Managing scope, time, cost, and quality risks in projects

Project Risk Management

Risks associated with projects successful completion

A project is an undertaking of human beings towards satisfying world needs. Projects are endeavors with a defined beginning and an end. Projects suffer from scope, time, cost and quality constraints. It is necessary for project managers to manage the risk of developing weak scope. Scope of a project incorporates the objectives of a project, the target population, the output and impact of that endeavor. Therefore, managers of project need to do a problem analysis, stakeholder analysis, environment analysis to know if the project is sustainable (Cleland & King, 1988). On the risk of time, managers need skills on time management. Management of projects requires one to be well versed in developing schedules. Time management involves developing systems that has a specific time of completion and start time.

Scheduling of projects includes hiring of individuals for the accomplishment of projects. There is a need to have a human resource department that caters for the needs of workers. The human resource department is responsible for selecting employees, remuneration and in the award and punishment allocation. In scheduling activities, project managers need to have competency in time management. Time or schedule management requires managers with scheduling and management skills. Managers must know how to use scheduling charts and in developing network diagrams. Network diagrams and scheduling charts are necessary in allocating resources and activities. Management of time involves developing work breakdown structures. Work break down structures is essential in the allocation of projects task and resource distribution (Kwak & Anbari, 2009). Each employee in the organization understands their roles, and records of their performance assist in the allocation of salary.

On the risk of budget, managers need training on cost management. Various tools need consideration in budget management. Management of budgets is critical to project completion. Money can be of high risk to the accomplishment of the project. Budget is a necessity at every stage of the project management cycle. There is always a cost to incur when developing and implementing projects. There is the cost of developing the scope; there is the cost of scheduling, the cost of implementing the project and the cost of evaluation. Cost management involves the use of a variety of tools. Chief finance officers of projects need to have budget management skills.

Chief finance officers in any project helps in the formulation of strategies that affect project activities. Another risk that affect project all over is the risk of not meeting quality standards. Quality is a constraint to project completion. It is a fact that, stakeholder satisfaction is the essence of undertaking a project and their satisfaction is crucial to project accomplishment. Customers of a project define quality. There are policies relating to standards of projects set by the state or governing bodies. ISO standards are truly essential in managing the quality of projects in the market. Since quality is an essential component of any project, management of the same is necessary. Stakeholders of projects include project owners, management, and community. Projects have positive and negative impacts on stakeholders and management teams need to ensure it is of a positive influence.

Identification of need of a project is the first step to completing projects. A problem affecting a society or a certain section of an organization can be the starting point of a project. At this stage in project management stakeholders, need analysis, analysis of the problem are another aspect to consider and one need to analyze the possible outcome of the project. The next steps to the accomplishment of project involve the designing of the project. Design stage of projects involves conceptual analysis of a project. Models representing the project need to be in paper in the form of a logical framework or project cycle. A basic logical framework has the work break down structure, the output needs of a project, the assumptions and possible. Logic frameworks are hugely essential in the management of the project lifecycle.

At the appraisal stage, in the project the chief finance officer analyzes costs of every activity. At this stage, strategy about implementing the project and the amount of the fund, to use comes into perspective. Analysis of strategies at this stage is important since, it show whether the project is technically or financially feasible. Financial resources need consideration in order to fund project activities. In order to fund and manage projects' activities effectively, the project owner and the management team need to answer specific questions. These questions are essential in managing project activities, minimizing risk and analyzing the overall possible benefit of a project. Project team members should understand their current situation, how to meet future situation and should have a clear definition of their future (Pritchard, 2010).

The next step in the management of risks of the project and meeting project goal is the implementation stage. Implementation stage of a project is when real tasks of a project take place. At the stage, the work breakdown structures become practical; costs of activities incurred, and project objectives met. Implementation stage involves management of activities, assumptions, budget and output management. This stage precedes the monitoring stage where, an output of every activity reflected against a certain yardstick set at the strategy formulation stage. Resources usage on activities measured against action plans; immediate output documented. Evaluation is the last stage in the management of projects. At this stage of the project, measurement of project's outcome, impact and benefits need considerations. Instituting a qualitative study to understand the level of efficiency, effectiveness, sustainability and the overall impact of the project to the stakeholders is a good practice (Kutsch, & Hall, 2010).

