Table of Contents
Introduction 3
Monitoring Project 4
Identification of Risks 5
Risks in Projects 6
Global Environment and Project Risks 9
Conclusion 10
Reference 10
Introduction
All projects contain risks which in a project is associated with issues. A project risk is described as any event with disadvantageous outcome for the project that might happen in future as Gardiner states. (2005) These risks might stop from the nature of the work, from the available resources, from the contractual relationship or from the political factors which may influence the project. It is usually not practical to decrease all risks together, however it is practicable to manage project in a technique that recognizes the reality of the risks and prepares methods to deal with them if they appear. One of the modern struggles which a new Project Manager might face is not having an overall list to mention when categorizing the project risk. Project Risk Management includes the processes of managing risk management identification, planning, analysis, response planning and controlling risk on a project. Project risk management objectives increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.
Identifying risk in projects is the most significant activity in the Risk Management Planning. Identifying risks determines which risks may affect the project and documents their characteristics. As Donna Ritter states, it not positive if too much time spent in identification of risks. When the list of risks is made, quantitative and qualitative analysis is done to figure out risks in which the time and money will be spent. (projcttimes.com, 2016)
As Gardiner states there are essentially two categories of risk which are the speculative and the pure risk. Speculative risk defined as a chance of a loss or chance of a profit. For instance, an organization could expand and make more profit or it might go bankrupt, thus buying stock in this company is a risk. The most projects carry speculative risk. On the other hand, pure risk means only a chance of loss. For instance, driving a car involves only the chance of an accident. The risks in this category are insurable.
Usually the success of many larger and complex projects depends on having in place an efficient approach to risk and a risk management plan from the start of the project. The risk management plan will take account of risks appearing from three different sources which are the factors under the project control such as poor performance by contractors or poor design. Secondly, the factors in the wider external environment which only decision makers can control them such as changes in government policy, and thirdly, the factors that are essentially uncontrollable such as institutional weaknesses or natural disasters as Gardiner (2005) states.
Monitoring Project
Monitoring means to keep track of and to check systematically all project activities. Project need to be managed by three viewpoints which are cost, time and quality. Usually, the decisions of the manager will involve a trade-off between these three perspectives. These decisions might be outside of the project manager’s control and they might have to get involved with some hard bargaining with the project board or the customer before the approach can be agreed as Cadle states. (2008)
To monitor progress of the project it is necessary to gather information. This can be achieved by completing timesheets from team members. This process can have political difficulties due to the fact that team members can see the timesheets as spying on them. Timesheets will show to the manager if the project is on schedule.
Labour costs are often the main cost component of a project but there are other costs as well and all have to be kept under review. Sometimes, there are other expenses that might depending on the company’s accounting practices. Many organizations costs for general developmental training are born centrally, though reflected in the staff costs but training for project task might fall on the project. Sometimes, if the project team is big a self-contained office is required. Additionally, if a member of the project staff has to work away from the base, the project might have to pay for accommodations and meals. Also, travel costs and consumables such as cartridges and other items can add an amount of cost to the project. Furthermore, it very essential for the project manager to create the right environment for quality control to work accurately. It is good for people to feel involved in what they are doing, otherwise they will not care of what they are doing or if they are doing well or not. A good idea to build a good environment is to trying not to criticize personal or to avoid comparisons.
Identification of Risks
To begin with, the first step of managing risks process is to discover the risks of the project. However, this is easier said than it can be done. Each project is unique and also its risks will appear from the independencies between factors which might not have been seen in a combination. There are many areas on a project which risk could arise and it is difficult for a project manager to be identified. Thus, usually the project manager gets a second or a third view from a more experienced project manager who might be faced in similar projects. It is very important that the risks must be highlighted, even if some of them are politically unpopular and then, risks need to be described so it is clear what each risk is about. Finally, a breakdown structure list need to be made to counter them.
Identification of risk is about finding all the risks which can affect the project and documenting their characteristics in a more understandable way. It is an approach that aims to seek out any events associated with the project that may impair the achievement of that project’s critical success factors. The risk identification process needs to examine all areas of the project in a systematic manner and be proactive rather than reactive. This process uses information such as previous lessons which learned from historical information of the company about the specific project. It can also be all planning outputs to date including work breakdown structures, cost plans and schedule. Finally, it might be trade off analyses which is involved time cost, quality and scope or interviews with experts and workers that have experience on the project.
When all the risks are identified, a description and a categorization of risks is essential part of the project. Also, to identify risks a breakdown structure of the risks will help the project manager to know about the risks on the specific project. It is necessary for the organizations to have a breakdown structure for the types of project and the types of risks that might find on the project. A checklist with the risks could be offer a summary of the causes of risks. These simple tools are usually highly suited in different companies and sectors. They can help a group of people identify risks systematically across a project, however, they are only a guide and should not be regarded as exhaustive as Gardiner states. (2005)
Risks in Projects
On this assignment risks of information system projects will be analyzed and discussed. However, the general principles of project management are common to all Information System projects. A risk checklist offers a summary of the common causes of risks. These simple tools are often suit different organizations and sectors. They can assist a group of people identify risks systematically across a project or programme. There are several areas where risk can often be identified.
The risk on that case for the project might be the funding that might not have been approved. If there are more than one customers, the commercial relationships between them may be unclear or the contract type might be inappropriate for the type of work. For instance, a fixed price for a research project. The best way to avoid this kind of risk is to have a pre-project review procedure where the commercial issues are considered along with the technical problems that the project will face. If commercial risks are identified, these should be reflected in the set up of the project and on the contract type of that.
