Project Risk Management Plan and Analysis Techniques

Strategies on the PMBOK Guide

The Guide to the Project Management Body of Knowledge creates a temporal framework for project implementation. The major strategies include a WBS, project scope, project requirements, defined activities, activity resources, project timeline, project schedules, and cost estimate.

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Risk Management Plan

Risk management is a procedure that incorporates risk appraisal and a mitigation plan (Hajdu, 2014). Risk evaluation includes the recognizable proof of risk, and assessment of the risk effect. Thus, risk management plan should mitigate the occurrences that negatively affect the venture. Recognizing risk is both an innovative and a trained procedure. The inventive procedure incorporates meetings to generate new ideas where the group classifies the outcome Thus, risk management template must identify, categorize, prioritize, determine, schedule, and monitor the approved implementation actions.

Risk Analysis Techniques

Impact analysis is utilized to assess planned effects or presumption of a task or action. Risk analysis is a task administration practice that mitigates risk occurrences during the project implementation phase (Hajdu, 2014). Although one cannot anticipate with assurance, project supervisors can apply a straightforward and streamlined risk procedure to foresee the vulnerabilities in the tasks and limit the event or effect of these vulnerabilities (Zhang & Huo, 2015). This enhances the possibility of project fulfillment and lessens negative outcomes.

Brainstorming and Sensitivity Analysis

Brainstorming is used to recognize and hypothesize hazardous situations for a specific venture (Purnus & Bodea, 2013). It is a successful attempt to enable individuals to think imaginatively without feeling depressed or being censured by others. The guidelines are that team members should attempt to expand on the thoughts and comments of the previous meeting (Project Management Institute, 2009). Sensitivity analysis is another risk technique that measures the effect of change on a solitary element by assessing its impact (Purnus & Bodea, 2013). It is the most straightforward type of risk assessment.

Vulnerability and hazard are reflected by characterizing a range of variety for each project variable. It is important to note that sensitivity analysis is conducted on variables that affect project cost, time, or financial return. Thus, sensitivity analysis has its benefits to the management and investor. The analysis provides valid information on probable outcomes, which enhance decision-making. As a result, the relative significance of every factor analyzed is recorded to avoid operational miscalculation. However, sensitivity analysis creates difficulties in measuring multiple project variables. Consequently, this analysis does not factor the likelihood of risk occurrence.

Risk Associated with Project Implementation

Project risk is categorized using different variables. Risks associated with the project include schedule risk, cost risk, or performance risk. Cost risk describes hazards associated with poor expense assessment during the project implementation phase. Schedule risk describes activities that affect the project implementation phase. For example, the late arrival of raw materials, late completion of drainage channels, and the receipt of project task sheets. Performance risk describes the effects of poor project management. It explains the impact of poor decision-making on project quality.

Risk Response Strategies and Performance Monitoring

Risk response strategies and performance monitoring depend on the project and its implementation process (Purnus & Bodea, 2014). The project’s performances are evaluated to monitor its viability and to change the plan if the need arises. Risk response strategies include “accept”, “avoid”, “control”, “transfer”, and “monitor”. These choices depend on the likelihood of an event and the significance of the outcome for a recognized hazard.

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Under the “accept” response, the project supervisor acknowledges the presence of a specific hazard without taking part in uncommon endeavors to control it. The supervisor should adjust project requirements to avoid or lessen the hazard. This modification includes a change in the project timeline, project funding, work schedules or specialized requirements. The “control” response plan implements activities to limit the effect or the probability of the hazard. Further, the “transfer” response plan reassigns organizational responsibility, accountability, and management to supervisors that can recognize project risk.

References

Hajdu, M. (2014). The effects of different activity distribution on project duration in PERT networks. Procedia-Social and Behavioral Sciences, 119(1), 766-775.

Project Management Institute. (2009). PMBOK® guide: A guide to the project management body of knowledge. Newtown, PA: Project Management Institute.

Purnus, A., & Bodea, C. (2013). Considerations on project quantitative risk analysis. Procedia-Social and Behavioral Sciences, 74(1), 144 – 153.

Purnus, A., & Bodea, C. (2014). Correlation between time and cost in a quantitative risk analysis of construction projects. Procedia Engineering, 85(1), 436-445.

Zhang, L., & Huo, X. (2015). The impact of interpersonal conflict on construction project performance: A moderated mediation study from China. International Journal of Conflict Management, 26(4), 479–498.

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