Project Progress Note: The assignments in this course are a series of papers that are based on the same case, which is located in the XanEdu tab in the left-hand menu of your course. The assignments d
Running head: RISK MANAGEMENT PLAN 0
Risk Management Plan
One of the most critical aspects of project management is risk management. The rationale for the same is that it benefits the project team in enhancing the project success rate through proactive risk identification and management. Therefore, it is imperative to carry out significant risk effective management for every project. This study attempts to develop a risk management plan for the British Petroleum project with the same consideration.
Description of ProjectBP is initiating a new project for improving their daily production capacity by 85,000 barrels. The organization had experienced various safety and similar risks in the previous projects; therefore, the organization is unwilling to ignore any potential risk in the new project due to tighter deadlines and extensive budget involved in the project. Thus, BP is firmly integrating effective risk management in its project management practices to improve its success rate. BP's cost for the same task is about $100,000, where it is expected to complete within six months.
Risk Management Process Section Aims, Objectives, and ScopeThe BP project's key aim from the risk management process is to ensure adequate identification, assessment, and management of all the potential risks existing proactively to maximize the project success rate. BP project team will be using P-I scoring to assess the project risk's acceptability reaching up to a threshold of maximum 4 (Hillson & Simon, 2007).
The BP project's risk management process will cover all the critical activities being carried out throughout its life. Moreover, it will hide all the external and internal risk elements comprising safety, program, etc.
The objectives of the BP project risk management process comprising
Increase the success rate of the BP project through sufficient identification, assessment, and management of potential risks existing at the project
Ensure strong coordination between project team members related to risk management to adopt effective strategies to manage project risks.
Develop ownership and commitment among the employees about risk management to maximize their contribution towards effective risk management.
Hilson and Simon (2007) make use of the ATOM process for determining the size of the project. The size of the BP project will be determined through the same tool as follow:
Strategic significance: The project is of high strategic importance for BP as it will improve the company's production capacity by 85,0000 barrels per day.
Commercial Complexity: BP had executed similar projects in the past; therefore, there is minor commercial complexity involved in this project. Therefore, 8 is the criterion value for this aspect (Hillson & Simon, 2007).
External Linkage: BP organization is solemnly responsible for executing this project with no external dependency. Therefore, 4 is the criterion value for this aspect.
Requirements Stability: BP project requirements are quite exact and already communicated to the concerned stakeholders. Therefore, 4 is the criterion value for this aspect.
Technical Complexity: BP project is coming with no new technology development or utilization in this project. Instead, they will be making use of past technologies to improve production capacity. Therefore, 2 is the criterion value for this aspect (Rodríguez-Rivero et al., 2020).
Characteristics of Market Sector: The project team must comply entirely with the Standard Regulatory Framework for this project. Therefore, 4 is the criterion value for this aspect.
Value of Project: $100,000 is the value of the BP project, which is significant. Therefore, 4 is the criterion value for this aspect.
Duration of Project: BP project team needs to complete the overall project within six months, which is less than a year (Amarshi Maru, 2015). Therefore, 4 is the criterion value for this aspect.
Resources of Project: BP organization will make use of a medium in-house project team for completing this project within defined constraints of time, cost, and quality. Therefore, 4 is the criterion value for this aspect.
Liabilities after Project: It is allowable to accept the weaknesses of the project after completing the same. Therefore, 4 is the criterion value for this aspect.
The BP project's size is medium, evident through the project's overall criterion score, i.e., 42 as per ATOM methodology (Ruqaishi & Bashir, 2015). With the same size of the project, the BP project team must use all the risk processes as per the project size. The BP project team will utilize the ATOM process for managing risks making use of provided stages.
Initiation: Clarity in the objectives of the project
Identification: Documenting all the potential risks existing at the project
Assessment: Making use of the qualitative or quantitative methodology to assess project risks.
Planning of Response: Determining effective strategies against each risk living at the project.
Reporting: Communicating the project's active status.
Implementation: Making use of effective response strategies to manage potential risks at the BP project.
Review: Reviewing the residual risks after implementing risk management strategies
Post-Project Review: Producing lessons learned from a complete risk management process to support future projects.
