Abstract
This is a project implementation centered on the probability of risks, which may occur either pre or post implementation. The study also assesses the effect of the risks themselves on the project. The probability provides a measure of surety, in form of a fraction, of the likelihood of the event actually happening. The manifestation of the various types of categorized risks comes with different levels of impact, which is a fraction reflecting the probability, but generates the amount of anticipated effect on budget and timeframe of the project. There is an analysis of the levels of risks which is represented in a Probability-Impact chart, a 9-grid matrix putting the various risks in rows and columns which correspond to their probabilities as well as the impact. With the movement through the probability matrix from left-side bottom edge to the top, there is increase in the probability of the risks while there is increase in impact from right side. In this regard, the matrix helps in measuring the intensity of the risks.
Introduction
The aim of this project is to launch a new product under the name Mint cake at the Bakes Confectionaries. We will plot the seven crucial risks relating to the launch of this product in a PI matrix. This would significantly help us in analyzing the severity of the risks on a scale ranging from low to medium to high. This paves way for prioritization of the project risks and subsequent calculation of the risk cost on the budget. An increase in the amount scheduled in the budget would be necessary so as to reduce the impact of the medium and high risks on the project. The following is an analysis of the different risks and tasks in the project.
Risks
The first risk (R1) of the projects stems from the new name chosen for the product, “Mint Cake”. There is the potential of a legal suit to be brought against Bakes Confectionaries because the legal permission for the product name is yet to be acquired. There is 40% probability of this risk occurring, thus it can be regarded as a medium level risk.
The second risk (R2) concerns the availability or unavailability of the pastry cook. The business would be forced to find a replacement of the cook in the event that he is unavailable. This risk has about 50% probability that the current pastry cook would not available. While this risk is high, it slightly falls short of being termed as a high risk, thus it is categorized under medium risks (Gracia 2008, p.78).
The third risk (R3) relates to the probability of government regulations relating to production of confectionary foods being changed in the future. However, this risk is presents a low level risk of about 20%.
The fourth risk (R4) stems from the probability of mint cake raw materials being unavailable available or in short supply at the time of production. If this occurs, it would destabilize the demand and supply of the product in the market (Sadgrove 2005, p.52). In this regard, while the probability of this risk to occur is only 30%, it would have a far reaching impact on the business as high as 70%.
The fifth risk (R5) relates to a delay in market research. This is especially because the amount of time spent to reach the respondents and conducting interviews with them may take longer than expected (Siegel 2011, p.69). This risk has a high probability of occurring, 80%, thus it would have a critical impact of 90% on the introduction of the product. It would also cause the business significant losses (Sanghera 2010, p.23).
The sixth risk (R6), which has high probability of occurring (70%), is the likelihood of project manager of mint cake at Bakes Confectionaries being transferred to another project. This risk would have a high impact (80%) on the business.
The seventh risk (R7) relates to Bake confectionaries’ in-house tasting expert. There is a 20%) chance of the tasting expert to be unavailable at the time when most needed. While the probability of this risk is low, its potential impact on the business operations would be high, 70%. This would make the business to incur major losses. R7 can be averted by sourcing an external tasting expert. However, the chances of the external tasting expert being unavailable is 50%, potentially causing a delay in the product launch schedule.
Task 1 and 2
Figure 1 shows the plotted seven risks discussed above relating to the launch of new product by Bakes Confectionaries, mint cakes. The PI matrix shows risks according to their severity, low to high. From the plots, it is clear that risks five and six (R5 and R6) are the high risks because of both their high probability of occurring and impact. It is also concluded that risks two and eight (R2 and R8) have medium probability of occurring but with high impact on the business. Similarly, risks four and seven (R4 and R7) have low probability of occurring but potentially high impact on the business. The first risk (R1) has medium probability of occurring as well as medium impact on the business. Finally, risk three (R3) has the lowest probability of occurring along with medium impact on the business.
High
4
7
9 R5, R6
Medium
2
5 R1
8 R2, R8
Low
1
3 R3
6 R4, R7
Low
Medium
High
Figure 1: The PI matrix of risks linked to launch of “Mint Cake”.
Task 3
Task 3 involves the calculation of the additional cost which needs to be budgeted in order for Bakes Confectionaries to effectively address both the high and medium risks. This is represented in Figure 2.
Risks Additional Cost to avert risks(£)
R1 375
R2 3200
R3 400
R4 880
R5 2100
R6 675
R7 1200
R8 4200
Total 13030
Figure 2. Additional Costs
Therefore, Bakes Confectionaries would need a total additional budget of £13,030 in order avert delays in the planned launch of the product.
Task 4
Modifications in probabilities of R6 and R7 would result in the following changes in the PI matrix.
High 4 7 9 R5
Medium 2 5 R1 8 R2, R8
Low 1 3 R3 6 R4, R6, R7
Low Medium High
Bibliography:
GRACIA, J. J. E. (2008). Latinos in America philosophy and social identity. Oxford, UK, Blackwell Pub.
SADGROVE, K. (2005). The complete guide to business risk management. Aldershot, Hants, England, Ashgate Pub.
Sanghera, P. (2010). Project Management professional Guide for PMP Exam. 2nd Ed. Boston: Course Technology
SIEGEL, A. (2011). Practical Business Statistics. Burlington, Elsevier Scien
