSS MARGIN 14,54% 7,22% -7,31%

The figures show that the assumptions were wrong from the beginning, mostly because of the wrong estimation of MW costs.

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MW = Mechanical Work Subcontractor PM = Project Manager DL = Display Case Subsupplier b) Comparison between calculation and budget calculation Tabel 2 – Calculation – Budget Calculation Analysis

Nr. Description CalculationSEK Budget

Difference Budget -

Calculation % from

Calculation Comments



(proposal)


during the project

execution(proposal)

1 Panel accessories 0 0 0


2 Transport 59 662 33 280 -26 382 -44,22%

• Approximated as percentage of refrigeration material; • According to the calculation the refrigeration unit should come from Italy; later on it came from refrigeration unit supplier, Sweden; • Anyway the final costs were higher than in the calculation.

3 Mechanical work 750 000 930 000 180 000 24,00%

• The calculation was not based on an offer; • Budget is based on an offer; • A small amount of refrigeration material was included in the offer from MW.



4 Installation accessories 22 000 22 000 0


• The prices are taken from the database, so the price estimation was good. • Part of refrigeration material was included in the offer from MW, that is why the Budget is lower.

PM should come into the project during the final part of sale stage in order to have a clear delimitation of the scope of supply between MW and refrigeration material.

One should have better control regarding the scope of supply of MW and refrigeration material. Use of delimitation lists.

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6 Electrical work 400 000 420 000 20 000 5,00%

• The calculation is not based on an offer; • After signing of the contract, the PM had two offers (420 000 kr and 385 000 kr) and could negotiate the price.

• The calculation should be based on an offer. • In order to improve control on the electrical work scope of supply use a delimitation list or ask for a more detailed offer.


7 Civil work 0 0 0

8 Other costs 47 000 33 280 -13 720 -29,19%

Following differences between the calculation and the budget: • CO2 tubes hiring costs were taken away being considered that they are included in the service costs for storage; • In the calculation the costs for automation and control panel were approximated, while the budget is calculated based on an offer; • costs for CE-marks were taken away from the budget; they should have been included in both the calculation and budget; the final costs were almost 20 000 kr)

• Automation and control panel should be based on an offer, including technical support for start-up (specially in this case when it was new solution); • The costs for CE-marks and inspection should be included in the calculation;

9 Freezing AB work 478 008 355 104 -122 904 -25,71%

Start-up costs not covered because of: • taking over responsibility of DL - no costs included in the calculation; • new solution CO2 direct expansion; • the start-up time was reduced in the budget because the third company should ensure support, but there is no contract or offer from the third company and no costs were allocated either in the calculation or budget for this;

• Taken over responsibility costs should be included in the calculation; • One should include unforeseeable costs in the calculation due to new technical solution; • Costs for the automation and control panel should be based on an offer (specially in this case, new technical solution).

TOTAL COSTS 3 461 294 3 477 639 -16 345 -0,47%

PRICE 4 050 000 4 050 000 0 0,00%The budget costs are higher with 0,47% than in the calculation.

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GROSS MARGIN 14,54% 14,13% -0,40%

One can see that the total costs in the calculation are comparable with the total costs in the budget, but actually there are two big differences: costs for MW which are compensated by costs for Freezing AB work. If the assumptions in the calculation were right from the beginning than we would have obtain the same total costs in the calculation as in the budget.

c) Comparison between budget calculation and final costs Tabel 3 – Budget Calculation – Final Costs Analysis

Nr. Description Budget Final costs

DifferenceBudget -

Final costs

% from Budget Comments



(proposal)


during the project

execution(proposal)

1 Panel accessories 0 2 893 -2 893


2 Transport 33 280 46 067 -12 787 -38,42%

• Approxi-mated as percentage of refrigeration material; • Anyway the final costs were higher than in the calculation.

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3 Mechanical work 930 000 948 000 -18 000 -1,94%

The budget is based on the sub-contractor offer . The difference comes from additional Freezing AB order (filters) to the sub-contractor that was not included in the calculation.

In order to improve the control on the MW scope of supply, one can make a delimitation list or ask for a more detailed offer.

• Ask for at least 2 offers in order to have control on the price and to negotiate. • PM should have control on the MW scope of supply and should not accept to invoice more than the fixed contract price.

4 Installation accessories 22 000 41 980 -19 980 -90,82%

Part of cranes were not fully used during the hiring period; bad PM control on the effective using of the accessories.

Improve the installation time; the on site leader must have control on this; plan the hiring of the tools in advance on a detailed time schedule.


PM should come into the project during the final part of sale stage in order to have a clear delimitation of the scope of supply between MW and refrigeration material.

One should have better control regarding the scope of supply of MW and refrigeration material. Use of delimitation lists.

6 Electrical work 420 000 393 593 26 407 6,29%

The budget is based on an offer. After signing the contract Freezing AB received an offer of 385 000 kr; the difference towards the final costs is because of additional orders for components that were not included in the calculation.

