Risks in Project Management
A project is considered successful if it delivered on time and budget and is of high quality as it was promised. However, each project experiences various risks throughout its phases until completion. Different reasons can cause hazards, and each risk has its impacts on the success of the project. Risks are part of a project, and it is vital to the project’s progress, and failure is an opportunity to learn. The most important thing is project management is to balance the negative and positive impacts of a risk. Similar, during the initiation stage of a project, it is vital to identify the potential risks. Thus, the purpose of the paper is to identify the different types of risks that may affect a project.
In everything that people do each day, there are exposed to several risks. A risk can be defined as the possibility of a loss or danger with known outcomes. Risk is quite different from uncertainty, which is defined as the lack of assurance of a project’s outcome in that one is not sure of what to expect from the project. Uncertainty is commonly caused by insufficient knowledge of the present conditions making it difficult to predict the future. Similarly, it is not possible to measure uncertainty using quantitative terms as the probabilities are not known. On the other hand, theoretical models can be used to measure and quantify risks.
Risks in project management are categorized depending on their area of focus. The risks are related and can occur interchangeably, or one risk can result in another type of risk.
The first risk is the cost risk. It arises from poor cost estimation techniques in terms of accuracy and scope creep. Thus, in the end, the project budget overruns the initial project. The market is quite competitive, and therefore, business is bound to change the prices of products depending on the demand. Thus, it is essential to always important to consider price fluctuations when budgeting for a project. The project needed the purchase of certain supplies for such as Spore growth kits. However, due to the coronavirus crisis, it was difficult to find these kits. Thus, there was a need to increase the amount budgeted for the kits.
The other risk is schedule risk. It is the possibility of the project’s task taking more time to complete than had been anticipated. Extended deadlines increase the operating costs and thus leading to cost risks. Similarly, performance would arise if the project is done be past the due date. Additionally, completing a project late reduces the value of the project. Schedule risks can arise from unforeseen circumstances. For example, the project manager or team member can become sick, and there can be a delay in completing the project as one can miss to carry out their responsibilities. The project experienced a schedule risk. We had subcontracted the use of a lab. However, the lab technician fell sick and had to be out of work for a few days. Since, our team could not access the lab without a technician, finding a replacement took two days as we had to reschedule our activities and thus delaying our Sample Analysis using ICP.
Thirdly, a project can experience performance risk. This is the possibility of a project failing due to inconsistent results that are different from the project’s specifications. Due to the reduced number of spore kits, we did not obtain the results that we wanted. The lacked enough samples to be used for comparison due to inconsistent results.
Finally, a project can experience risks that arise from external hazards. These risks could arise from natural disasters or human-made disasters. Natural calamities include ordeals such as storms, earthquakes, tsunamis, or wildfires. Human-made disasters can be vandalism, terrorism, or data theft. Similarly, this risk would result to cost and schedule risks.
A project can also experience operational risks that result from poor implementation and problems with ordinary activities such as procurement, distribution, or manufacturing. A company’s procurement procedures can fail due to late orders or payments or delays with the supplier or increased demand. The Corona Virus made it challenging to procure the spore growth kits. To find enough kits, we had to make orders earlier as they were not in the market, and there was a change in the procurement process. Thus, we did not get the number that we needed, and there is a possibility of inconsistent results.
Risk management is essential in any project. Many companies have failed or experienced financial losses due to risk management failure. Hence, the need to manage all the potential risk throughout the stages of a project. Firstly, it is essential to clarify the project’s requirements and to define the objective of the project. This involves identifying all the potential risks in the initial stage of the project and creating a comprehensive scope document with a specified timeframe and plan. A clear guideline of the requirements of the project help in defining the roles and responsibility of each person. it also ensures everyone knows the implications each avoid using ignorance as an excuse
Getting the right team also helps in mitigating risks. The human-factors makes a project vulnerable as people bring different risks to a project. Thus, it essential to choose people with the right skills and are available during the project’s period. Inadequate skills and unavailability increase the time taken to complete a project, thus resulting in the schedule, cost, and performance risks.
Additionally, communication is critical in mitigating risks. Communication is the exchange of information. Thus, as a project manager gives out instructions guidelines, he must be flexible to receive feedback from the team members and respond to them. Communication helps in identifying potential risks and find strategies that engage each stakeholder more effectively. Thus, it is crucial to engage every person that is directly or indirectly involved with the project.
Finally, risks can be mitigated through feasibility studies. It is used to test various ideas and solutions before making a decision Feasibility studies helps in reducing particular as an early stage. It is done by carrying out a feasibility study at each stage and test a solution before it is fully implemented.
Finally, it always necessary to have Plan B. It takes care of all the unforeseen problems. A plan B includes have a contingency fund, additional resources, and a shortened timeframe.
It is crucial to prioritize the risks. Each identified risk will affect different aspects of the projects. Prioritizing risk ensures that the risk that causes enormous losses are dealt with first. Similarly, each threat has to be monitored regularly; this helps in providing that the team does not repeat any mistake that led to a risk.
A risk response plan is a critical aspect of mitigating the risk that could affect a project. The plan ensures that the processes of risk management are documented. It provides each member is aware of the implications of each risk and knows what to do to manage the various risks. This ensures that there are no missed opportunities and provides continuity, even as a risk occurs.