Project Risk Management Plan in Renovating a Kitchen

Effective risk management is crucial for ensuring project success. This is true for not only large, complex projects, but also small and less complex projects such as renovating the kitchen at one’s residence. Kitchen renovation is a project that may involve substantive expenditure, hence the need for proper identification, analysis, and mitigation of the associated risks. Generally, the major risks that may arise during the renovation of the kitchen relate to the following aspects: financial loss, damage, security, the contractor, and supply of inputs. For instance, there could be budget overrun, theft of supplies, accidents and injuries, delivery delays, and unfavorable weather. These risks must be carefully identified, assessed, mitigated, monitored, and controlled to ensure the kitchen renovation project succeeds. This paper provides a comprehensive risk management plan for the project. First, the top 20 risks associated with the project are identified, along with their likelihood of occurrence and impact on the project. Next, attention is paid to mitigation strategy. This section outlines the strategy or strategies for mitigating each identified risk. Risk response, monitoring, and control are addressed in the following section. Finally, critical success factors and implementation issues are highlighted.
Risk Identification and Analysis
The first step in the risk management plan involves identifying risks as well as assessing their likelihood of occurrence and impact on the project (Hardaker, Raud & Anderson, 1997). In the case of kitchen renovation, risks begin even before the commencement of the actual work. Most renovations go smoothly, but there are many issues that can arise, consequently affecting elements such as project budget, project schedule, and liability. Just to name a few, there could arise substandard work, undiscovered mold, dangerous materials from prior construction work (e.g. lead paint and asbestos), delays in project completion, delays in the delivery of supplies, vandalism, and unfavorable weather events. It is important to assess what could possibly happen, and who will be liable if/when those events occur.
After identifying the risks, an analysis must be carried out to ascertain the probability of occurrence and impact on the project. This can be achieved using quantitative or qualitative techniques, or both (Project Management Institute [PMI], 2008). In this case, however, the qualitative approach would be ideal. Quantitative techniques are usually applied in large, complex projects. Renovating a kitchen is arguably not a complex undertaking, hence the appropriateness of the qualitative approach. Qualitative risk analysis simply involves subjective assessments of the likelihood of risk occurrence and the possible impact of risk on the project. Table 1 summarizes the top 20 risks associated with the project as well as their probability of occurrence and impact on the project.
Table 1: Identified risks, likelihood of occurrence, and impact
Risk
Likelihood
Impact
General contractor is not competent enough to complete task adequately (Costa & Manning, 2005).
Low
Entire project
Project goes over budget and is completed in a much longer timeframe than what was originally projected (Costa & Manning, 2005).
Low
Entire project
Loss of money due to an accident or fire, litigation stemming from an accident or injury, and/or theft of supplies and tools (Costa & Manning, 2005; Freed, 2011).
Low
Entire project
Subcontractors hired are not competent, causing delays, problems, and loss of money.
Low
Entire project
Security guard hired is incompetent or unreliable: unable to protect the home and the construction site from losses and damages.
Low
Entire project
Crane operator is incompetent: causing delays and potential injuries and possible litigation (Nam & Kim, 2014).
Low
Entire project
Insurance agent is not competent.
Moderate
Entire project
Homeowner does not adequately increase the projected value of the home upon completion of remodeling.
Low
Entire project
Remodeling process exposes the home to damaging or distressing weather events (a hurricane, tornado, blizzard or even a heat wave could cause forced delays to the project and more expenditure) (HSB, 2017).
Low
Entire project
Work completed is not up to code or is otherwise unsound or faulty (HSB, 2017).
Low
Entire project
Poor communication with suppliers (this may cause, for example, delays in receiving supplies) and poor communication between the general contractor and owner (this may cause, for instance, confusion over the materials required) (Freed, 2011).
Moderate
Entire project
Deadline missed and team cannot finish project: new general contractor and subcontractors may have to be brought in who are not familiar with the project thus far or the work already completed.
Low
Entire project
Supplies/appliances arrive showing signs of tampering or faultiness: this may cause another delay and more costs to the project.
Low
Entire project
Mold discovery: if during the remodeling project, mold is discovered anywhere on the premises, then this could lead to delays, added costs, not to mention potential litigation (Paich, 2014).
Low
Entire project
Permits are not properly procured or applied for: this can lead to delays or fines from the city inspector.
Low
Entire project
Dust becomes a major liability: the general contractor does not properly control dust nor make the adequate preparations to control dust, such as sealing up air vents, sealing doors and covering up items that cannot be transported.
