In projects, some elements may fail to meet objectives or achieve their respective project targets. Identifying both items is critical during the project life cycle since they influence the overall outcome. The distinguishing of the entities that could go wrong or right in a program relies hugely on the risk assessment procedure. This process mainly involves risk identification and evaluation ofits impacts (Watt, n.d). The discerning process entails developing a checklist of the risks and accessing their likelihood of occurrence. The paper aims to analyze the strategy used to identify the factors that could go wrong or right with a project.
The distinguishing of project risks can be sourced-based; this typically entails pinpointing the areas where risks are most likely to arise, such as technical, cost, schedule, and people. After isolating such areas, risk managers perform the evaluation, accessing the likelihood of the risk to occur and estimating the loss realizable from it (Watt, n.d). One of the analytical tools used to evaluate risk is Failure Mode and Effects Analysis – FMEA (Urbański et al., 2019). This model defines the risk index (RI) = probability (P) * severity (S) * detection (D) (Urbański et al., 2019). A higher RI is indicative of a wrong item, which demands greater attention.
In more complex projects, the risk evaluation process can incorporate a frequent series of meetings in the course of its lifecycle to assess possible areas of failure or inadequacies at different phases. The method of identifying risk areas in such programs may involve statistical models since multiple risk combinations are likely to complicate a one-time calculation (Watt, n.d). An example of such a statistical model would be the Monte Carlo simulation, which experiments a probable outcome range through a multi-combination of risks based on the likelihood of occurrence. The results of the simulation then help the project management team in identifying what would go wrong based on the probability of its occurrence. For instance, a Monte Carlo simulation output of 13% would indicate the chance that a person may not be available and that a technical deficit may also be experienced (Watt, n.d.). After risk evaluation, the project managers usually develop contingency plans to address the inadequacies or items that may have been forgotten and present risks, known as risk mitigation.
Risk mitigation is a plan that reduces resultant loss from risk occurrence and involves risk avoidance, sharing, reduction, and transfer. Avoidance is the establishment of a strategic alternative with a higher success probability, albeit, usually at a higher cost (Sorger, 2011). The most typical risk avoidance tool is the adoption of existent, proven technology as opposed to employing new technical approaches. Risk-sharing entails sharing project activities and risks through a partnership with others. For example, international projects may involve the reduction of legal, political, and labor risks through the establishment of joint ventures with local firms of a country where such items have been identified as the project inadequacies or risks. Risk transfer, however, is the shifting of project inadequacies and risks to another party or firm (Watt, n.d). For instance, if a company realizes a threat, it may purchase insurance, therefore transferring its inadequacy to the insurance company.
Overall, the process of establishing what could go wrong or right with a project relies on the risk identification procedure. This process typically incorporates the use of analytical tools to assess the probability of its occurrence and measure the impactful loss from the incident. In the event a project manager identifies a gap through an item that was forgotten, they can address this through risk mitigation which involves risk transfer, risk avoidance, risk sharing, or risk reduction.
References
Sorger, S. (2011). Marketing planning. Pearson.
Urbański, M., Haque, A., & Oino, I. (2019). The moderating role of risk management in project planning and project success: Evidence from construction businesses of Pakistan and the UK. Engineering Management in Production and Services, 11(1), 23-35.
Watt, A. (n.d.). Project management: Risk management planning. BCcampus.