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Your friend was appointed as a project manager for the development of a new product. This product is based on innovative ideas. If successful, the

Your friend was appointed as a project manager for the development of a new product.
This product is based on innovative ideas. If successful, the new product will become a
great hit, and will be very profitable. In such a case, your friends reputation will
significantly increase, and he will be promoted to the next level of the organizational
hierarchy. On the other hand, if failed, your friends reputation will be significantly
damaged, and he may lose his job.
The new product is supposed to be very complicated. It is built from different
components in different levels (all of them are to be developed as a part of this project).
That is to say: some components performance is dependent upon the performance of
other components at lower levels. The president of the company told your friend that
some other companies in the industry started to plan a similar product. The first company
that will roll out a high-performance product for the right price will gain a significant
market share. Therefore, your friend must prepare a very accurate project plan and make
sure the four objectives (included the added value) are successfully addressed.
4
As a part of the project plan your friend had to prepare a risk management plan. He
identified some potential risks in advanced stages of the project. He can eliminate the
risks by allocating more resources at the beginning of the project, but then he may exceed
the budget and/or the lead time, or compromise on the performance from the beginning of
the project. In such a case, the companys management will not be happy and may even
replace him by another PM.
Then he remembered that he learned in class that the chances of a risk item occurring are
greater in the early portions of the project. Based on these odds, he thought he should
assign lower probabilities to the risks that may occur in advanced stages of the project,
which will lead to lower cost on the decision tree. In addition, he thought that if these
risks do happen, they will only occur late on the project schedule, and therefore not likely
to be significant, and neither difficult nor expensive to solve. Meanwhile, the companys
management will be happy with his plan and progress, and he will pave his way for
promotion.
Your friend wanted you to help him and asked for your opinion regarding his plan. What
will you advise him to do? Please explain

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