Moderate
Entire project
Lead paint is discovered on the job site: this is a more common risk for homes that were built before 1976. If this is discovered during the job, it will be a major liability to the completion of the project as a whole (Paich, 2014).
Low
Entire project
Discovery of asbestos in pipes, ducts, or in the insulation of the furnace or in supplies such as the cement siding or in the floor coverings or in the spackling materials: this can cause massive delays along with potential litigation (Paich, 2014).
Low
Entire project
Home becomes riddled with toxicity: volatile organic compounds are used in many home renovation projects and can seep into the rest of the home, making it unsafe and hazardous, even causing illness or death.
Moderate
Entire project
Construction site becomes the target of vandalism: causing delays and added costs to the project, and creating an unsafe work environment (Will & Baker, 2007).
Low
Entire project
The risks identified in Table 1 are the ones that the project manager will prioritize. Risk prioritization is vital for ensuring resources are allocated where they are needed most (PMI, 2008). As seen in Table 1, the major risks associated with the kitchen renovation project have low to moderate likelihood of occurrence. Nonetheless, the impact of the risks could be significant, affecting the entire project. Major outcomes that are likely to be experienced in the event of risk occurrence include project delays, added costs, litigation, illness, injury, and even death. Hence, a comprehensive risk mitigation strategy is crucial for avoiding or minimizing these risks and their impact on the project.
Risk Mitigation
Risk mitigation essentially involves taking steps to avoid or minimize risk (Smith, Merna Jobling, 2014). It is the step that succeeds the risk identification and analysis stages, and entails planning responses to the identified risks. This results in a predetermined plan for addressing risks in the event of occurrence. Numerous measures will need to be taken to mitigate the risks identified in Table 1. One of the risks that may occur is damage to property as a result of events such as fire and bad weather. This risk can be minimized by, for instance, removing all items in the vicinity of the kitchen before commencement of work, hiring a competent contractor, and taking an insurance cover for property. Other risks relate to security of the site. Removing valuable items from the site, working with a competent contractor, and employing a diligent security guard can be effective ways of mitigating security risks. There are also risks relating to the contractor and subcontractors – e.g. poor workmanship, delivery of poor quality supplies, and delays in the delivery of materials. Hiring a competent contractor and subcontractors will be useful in mitigating contractor and supplier risks.
Risk mitigation involves not only specifying the risk mitigation strategy, but also the individuals or entities responsible for mitigating each identified risk (Dinsmore & Cabanis-Brewin, 2011). A construction project such as this one involves several stakeholders. The project involves the homeowner, the project manager, the general contractor, subcontractors, equipment operators, suppliers, and the insurance agent. All these stakeholders have important roles to play with respect to risk mitigation. For instance, the homeowner must conduct due diligence before hiring a general contractor to ensure the risk of contractor incompetence is avoided. Similarly, the general contractor should check the house for lead paint, mold, and asbestos to avoid or minimize the risks associated with these phenomena. Table 2 summarizes the measures that should be undertaken to mitigate each identified risk and the entities responsible for mitigating each risk.
Table 2: Risk mitigation strategies and responsibilities
Risk
Mitigation Strategy and Responsibility
General contractor is not competent enough to complete task adequately (Costa & Manning, 2005).
· Home owner will conduct due diligence (e.g. samples of work and checks with third party entities) to ensure a licensed, competent, and insured general contractor is hired;
· Homeowner will rely on third party professionals (e.g. contracting professionals) to ensure everything is in order
Project goes over budget and is completed in a much longer timeframe than what was originally projected (Costa & Manning, 2005).
· Home owner will hire a competent project manager to ensure time is managed effectively.
Loss of money due to an accident or fire, litigation stemming from an accident or injury, and/or theft of supplies and tools (Costa & Manning, 2005; Freed, 2011).
· Project manager and general contractor will ensure all necessary safety precautions are followed at all times;
· Homeowner and project manager will hire a diligent security guard;
· General contractor will remove all items in the vicinity of the kitchen before commencement of work;
· Homeowner will take an insurance cover for property.
Subcontractors hired are not competent, causing delays, problems, and loss of money.
· Homeowner, project manager, and general contractor will thoroughly scrutinize the qualifications of all subcontractors to ensure competent subcontractors are hired.
Security guard hired is incompetent or unreliable: unable to protect the home and the construction site from losses and damages.
· Homeowner and project manager will hire a diligent security guard.
Crane operator is incompetent: causing delays and potential injuries and possible litigation (Nam & Kim, 2014).
· General contractor will hire an experienced crane operator with proven work experience.
