Introduction
The purpose of this Risk Management Plan is to outline the strategies and procedures for identifying, assessing, mitigating, and monitoring risks associated with building a house. The plan is based upon a thorough evaluation of possible factors that may hinder the effective implementation of the project and reduce its profitability. Ten central risks were identified and described in terms of their likelihood of occurrence, impact, owners, mitigating actions, and contingency plans. The risk register that summarizes the risk management plan is provided in Appendix.
Risk Identification and Rating
A total of 10 risks were registered and assessed in terms of their impact and probability of occurrence, which allowed for the creation of a rating ranging between 8 and 16. A total of six risks had the highest priority, with a rating of 16. The two central risks were that the project would be late (Risk 3) and exceed the budget (Risk 2). While these two risks have similar ratings to the other five, they have the highest probability of occurrence due to numerous factors that can affect the risks.
At the same time, health and safety risks (Risk 4). The problem with the risk is that any issues with health and safety on the construction site may lead to significant implications for both the timing and cost of the project. Moreover, Risk 5 may be associated with legal implications, which may threaten the completion of the project altogether. The probability of occurrence was estimated to be “High” due to the increased possibility of minor problems associated with the health and safety of workers.
At the same time, the impact of the associated problems was also estimated as “High” due to the potential legal consequences of health and safety problems. However, it should be noted that the probability of highly impactful events occurring is low. Therefore, even though the nominal rating of Risk 5 is similar to Risk 2 and Risk 3, Risk 5 is de facto lower in rank.
Risks 6 and 7 are closely correlated, as they are associated with supply chain disruptions. Risk 6 concerns the problems that may occur with the in-time purchase of all the materials related to purchase orders, while Risk 7 focuses on the possible lack of availability of the material in time due to problems with vendors (suppliers). Both Risk 6 and Risk 7 are highly probable to occur, and their impact on overall project timeliness and cost-efficiency would be high.
However, while these two risks have the same rating as Risks 2, 3, and 5, they are less of a concern for the project manager due to the high effectiveness of the mitigation strategies. In other words, if proper mitigating actions are in place, Risks 6 and 7 are unlikely to occur, which is not the case with Risks 2, 3, and 5, which remain a threat to the project even after implementing mitigating strategies. The same consideration concerns Risk 8, which is associated with weather delays. Weather delays are frequent in the area, which may affect the project schedule. However, since the weather is relatively stable in the region, it is relatively easy to mitigate the risk.
Two risks had a risk rating of 12: difficulties selling a home (Risk 4) and the possibility of theft (Risk 9). The probability of inability to sell the home is medium, as the demand is high in the area. However, due to market instability, there is still some possibility of the house not being sold at the needed price. The probability of theft is high; however, it is unlikely that major theft can occur, which makes the impact medium. The least impactful risks were the ineffectiveness of the marketing campaign (Risk 10), with a rating of 9, and delays associated with receiving a permit, with a rating of 8 due to low probability of occurrence.
Risk Mitigation
Each risk has been assigned an owner responsible for its management. The owners, such as the Permit Coordinator, Finance Office, Construction Manager, Sales Office, Safety Officer, Purchasing Office, Security Team, and Marketing Team, will take appropriate actions to mitigate the identified risks. Mitigation actions, as provided in the risk register (Table 1), will be executed to reduce the likelihood or impact of the risks. The mitigating strategies included creating flexible budgets and schedules that could account for all the identified risks. Moreover, the risk mitigation strategy included motivating all the stakeholders to be on schedule and on budget, which is crucial for all the team members to feel personal responsibility for the project flow.
The risk register provides the cost associated with implementing the mitigation actions for each risk. These costs are essential to consider in budget planning and resource allocation. The risk responses identified for each risk in the register include escalating, reducing, or accepting the risks. This categorization helps determine the level of attention and resources required to manage each risk effectively.
Contingency Planning
Contingency plans are important because they provide a predetermined course of action to be implemented in response to identified risks, allowing for a swift and effective response to minimize the impact of those risks and maintain project continuity (Badiru, 2019). The risk register provided in Table 1 also contains contingency plans for risks that require additional actions if they occur. These plans outline specific steps to be taken to address the risks and minimize their impact on the project. Contingency plans include rescheduling home construction, reallocating funds, finding alternative trade partners, adjusting schedules for weather delays, reinforcing security measures, and implementing marketing strategies. The provided contingency plans are expected to minimize the effect of the outlined risks on the project’s outcome.
Communications and Reporting
A robust communication plan will be established to ensure effective sharing of risk-related information among project stakeholders. Regular reports will be generated to provide updates on risk management activities, including risk assessment, mitigation progress, and any changes to the risk landscape. At the completion of the project, a “lessons learned” session will be conducted to capture insights and experiences related to risk management. This will provide valuable feedback for future projects and help improve risk management practices.
These communication efforts will foster transparency and collaboration among stakeholders, facilitating timely decision-making and enabling proactive risk response strategies. By capturing lessons learned, the project team can leverage valuable knowledge gained from risk management experiences to enhance future projects and continuously improve risk management processes and procedures.
Reference
Badiru, A. B. (2019). Project Management: Systems, Principles, and Applications, Second Edition. CRC Press.
Appendix
Table 1: Risk Register
