Project Risks Response Strategy Essay

Project Risks Response Strategy

Project Risks Response Strategy

Risk response strategies refer to a systematic way in which the risks that have been identified in the new office project can be contained, reduced or eliminated (Simon et al., 1997). The criteria followed in developing the risk response strategies ensured that the strategies were realistic, cost effective, timely, and acceptable throughout the organization. However, the most important aspect of the strategies was the fact that they were proportional to the severity of the identified risks. The response tools and techniques ensured that both positive and negative risks were rightly addressed. A contingent response strategy was also developed to cater for any unprecedented hitches.

The strategies used to combat the negative risks (threats) include avoidance, transfer, acceptance, and mitigation. Risk avoidance may involve relaxing relevant objectives and modifying the project plan with the aim of risk elimination. The negative risks that cannot be avoided are approached using the other available alternatives. Risk transfer will involve moving the risk to another third party who will carry the risk. Risk mitigation comes before the occurrence of the risk and is aimed at reducing the impact in the event of such occurrence.

The strategies that will be used for positive risks (opportunities) will include exploiting, sharing and enhancing. Exploiting strategies involves putting in place measures that will ensure that the risk occurs. It therefore involves removing any uncertainty about the risk. Sharing the risk involves allocating a portion of risk ownership to a qualified third party for better quality. Enhancing involves increasing the likelihood of occurrence.

Risk acceptance will be used in the project for both positive and negative risks. Risk acceptance implies that the strategies for positive and negative risks are insufficient to deal with the inherent risk. The acceptance can be active and passive acceptance. Active acceptance involves creation of a contingency plan that can be used in the event that the risk occurs. Passive acceptance means that no plan is developed and the project tem has to deal with the risks when they arise.

The project will use risk mitigation strategies to take care of the integration risks. Integration risks refer to those risks that the project might face in a quest to entrench the project into the organization culture (Project Management Institute, 2009). As part of ensuring that such risks do not occur or their impact is reduced, the project will engage in a training and simulation program. The aim of this will be to familiarize the employees with the new operating environment and technology. The training and simulation program will also be useful in creating buy-in and reducing resistance. The scope of the project will be considerably reduced in order to avoid the scope risks.

According to the results of the project risk analysis, communication risk was described as the most serious threat to the project. This was followed by scope risk, executive support risk, and design risk respectively. The project, however, had little to worry about when it comes to the threat posed by resource and technical risks. In order to respond to the inherent risks, the company will employ risk strategies which include; avoidance, transfer, mitigation and acceptance. The specific strategy that is employed in each case will aim to minimize the project’s overall risk at all costs (Simon et al., 1997). From the SWOT Analysis, the risks that are identified as threats to the project will be avoided, mitigated and transferred. However, those identified as opportunities will be exploited, enhanced and shared. The risks that cannot be solved through the use of any of the named strategies will be accepted.

Avoidance of a risk involves removing the stimulating factor or the causative agent responsible for the risk. Alternatively, these risks will be avoided through embracing a different approach in project execution Simon et al., 1997). The scheduling risk of the project will be dealt with through avoidance. This is done with an aim of ensuring that the project is completed in a timely fashion. The project time limit will be made flexible to cater for any time loss and enabling extension of the project. The phases of the project will also be clearly defined for the workers to understand.

The company can enhance some of the positive risks facing the project. For instance, communication can greatly benefit the company is properly used by the project. While communication is ranked as the least risky aspect of the project, it can significantly impact the implementation. The risk management team, therefore, intends to avoid communication related risks by removing all the communication barriers (Hillson, 1999). For instance, the team that is responsible for implementing the project will come from a known unit within the organization and will work under familiar authority. This will give them ease while communicating with each other.

Risk mitigation involves the strategies that have been put in place to address adverse risks to acceptable levels (Project Management Institute, n.d.). It involves taking early action to reduce the probability and impact of the risk within the project implementation. Given the importance attached to quality, it is vital that the management employs risk mitigation to take care of the technical risks. The measures will involve using certified company and industry standards while working on the project. These predetermined standards will be instrumental in clearly defining the

Risk transfer is usually ideal in dealing with financial risk exposure (Wideman, 1992).. Through this means, the company can be able to operate seamlessly while the appointed third party bears the risk. In this specific case, the technical risk presents the most pressing threat to the plan given the magnitude of the risk. There is a major concern if the software products being used in the project will be obsolete in the near future thus necessitating frequent updates. To avoid this risk, the company intends to invite competitive tenders for companies that will supply long-term software needs that will support the program and operations of the business. In the submitted bids, the company will look for companies that guarantee replacement of outdated software at no extra charge on the company.

Risk transfer will also be used to ensure that the resource risks are well contained. Since the resource risks can arise from price fluctuations and supply of improper materials, the company will commit the suppliers to a contract (Project Management Institute, 2009). This will ensure that the quality of materials supplied is within the required standards. There will be fixed price contracts that will ensure that the hoods being supplied are within the specified prices despite the fluctuations in material price. This ensures stability with the implementation of the office project. The employees who work on the project will also commit to a performance contract. This will be essential in ensuring that they stay within the requirements of the project and deliver quality work. Risk transfer strategy will thus improve efficiency and quality.