Following risk tools and techniques will be used by the project team for managing existing risks at the project.
Qualitative risk analysis will use a pre-defined rating scale to determine and prioritize all the potential risks in the project. Judgment knowledge, Situational awareness, etc., are the critical factors required for completing such a kind of analysis (Hillson & Simon, 2007).
Probability of Risk and Assessing the Impact: The scoring of risk will be carried out through occurrence chances and the potential impact of the project's risks (Ruqaishi & Bashir, 2015). The project team will also evaluate the effect of trouble on the project's time, quality, and cost parameter.
Probability and Analysis of Impact: BP project team will define all the project risk tools at the initial stages. It will benefit in identifying and managing potential risks existing at the project with their numerical scoring.
Categorization of Risk: BP project team will place the project risks in different categories after identifying their impact on the project output (Rodríguez-Rivero et al., 2020).
Assessment of Risk Urgency: BP project team will also assess the urgency of the potential risks existing at the project to determine their sensitivity for taking timely actions.
BP project team had selected qualitative tools to assess and manage risks effectively and fastly at the project utilizing effective team coordination and subjective evaluation.
The project team will also use the quantitative risks analysis tool for allocating a numerical value to every risk existing at the project to carry out faster decision making and effective action (Hillson & Simon, 2007). The BP project team will be using the following tools and techniques in this regard, including
Three-Point Estimate: Different values, including pessimistic, most likely, and optimistic, will be used for the project risks to determine their most harmonious relationship with the project.
Sensitivity Analysis: BP project team will evaluate each risk's potential impact and urgency over the project using this tool (Ruqaishi & Bashir, 2015).
Decision-Tree Analysis: BP project team will be developing a tree for each risk to determine all possible courses of action for selecting the most suitable one (Shayan, Pyung Kim, & Tam, 2019).
Expected Monetary Value: BP project team will develop a contingency schedule and budget for each potential risk existing at the project using this tool.
The rationale for selecting quantitative risk tools and technique is that it will be delivering all the results in numerical form that will be suitable for the project team to carry out informed decision making and strategy implementation (Hillson & Simon, 2007).
The below table provides information regarding the complete life-cycle of utilizing risk tools and techniques at the project.
1. | Risk Management Process Initiation |
1.1 | Signing off Risk-Management Plan and sharing with all the concerned stakeholders; |
2. | Identification |
2.1 | Initial Risk Register |
2.2 | Ad-hoc Risks Identification |
2.3 | Standard Checklist |
2.4 | Project Constraints and Assumptions |
2.5 | Brainstorming |
3. | Risk Assessment |
3.1 | Risk Register Updating |
3.2 | Categorization of Risks |
3.3 | Preparation of top risk existing at the project |
3.4 | Assessing the impact and probability of each risk |
4. | Planning response for the Risks |
4.1 | Developing Risk Urgency |
4.2 | Carrying out Sensitivity/Decision-Tree/Monetary Analysis |
4.3 | Risk Register Updating |
4.4 | Risk analysis and delegation of risk roles |
5. | Reporting |
5.1 | Risk Report to the project owner |
5.2 | Risk ad-hoc report to the stakeholders |
6. | Implementation |
6.1 | Monitoring of Risk Actions |
6.2 | Implementing Response Strategies |
7. | Review |
7.1 | Developing Lessons Learned to support effective risk management in future projects |
The complete risk plan will provide appropriate support to the project team to ensure the BP project's effective risk management to achieve the project's desired success rate.
Review of Risks and Reporting SectionBP project team will be using a defined frequency throughout the project to evaluate the project's risk exposure. The regular risk review will benefit the project team in assessing that either the project risk management is proceeding in the right direction or not (Hillson & Simon, 2007). It will also support them in modifying their risk planning appropriately as per the needs of the project.
BP project team will be making use of a daily morning meeting to review the minor risks existing at the project. BP project team had selected such a short frequency to ensure exact, regular, and updated information to all the project stakeholders regarding potential risks at the project for effective risk management (Rodríguez-Rivero et al., 2020).
BP project team will be carrying out fortnightly meetings to evaluate and review the significant risks existing at the project (Shayan, Pyung Kim, & Tam, 2019). BP project team had set the same frequency for ensuring that regular detailed analysis of the project risks is carried out to avoid any adverse impact on the project's performance.