Insurance agent is not competent.
· Homeowner will hire a competent insurance agent based on recommendations.
Homeowner does not adequately increase the projected value of the home upon completion of remodeling.
· Homeowner will hire an insurance agent competent enough to increase the value of the home after remodeling.
Remodeling process exposes the home to damaging or distressing weather events (a hurricane, tornado, blizzard or even a heat wave could cause forced delays to the project and more expenditure) (HSB, 2017).
· Homeowner and project manager will select a time of the year that is unlikely to experiences damaging or distressing weather;
· Homeowner will take insurance against bad weather
Work completed is not up to code or is otherwise unsound or faulty (HSB, 2017).
· Homeowner will select a contractor with a proven record of delivering projects as per the relevant code.
Poor communication with suppliers (this may cause, for example, delays in receiving supplies) and poor communication between the general contractor and owner (this may cause, for instance, confusion over the materials required) (Freed, 2011).
· General contractor and project manager will use sound and clear communication with suppliers;
· Homeowner will use visual aids to ensure the general contractor has a clear understanding of the materials required with respect to specifications;
· Every important communication will be in writing.
Deadline missed and team cannot finish project: new general contractor and subcontractors may have to be brought in who are not familiar with the project thus far or the work already completed.
· Homeowner will hire a competent project manager and general contractor;
· Project manager and general contractor will hire competent subcontractors;
· Project manager will keep the project on schedule.
Supplies/appliances arrive showing signs of tampering or faultiness: this may cause another delay and more costs to the project.
· General contractor will use trusted suppliers to ensure supplies and appliances meet the required specifications.
Mold discovery: if during the remodeling project, mold is discovered anywhere on the premises, then this could lead to delays, added costs, not to mention potential litigation (Paich, 2014).
· General contractor will check the house for mold prior to the commencement of work.
Permits are not properly procured or applied for: this can lead to delays or fines from the city inspector.
· Project manager will ensure all legal requirements are filed in good time.
Dust becomes a major liability: the general contractor does not properly control dust nor make the adequate preparations to control dust, such as sealing up air vents, sealing doors and covering up items that cannot be transported.
· General contractor will engage in due diligence to manage dust.
Lead paint is discovered on the job site: this is a more common risk for homes that were built before 1976. If this is discovered during the job, it will be a major liability to the completion of the project as a whole (Paich, 2014).
· General contractor will check the house for lead prior to commencement of work.
Discovery of asbestos in pipes, ducts, or in the insulation of the furnace or in supplies such as the cement siding or in the floor coverings or in the spackling materials: this can cause massive delays along with potential litigation (Paich, 2014).
· General contractor will check the house for asbestos prior to commencement of work.
Home becomes riddled with toxicity: volatile organic compounds are used in many home renovation projects and can seep into the rest of the home, making it unsafe and hazardous, even causing illness or death.
· Project manager will ensure toxic substances are kept at a minimum.
Construction site becomes the target of vandalism: causing delays and added costs to the project, and creating an unsafe work environment (Will & Baker, 2007).
· A diligent security guard will be hired;
· Security guard will protect the site from vandalism;
· Homeowner and general contractor will lock all doors and cover any open areas when workers are not present to avoid or minimize vandalism;
· Homeowner will install security cameras at the site;
· General contractor will remove all valuable items from the site before commencement of work;
· Homeowner will take an insurance cover for the property.
Risk Response, Monitoring and Control
The final aspects of the risk management process involve monitoring, responding to, and controlling risk (PMI, 2008). These steps are conducted over the course of executing the project. Once the project commences, monitoring should be done to track the status of the pre-identified risks. The project manager conducts an ongoing assessment to ascertain whether any pre-identified risk has occurred and its impact on the project, if any. For instance, as the project progresses, the project manager can check whether there have been instances of mold discovery, delays in the delivery of supplies, vandalism, and poor communication. If a given risk occurs, the project manager should assess whether the identified mitigation strategy was effective in mitigating the risk. Also, the project manager should document efforts done to respond to risk when it occurs. For instance, what was done when mold or asbestos was discovered? What was done when the supplier delivered substandard materials? This is what risk monitoring is all about.
Risk monitoring and control are vital as the project manager is able to not only monitor the status of the project, but also identify unexpected risks that were not included in the original risk list (Dinsmore & Cabanis-Brewin, 2011). As an example, there could be an unanticipated supply shortage. For instance, if a carpet warehouse is ravaged by fire, the supplier may be unable to deliver the required carpets. Likewise, inventory or delivery errors may cause the supplier not to deliver supplies in good time. Also, employees may “go rogue” and engage in conduct that may not be immediately noticeable to the general contractor, such as theft and shoddy workmanship. Such possibilities call for meticulous risk monitoring and control.