To improve the control on the scope of supply, one can make a delimitation list with the sub-contractor or ask for a more detailed offer.

• Ask for at least 2 offers in order to have control on the price and to negotiate. • PM should have control on the MW scope of supply and should not accept to invoice more than the fixed contract price.

7 Civil work 0 0 0

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8 Other costs 33 280 114 361 -81 081 -243,63%

Higher final costs because of: • In the budget there were no costs included for the start-up support from the third company (the final costs 49 000 kr); • The final costs for the CO2 pipe insulation were higher than estimated in the budget (17 160 kr part of final costs, 7 500 kr insulation costs - budget). • No costs allocated for CE-marks and inspection in the budget; final costs were approx. 20 000 Kr.

• Automation and control panel should be based on an offer, including technical support for start-up (specially in this case when it was new solution); • Insulation costs estimation may be improved by comparing with the similar project in Växjö; ask for offer for the items not included in Freezing AB work; • The costs for CE-marks and inspection should be included in the calculation.

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9 Freezing AB work 355 104 447 044 -91 940 -25,89%

Start-up costs not covered because of: • taking over responsibility of DL - no costs included in the calculation; • new solution CO2 direct expansion; • the start-up time was reduced in the budget because the third company should ensure support, but there is no contract or offer from the third company and no costs were allocated either in the calculation or budget for this;

• Taken over responsibility costs should be included in the calculation; • Costs for the automation and control panel should be based on an offer (specially in this case, new technical solution).

When PM decided to get support for the start-up, the costs should have been included in the calculation (see calculation-budget analysis).

TOTAL COSTS 3 477 639 3 719 942 -242 303 -6,97%

PRICE 4 050 000 4 009 500 -40 500 -1,00%

Enjoy Food Supermarket has 1% discount to Freezing AB; this was not taken into account in the budget calculation.

One should include all discount from the beginning in the calculation.

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GROSS MARGIN 14,13% 7,22% -6,91%

The difference between budget and final costs are comparable with the difference between calculation and final costs. This means that one can influence included costs in the beginning of the calculation.

Conclusions The table below shows the summary of comparison between calculation costs and final costs. Tabel 4 – Summary on Calculation – Final Costs Analysis

Summary Calculation

SEK Final costs

SEK

Difference Final costs – Calculation

SEK

Percentage from Calculation

% Total costs 3 461 294 3 719 942 -258 648 -7,47 Price 4 050 000 4 009 500 -40 500 -1,00 Gross Margin % 14,54 7,22 -7,31

1. Both the discounts that clients have to Freezing AB and the discounts that

Freezing AB has to sub-suppliers and sub-contractors must be included in the first calculation.

2. The major difference between the calculation and the final costs (-265 361 SEK) is because of the following reasons: - Wrong estimation of MW (mechanical work sub-contractor) costs; - Wrong estimation of automation and control panel and technical support for start-up; - Wrong estimation for pipe insulation; - Neglecting of CE-marks and inspection costs; - Neglecting of the taking over responsibility for DL. The own Freezing AB work costs were correct estimated in the beginning; the problem came later on when PM decided that the automation and control panel sub-supplier will offer technical support during start-up. PM took away part of the start-up costs without adding costs for technical support.

3. The best opportunity was negotiation of the electrical work (Calculation – Final costs = + 6 407 SEK).

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4. Costs for MW, electrical work and automation and control panel should be based on offers already from the calculation stage. After signing of the contract, PM should ask for several offers in order to negotiate the price.

5. Major of over time costs were due to taking over the responsibility of DL (during start-up and additional project management meetings).

6. Refrigeration material is calculated according to the database prices. There is a better control for these prices.

7. Project manager and the on site leader should have better control on the installation accessories and on the scope of supply provided by the MW and electrical work sub-contractors.

8. One should add in the calculation an amount for unforeseeable costs (1–2% from refrigeration material, for instance), specially for a new technical solution.

9. It is necessary to improve the calculation file in Navision program regarding the calculation costs of working time and over working time in order that one can see how the workers have spent the working time. In this way the sale engineer and the project manager can have a better control for the own Freezing AB working costs.

6.1.3. Risks and opportunities (identification, describing, assessment, action list) The above analysis was the base for identifying the risks and opportunities that occurred during the project life. For the identification and describing process I used check lists, interviews with the sale manager, project manager, area sales manager, analysis of all documents belonging to the project (customer inquiry including project specification, drawings, work breakdown structure, time schedule, costs analysis), information regarding the sub-contractors and sub-suppliers, assumptions and restrictions, in order to explain the event that occurred, to identify the project phase when it occurred and what influenced the event. The risks and opportunities description, the assessment and action list are described in Annex 1 - Enjoy Food Supermarket, Risk list. The document includes also conclusions regarding the risks with biggest impact on the final costs, grouping of risks depending on the biggest occurred costs and grouping of risks depending on the biggest costs possible to occur. Conclusions The biggest loss came from: Tabel 5 – Summary on the risks with major impact on costs No. Risk description Percentage from total

costs in the calculation 1 Resources (calculation, start up, no standard

technical solution, installation accessories) 9,5%

2 Sub-suppliers and subcontractors (penalties in

case of delayed delivery, back to back agreements, unclear scope boundaries)