BP project team will generate a monthly risk management report to keep all the stakeholders updated and informed regarding the project's risk management progress. The story will benefit all the BP project stakeholders to gather the latest and updated information regarding the project risks for carrying out informed decision making and further action (Hillson & Simon, 2007). Moreover, they will also be able to fulfill their roles and responsibilities effectively. BP project team will also regularly update the lessons learned document for making sure that they can realize their mistakes in the current risk process to avoid the same in the future strategy.
Probability and Impact of Potential Risks$100,000 is the total cost allocated for completing the BP project within about six months. BP project team also used a contingency rule of 10% to determine particular values related to the project linked with cost, time, and quality. The below table provides a probability and impacts analysis table for the current project with appropriate scaling to ensure effective risk treatment and management.
SCALE | PROBABILITY | IMPACT ON PROJECT OBJECTIVES | ||||
TIME | COST | QUALITY | ||||
VI | 71-99% | >30 d | >$13K | Impact on Project Objectives is HIGH | ||
HI | 51-70% | 22-30 d | $7K - $14K | Impact on Project Objectives is MAJOR | ||
MED | 31-50% | 12-21 d | $3K - $7k | Impact on Project Objectives is up to SOME EXTENT | ||
LOW | 11-30% | 6-11d | $2.1K - $4.1K | Impact on Project Objectives is MINOR | ||
VL | 1-10% | 1-6 d | <1.9K% | Impact on Project Objectives is MINOR | ||
NIL | <1% | No Change | No Change | Impact on Project Objectives is NOTHING |
It is imperative to mention that if the potential risks existing at the project are creating an opportunity for the project team related to quality, cost, and time, then the probability and impact table will deliver positive results; otherwise, it will provide adverse effects.
Threshold Value for Risks$100,000 is the total cost allocated for completing the BP project within about six months. Therefore, it might be suitable to determine contingency values for risk thresholds in the project (Hillson & Simon, 2007). However, all the project risks will be coming up with different influence and impact; therefore, the BP project team must use probability and impact matrix to determine the threshold values for the risk.
If the risk tends to carry a probability of about 11 to 30% with an impact on the time of about 6 to 11 days and a cost impact of a maximum of $1.9k on the BP project objectives, they must be considered falling within the threshold value. Suppose the effect and probability of the identified risks at the project are falling within the criteria as defined above. In that case, the project team will accept the same risks without further action-taking (Rodríguez-Rivero et al., 2020). However, the BP project team must ensure to showcase rapid-response towards project risks exceeding these values.
ConclusionOverall, one of the most critical aspects of project management is risk management. The rationale for the same is that it benefits the project team in enhancing the project success rate through proactive risk identification and management. The risk management plan prepared in this study will help the BP project team achieve success with the minimum impact of the potential risks.
References
Amarshi Maru, A. (2015). Project Risk Management: Methodology Development for Engineering, Procurement, and Construction Projects a Case Study in the Oil and Gas Industry. American Journal of Civil Engineering, 3(3), 75. https://doi.org/10.11648/j.ajce.20150303.14
Hillson, D., & Simon, P. (2007). Practical project risk management: the ATOM methodology by David Hillson and Peter Simon. Vienna, VA: Management Concepts
Rodríguez-Rivero, R., Ortiz-Marcos, I., Romero, J., & Ballesteros-Sánchez, L. (2020). Finding the Links between Risk Management and Project Success: Evidence from International Development Projects in Colombia. Sustainability, 12(21), 9294. https://doi.org/10.3390/su12219294
Ruqaishi, M., & Bashir, H. A. (2015). Causes of Delay in Construction Projects in the Oil and Gas Industry in the Gulf Cooperation Council Countries: A Case Study. Journal of Management in Engineering, 31(3), 05014017. https://doi.org/10.1061/(asce)me.1943-5479.0000248
Shayan, S., Pyung Kim, K., & Tam, V. W. Y. (2019). Critical success factor analysis for effective risk management at the execution stage of a construction project. International Journal of Construction Management, 1–8. https://doi.org/10.1080/15623599.2019.1624678