Project management
Success Factors for Risk Management
There are a number of standards that are connected to risk management; project management body of knowledge, and International standards Organization among others. These standards are related in the aspects that comprise risk analysis, treatment, planning and monitoring.
A risk is described as an exposure to the chance of loss or a threat. The outcome is undesired, due to its nebulous form of risk, a number of people get it hard to effectively manage a risk. This section of the paper offers a set of factors that are to help risk managers to make the projects risk less nebulous for successful results to be acquired (Conrow, 2003).
1. Establish the Context
Companies widen the range of risk management to be composed of regions external to the project group’s direct influence. This external management of risk brings about confusion and wasted effort as well as the desire of a Project Management Office. The PMO program is able to effectively to manage risks when compared to a project group in a company (Conrow, 2003). The context of the project risk control ought to be within the project’s financial ability, timing, and quality.
2. Identify Risks
The most common factor is the identification of risks. The risks have a variety of signs that show their availability. The risk team will in most cases note the risk signs as the risk while the actual risk is not recorded or noted. The real threat is that noting the risk signs are not recorded or managed.
Poor identification of risks can bring about a massive threat that would be hard to manage. Risks ought to be described in regards to the time it was affected, financial implication, and quality of the results or the ability to meet the needs of the mission (Gardiner, 2005). This would vital for the effective implementation of the project.
3. Quantify Risk Impact
For the effective management of a risk, the result has to be well quantified. For example a month schedule delay, $50,000 budget overrun, 600 hours of rework among others. Major delays limit the quality of work to be acquired and major cost overruns. Quantifiable implication is vital when assessing risks as they make limited sense to use $100K to organize a risk of a result of $50K.
It is definite that a risk can impact several aspects of a project; schedule delay may affect the finances. For effective management of risk it is vital to known the aspects in the project. If time is of value the risk has to be defined and managed as a scheduled risk, while if the finances are of value then it ought to be stated and managed as a budgetary risk (Chapman, and Ward, 2007, 43).
After the risk has been determined, what follows is the assessing of the potential influence. This calls for an analysis of the influence on the scope that has to be analyzed so as to apply the needed changes. A good example is the use of 600 hours to complete a project, this time can be used to quantify a project.
4. Prioritize Risks
After noting the risks and quantifying them, what follows is the prioritizing them. This step will bring about the most effective result to the team by being keen on the greatest implication on the risk. The rating ought to be done with regard by being keen on influence it has to the project. A good example of a prioritization scheme is the Carlo simulation also known as the 9-box model (Cleland and Ireland, 2007, 18).
5. Treat Risks
This stage involves; Avoid, Transfer, Mitigate and Accept as among the options to be considered. Through avoiding the risk strategy the project can decide to do away with the software connected to the risk. In transfer, this may involve buying insurance as well as subcontracting it. Mitigation involves a treatment strategy that is bound to reduce the risk influence in the project (Meredith, and Mantel, 2009). The risk treatment plan is quite extensive and is composed of intended steps, resources, tasks, period, performance steps and reporting & monitoring. Lastly there is acceptance stating that the project will take in the risk this may so especially in cases where the cost of controlling the risk is high than the effect caused.
6. Monitor Risk Treatment
This factor involves monitoring the risk management process. This may be tactical and strategic monitoring. Tactical step is done on a day to day basis and involves performance measures, trigger aspects and performance itself (Chapman, and Ward, 2007, 24). This assesses the treatment strategy if it’s effective in risk management in a project. It is not worth to spend $100K in a project that would result to $60K loss. Strategic monitoring is undertaken as a management review as the project comes to an end. This state assesses the future aspect on effective enhancement.
7. Risk Models
This is a treatment plan that has been shown to be effective it will include the mitigation methods, indicators and reporting methods among others (Cleland, and Ireland, 2007, 18). The risk model is vital in that is the effective operations are made valid and ineffective methods are noted.
8. Oversight and Feedback Loop
The supervisory role ensures that the project meets the intended outcome. This is with the help of quality assurance and management reviews this calls for intense compliance. On the other hand the feedback mechanism allows the project to acquire value from the risk management project. Here lessons are learnt through bisecting information that allows the project to leverage developed risk models on an actual time basis of the project.
Bibliography
Cleland, D.I. and Ireland, L.R. 2007. Project Management: Strategic Design and Implementation (5/e), New York: McGraw-Hill, USA.
Chapman, C and Ward, S 2007. Project Risk Management: Processes, Techniques and Insights. New York: John Wiley & Sons.
Conrow, E 2003. Effective risk management: some keys to success. Virginia: AIAA
Gardiner, P.D. 2005. Project Management: A Strategic Planning Approach. Basingstoke: Palgrave Macmillan.
Meredith, J.R. and Mantel, S.J. (2009). Project Management: A Managerial Approach, (7/e). New York: John Wiley and Sons, Inc.