2,7%

3 Contract (unclear scope boundaries, taking over responsibility from DL)

1,1%

TOTAL 13,3%

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6.2. Description of Viktor Supermarket project analysis

6.2.1. Project data summary • Viktor Supermarket is an old customer of Freezing AB. Unfortunately the relations between them can be improved. The customer has not a very good financial status and not too much experience with refrigeration plants. • The sub-contracting structure, according to the project contract, is illustrated in the figure 11:

Risks and Opportunities Management Plan (ROMP)

• Contracting StructureVIKTOR SUPERMARKET

Freezing AB

Mechanical work/ Dismounting Sub-contractor

Electrical work Sub-contractor

ComponentSub-suppliers

Civilwork

Figure 11 - The subcontracting structure, Enjoy Food Supermarket project • According to the contract specifications the reconstruction of the existing refrigeration plant will be made in the following conditions - No production stop for coupling the new plant to the existing running plant; - The customer has no technical documents for the existing plant; - It is the tenderer’s responsibility that before sending the offer, to inspect the site carefully and to ensure himself about the site conditions; - The contractor has no right to additionally costs paid by the customer caused by details he could have found out by inspecting the site. • The customer asks for different types of insurance that Freezing AB does not have; it is the duty of Freezing AB to negotiate canceling of such request. • Regarding the commercial terms: - The work is to be done according to ABT94 (Swedish General Conditions for building contracting work) - Guaranty time: 2 years - Consequential damages: during the contracting work and guaranty period, Freezing AB must be on site in 120 minutes in case of technical problems, otherwise it has to pay twice the price of the destroyed goods.

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- Penalties/indirect costs due to delay delivery: 2% of the contract amount for each beginning week; no penalty limit. - Approval procedures for changing: according to ABT94 so long as the customer does not decide something else. - Changing of the time schedule: if the customer asks for delay of time schedule, no additional costs will be paid to the contractor. - The customer does ask for bank guaranties - Paying plan: according to ABT94; 5% of the contract amount will be paid after the measures resulted from the final inspection are fulfilled. • Project budget Refrigeration components costs: 3 066 355 SEK Electrical work, material, dismantling costs: 1 006 900 SEK Mechanical work, material, dismantling costs: 1 324 600 SEK Freezing AB resources costs: 272 150 SEK TOTAL Budget: 5 905 805 SEK • Early experience: Freezing AB has done other projects for the customer before • Technical solution: New developed refrigeration unit; the first unit on this type on the market

6.2.2. Planned and actual costs analysis In order to identify the reasons for losses, I analyzed first the budget and cost calculations. Regarding industrial projects, the routine of calculating and following the costs is: the sale engineer makes a calculation for presentation the offer to the client and for negotiating. The contract is concluded based on this price. During this stage, the sale manager had asked for offers from sub-suppliers or sub-contractors for part of the equipment and sub-contracting work. After concluding the contract, the project manager asks for quotations for the rest of equipment and work. For this project, the mechanical work was done with a company based on hourly rate price, which enhanced the risk for Freezing AB. The final costs are gathered in the Navision system by inserting the invoices under the specific project. I made a comparison between the budget costs in the calculation and the final costs, between the offer prices and final costs in order to check if the fix price of the offer was escalated or not and between the budget costs and offer prices to check the deviation of the estimated costs. Comparison between calculation, offer prices and final costs Many of the invoices were not placed in the right category in Navision program and some of the invoices were not clear to what category should they belong. This was clarified after several discussions and meetings with the sale manager. The column “Comments” includes explanations to the differences between the analyzed costs. The table includes also proposals for measures to be taken before signing the contract and during the project execution. As showed before, most of the measures can be taken during the first stages when the influence on cost, scope and dates is bigger. The summary table of comparison between calculation, offer prices and final costs are presented in the Annex 2, 3 and respectively 4.

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Annex 2 - Calculation – Final Costs Analysis Annex 3 - Calculation – Offer Prices Analysis Annex 4 - Offer Prices – Final Costs Analysis Conclusions The table below shows the summary of comparison between calculation costs and final costs. Tabel 6 – Summary on Calculation – Final Costs Analysis

Description Calculation SEK

Final costsSEK

Difference 2 - 3 SEK

Percentage from Calculation

% 1 2 3 4 5

TOTAL COSTS excluding guaranty costs

5 790 005 7 091 410 -1 301 405 -22,48

TOTAL COSTS including guaranty costs 5 905 805 7 091 410 -1 185 605 -20,08

PRICE 6 725 000 6 979 870 -254 870 -3,79 GROSS MARGIN % 12,18 -1,60 13,78

1. The major difference between calculation costs and occurred costs comes from additional costs for electrical work, mechanical work and material, civil work and own resources. The main reasons for costs increasing are:

- more electrical work than planned in the scope of supply; - additional work for re-mounting of the refrigerating unit; - additional work for re-mounting of the defrosting valves; - additional civil work due to invisible pipes; - problems with the refrigeration unit during start up; - additional work for taking care of inspection remarks; - underestimated costs for design; - higher costs for oil, CO2 and ethylene glycol than in the calculation.