Regular meetings with stakeholders are important for monitoring and controlling risk during the course of the project. Stakeholder meetings provide an opportunity for project stakeholders to review the progress of the project (Smith, Merna & Jobling, 2014). Key stakeholders in this project include the homeowner, the project manager, and the general contractor. These stakeholders should meet frequently to review the project’s status in terms of risk management. This way, key stakeholders will be able to assess risks at various phases of the renovation project. The review can lead to a change in risk mitigation strategy. For instance, stakeholders may realize that the security guard is not able to hinder vandalism, consequently resorting to a different security technique.
One of the ways the project manager measures the success of the project is through risk monitoring and control (PMI, 2008). Risk monitoring and control enables the project manager to measure whether everything is going or went according to plan. The project manager evaluates whether each of the identified risks was effectively mitigated. This is crucial for determining the strengths and weaknesses of the risk management plan. In this case, for instance, the project manager would want to know whether hiring a security guard was effective in mitigating the risk of vandalism. The project manager would also want to know whether the communication techniques used were successful in ensuring effective communication between the homeowner and the general contractor or between the general contractor and suppliers.
Critical Success Factors and Implementation Issues
A good risk management plan also considers critical success factors (CSFs) and anticipated implementation issues. There are certain factors that must exist for the project to be a success (PMI, 2008). The relevant stakeholders must closely monitor these factors, which are often beyond the project manager’s control (Kendrick, 2009). Three factors that will be critical to the success of this project include project funding (the financial resources required to accomplish the renovation), stakeholder commitment, and effective communication. Monitoring these factors increases the chances of success. For instance, ensuring funds are available whenever required is essential for avoiding or minimizing delays in project completion or the delivery of materials. Likewise, the commitment of every stakeholder – from the homeowner and the project manager to the general contractor and subcontractors – to their obligations, duties, and responsibilities is imperative for minimizing conflicts between stakeholders and ensuring successful project completion (Dinsmore & Cabanis-Brewin, 2011). Effective communication will ensure smooth flow of information between the various stakeholders involved, consequently facilitating clear understanding of responsibilities, requirements, specifications, and unexpected project changes (Kendrick, 2009).
In spite of the meticulousness of the risk management plan, some issues actually emerge in the course of implementation. The project manager must clearly understand and anticipate those issues to ensure the commencement, progress, and/or completion of the project is not hindered (Kendrick, 2009). Two issues to anticipate in this case include conflict between stakeholders (e.g. conflict between the homeowner and the general contractor) and communication breakdown. Conflict in the project environment occurs due to differences in objectives, priorities, and perspectives (PMI, 2008). Communication breakdown stems from factors such as ambiguity in communication, delays in relaying information, and/or use of an inappropriate communication channel (Dinsmore & Cabanis-Brewin, 2011). As these issues may negatively affect the project, the project manager should have an action plan detailing how the issues should be dealt with (Kelly, 2015).
Issues may not necessarily be negative – some may be positive. Positive issues are opportunities that may positively affect the project (Kahkonen & Artto, 2000). The project manager should as well be keen on opportunities during project implementation. Some of the opportunities that may emerge in this case include completion of the project faster than expected, delivery of supplies earlier than expected, and completion of the project at a lower cost than expected. The project manager should take advantage of such opportunities to deliver even better project outcomes. The action plan should also outline how the opportunities can be exploited.
Conclusion
Overall, if properly renovated, the kitchen could provide a positive return on investment (ROI) to the homeowner. The remodeling should ensure the renovated kitchen has a better design and better aesthetic appeal than it currently is. Nonetheless, numerous risks are involved, which if not effectively mitigated may cause the project not to deliver the expected ROI. The key to ensuring that the project delivers the desired return lies with risk management. Risk management allows the project manager to identify the risks inherent in the project, and to take steps along the way to mitigate those risks as much as possible. Whereas it is difficult or impossible to completely eliminate risk, most of the risks associated with the project can be effectively mitigated, monitored, and controlled. To achieve this, however, effective communication and stakeholder commitment are vital. These two issues have significant implications for project success; especially in terms of minimizing conflict between stakeholders and ensuring everything goes according to plan. Most importantly, the project manager must be wary of issues that arise in the course of project execution and take the necessary steps to address or take advantage of those issues.




References
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