The Identification and Reduction of Risk in Project Management

Résumé du document

The main goal of this report is to discuss the process of identification and risk reduction in project management. The report will target two vital tools and techniques which are crucial for risk management and its significance. The level of failures among large, medium and even small projects is such that the topic of risk and management analysis gives room for a detailed research to provide answers to a number of questions. Among the many favored queries, one of the key questions asked is whether companies are genuinely aware of the different methods and techniques available for risk and management analysis in today's world. Or to articulate it the other way, whether too many projects exist which lack a well designed and thought out risk assessment process. The reasons could be numerous. However, the most common reason could be the lack of qualified project managers. Another question could be the need for in depth research in order to complement what currently exists. This article does not focus on answering all the questions directly. The aim however is to review and explain the context, the benefits and the importance of risk management. Many projects fail due to unforeseen or unavoidable reasons (as per Chapman and Ward). This does not declare that many projects can also falter due to avoidable reasons.

Extraits

[...] The definition baseline: concerns the particular route settled upon to achieve the project requirements. It is the target in terms of high-level product design, function and performance, the costs involved, the contractual aspects and the plan committed (CARTER, B. HANCOCK, T. MORIN, JM. ROBINS, N). The technical baseline: is the response to the definition baseline requirements, which embodies finalising the design of the product architecture and its implementation, and the means, of ensuring that it satisfies the definition requirements (CARTER, B. [...]

[...] system Station Pipes construction & SCADA system construction Laying pipes Laying pipes Laying pipes Laying pipes Laying pipes in normal across river across various in slushy in offshore terrain crossings terrain location Pump Delivery Scraper Offshore stations stations stations terminal Survey Land Statutory Power Design and Material Works Implementation acquisition clearance supply detailed procurement contract engineering Figure 3 - Work breakdown structure of “Cross-country Petroleum Pipeline” project Level project Level work packages Level work packages Level activities of each work package Appendix 6 Table 8 - Probability and severity of risk factors Table 9 - The cost data (Million for each package against various responses Appendix 7 Figure 4 - Decision tree for pipeline laying work package Figure 5 - Decision tree for river crossing work package Figure 6 - Decision tree for station construction work package Figure 7 - Decision tree for telecommunication and cathodic protection work package Appendix 8 Table 10 - The EMV for pipeline laying project Table 11 - The EMV for pipeline laying across river Table 12 - The EMV for station construction Table 13 - The EMV for telecommunication and SCADA system Table 14 - The decisions emerge from the decision tree approach of risk management For each work package Bibliography Baccarini, D. “Risk management Australian Style Theory vs. Practice” Proceedings of the Project Management Institute Annual Seminars & Symposium, Nov. Carter, B. [...]

[...] Using the information from Table 5 (appendix pair wise comparisons were made for the project. Then, the risk management group came up with a comparison matrix (Table appendix of the factor level, that shows the likelihood of the risk occurring at this level. The pair wise comparison performed in the other levels resulted in the determination of the likelihood of occurrence of risk sub factors. The probabilities for both factors and sub factors are listed in the detailed analysis of the AHP model in Table 7 (appendix 4). [...]

[...] This study presented the application of a risk management methodology through a project. Despite the subjective nature of risk, the AHP allows an objective analysis of the effect of risk on a project. The methodology also allows active involvement of experienced specialists who work closely with the top management. The establishment of the AHP model and its combination with the decision tree analysis (DTA) framework provided the project group with a very detailed and clear decision support system (DSS). Such a DSS was very helpful in making decision for this particular project, moreover in general it is a powerful tool for project risk management. [...]

[...] This list does not intend to be exhaustive, but it encompasses the most common techniques used in project risk management. Some authors like Burke (1999) also suggest enhancing the risk identification document by including useful characteristics of the risks like triggers and their effect on the project. At this stage of the process the likelihood of the identified risks of occurring is not important, their identification is. Started as early as possible, risk identification is a continuous task throughout the project life cycle as new risks can show up at any time during the project. [...]