Project Management is the application of knowledge, skills, tools and techniques to project activities to meet project requirements (Project Management Institute, 2008; Gordwin, 2012). When applying this knowledge effective management of appropriate processes is required. Risk Management is considered most critical and includes the processes of conducting risk management planning, identification, analysis, response planning, and monitoring and control on a project. The purpose of the risk management plan is to establish framework in which the project team will identify risks and develop mitigation strategies to avoid, eliminate or convert to
Purpose of this document is intended to address risks of the projects. Scope of this document is to manage project risks and opportunities during the entire project life cycle. Life cycle of the project is from project inception to completion of project. Project manager along with the team, project sponsor jointly develop a risk that enables us to identify, assess, quantify, prepare a response to, monitor, and control risks of the project.
The following short case will give you a good idea of how risks surface in business and project planning and what companies do about it. Consider that you are the Risk Manager as you look at this case, as it will be a good exercise for the time when you will be that Risk Manager!
Working to understand the risks a project may endure along with the cost associated is critical in every project management plan. Understanding potential risks based on the project type, resources needed, timeline and budget still leaves gaps that creates uncertainty for actually predicating the outcome of the project. There is not a true way to predict when and where a project risk will occur but designing a plan to properly address and manage those risks will increase confidence while eliminating the element of surprise.
When the manager of project carried out its work plan should take into consideration the possible risks that may occur within the project. The risk is the possibility that occurs a problem within a project and that may cause some change within the same (Heldman, 2011). It should be noted that not all risks are bad since they can be potential opportunities to make some changes that will improve the overall status of the project. In the same way a risk not taken into account in time can create one problem in the project and can completely change the final performance of the project. The project manager can take several elements to identify the risks. Some elements and documents that can be used to identify risks are: search internal risks of the project, such as resources
Risk or threat is common and found in various fields of daily life and business. This concept of risk is found in various stages of development and execution of a project. Risks in a project can mean there is a chance that the project will result in total failure, increase of project costs, and an extension in project duration which means a great deal of setbacks for the company. The process of risk management is composed of identifying, assessing, mitigating, and managing the risks of the project. It
Risk management is an ongoing process that must continue through the life of a project. It includes processes for risk management planning, identification, analysis, monitoring, and control. These processes need to be reviewed throughout the project’s lifecycle as new risks arise throughout the implementation of the project. It is the objective of risk management to decrease the probability and impact of events adverse to the project. On the other hand, any event that could have a positive impact should be exploited.
Risks management is an important step during the process of a project. Failing to manage a risk may result in unforeseen event happening and a project’s failure. For example, with limited budget, an unforeseen event or an accident occurs in the middle of a project and this matter has not been considered and needs a big sum of expense, then the project may be stopped because of this unexpected event. We should know it is necessary to understand how to identify risks and assumptions based on the information. After identifying risks, it is important for project managers to set contingency plans to prevent and deal with these risks when they occur. Of course, several problems may happen during considering
Risk Management Procedure: Defining and summarizing the steps to respond to the risk during the project life.
Flyvbjerg, B (2006). From Nobel Prize to Project Management Getting Risks Right. Project Management Journal, 37(3), 5-15. Retrieved November 1, 2006, from ProQuest databaseJust, M.R., Murphy, J. P. (1994). T
Project Risk Management – identifies potential risks (good and bad) that can affect the objectives of the project.
Risk mitigation is a critical function of every project manager. A well-developed risk management process “attempts to recognize and manage potential and unforeseen trouble spots that may occur when the project is implemented” (Gray & Larson, 2006, p. 1). Risk mitigation begins with project planning. Based on previous experiences, lessons learned, schedule and budget constraints of the assigned project, the project team can identify all the risks, analyze each risk in terms of the severity of the impact, the likelihood of the occurrence, and the degree to which the risk can be controlled. Although a direct relationship between the amount of risk in a project and the opportunity for increased rewards exists, successful businesses take every
During the integration phase of any competently designed project management program, the effective evaluation of potential risks is a critical component for managers and other project leaders tasked with supervisory role. The sheer number of unforeseen circumstances which can arise during the course of a business project is daunting indeed, but proper project planning requires the anticipation and neutralization of various risks to assure that a goals are met without external disruption. According to the authors of Integrated Project Management, a recognized authority on the subject of risk management, "every project plan approaches work structure and tasks in terms of overcoming uncertainty and barriers to project completion," and this universal approach to risk management is based on the tenet that "risk is inherent in a project simply because projects are usually new and different from past work and because there is a level of uncertainty and risk involved in every aspect of the project" (Barkley, 2006). The fact remains that innovative and enterprising ideas typically result in experimental projects involving untested techniques, and the innate uncertainty of these business projects creates a litany of risk factors. Managers and project leaders who are capable of predicting risks and adjusting to them, rather than simply reacting when risks are manifested, are those who routinely encounter the most consistent success in the world of business (Raz, Shenhar & Dvir,
6. Establish risk thresholds 7. Define risk communications 8. Define risk tracking process Risk Management and Project Selection Techniques Two commonly used project selection techniques are Benefit Measurement Models and Mathematical Models, i.e. (Mathematical Models used for extremely complex projects). In the workplace, Benefit Measurement Models are more often used. Some techniques in this category are: (1) Cost-benefit analysis: Which provide a net gain. Typically, the net gain is proportional to the risk level, i.e. the higher the risk, the higher the gain. (2) Weighted Scoring models: Risk of Incompletion is a factor that needs to be considered when comparing projects, using the Weighted Scoring Model for Risk Management and Project Selection to help you select a project. (3) Cash flow analysis: Takes into account the payback period, AND (4) Time Value of Money: Uses Net Present Value (NPV) and Internal Rate of Return (IRR). Generally, the higher the NPV, the better the project is. There are positive risks in every project that require knowing how to respond to them. Risk Management and Project Selection should also account for positive risks. Risk Identification Risk identification is the process of understanding what potential events might hurt or enhance a particular project. The customary origins
This assignment is included in the 2014 session of the Risk Management module of the MSc in Project Management course at University of Aberdeen. The main purpose of the assignment is to demonstrate my understanding of the issues involved in Risk Management and how they are applied in my current Project environment. The assignment is split in to two questions as detailed below.