2. The best opportunities were negotiation of: - pump costs; Calculation – Final costs = + 28 880 SEK; - using the existing plate heat exchanger, saved approx. 10 000 SEK; - dismantling; Calculation – Final costs = + 14 240 SEK; - PED (pressure test certification) and inspection; Calculation – Final costs - = + 14 685 SEK; - additional customer order 254 870 SEK; - heat pump was negotiated for a smaller price, saved 10 000 SEK; TOTAL Opportunities = 332 595 SEK.

3. Refrigeration components are calculated according to the database prices. There is a better control for these prices.

4. The contract must define very clear the scope of supply (not the priority of the documents like in the present contract) and the reservations and exclusions from the scope of supply (for example invisible pipes, unclear specification for the existing electrical panel). On site inspection rapport must be attached to the contract.

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5. The calculation must be based on detailed offers for refrigeration component suppliers, especially for the main unit in order to provide additional costs for possible additional contracting work.

6. A contract model should be developed with the refrigeration unit supplier for contracting projects in order to cover the additional costs due to unexpected technical or commercial problems.

7. Regarding the document priority in the contract, the offer must be given priority before customer’s inquiry; otherwise the offer reservations and assumptions are not valid.

8. Unforeseeable costs must be included in the offer, especially for a project with new developed unit and lack of documentation for the existing plant.

9. The calculation should be done more carefully. More consideration should be given to own work time costs. It is recommended to have a good calculation model for different cost categories to easy the calculation for future projects.

10. The project manager can join the last negotiating period together with the sale manager in order to have a better control on the scope of supply.

11. Some costs were wrong registered in Navision (43 783 SEK). 12. The training costs must be included in the calculation. 13. It is necessary to improve the calculation file in Navision program regarding

the calculation costs of working time and over working time in order that one can see how the workers have spent the working time. In this way the sale engineer and the project manager can have a better control for the own Freezing AB working costs.

6.2.3. Risks and opportunities (identification, describing, assessment, action list) The above analysis was the base for identifying the risks and opportunities that occurred during the project life. For the identification and describing process I used check lists, interviews with the sale manager, project manager, area sales manager, analysis of all documents belonging to the project (customer inquiry including project specification, drawings, work breakdown structure, time schedule, costs analysis), information regarding the sub-contractors and sub-suppliers, assumptions and restrictions, in order to explain the event that occurred, to identify the project phase when it occurred and what influenced the event. It was often difficult to divide prices in order to estimate loss for a specific category of work. In some cases figures had been approximated by the project manager. The risks and opportunities description, the assessment and action list are described in the Annex 5 - Viktor Supermarket, Risk list. The document includes also summary on risk grouping depending on the biggest occurred costs and summary on risk grouping depending on the biggest costs possible to occur. Conclusions Below is part of the summary on risk grouping depending on the biggest occurred costs: Tabel 7 – Summary on the risks with major impact on costs No. Risk description Percentage from total

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costs in the calculation 1 Own Resources (installation, start up,

availability of man power, calculation) 9,7%

2 Technical (non standard application solutions,

technical solutions or components, re-building/ extension of an existing plant)

• Re-mounting unit 2,6% • Problems during start up included in the above 9,7%

• Defrosting valves 2,6% 3 Contract (unclear scope boundaries, approved

procedure for changes) 3,9%

4 Sub-suppliers and sub-contractors (back to back agreements, unclear scope boundaries)

See point 2

5 Financial (currency insurance, bank guaranties) 1,1% 6 Customer (business counterparts / consultants) 0,4% TOTAL 13,3%

Additional conclusions to those from the costs analysis are:

1. Using fixed price contract for Mechanical work Sub-contractor is a better solution than hourly rates. Hourly rates imply more risks for the contractor and Freezing AB should include costs for more detailed control during project execution.

2. Freezing AB should reconsider to conclude future contract with Viktor Supermarket.

3. The customer asked for specific insurances that Freezing AB cannot offer. Freezing AB should reconsider getting these insurances to avoid difficulties with other potential customers that have similar demands.

7. Proposed Solution During interviews with sale managers and project managers it was clear that the risk analysis was done in an informal way, by appealing the experience stored in the memory for similar projects. In this way, some risks were neglected, while the assessing of the possible costs to occur was not done based on a documented previous experience. It was a matter of luck if costs in the calculation were correct estimated. In fact even the cost estimation was not done using specific formula but just by roughly approximation. The need for a tool capable to store the previous experience and to assess the possible costs in more fundamental way was obvious. Advantages of using such a tool are: - makes updates easy - contains updated check-list with frequent risks - the result (Risk and Opportunities Management Plan - ROMP & curves) can be

made available to all participants Updated ROMP can be used for the following purposes: - Controlling - Reporting - Feed back for future projects

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7.1. Risk Management Planning As discussed before, the question is not how risks can be avoided, but how risks can be handled. Planning the risk management means handling the risks based on a well defined method. Following the theory model of the PMBOKGuide of describing the risk management processes, I will make remarks related to the proposed tool (ROMP). Inputs: - Organization’s risk management policies – Freezing AB had not developed such

a policy; however, taking into account that the subcontracting activity is always a risky one, it may be possible that the need for adopting a risk policy may become urgent. The first step is implementing the risk tool.

