Preliminary Study of Risk Factors

Introduction

Projects are designed to achieve predestined objectives and attain or exceed the respective stakeholders’ expectations. An effectively executed project results in a unique service or product that did not previously exist. A project is regarded as successful if the predetermined goals and objectives are achieved for the stakeholders’ fulfilment. Rasid et al. support the perspective that the “ability to effectively manage a project is essential for organizational sustainability” (164). Thus, the significance of managing projects cannot be undervalued.

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Project management

The delivery of the project outcome is based on the efficacy with which the requisite project processes are applied. The fundamental project management processes include project initiation, planning, execution, controlling, and monitoring and closure. The respective processes must be optimally managed. Project management involves the application of skills, tools, techniques, and knowledge on the respective project activities. Project management improves an organization’s capacity to institute the project management processes consistently. Moreover, project management increases the probability of attaining the project outcome through continuous improvement. This goal is achievable as the lessons learned from the project processes form the basis for designing the continuous project improvement plan (Rasid et al. 265).

The project management process should be undertaken within the time, scope, quality, and cost constraints. Wienclaw supports the view that projects must focus on delivering technically acceptable outcomes within the stipulated time and budgetary frameworks (54). Wienclaw further affirms that project management attempts to minimize the occurrence of risks associated with a particular project (55). Consequently, the project benefits are maximized. Furthermore, the project is completed within the stipulated resource constraint. Therefore, project management is the art of controlling a project.

Risk management

Projects encounter diverse risks and challenges that limit their successful completion. The nature of risk varies across different projects. The impact of risk depends on the project approach and scope. The complexity associated with a project risk increases as an organization becomes more persistent on special-purpose projects. The risk profile of a particular project is influenced by the complexity of a project. Examples of projects characterized by high complexity and hence the risk profile include project initiatives that amount to remarkable organizational change such as mergers and acquisitions, implementation of new technology, compliance with regulatory requirements and cost-reduction initiatives. In addition to the above aspects, the likelihood of project risk increasing is considerably high due to factors such as ineffective internal project processes and methods, the lack of adequate knowledge on issues regarding scheduling, budgeting, and evaluation of project success.

The above aspects highlight the significance of incorporating effective risk management, which entails the systematic identification, evaluation, and prioritization of different risk categories. Thus, the project manager’s ability to coordinate and apply the resources necessary to reduce, monitor, and control the likelihood of risk occurrence or mitigating the impact of the unfortunate events is increased. Therefore, risk management forms the foundation on which the project manager integrates an action-oriented approach (Benta, Podean, and Mircean 146).

Critical risk project points

In the process of risk management, the project manager should take note of the critical risk project points. This aspect entails the process of identifying the prospective trouble points. Past studies identify three main sources of risk that include the business environment, project framework, and execution. Rasid et al. state that projects are not implemented in isolation but as a component of a larger organization (267). Thus, they are affected by factors beyond the project manager’s capacity to control. The project manager must take into account the respective internal and external environmental factors. Examples of external factors include market changes, competition, regulatory changes, and changes in supplier or customer behavior. On the contrary, the internal factors arise from management operations, organizational culture, and the stakeholders. The environmental factors should be considered in the process of defining the project scope and content (“Project Management Institute” 130).

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The project framework is comprised of specific areas that can be directly controlled by the project manager. The components of the project framework relate to project sponsorship, project management structures, staffing and dependencies. The project’s framework elements are guided by internal procedures and policies. Nevertheless, the elements can be adjusted (Rasid et al. 268). The project scope and the respective approaches used in executing the diverse project activities carry inherent risks. The project scope relates to the various processes that should be integrated to complete the project successfully hence achieving the anticipated benefits. On the other hand, execution entails the diverse activities undertaken in the quest to attain the expected outcome. The manager should ensure that the project activities are undertaken concurrently.

Risk management processes

Managing risk is comprised of diverse processes that include risk management planning, risk identification, qualitative and quantitative risk analysis, risk response planning, and risk monitoring and control.

Risk management planning

This process entails the determination of the approaches and plans to be incorporated in undertaking the risk management activities. According to the “Project Management Institute”, “it is imperative to plan for the risk management processes that follow to ensure that the level, type and visibility of risk management commensurate with both the risk and importance of the project to the organization” (129). The critical inputs in risk management planning include the project charter, defining the risk management policies, defining the project roles and responsibilities, assessing the project stakeholders’ risk tolerance and developing the work breakdown structure.

During the risk management planning process, the project manager should consider holding planning meetings. The key participants of the planning meetings should include the project team leaders, key stakeholders, and the project manager. The outcome of the risk management planning entails a risk management plan specifying the methodology, roles, and responsibilities, budgeting, scoring and interpretation, and reporting formats (“Project Management Institute” 134).

Risk identification

This process entails the determination of the respective risks that might influence a project and documenting their respective characteristics. The risk identification process should be iterative. The first iterative should be undertaken by a section of the risk management team while the second iterative should be conducted by the entire project stakeholders and team members. The critical inputs during the risk identification include the risk management plan and planning outputs. The major risk categories that should be identified entail organizational risks such as time, scope and cost, external risks, project management risks, and performance, quality and technical risks. Some of the critical tools and techniques that should be integrated during the risk identification process entail information gathering techniques such as brainstorming, checklists, assumptions analysis, diagramming techniques, Delphi technique, interviewing and the SWOT analysis. Effective implementation of risk identification enables the project manager to understand the risks and the respective triggers (“Project Management Institute” 140).

