SYSTEMATIC IDENTIFICATION, ANALYSIS, AND ASSESSMENT OF RISK AND DEALING WITH THE RESULTS CONTRIBUTES SIGNIFICANTLY TO THE SUCCESS OF PROJECTS

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Introduction

Projects own different attributes in terms of uniqueness, interests, and complexity. Similarly, the demands of every project are also diverse in terms of time management, planning, execution and assessment activities (Cooper, Grey, and Raymond, 2005).

This demand for the project requires the association of various factors under the management of that project. For example, a range of resources, financial assistance, people management, time measurement, accessibility evaluation, technological indulgence, legal obligations, economic impacts, pressure from the competition, etc.

Under all these circumstances, the project management is mandated to track the record of its initial goal and its current ongoing.

The fact is introduced to every project management process when the outcomes are not the same as desired or listed. This alteration results from associated risk in the project management process (Cooper, Grey, and Raymond, 2005).

In response, the management of a project is essential, but project risk management is the most essential process for successful projects.

Concerning this statement, the following study has quantified attributes of project risk management with the help of a project life-cycle example. Eventually, an obstacle in goal accomplishment, the significance of risk identification and the importance of risk management are highlighted.

Risk Analysis and its Importance

The chance to get an altered outcome is known as a risk. In other words, the exposure to the uncertainty present in every procedure is termed an associated risk in that project (APM, 2004).

Moreover, the extent of loss or gain is determined by the associated risk levels in any project. Hence, two risks are found under every project management list, namely, the probability of something to happen and its consequences on the project.

The outcome of risk can alter the initially set goal, which will lead to ineffective execution of project management. Hence, identifying and analysing the probability of any uncertainty is essential to align with its outcome.

Risk identification is referred to as determining what, how and why can anything happen. Later on, the measures for mitigating and preventing the likelihood of uncertain or unpleasant events while executing a project is crucial for a successful project.

Significance of Risk Management

Risk analysis is the systematic use of available information to determine how often specified events may occur and the magnitude of their consequences. It may use a wide variety of mathematical and other models and techniques.

As the association of any risk is critical to be highlighted, the next step is to set measures for analysing the risk and preventing it from occurring. In detail, risk analysis is referred to as the employment of relevant information to measure the magnitude of the possibility of occurrence of an uncertain event. Here, the risk analysis is essential to determine suitable treatment for that risk is easy to be set (Cooper, Grey, and Raymond, 2005). Morever, APM (2004) has defined in their book that risk treatment leads to the successful implementation of projects free from errors. Provided, risk treatment is backed up by risk analysis. Therefore, risk identification, analysis, evaluation, and treatment are crucial elements of a risk management program that yields an effective project.

Project Life Cycle

Throughout the ongoing project, the entire team shares a single goal in terms of project accomplishment effectively. In response, every project possesses a point to begin, an interface and a point to end (Cooper, Grey, and Raymond, 2005). Under these defined stages, the activities are controlled systematically until the outcome is obtained. For every project, the stages remain similar and repeat for every induction or reduction decision in a project. Hence, this repetition and constant phased stages have yielded to the determination of the project life-cycle. In detail, the project life-cycle composes four basic phases encountered by every project (Kendrick, 2015). Firstly, the initiation phase determines the requirements of any project. Secondly, the planning phase is developed that quantifies essential procedures and resource allocation for the project. Thirdly, the execution phase evolves soon after the planning phase. Ultimately, the closure phase takes place when the project’s goals are accomplished.

Example

Considering examples is essential to critically analyse the project life cycle and management of risk under it. Therefore, this study has employed the example of Subway Station near London Bridge. In late 2018, the subway station was completed. The project was initiated in 2010, and it took 8 years for completion with a total executed cost of £1 17 billion. The construction was massive, with 80 new houses in the region. Due to its huge scope, this project has underlined several associated risks. Each of which is discussed below as per the life cycle of the project;

Initiation Phase

At first, the initiation phase took place, and the need to construct Subway Road on the London Bridge was determined. The requirement of elongated tracks, shops, and more houses for the country gave rise to initiation and framework formation for London Bridge Subway Road (LBSR). As the project was massive, it contributed to several attributes of the economy of London.

Associated Risk

Every project encounters the presence of risk. Similarly, the associated risks under the initiation phase of establishing LBSR were categorised into two, namely, Network Rail Infrastructure and Thameslink Programme. Under this, the two categories are defined to denote the separate forms of activities imposed during the project planning and execution phase. As initiation is the first phase for project formation, it rests on collecting information and support material to accomplish consent for the project. Any risk at this phase will eventually alter the next phase (planning). Therefore, the determination of risk, measures, and treatment are essential to be noted.

Measures for Addressing Risk

Once the associated risks are determined through risk evaluation and identification techniques, the next step is to set measures for addressing the risk. In association with LBSR, the project management has defined a framework for treating the risk associated with the project. In action, Network Rail Infrastructure Projects (NR IP) Risk quantifies the associated risk under network rail infrastructure. Similarly, the risk under the Thameslink Programme was listed and treated in a separate mode. Besides, a separate risk management guide was composed of the project management team soon alongside the planning and resource allocation of the project.