The success of the project will largely depend on the level of support it receives. This is why managerial buy-in is integral to ensure success of the project. The Executive support risk will be advanced through an intensive awareness campaign. To help the management to make a support decision on the project, there will be presentation of specific, measurable, attainable, and realistic time bound objectives.

Sharing of the risk involves bringing a qualified third party on board to improve the quality (Wideman, 1992). Given the fact that the ICT department has never engaged in such a project, it will be wise to outsource experts to help avoid the design risks. This sharing will prove useful since the employees in the company will also get to learn from an outside source. This could be instrumental in future projects of the company.

The following updated table shows the strategies taken by the business to address each risk;

Risk

Likelihood of Occurrence

Severity

Overall (2X2)

Rank

Response

Scheduling Risk

2

4

8

4

 Avoidance

Resource Risk

3

5

15

1

Transfer 

Executive Support Risk

1

5

5

6

 Exploit

Scope Risk

2

2

4

7

Avoid 

Design Risk

2

3

6

5

 Share

Technical Risk

3

4

12

2

Transfer

Integration Risks

3

3

9

3

Mitigate

Communication Risks

1

3

3

8

Enhance 

From the Threats and Opportunities identified in the risk identification phase, the following schedule was developed to help in responding to the risk.

For Threats

For Opportunities

-Avoid

Exploit

Scheduling Risk; These are the risks that might lead to delay in the project. The scheduling risks are to be avoided through flexible time frame of the project and clearly stating the time for each project phase

 Executive Support Risk: These are risks that have to do with management buy-in. The project hopes to exploit this by encouraging everyone to back the project. This will also help ease the training and simulation phase before implementation kicks off.

 

 

 

 

Transfer

Share

Technical Risks: This risk is going to be addressed through engaging with third parties who will be responsible for supply of software needed by the project.

Resource Risk; This are risks that pertain to the material and human resource needed for the project. This risk will be transferred to the contractors and employees who will sign performance contracts to compensate in the event of damage

The risk will also be transferred through signing contracts with suppliers to ensure that the

Design Risks; These are risks associated with the architecture. They will be shared between the team and another professional group that will offer an insight that will be useful to the ICT team.

 

 

Mitigate

Enhance

Technical Risks;These are risks that affect the quality of the project. The technical risks will be mitigated through the use of predetermined industry and company standards to make decisions that involve quality addition within the project

Communication Risks; These are risks that deal with communicating the requirements and objectives of the project. They will be addressed by ensuring that a cohesive team is built to address the needs of the project.

 

 

 

 

Acceptance

This strategy is useful in the situations where the risk can neither be managed through the positive risk strategies or the negative risk strategies.

The contingency risk stated below will be accepted as part of addressing the risks.

 

The responsibility will be allocated to the team members to take leadership of each risk response. Their task will include monitoring if the risks are being responded to in the appropriate way (Hillson, 1999). To avoid any conflict of interest, no single member of the team will have more than one role to perform in tracking the risk response.

Contingency Plan

While the strategies explained above will help in addressing the anticipated risks, there are certain that will occur during the project. There is need to create effective tools to manage such risks through the use of a contingency plan (Project Management Institute, 2009). This plan will ensure that all risks that are not accounted for are catered for whenever they arise. Intermediate milestones of the project are to be well placed and tracked throughout the project to cater for any arising risk. There will be a separate financial reserve left to cater for any financial risk that might occur during the project implementation. The contingency allowance also specified the acceptable time and resources that will be used in the event of unprecedented risk. In the event that the demand for time, resources and finances exceed those in the contingency plan, there will be need to halt the project and reevaluate its feasibility and desirability given the fresh demands.

References

Cooper, D. F. (2005). Project risk management guidelines managing risk in large projects and complex procurements. West Sussex, England: J. Wiley.

Hillson, D. (1999). Developing Effective Risk Responses. Proceedings of the 30th Annual Project Management Institute 1999 Seminars & SymposiumPhiladelphia, Pennsylvania.

Lehman, B. (2007, February 1). Project Risk Management. Mortgage Banking.

Metheny, M. (2013). Risk Response Strategies. Retrieved from http://www.fedramp.net/risk-response-strategies

Project Management Institute. (n.d.)A Guide to the Project Management Body of Knowledge (PMBOK Guide) – Fourth Edition

Project Management Institute. (2009), Practice standard for project risk management (4th ed.). Newtown Square, Pa.

Simon, Peter W., Hillson, David A., Newland, Ken E. (eds.) 1997. Project Risk Analysis & Management (PRAM) Guide. High Wycombe, Bucks HP11 2DX, UK : Association for Project Management. ISBN 0.9531590.0.0.

Wideman, R. M. (1992). Project and program risk management: a guide to managing project risks and opportunities (Prelim. ed.). Drexel Hill, PA: Project Management Institute.

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