A project is defined as an initiative that labor, material, and fiscal resources are planned in an original approach to undertake an exclusive scope of work under the restraints of cost and time (Gray & Larson, 2006). Based on the definition, it is apparent that successful project risk managers must put in order a variety of resources under significant restraints. They must emphasize on the inherent uncertainty associated with novel organizations and the unique scope of work. The art of project risk management comprises of a number of procedures. According to PMBOK Guide, produced by the Project Management Institute, these procedures can be categorized into five groups (A guide to the project management body of knowledge, 2013). These procedures are initiating, planning, executing, controlling, and closing processes. In week 1 to week 4’s readings, several topics are discussed. Week 1’s topics focus on introduction to project risk management and uses of risk data. Equally, week 2’s topics focus on planning for risk management and risk management tools and techniques. Week 3’s topics focus on project scope risk, sources of risks, and documentation of risks. By focusing on the above topics, this paper seeks to highlight on project management methods.
Regardless of the type of the project, there is always some level of uncertainty in its outcomes (Lientz & Rea, 2001). Unlike other projects, technologically advanced projects are riskier. High-tech projects are highly varied. As such, they comprise of exclusive features and outcomes that vary from preceding work and the environment. Because of this, technical projects are normally challenging to manage. Similarly, technical projects are executed under the constraints of limited funding, staff, and equipment (Kendrick, 2009). Therefore, if project managers want to avoid project malfunctions, they must employ the finest procedures. With respect to the above discussion, it is apparent that risk management is very essential for organizations undertaking complex projects.
For projects, risk management can be categorized into micro-risk management and macro-risk management. Concerning micro-risk management, the use of averages is essential, however it is never adequate. Therefore, managing risk entails taking action to manipulate the results. For projects, managing risk in micro essence implies that very exposure faced by the current project should be analyzed. Unlike in macro-risk management, in this approach standards and criteria are employed to reduce the chances of large individual variance above the mean. Equally, through the approach necessary steps are undertaken to move the probable outcome. This approach is being used by banks to screening loan borrowers by banks. With respect to project risk management, each project should be assessed or screen separately. Through this, the best projects can be can be identified and the projects deemed to fail neglected.
Project risk management is justified because it increases the likelihoods of attaining projects’ objectives (Kendrick, 2009). Through it, a plausible foundation for any project can be attained indicating if it is feasible. It the project is feasible, it should be executed otherwise it should be aborted. Generally, risk analysis can lower costs and chaos, enhance fine-tune plans to reduce risk, and enhance project communication and control.
Another important topic in project risk management is planning for risk. If project managers want to avoid failing their projects, they must plan for risk through paying attention. According to statistics released in the year 1994 by the Standish Group, seventy five percent of all the projects undertaken fail (Kendrick, 2009). According to this report, a quarter of all the projects are usually nullified before they deliver on their objectives. A half of the projects faced numerous obstacles in delivering on their objectives resulting in late delivery. According to these figures, it is apparent that most of the projects fail because they are not feasible, they are over-constrained, and they are not competently managed. As such, a project can be deemed unfeasible when its intentions fall outside the technical competences currently available. It is unfortunate to note that some projects do not succeed despite having possible intentions, time, and budget expectations. Such projects fail because they are not competently managed. As such, their managers invest too little thoughts and actions into the projects to influence their outcomes (Kendrick, 2009). In this regard, risk and project planning is very essential, as it will enable individuals to differentiate between and tackle the above challenges.
When planning, project selection processes should be carried out with cautious. Major risks encountered when undertaking projects originate from the project selection process. If projects are carried out without adequate project selection process, it would be difficult to ascertain on the risks that will be met while implementing on the project. In case of such situations, the project managers can project with certainty if the projects are feasible or not. Considered the cost of undertaking technological projects, it will be costly for any organization if they carry out an inadequate project selection process.
Considered that project planning is a very important facet of project risk management, every organization should spend more on planning processes both inside and outside the project levels (Kendrick, 2009). The effectiveness of project risk management relies on methodical and continued applications of management principles. The exact nature of the project management method differs, however the management of risk is most effective if the project managers employ steady procedures. Apart from essential project planning, risk managers should also be focused on reviewing the basic project assumptions (Chapman & Ward, 2003). Usually, the information about project risks, assumptions, objectives are contained in the project datasheets and charters.
Therefore, project managers should access the risk information contained in the documents with keen interest. More often, projects perceived to be having low risks are usually underrated leading to underfunding and understaffing. Therefore, project managers should pay attention to the differences that exists between their perceptions of project risks and the risks indicated on the project charters or datasheets. Thereafter, the managers should implement an approach that is in line with their environment. Organizations adopt approaches depending on their line of business. Oil explorers and start-up business have increased tolerance for risks. Many of their projects fail, however a small number of projects that succeed compensates the cost of these projects.
Normally, small projects’ risk planning has been informal. However, complex project’s planners should come up with detailed and published risk management plan (Chapman & Ward, 2003). This document comprises of information about the stakeholders, planning processes and, project instruments. Equally, the document should contain the risk management standards and objectives.
Another facet of project risk management that should be considered is scope risks (Kendrick, 2009). Usually, every project is undertaken under three constraints. These constraints are scope, schedule, and resources. Of these constraints, scope risk should be given a higher attention. According to Project Experience Risk Information Library (PERIL), there are a number of scope risks. In the library, the risks account to more than one-third of their data. These scope risks are categorized into changes and defects. To manage change risks, the loose ends of necessities at project commencement should be reduced. Similarly, change risks can be minimized by adopting a vigorous process to control changes that might be encountered throughout the process. There are numerous challenges encountered when identifying scope risks. Therefore, project managers should review several examples given in the PERIL database to identify the possible scope related challenges for their next projects. Generally, scope risks can be easily identified by clearly illustrating the project deliverables, setting the limits of the project, and decomposing the project into small pieces.
In conclusion, it should be noted that successful project risk managers must put in order a variety of resources under significant restraints. They must emphasize on the inherent uncertainty associated with novel organizations and the unique scope of work. Project risk management is justified because it increases the likelihoods of attaining projects’ objectives. A very important topic in project risk management is planning for risk. When planning, project selection processes should be carried out with cautious. Major risks encountered when undertaking projects originate from the project selection process. Considered that project planning is a very important facet of project risk management, every organization should spend more on planning processes both inside and outside the project levels. Lastly, another facet of project risk management that should be considered is scope risks.
A guide to the project management body of knowledge (PMBOK guide) (5th ed.). (2013). Newtown Square, Pa.: Project Management Institute.
Chapman, C. B., & Ward, S. (2003). Project risk management: processes, techniques and insights (2nd ed.). Chichester [etc.: John Wiley & Sons.
Gray, C. F., & Larson, E. W. (2006). Project management: the managerial process (3rd ed.). Boston: McGraw-Hill/Irwin.
Kendrick, T. (2009). Identifying and managing project risk essential tools for failure proofing your project (2nd ed.). New York: Amacon.
Lientz, B. P., & Rea, K. P. (2001). Project management for the 21st century (3rd ed.). San Diego, Calif.: Academic.