Define Risk And The Risk Management Process

Risks refer to the uncertain events which cannot be controlled in organization despite the proper planning. However, risk management is a process of recognizing as well as, managing the internal events and external threats which are likely to have an impact on the success of a project. Today, risk management is applied to all levels of an organization in both operational and strategic contexts (Larson & Gray, 2003). Risk management process includes; risk identification, risk assessment, risk response development and risk response control. In risk identification, lists of possible risks are generated through risk profiling, brainstorming along with problem identification. In risk assessment, the vulnerability of the risks are analyzed and measured (MacCrimmon Wehrung, & Stanbury, 2006). In risk response development, the risks manager identifies all the activities which aim in reducing the likelihood of the risks from happening. These include; risk mitigation, risk avoidance, risk transfer and risk retaining. However, in risk response control, the risks managers establish a change management system and risk control such as initiating contingency plans while monitoring, tracking and reporting risk (Lientz & Larssen, 2006).

Explain the relationship between risk and cost during the project life cycle (5 Points)

The relationship between risk and cost during a project life cycle is that, on the basis of uncertainty, risk management cost under certainty while risk loss cost under uncertainty. During project development, the project developer has to balance cost and risk by understanding their relationships as well as, developing a learning organization from cost and risks lessons. During the project development, the cost and risk are very high. For instance, the cost used to develop the project may be higher just like risks that the project may not be the best, hence can be rejected by the client (Larson & Gray, 2003).

Explain the project change control process. (10 Points)

The purpose of the project change control process is to ensure that an action on the proposed changes occurs on purpose, but without unnecessary delay as well as, interfering with the project process (Lientz & Larssen, 2006). The project change control is significant because it allows the project team to identify, evaluate, approve as well as, document the proposed changes to the project baseline. First, the process is initiated a change request. The change request is a formal mechanism used to propose and assess a deviation to the project being developed. After the change request is evaluated, there is approval that is granted at an appropriate level after which the change request becomes a change order for implementation (Larson & Gray, 2003).

Second process is where the change order is communicated to the affected parties along with cooperating them in the project baseline in that data integrity is preserved and budgets reconciled across the project documentation such as work Authorization Document (MacCrimmon Wehrung, & Stanbury, 2006). In change control process, the three phases such as request change, review phase and documentation phase are accomplished in request change phase, appropriate classification is determined, however, for the review phase, assessment of a proposed change request is accomplished while the approval is obtained from an appropriate authority level. Lastly, the approved changes are thus implemented and the integrated project baseline documents are revised in the document phase (Lientz & Larssen, 2006).

Silver Fiddle Construction Case

Potential risks associated with the project

Risks are events which its occurrence can cause positive or negative effects on the project’s objectives. However, risk management helps in identifying, assessing, responding, monitoring as well as, reporting of the risks. For the Silver Fiddle Construction Case, the risk management plan will define how risks associated with the Silver Fiddle Construction Company are monitored throughout the project lifecycle while providing practices for recording and prioritizing those risks (Larson & Gray, 2003). Conversely, there are various potential risks which can be associated with the project. For example, these risks may be;

Unfavorable weather conditions such as earthquakes, rain, snow and many others

The workers may decide to on strike during the projects development

The Czopek on the other hand may change their mind on a certain part of the house

If the project need more materials to be used than what was projected

The Silver Fiddle Construction (SFC) may fail to find enough subcontractors to help with all the 11 projects

If the house costs more than the actual cost of $500,000 to finish the project

If the Silver Fiddle Construction (SFC) receives faulty appliances such as kitchen appliances.

Risk assessment form to analyze identified risks

Risk Event Likelihood Impact Detection Difficulties When

Unfavorable weather 4 6 4 From when groundbreaking begins till completion

Workers strike 2 2 2 Throughout the whole project

Czopek’s change their mind on the part of the house

3 5 5 After the foundation has been poured and frame built

Need more materials than what is projected 3 4 2 Early stages of development

Receive faulty appliances 2 4 2 End of the project or when the appliances are installed

House costs more than the projected cost 3 3 2 Throughout the project’s completion

Less subcontractors – – – Prior to beginning the project

Developing a risk response matrix similar to outline how to deal with each of the risks

Risk event Response Contingency planning Trigger Who is responsible

Unfavorable weather Retain Working around until the issue of weather clears up When unfavorable weather is predicted for the future No one

Workers strike Avoid Avoid all cost and if it continues to happen seek for other subcontractor Workers start to complain Kimberly and Ronald

Czopek’s change their mind on the part of the house

Avoid Avoid through communication if this will make them to feel happy The Czopek’s may start to ask for additional work to be added to part of the house Kimberly, Ronald, subcontracted companies

Need more materials than what is projected Avoid Avoid by ordering more projects Materials start to be scarce The subcontracted Companies

Receive faulty appliances Avoid Go for a reputable supplier Appliances malfunction General contractor

House costs more than the projected cost Avoid Get insurance in the beginning Start to exceed the budget General contractor and book keeper

Less subcontractors Mitigate Outsource reliable company Project is a month away from beginning General contractor

References

HYPERLINK “http://www.bibme.org/” o “Edit this item” Larson, E., & Gray, C. (2003). Project management. The Managerial process. Retrieved December 27, 2013, from http://www.engr.sjsu.edu/fayad/current.courses/cmpe203-fall2013/docs/Articles/Project%20Management%205th%20Edition.pdf

HYPERLINK “http://www.bibme.org/” o “Edit this item” Lientz, B. P., & Larssen, L. (2006). Risk management for IT projects: how to deal with over 150 issues and risks. London: Elsevier/Butterworth-Heinemann.

HYPERLINK “http://www.bibme.org/” o “Edit this item” MacCrimmon, K. R., Wehrung, D. A., & Stanbury, W. T. (2006). Taking risks: the management of uncertainty. New York: Free Press ;.

HYPERLINK “http://www.bibme.org/” o “Edit this item” Saporita, R. (2006). Managing risks in design & construction projects. New York: ASME Press.