- Stakeholder risk tolerances – During my thesis work in the company, because of the critical situation of the company, the Steering Committee had adopted risk tolerances.

- Work Breakdown Structure(WBS) – The importance of a well done WBS has been underlined before. It is not only the risk management process that needs WBS, but also earned value management starts with a good WBS. This is an important remark as according to the analyzed projects, both lacked a good definition of scope of supply and also, Freezing AB has expressed also the urge to follow up the estimated costs in the ROMP compared to the actual costs at the end of the project.

Tools and Techniques Planning meetings - During and after implementation it is recommended that project managers, sale managers and quality manager to meet periodically in order to develop the risk management plan. The effectiveness of the risk management tool can be discussed and further improved. For a specific project, it is recommended that risk analyze to be done at milestones of the following stages: - During offering stage:

o Bid/ No bid o Delivering of the offer and its contain o Signing of the contract (if the contract differs

significantly from the offer) - During execution:

o Periodically analysis or whenever the circumstances impose;

o Establishing on site. Outputs Risk management plan – The documents that Freezing AB has received from my part are: - ROMP power point presentation; - ROMP file; - “Handling of risks and opportunities in contracting projects” file; - “Risk management agenda” file; - “Recommendations” file; - Examples of applying the risk management tool (ROMP): ROMP Enjoy Food Supermarket AB version 1 and 2; ROMP Viktor Supermarket version 1 and 2.

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These documents describe the methodology used, roles and responsibilities; include the tool to make a budget for risk management. For risk calculation the Probability/Impact method was used. Regarding thresholds, it is up to the stakeholders of the project to decide the threshold criteria for risk. ROMP is an excellent document for tracking risk activities for the later benefit and lessons learned.

7.2. Risk Identification Who does risk management? Risk analysis can be done first by the sale manager; if he sees that the risk cannot be eliminated or reduced during the project life, than the risk costs must be included in the calculation. During project execution the project manager that risk assessment is completed and continually updated. Experience regional sales and other project managers can also participate in risk identification. Inputs Risk categories Based on the two studied projects and on documented results from other projects of Freezing AB, the risks were grouped in the following categories specific for the company’s activity:

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SUB-CONTRACTORS AND SUB-SUPPLIERS

CONTRACT

FINANCIAL

PROJECT

Payment proceduresBank guaranties.

InflationCurrency costs

Unclear limit of responsibility

Unclear scope boundariesPenalties in case of

delayed deliveryApproved procedure for

changingsPenalty/Indirect damages

TECHNICAL

Non standard solutionsTechical solution/

componentsUnclear technical

specificationsRebuiding/Extension

of an existingplant

PM experienceProject team’s experience/

componentsInstallation

Start upInstallation accessories

Availability of man powerCalculation as a whole

OWN RESOURCES

Unclear limit of responsibility

Unclear scope boundariesPenalties in case of

delayed deliveryApproved procedure for

changingsPenalty/Indirect damages

Penalties in case of delayed delivery subcontractors

Penalties in case of delayedDelivery subsuppliers

Unclear scope boundariesUnclear limit of responsibility

Payment procedures(payment plan)

Non Standard solutions Technial solution

/componentsInstallation

Start up

CUSTOMER

Level of experienceof key personnel

componentsBusiness counterparts/

consultantsGUARANTY

Non standard solutions

Performance

TIME SCHEDULE

Siteavailability

Time schedule

OPPORTUNITIES

Changes Additional orders

ClaimsAlternative suppliers

TrainingSpare parts

Service contract

Figure 12 – Risk categories Project planning outputs Documents and factors to be considered for the identification process are: Project specifications, WBS, time schedule, estimated costs, own resources, sub-suppliers and sub-contractors, assumptions and restrictions. Tools and Techniques Brainstorming Check lists – The file “ROMP” described in Annex 6 contains also an additional check list for risks which are difficult to quantify, but that must be revised for the risk analysis. Experience from similar projects Outputs Risks – The identified risks are documented in the ROMP file. Inputs to other processes – It might result a need for updating other areas of project management.