A contract risk is that the scope of work is not agreed between the parties. There might be penalties for delays. The payment schedule might be unclear. If the areas of contract are ill defined, a wise policy is to document any assumptions and ask the customer to approve them. An experienced manager should be asked to review all the contracts to check that the interests of the parties are protected. A risk on that case can be the customer management structure which might be unclear.
Finding access to essential customer staff might be difficult and it could be hard to get decisions made. Probably, there might be political difficulties in the customer’s company, with no mechanism to solve this. If issues with customer are expected, the project manager might make early efforts to get to know the parties and to gain the commitment of the project. A risk that might occur is that the users might not be committed to the project or they might be unfamiliar with the technology and require more training. Every effort must be made to involve the users in the project and this might involve providing training. If the senior customer management is unwilling to involve the users, the project manager must try to persuade them into a more constructive approach.
Moreover, the requirement might not have been formally signed off before development began. The specific requirement might not be completed because it was defined at too high level and making it difficult to operate change control procedures. There might be a mismatch between the developer and the customer understanding of the requirement. To avoid the risk, the functional requirement should be reviewed independently by someone who is not involved in the project. A formal review technique will help to identify differences between the customer’s and the developer’s expectations of the system. The system might be technically complicated or it might require the use of tools, techniques which the developer is not familiar.
Testing the system might be difficult or the interface need to test with other system interfaces. To avoid this technical risk, it is necessary an expert to define a suitable approach to the technical problems. Additionally, an overall design should be made before proceeding to the detailed design of the part. There are some requirements for the system. It might be difficult to test the system using realistic values or there might be no way to simulate the performance of the system. The contract should be tested closely for challenging the performance requirements and the project manager have to ensure that the conditions are defined.
The project manager might not have been involved in the bid phase and might not have contributed to the initial plan. The project might have tight timescales or milestones might be too far apart. Additionally, the plan may not take into account revisit work from previous phases of the project. If the project manager was not involved in the bid phase, then they should revisit the plans as soon as possible.
Furthermore, project managers or team leaders may be new in their role or whole team might be inexperienced. If this happen the project manager might re-examine the estimates and consider on what basis they were prepared. If there is a weakness in an area, then they must work for consultancy support. The staff of the project might not be available when required or the staff might have other commitments that could divert them from the project. Generally, the project manager should aim to take staff when the project need that. Also, if team members need to be shared with another project, the project manager should negotiate with the manager of the other projects.
The working environment might be new to the developer or it may not match the live environment or there might be restricted access. Moreover, if the environment is new to the developer, training sessions need to be provided or if it is necessary a technical expert can be arranged to resolve difficulties. System software might be new or not available yet. It might be unfamiliar to the technical support and developer. Additionally, the version might be unstable and it could be change during the project. To avoid that risk during the project it is positive to provide training so the development team understand the advantages and the weaknesses of the software. The programming languages might be unfamiliar to the developer or it might be unsuited to the particular project requirements. To avoid this risk of programming language, it is very essential training sessions.
Hardware of the project might be new, or not used for this purpose. Additionally, the hardware might not be available until late in the development or it might be issues of capacity of the hardware. To avoid hardware issues testing on the target environment should be schedule as early as possible due to the fact that that it will highlight any issues. If the project needs third party products, there could be experience of the suppliers due to the fact that the suppliers might be in poor financial condition or it might be difficult to establish tests for bought in items. Technical and financial credibility of the suppliers need to examined carefully. Also, a switch of the suppliers might be a solution if the things get more difficult. However, the developers must be protected by a contract if the supplier change.
When all the risks of the project are identified and quantified their effects, some actions must be taken. There are four main responses to risks which are Acceptance, Avoidance, Mitigation and Transfer. When the risks are accepted it means that the change of the project might be more expensive than the risks that may occur. In that case, the risk will happen but it will build budget or time possibility to deal with the effects. On the other hand, a risk can be avoided and the company can deal with the likelihood. Also, mitigation response includes some steps that the project manager can do to reduce the result of the risk, and finally, transfer response involves to make the impact of the risk and if the risk happens to the project to fall on someone else. That means that the project might have something as insurance.
Global Environment and Project Risks
The development of technology and Internet worldwide has managed an evolution on projects worldwide. Companies are trying to develop themselves and their project, to increase the speed of the project process, to boost the quality and reduce the costs of a project. If the risks are considered, it can be stated from Popescul and Genete that emission speed of error and threats is much higher comparing to the past. (2007) The advantages of the increase of the technology is that reporting system is build in every organization to analyze the statistics in projects across all departments. Furthermore, most of time tasks are outsourced to vendors who are specialists in the field. Thus, the tasks can b completed faster and with better quality. Also, outsourcing can help company to reduce operational and recruitment costs. This can be achieved because outsourcing escapes the hiring need of a company. (Popescul and Genete, 2007)
On the other hand, there is a big risk of security because of the rise of the technology. Sensitive data and information can be shared with third party and it can be a risk for the company. Furthermore, global information systems involve the performance of group task. Global information systems sum on virtual teams with dissimilar culture, languages, backgrounds and social, which in some culture working in teams has negative impact on the team productivity and reduces team’s performance. Finally, the biggest costs of a company are generated from processes reconfiguration or from the data conversion from an old application to a new one. (library20.com ,2016)
Conclusion
To sum up, all projects have risks which can be positive or negative for the organization. For instance, a positive risk can be an under budget project. It is positive for the company being under budget, however, it is considered a planning error by the project manager. Identification of risks are the most essential process of risk management. When a risk is identified early, the plan to mitigate the effects of the risk can be earlier. Finally, global information systems have necessary positives to global companies through reducing the development duration of the company’s software development model. However, global information systems have negatives as well in regards of social impact on human performance within teamwork, the company information capacity overload on company’s communication channels. (library20.com, 2016)
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