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Qualitative and quantitative risks analysis

The risks identified should be analyzed comprehensively using qualitative and quantitative techniques. The analysis forms the basis of which decision to address and respond to risk is addressed. The tools and techniques that should be integrated include the risk probability and impact, risk rating, project assumption testing and data precision ranking. On the other hand, the quantitative risks analysis tools and techniques include interviewing, sensitivity analysis, simulation, and decision tree analysis. The outputs of the qualitative and quantitative risk analysis include the development of a prioritized list of quantified lists and effective determination of the chances of attaining the time and cost objectives.

Risk response planning

This process involves the process of stipulating the options and actions that should be undertaken to reduce the threats and increase the project opportunities. Risk response planning further involves the process of identifying and assigning risk response responsibility to a specific stakeholder. The risk response planning process is essential in ensuring that the identified risk is addressed effectively.

Risk monitoring and control

This process entails the continuous evaluation of the identified risk, identifying new risks, and examining the efficacy in reducing risk. Risk monitoring and control should be an ongoing process during the project life.

Quality management

“Project Management Institute” defines project quality management as the requisite processes that should be integrated into a project to satisfy its purpose (108). The fundamental quality management processes include quality planning, quality control, and quality assurance. The quality planning process involves the formulation of the quality standards that should be adhered to during the project implementation process and the determination of how the standards should be satisfied. The inputs of the quality planning process include the quality policy, product description, and scope statement. The essential quality planning tools and techniques include benchmarking, flowcharting, and cost-benefit analysis. Effective quality planning culminates in the formulation of a quality management plan, operational definitions, and checklist. Quality assurance entails the process of ensuring that systematic and planned project activities are accomplished within the set quality system. The motive of quality assurance is to provide confidence that the project will attain the appropriate quality standards. Conversely, quality control refers to the different activities that are undertaken to ensure compliance with quality standards. Moreover, quality control involves identifying the approaches to be adopted in eliminating the factors that lead to unsatisfactory results.

Quality function deployment

One of the critical aspects in entrenching total quality management in a particular product entails ensuring that the product design and the relevant processes are linked adequately. This goal can be achieved through quality function deployment, which entails the process of translating the project expectations into technical requirements. Teller, Kock, and Georg assert that quality function deployment ensures that the project design targets are aligned with the quality assurance points (75). Subsequently, quality function deployment ensures that the target audience input is taken into consideration throughout the entire project execution process. The quality deployment function is comprised of two main aspects that include quality and function. Under the quality deployment function, the customers’ input in the design process is entrenched. Conversely, the function deployment function ensures that the different project functions and units are aligned optimally with the design-to-manufacturing process. This goal is attained through the effective formation of the project design team.

Zwikael asserts that Quality Function Deployment is founded on the ideas of resource commitment, performance evaluation, and timing (65). Moreover, different aspects are involved in the deployment process of quality function. They include product concept planning, production tools and manufacturing process, product development and specification and actual production of the desired product. The product concept planning emanates from the findings of market research, which forms the foundation on which the project ideas and concept models are generated. On the other hand, product development and specification involve the formulation of the project tests and prototypes, while the manufacturing processes and production tools are determined depending on the project component specification.

Different benefits can be accrued by entrenching quality function deployment. The customer requirement specification ensures that the project is aligned with the target audience’s needs. Therefore, it increases the value of the project and hence the level of stakeholder satisfaction. Secondly, QFD involves an internal analysis of the technical characteristics of the project to determine whether they are agreeable to the stakeholders’ requirements. The QFD process further entails undertaking a trade-off analysis that entails the determination of conflicting customer requirements.

One of the valuable tools in implementing the QFD includes the matrix diagram that enables the project manager to organize the project data effectively. Thus, the project manager’s capacity to facilitate project improvement is increased. The QFD ensures that the requisite information in managing project quality is effectively organized in a structure commonly referred to as the ‘House of Quality’. The ‘house of quality’ underlines the relationship between the dependent and independent variables in the project. Effective application of the QFD contributes to the remarkable attainment of project results. Some of the notable companies that have successfully implemented the QFD include the Chrysler Motors Corporation.

Conclusion

Projects should focus on achieving an outcome that amounts to a high level of stakeholder satisfaction. However, attaining this goal is subject to different internal and external forces that might amount to deviation from the intended outcome. Therefore, the application of effective project practices and processes is critical. Some of the fundamental practices relate to project management, risk management and quality management.

Works Cited

Benta, Dan, Ionas Podean, and Cristian Mircean. “On best practices for risk management in complex projects.” Informatica Economica 15.2 (2011): 142-150. Print.

Project Management Institute: A guide to the project management body of Knowledge. Pennsylvania: Project Management Institute, 2001. Print.

Rasid, Siti, Wan Khairuzzaman, Nor Mohammad, and Choi Sang. “Assessing adoption of project management knowledge areas and maturity level; Case study of a public agency in Malaysia.” Journal of Management in Engineering 3.4 (2014): 264-270. Print.

Teller, Juliane, Alexander Kock, and Hans Georg. “Risk management in project portfolios is more than managing project risks; a contingency perspective on risk management.” Project Management Journal 45.4 (2014): 67-80. Print.

Wienclaw, Ruth. Project management, New York: Research Starters, 2015. Print.

Zwikael, Ofer. The relative importance of PMBOK guide’s nine knowledge areas during project planning, Canberra: The Australian National University, 2009. Print.

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