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7.3. Risk Assessing The impact and likelihood of risks are assessed and expressed in money. Inputs Scales and Probability of Impact – The recommended scale of probability to be used is 20%, 50% and 80% in order that all persons involved in the project to have the same perception of the likelihood that a risk will occur. Tools and Techniques Risk Probability and Impact – The most usual methods are Probability-Impact and Lichtenberg method (Successive Principle). The method used in this case is Probability-Impact. Risks are assessed by multiplying the risk impact by the risk probability. The risk impact is the maximum loss (costs) or the maximum gain caused as a consequence of risk incurring. In the Annex 6 the risk impact is called exposure. The assessed risk is the statistical expected value of the risk value, not a prediction of the final cost. Outputs Overall risk ranking for the project and List of prioritized risks The result of assessing risks represents an overall image of project risks. Since it is possible that the number of identified risks is large, the risks should be ranked in order of priority and the focus should be made on the major risks. In the Annex 6, a summary table shows the risk results for each category of risks and in the “Summary” file a graphic representation shows the distribution of risks and opportunities. The column “Comments” should include explanations for the assessed value, assumptions and restrictions.

7.4. Risk Response Planning The risk response is planned and documented in ROMP. Tools and Techniques Several risk strategies are available as mentioned in the theoretical part. The measures should be developed and selected within the project team so that the synergies can be used. The type of measure depends also on the project stage. In ROMP the project life is divided into two main stages: - Measures to be taken during sale stage; if the sale manager sees that the risk

cannot be eliminated or reduced during the project life, than the risk costs must be included in the calculation.

- Measures to be taken during project execution in order to reduce the risk. Outputs Risk Response Plan Measures can imply new or changed risks and opportunities. When choosing the right type of measure, one should also check if the solution is economically efficient, especially regarding taking out insurance policies with high premiums. Reserves will be included in the calculation after other possible measures have been taken. Reserves must be separated from other costs or time periods. Reserves can be later on reduced as the remaining risks have been reduced during project life.

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Regarding the allocation of time and capacity, the measure should be incorporated in the project plan with the time scheduled and responsibilities. Measures to be taken can result in new agreements with the customer, sub-contractors or sub-supplier.

7.5. Risk Monitoring and Control Tools and Techniques Periodic project risk reviews Additional risk response planning The project is a living instrument so risk monitoring and control is a continuous process during the running of the project. Project manager must follow up identified risks, identify new risks and implement and follow up the measures. The new identified risks must be identified, assessed and measure planned in ROMP. This implies that the risks and opportunities and the associated planned measures must be reassessed regularly, in the event of major cases and before important milestones are reached. Outputs Risk database Lessons learned Updates to risk identification checklists The information gathered in ROMP represents an important source of information for future projects. At the end of a project it is recommended that the project team meet in order to evaluate the efficiency of planned measures and ways to improve risk management. Also check lists updated from experience will help risk management of future projects. Experiences should be summarized in the Project Close-Out Report so that they are later accessible to other projects in their start-up phase.

7.6. Examples – Applying ROMP for two projects In Annex 7, 8, 9 and 10 it is presented how ROMP can be applied on the two studied projects: Enjoy Food Supermarket and Viktor Supermarket. This time the risk analysis was made on the assumption that these were two new projects.

7.6.1. Enjoy Food Supermarket Annex 7 shows the first iteration of risk evaluation that the sale manager should make during the start-up phase. The document shows how all risks have been identified and assessed during the sale stage. The graphic representation shows an overall image of project risks. Annex 8 presents the next iteration of risk analysis: only the risks considered not possible to be eliminated during the sale stage are taken into consideration this time, getting a more realistic distribution of risks.

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Conclusions If we turn back to the “square one” of this project, looking forward from a bid/no bid perspective, we can consider the following conclusions from the risk analysis: - difficult for the customer to accept commercial changes; - difficult to estimate costs for taking over responsibility from DL; it becomes of

utmost importance to develop partner agreements with DL suppliers in the future; - new solution implies unforeseeable costs; - necessity of training for technicians during the start up Of course, in order to evaluate chances to win the bid, one should make also competitor analysis and SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis and keep in mind that in this case the price is the deciding factor!

7.6.2. Viktor Supermarket Annex 9 and 10 illustrate the first and second iteration of risk analysis. Conclusions - difficult for the customer to accept commercial changes; - new solution implies unforeseeable costs; - ensure the contract with refrigeration unit supplier contains technical support

during start up and suitable guaranty; - re-building of the existing refrigeration plant during start up and the fact that there

are no documents available on the existing plant implies unforeseeable costs that can be significant

Taking into account the above and the results from the risk analysis, re-considering of participation at this bid should be made.