Risk Processes and Outputs

Risk management planning yield risk management, qualitative risk analysis produces risk register, quantitative risk analysis, of project yield quantitative reports. Risk response strategies involve analysis of risk register, analysis of project plans, and developing contractual agreement to risk mitigation. Contractual agreements involve the contract of employment, which project teams have to sign. Risk monitoring and controls are highly valuable in the management of project activities, development of risk checklist and in formulating corrective actions (Tummala, & Schoenherr, 2011).

Risk Spreadsheet

Risk ID

Risk category

Risk description

Objective

Probability

Impact

Risk rating

Risk responses

10

High

Increase in cost of electrical wire

Cost

2

1

Low

Solicit for cheaper products

02

Moderate

Improvement of transportation channel

Time

4

1

Moderate

Employ qualified employees.

Steps in risk management

Risk planning

The process of risk management in projects involves a number of steps. These steps are risk planning, risk identification, qualitative risk analysis, and quantitative risk management. Risk response planning is another of the steps in risks control and management. Risk management planning involves the process of identifying the best approach in conducting risk management activities. Planning assist in selecting the best ways of handling risks in a project. The result of a risk management planning is a risk plan. After the risk plan, the next step is risk identification. Risk identification involves the identification of potential risk factors. Identification of these risks yields a risk register. The potential effect of the risk documented, and the potential outcome of it hypothesized. Risk analysis and response analysis need consideration at every stage in the project cycle. Participants to the risk identification include project manager and project team. While only few members are responsible for risk identification, project team members need to identify risks.

Risk identification

Risk identification is always a continuous process since risk factors develop almost on a daily basis. Risk identification is a requirement when analyzing Qualitative risk factors. Identification of risks involves the analysis of breakdown structures, using sample risk list, using knowledge and experiences of the management teams. Consultation is very important in identification of critical risk factors. Ignoring the possibility of a risk is dangerous to any project. These risks quantitatively and qualitatively recorded, have the potential of destroying the project. Threats will have a negative influence on the project opportunities yield positive results. In developing risk plans, management teams need to consider the risk trigger; risk triggers refer to the warning and symptoms. Residual risks remain after developing responses to the original risk. One may have solved the problem of change management, but this may lead to labor turnover. Secondary risk factors to be as a result, to responses on the original risks; for example if one decides to hire for outside consultancy services there is a risk of non-performance (Kutsch & Hall, 2010). Risk interaction comes because of combining the effects of two or more risk occurring simultaneously. For example, federal tax may promote delays in administration while at the same time, the return in dollars falls.

Risk analysis

Risk analysis involves two methods in projects. Qualitative risk analysis involves identification of risks and taking actions. This analysis involves looking at the probability of a risk occurring. The process does not consider the numerical aspects of a risk. Sometimes experts analyze risk at their places of work and share it for assessment. The project management team, customer and the sponsor are responsible for qualitative risk analysis. Qualitative risk management refers to the scope, time, quality and budget of a project. The probable impact of a risk to a project is essential when undertaking a qualitative analysis. Quantitative risk analysis on the other hand involves the numerical analysis of the risk outcome. The method starts with the development of a model. Monte Carlo simulation program is the best tool to use in analyzing quantitatively (Kutsch & Hall, 2010).

Response on the Risk

There are many in which a project can respond to the effects of a risk, these methods include risk avoidance, risk transfer and risk mitigation. Risk avoidance refers to the project team ignoring the effects of a risk. Using risk avoidance are a dangerous practice and a blessing in the same breath. Avoidance needs defining requirements, communication and acquiring experts. Risk transfer involves shifting the negative influence of a risk to another party by use of insurance. Risk acceptance on the other hand, involves accepting the effects of a risk. The last step to risk management is the monitoring and evaluation. Monitoring and evaluation provide lessons for future projects and in performing corrective actions (Tummala & Schoenherr, 2011).