Project Planning Phase

The very next phase after initiation is the planning phase for any project. Underpinning risk management into the planning phase of any project is critical as the entire project is dependent on the planned framework. Concerning the example of LBSR, two frameworks for risk management have been designed early at the initiation phase. The planning stage is composed of resource allocation, organisation of resources, induction of people management, consideration of macro and micro factors in the plan, estimation of budget and cost, forecast of duration, the scope of the project, limitation of the project, and many other attributes of the project (APM, 2004; Kendrick, 2015; Cooper et al., 2005).

Associated Risk

The list of associated risks under the project is huge. However, the most crucial risk aligned under the project involves cost-related, schedule, and resource management risks (Cooper et al., 2005). In detail, any ineffective forecast of cost or deficient cost management will delay the execution of project tasks on time. Consequently, the schedule will be affected, and the project will not get completed on time. Similarly, any risk associated with a schedule can affect the quality of the project in the end. Likewise, the risk of mismanaged resources, inadequate people management, and other micro-macro filaments can also either delay the project or affect the outcome quality of it (APM, 2004)

Measures for Addressing Risk

In the case of LBSR, project management has defined active measures for addressing the defined risks. At first, different TLP programs are designed for controlling the risk associated with cost, schedule, and resources. Secondly, a collaborative risk management approach has been employed by the project. Under this approach, risk data was lively visible to the associates of the projects. Further, regular and live reporting of the risk data was practised throughout the project’s planning, which will be implied in the execution. Finally, quantitative risk analysis will be performed by the project’s executors.

Project Execution Phase

Right after planning, the execution of the project takes place. This is the action phase and the most critical one (Kendrick, 2015). This is because the planned strategies are practically imposed. For instance, the planned construction designs for the LBSR project became actionable at this phase.

Associated Risk

The planning phase is the action phase, and it is composed of action based risks (APM, 2004). For instance, risk of resource management, conflict of interest, schedule mismanagement, and deficient cost estimation is the most common and effective risks associated (Cooper et al., 2005). In action, the lack of transparency at the project site can lead to miscommunication. Similarly, communication is also a critical risk aligned with the project. Lack of collaboration among the teams also gives rise to criticalities in the project (Kendrick, 2015).

Measures for Addressing Risk

The aligned risks are huge in number and own probability of occurrence as well. Therefore, different approaches were inducted by the management of LBSR project managers. For instance, a collaborative risk management technique was employed to address the associated risk of the mismanagement of resources. Similarly, transparency was promoted among the team to mitigate the risk of lack of communication. Moreover, regular meetings were scheduled to list any gaps encountered by the project. Moreover, the NR IP risk management program was accessible for placing assumptions for risks and their management. The induction of electronic measures for measuring risk management leads to an active environment where the risk data is easily accessible.

Project Closure Phase

The ultimate phase is closer to the inaugurated project. This phase is essential to review the outcome with the stated goals and vision of the project (APM, 2004). In association with this, the project is closed under the notice of all the project associates. During this phase, the final deliverables are presented, business documents are handed tote owners, suppliers and contractors are terminated, projects’ resources are released (Cooper et al., 2005). Ultimately, the learned lessons are recorded for future assistance in similar projects.

Associated Risk

The risk at this level includes loss of resources, damage of equipment and over-budgeted actions (APM, 2004; Kendrick, 2015). For example, used equipment got damaged right after the execution. Then the project managers are obliged to compensate the respective resources within the given budget. Similarly, any over-budgeted action can disturb the entire estimated cost of the project. This will lead to the ineffective closer of the project that will be recorded in the learned lesson records. Later on, the entire project will be the gain rate of inefficiency.

Measures for Addressing Risk

As the risk at this phase is directly associated with the effectiveness of the project’s outcome, its treatment is crucial. Therefore, the project managers at LBSR have implied techniques like insurance facilities for loss of resources and damage to equipment. Insurance was selected as the critical measure for addressing the risks, personal supervision for every action was also performed by the project supervisors. This will eventually prevent associated risks and the effective accomplishment of the project.

Conclusion

So far, the study has analysed that project management is a complex process that requires systemic intervention at each step. Project management is a critical task, but the management of associated risk under the defined project is also crucial for a successful implication. Moreover, the study has figured out that risk identification is directly a stimulus to the effectiveness of the project outcome. Similarly, risk analysis is significantly performed by project managers to push down the probability of risk. Eventually, the role of project life-cycle in quantifying associated risk and measures to address it was also intense in the case of megaprojects like LBSR.

References

APM. 2004. Project Risk Analysis and Management Guide (2 Ed.). APM Publishing. ISBN: 1903494125

Cooper, D. F., Grey, S., & Raymond, G. 2005. Project Risk Management Guidelines. England: John Wiley & Sons Ltd.

Kendrick, T. 2015. Identifying and Managing Project Risk: Essential Tools for Failure-Proofing Your Project (3 Ed.). AMAZON.