Page 161 - Global Project Management Handbook

PROGRAM MANAGEMENT AND PROJECT PORTFOLIO MANAGEMENT 7-11

Only when there is no correlation between the risks of the projects of a program is the
program risk equal to the sum of all the project risks. In the case of a positive correlation
of project risks, the program risk is increased; in the case of a negative correlation, the
program risk is decreased.
The basis of the program risk analysis is an analysis of the risks of the individual pro-
jects of a program. Then the correlation between the project risks can be analyzed.
Positive correlation between project risks occurs, for example,
● In a chain of projects between the pilot and follow-on projects or a conception and
a realization project
● In cooperations with the same suppliers or partners in several projects of the program
● In the use of the same technologies in several projects of the program
● In the performance of several projects for the same customer
● In the performance of several projects of the program in the same country
By deploying the same supplier or the same technology for several projects,
“economies of scale” and learning potential can be used, which are reflected in lower
project costs.Ontheotherhand,ahigherlevelofdependence,that is, risk, onthe chosen sup-
plier or on the technology is created. With loss of the supplier or if the technology is not
yet ready for implementation, not only one project suffers, but several projects of the pro-
gram are damaged. Here one has to strike a balance between lower program costs and the
risk of an even higher loss for the program.
A negative correlation between projects occurs when a risk in one project becomes
acute and in doing so excludes a risk in another project. Such relationships between pro-
jects are rare. Risk management in programs therefore must concentrate on reduction of the
positive correlation between the project risks. By adapting the correlations of the risks
between projects, the program risk can be influenced.

Program Standards
In programs, there are often repetitive projects. For the performance of repetitive pro-
jects in a program, it is recommended that program standards be developed. For the
management of projects, standard project plans (e.g., standard work-breakdown struc-

tures, standard work-package specifications, or standard milestone plans) can be devel-
oped and used.
The objective in the use of program standards is to develop a uniform way of working in
the projects of a program. Through the application of standards, the projects are more closely
coupled in the program. The relative autonomy of the projects therefore is less than in pro-
jects that are not part of a program. The development and use of program standards ensure
quality in the projects of programs and promote organizational learning in programs.

Program Marketing
Because of the high strategic importance and uniqueness of a program, the professional
communication of the program objectives and the program structures plays a large part in
the success of the program. Professional marketing therefore is especially important in
programs. Only through professional marketing can an understanding of the meaning of
the program be communicated to the relevant program environments and the availability
of management attention, know-how, and resources for the performance of the program
ensured.