8. Implementation Phase After presentation of my proposal to the temporary general manager and the quality manager, the decision for implementing the risk management tool was final. According to Kotter14, the following eight-stage process results in creating major change in an organisation:

1. Establishing a sense of urgency: identifying and discussing crises, potential crises, or major opportunities;

2. Creating the guiding coalition: putting together a group with enough power to lead the change;

3. Developing a vision and strategy: creating a vision to help direct the change effort and developing strategies for achieving that vision;

4. Communicating the change vision: using every possible way to constantly communicate the new vision and strategies and having the guiding coalition role model the behaviour expected of employees;

5. Empowering broad-based action: changing systems or structures that undermine the change vision and encouraging risk taking and non-traditional ideas, activities and actions;

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6. Generating short-time wins: planning and realizing of improvements in performance during the whole change process;

7. Consolidating gains and producing more change: using credibility to change all systems and structures and policies that don’t fit together and don’t fit the transformation vision;

8. Anchoring new approaches in the culture: making sure that the new gains go down deep the roots of an organization.

Taking into account the critical situation of Freezing AB, the sense of urgency was already established. During the time I worked in the company both the Steering Committee and the employees became aware of the fact that a major change is necessary. Implementing the risk management tool was part of the strategy for improving the company’s results. In order to ensure a smooth implementation process and to obtain the confirmation that my assumptions were correct, I maintained a continuous dialogue with the project and sale managers. The results from every step were presented and discussed with them. Several presentations were planned to be made in different locations of the company and also to insert the risk costs in the calculation file of Navision program. Unfortunately, during this period the new general manager took over the company’s responsibility and other items had higher priority than the risk implementation process. Consequently only one presentation was made at the central office. Hopefully, the implementation process will continue, but strong implication of the Steering Committee is necessary.

9. Future recommendations Below it is presented a summary of recommendations that can be part of the strategy to surpass the difficult period of Freezing AB. 1. The importance of a well done Work Breakdown Structure (WBS) has been

underlined before. It is not only the risk management process that needs WBS, but also earned value management starts with a good WBS. This is an important remark as Freezing AB has expressed also the urge to follow up the estimated costs in the ROMP compared to the actual costs at the end of the project.

2. Sale managers must consider both the discounts that Freezing AB has towards

different sub-suppliers and discounts that customers have to Freezing AB and to include them in the first calculation.

1. The budget calculation must be based as much as possible on offers from sub-

suppliers and sub-contractors. In order to improve the gross margin, at least for bigger projects, the sale managers should ask for quotation from mechanical and electrical work sub-contractor already during sale stage to reduce the risk of an underestimated price.

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2. The sale and project manager should ask for several quotations from sub-suppliers in order to have control and negotiate the price.

3. It is recommended to develop a calculation model for different types of project (at

least for similar component groups) in order to obtain a more accurate result and to reduce the calculation time.

4. It is recommended to improve the Navision calculation file for work time and

overtime in order to follow up better the work done during a certain period of time.

5. A time schedule model should be developed to include the main categories of

project scope of supply. Time schedule is a very important tool necessary for risk analysis, resource planning, following up of project execution, deliveries and payments.

6. Project manager should join the sale manger on the final negotiation stage in

order to avoid unclear scope boundaries later on. 7. The on site leader must be appointed. Otherwise it is difficult for project manager

to control the work on site especially if the site is located in another city and the travelling costs become significant.

8. Project managers must elaborate technical specifications for the workers

(material to be bought, installation instructions) to be included in the installation folder in order to improve the work and the work control.

9. Project manager should elaborate the Project Close-Out Report that should

include budget/actual cost analysis and summary experiences for future projects. 10. Taking into account the additional costs generated by the start up of the

refrigeration unit, it is advisable to develop a back to back agreement with the unit sub-supplier adjusted for contracting projects where a component’s miss functionality can create additional costs to other parts involved in the project. In this way the risks are divided based on the stipulations in the contract.

11. In order to avoid taking over the responsibility from DL, it is recommended to

develop partner agreements with different DL. 12. The management of Freezing AB should consider different types of insurances

that the customers might ask for to eliminate this possible impediment to win a bid.

The ROMP could have been developed further on: as regards the probability, we can distinguish between a pessimistic, realistic and optimistic view expressed in minimum, most likely and maximum impact values in case we need to deal with probabilities at a deeper level. I considered that the projects of Freezing AB are not so complex and I adapted the ROMP to the specific activity of the company. Nevertheless ROMP can be developed further if experience will show deeper analysis are necessary.

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Also as an output from the quantitative risk analysis, probabilistic analysis of the project with regards to time schedule and cost results could have been developed. Though it might be necessary first to adopt a more specific tool than Navision for following costs, Microsoft Project for instance.

10. Summary This master thesis is about implementing a procedure to evaluate risks and opportunities in a medium sized company with offices in Nordic Europe. The company has extended lately its product area and consequently, will be able to deliver larger scope of supplies. The company delivers refrigeration projects in which several sub-contractors and sub-suppliers are involved. Contracting activity has always been a risky activity, full of unexpected events during the project execution. That is why handling the project uncertainties in a professional way have become of bigger importance and using a risk management system has become a necessity. The present situation of the company is critical. Even if the company has succeeded to take over new markets, the profit is not as expected. It has been now two years since Freezing AB has become a larger company, and it is time to make a deeper analysis of possible causes of the situation. Risk management is the systematic process of identifying, analysing and responding to project risk, taking into consideration both risks and opportunities, maximizing the taking into consideration both risks and opportunities, maximizing the probability and consequences of positive events and minimizing the probability and consequences of adverse events to project objectives. By implementing a risk management system, the company could improve its control on uncertainties which reflects finally in the profit. The main advantages that a risk management system can offer are:

