Risk Management and Effective Communication Planning, Research Paper Example

Abstract

Project management incorporates many tools and techniques to facilitate the opportunity for the success of a project implementation.  Projects have inherent risks associated to them and there are multiple methods and techniques to monitor and control those risks.  The goal of the risk management plan is to outline and provide clarity to what the risks associated with the project are and what their impacts potentially could be.  There are tools to qualitatively and quantitatively measure the risks associated with the project.  There are also tools to take those measurements and incorporate the information from the risk measurements and incorporate those into the project planning activities.  Mitigating the risk requires communication and risk assessments to be utilized in the project.

Risk Management

Risk management incorporates the identification, assessment and prioritization of risks and takes those results and establishes a mitigation plan to limit or negated the effects of the risk.  The risk management process extends throughout the lifecycle of a project or circumstance and the root cause of those risks can stem from a multitude of sources.  Risk mitigation or the management of the risks can be handled in just as many varied ways.  The most common actions to reduce the risk exposure are to transfer the risk to another entity, avoid the risk altogether, reduce the probability of the occurrence or just accepting the risk (Alexander and Sheedy 2005).  Depending on the goals and objectives of the implementation team there are different ways to handle the risk.  There is a basic construct on how to analyze a risk and thus understand which risk assessment method would be appropriate.  The overall project is to implement an enhancement website that is ultimately replacing a legacy website that is no longer capable of meeting the requirements of the organization.  Through the project there are inherent risks associated with the project’s execution, transition and sustainment.  These risks will be outlined in a risk assessment matrix and a strategy for mitigating those risks will be defined.

Risk in project management is the perceived implications of an uncertain event impacting the project or the organization as a result of the project’s deliverables.  Within each of the risks there are varying degrees in which the impact, severity and likelihood will occur.  Each of these factors plays a role into the risk mitigation plan of the organization.  These risk mitigation actions incorporate the risk itself as well as the tolerance of the organization and the benefits of accepting certain risk models to achieve certain objectives (Cooper, Grey, Raymond, and Walker 2005).  The risk adversity or risk acceptance of the organization is interdependent with the goals and objectives that the organization wants to achieve as well as the activities that are necessary to achieve those deliverables.

Risk Assessment

The initial risk assessment is completed by the project team and the results are documented in the table format.

Each risk is defined for each category.  The responsible individual is annotated as well as the mitigation action, result and key participants involved.

Strategy

Assessing risk entails assessing the probability of a specific outcome to occur.  This assessment can be accomplished through the application of the basic probability theory.  This theory is a mathematical theory that models specific events with different variables or risks to the outcome.  This theory allows the user to derive outcomes based on the inputs of variables to the situation.  This is extremely useful when trying to develop a picture of what could potentially occur when multiple risks are associated to the same project.

With any type of project management activities in which risk is defined it then needs to be measured in both a qualitative and quantitative perspectives.  When measuring risk there are the two different areas of measure.  There are also different tools for measuring the types of risks and inputting those results into the project.  For qualitative risk management the first important tool is the risk management plan.  This pulls together all the findings, risks, mitigation plan, and other pertinent information required for the project team to perform their duties regarding to project scope, schedule and cost.  Other tools that help facilitate the qualitative risk assessment include a risk probability and impact assessment, assessment on the risk data, risk urgency assessment as well as incorporation of a probability and impact matrix.  All of these tools would be executed and documented in the risk management plan.  The qualitative risk management tools and techniques all provide the insight into the risks and allows for a prioritization of those risks which facilitates risk planning.

The strategy to mitigate the risks in this project regarding the implementation of the website renovation would utilize a hybrid approach to risk management including quantitative and qualitative risk management.  The major function of a risk assessment is determining the potential loss caused by the risk and the probability of that occurrence happening.  The risk assessment also takes into the population of people impacted by the risk.  The risk assessment brings together the qualitative assumptions and uncertainties and incorporates a quantitative value to the overall risk.  This allows the formulation of a hierarchy of potential impact of a risk.  This could then be used to determine the cost and effort needed to mitigate those risks and based on the strategic outlook which risks that would be ultimately mitigated.

Qualitative risk tools involve a highly disciplined analysis of the process to fully understand the potential hazard or risk of a situation (Baranoff 2006).  For each event there are ways to improve the probability of it not occurring or removing the risk.  One example of this type of assessment is the FMEA or failure mode and effects analysis.  This procedure analyzes each potential failure in the process/system and stratifies it by severity.  This is fairly labor intensive and becomes exponentially more labor intensive as the project increases in scope.  Each failure mode is denoted with the failure, probability, severity, impact and cost to mitigate.  All of this is rolled up into the stratification of all of the risks and evaluated against budget constraints.

Another method of risk assessment is the tree based technique.  This is used to evaluate in a qualitative and quantitative analysis.  This builds a “what-if” scenario and traces back to a root cause of the potential hazard.  This can illustrate a series of outcomes to specific scenarios and is highly useful when determining potential risks.  This outlines the causal risks and the impacts those risks have on the project or incident.

The risk assessment that suits this project most effectively is a hybrid solution between the FMEA and the fault tree analysis.  This is most applicable due to the fact that a detailed analysis will be required for specific scenarios dependent on the type of risks found.  The quantitative analysis of the risk, probability, scope and cost will have a direct implication on the efforts afforded to mitigate those risks.  The risk assessment tool will provide a fault tree analysis and denote risks through the lifecycle of the project.  Risks that have a high probability or significant negative impact will have a full analysis completed.  The risks will have mitigation plans associated with them.  The risk table annotated above with the risk mitigation tools would combine to not only mitigate the risks but also provide information that can be communicated to the responsible, accountable, consulted and informed members of the project.

Communication

The communication plan is vital to the success of the project.  The following table will denote the type of communication as well as the recipients of the communication.  The major benefit of defined communication is that the understand that it must occur, the key recipients and senders are defined and the expectations of the communications are establish allows for a defined standard operating procedure and removes uncertainty and increases clarity of the project.  Communication management by the project team will optimize the amount and type of communication by leveraging the effectiveness of directed and valuable information to the appropriate recipients.

Conclusion

Successful projects incorporate the best practices framework as well as the tools and resources that are gathered and utilized throughout a project manager’s career.  The project scope must align with the expectations of the stakeholders as well as the cost estimates, established budget and the proposed schedule of the project.  The project manager garners sign off on the project charter and scope statement at the beginning of the project but once that task is accomplished it becomes the project manager’s responsibility to manage the changes in the scope, the progress achieved through the resource allocation and ultimately the successful accomplishment of the milestones along the path of the project’s lifecycle.  This is achieved through monitoring and controlling techniques as well as the utilization of tools such as the EVM tool.  These tools and techniques provide the project manager the timely and accurate information to make project management decisions while taking the appropriate project actions to meet the expectations of the stakeholders while delivering the requirements on time, on schedule and on budget.

References

Alexander, C., and Sheedy, E. (2005). The professional risk managers’ Handbook: A comprehensive guide to current theory and best practices. PRMIA Publications.

Baranoff, H. (2006). Risk assessment; 1st edition. AICPCU.

Cooper, D. F., Grey, S., Raymond, G., & Walker, P. (2005). Project risk management guidelines, managing risk in large projects and complex procurements. John Wiley & Sons

Prencipe, A., Davies, A., & Hobday, M. (2007). The business of systems integration. Oxford University Press, USA.