- to offer support and guidance and to develop a strategy for contract negotiation and execution

- to get an overall picture of different types of risks - to gather and organize similar handling and documentation - to secure implementing of risk management tool

The master thesis plan was divided into the following steps:

I. Creating a Risk and Opportunity Management Plan (ROMP) to be used by the Company during contracting and after-contracting period in order to take preventive actions. This can improve the margin of projects and allow a better following up of the budget and time schedule. The form of ROMP would be an excel file, easy to be used by the employees. Study case of two finished contracts chosen based on the contract price and the negative impact of different events on the final gross margin;

I.1. Comparison between budgeted costs and actual costs (final costs) I.2. Identifying risks and opportunities I.3. Describing risks and opportunities and their impact

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I.4. Assessment of risks that have occurred and assessment of risks that may have occurred I.5. List of actions and costs I.6. Creating the ROMP file (excel file) I.7. Example: application of ROMP for two projects I.8. Presentation of results to the Steering Committee in order to decide the tool implementation II. Implementation of ROMP

II.1. Presentation of the method in the company II.2. Inserting the risk costs in the existing calculation system

The identified risks in the two projects represented the base for creating the risk check list from the ROMP file. Several meetings with project and sales managers from different locations of the company were organized to get a larger view of the possible risks. The basis of the theoretical part consisted mainly of PMBOKGuide and materials developed inside ABB company.

After making the two analyses the following main conclusions were drawn:

- The risk analyze was done before in an informal way consequently part of risks were missed, while the assessment of the risks was pure approximate.

- The scope of supply was not accurate described - The company did not use work breakdown structures, time schedules - Many item costs were not included or they were underestimated in the

calculation; in fact most of the calculation is based on estimations, not on offers from sub-suppliers/sub-contractors

- Poor controlling of the work status on site The proposed ROMP does not solution all the above mentioned problems, but it represents part of the strategy to improve the company’s activity. By using the ROMP file in the future projects, the company has a better control on identifying the possible uncertainties, assessing them and plan and follow up for measures. As showed before ROMP can be used for:

- control process - reports - storage experience for future projects

Unfortunately the present situation in the company did not permit to finalize the whole implementation process. Further presentations of the method should be made as well as inserting the risks costs into the calculation system of the company. Hopefully the process will continue as doing good business requires controlling risks and opportunities. Even if it is impossible to avoid or eliminate all negative risks, the risk analysis helps to determine the acceptable risk level and consequently, to administrate better the resources and the project budget, to minimize loose of profit, to improve work with sub contractors and the ways of approaching the future project management based on the accumulated experience. The courage to accept new risks begins with prudence.

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11. References ABB, Project Support, (1994) ABB Automation material, (2001), Management of Opportunities and Risks Archibald, R.D., (1976), Managing High-Technology Programs and Projects, John Wiley & Sons, New York Kotter, J.P., (1996), Leading change, Harvard Business School Press, Boston PMI Standards Committee, (2000), A Guide to the Project Management Body of Knowledge (PMBOKGuide), 2000 ed., Project Management Institute, Newtown Square Wenell Torbjörn, (2001), Wenell om project, Författaren och Uppsala Publishing House, Uppsala http://en.wikipedia.org/wiki/Work_breakdown_structure, 2006- 11-21.

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http://en.wikipedia.org/wiki/Work_breakdown_structure

12. Appendix List of text references: 1Archibald (1976), p.3 2PMBOKGuide (2000), p. 6 3Project Support, ABB, 1994 4Kotter P. John (1996), p. 25 5,6,7,8 PMBOKGuide (2000), p.8, 31, 38, 128 9Wikipedia website, http://en.wikipedia.org/wiki/Work_breakdown_structure, 2006- 11-21 10Project Support, ABB, 1994 11ABB Automation material, 2001 12ABB Automation material, 2001 13ABB Project Support material, 1994 14 Kotter P. John (1996), p. 21 List of abbreviations: ABB = Asea Brown Boveri DL = display case sub-supplier PM = project manager ROMP = Risk and Opportunities Management Plan SWOT = Strength, Weakness, Opportunity and Threat (Analysis) WBS = Work Breakdown Structure List of Annexes: Annex 1 - Risk list, Enjoy Food Supermarket Annex 2 - Calculation - Final Costs Analysis, Viktor Supermarket Annex 3 - Calculation – Offer Price Analysis, Viktor Supermarket Annex 4 - Offer Price - Final Costs Analysis, Viktor Supermarket Annex 5 - Risk list, Viktor Supermarket Annex 6 – ROMP Annex 7 - ROMP 1, Enjoy Food Supermarket Annex 8 - ROMP 2, Enjoy Food Supermarket Annex 9 - ROMP 1, Viktor Supermarket Annex 10 - ROMP 2, Viktor Supermarket

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http://en.wikipedia.org/wiki/Work_breakdown_structure