How to Control Risks Affecting a Project?

By Zulk Shamsuddin

Failure to control risk will result in the failure to achieve the objectives of the project.
How to Control Risks Affecting a Project is a comprehensive technical reference book that focuses on managing and controlling risks in a project. Whether you are an accountant, business analyst, planning engineer, or chief operating officer, you need to know about risk management. There are many types of risks affecting a project, they include budget, business risk, environmental risk, information security risk, systemic risk, process risk, resource risk, technology risk, technical risk and more. Risk Management describes the processes concerned with identifying, analyzing and responding to project risk. Accelerate your learning process in controlling risks affecting your project profitability. Apply the right processes in managing and controlling risks in your project. Control risks to deliver projects within cost and schedule. Readers are encouraged to acquire other books from the same author to progress further as certified professionals in risk management.
In any project, large or small, there are risks facing the project. Some risks are common across projects while others are unique to the particular industry. For instance, earthquake poses a major threat to construction projects but it is not a threat to software development projects. Landslide poses a major threat to both railway line projects and building construction projects, therefore landslide can be regarded as a common threat to both industrial sectors.
There are many types of risks affecting a project, they include budget, business risk, environmental risk, information security risk, systemic risk, process risk, resource risk, supplier risk, technology risk, and technical and architectural risk.

• Language: English
• Publisher: Lulu.com
• Release date: Oct 29, 2016
• ISBN: 9781365494628

Book preview

Copyright © 2020 Zulk Shamsuddin, PhD / GAFM ACADEMY

All rights reserved.

ISBN: 978-1-365-49462-8

INTRODUCTION

Failure to control risk will result in the failure to achieve the objectives of the project.

How to Control Risks Affecting a Project is a comprehensive technical reference book that focuses on managing and controlling risks in a project. Whether you are an accountant, business analyst, planning engineer, or chief operating officer, you need to know about risk management. There are many types of risks affecting a project, they include budget, business risk, environmental risk, information security risk, systemic risk, process risk, resource risk, technology risk, technical risk and more. Risk Management describes the processes concerned with identifying, analyzing and responding to project risk. Accelerate your learning process in controlling risks affecting your project profitability. Apply the right processes in managing and controlling risks in your project. Control risks to deliver projects within cost and schedule. Readers are encouraged to acquire other books from the same author to progress further as certified professionals in risk management.

In any project, large or small, there are risks facing the project. Some risks are common across projects while others are unique to the particular industry.  For instance, earthquake poses a major threat to construction projects but it is not a threat to software development projects. Landslide poses a major threat to both railway line projects and building construction projects, therefore landslide can be regarded as a common threat to both industrial sectors. 

There are many types of risks affecting a project, they include budget, business risk, environmental risk, information security risk, systemic risk, process risk, resource risk, supplier risk, technology risk, and technical and architectural risk.

This chapter provides an overview of project management, its characteristics, the organization and the people behind a project, the project management life cycle and a summary of the five phases of initiation, planning, execution, control, and closing. We will also examine the project management competency areas that will be applied during the various stages of the life cycle processes. The information you will learn in this chapter not only will help you to succeed in passing the examination but also guide you in managing a project regardless of your project experience. This reference guide has been prepared from the perspective of professional industry experts in the field of project management. 

A project involves a group of interrelated activities that are planned and then executed in a certain sequence to create a unique product or service within a specific timeframe, to achieve benefits.  Projects are often critical components of an organization’s business strategy. Projects vary in size and complexity.

For example, they may: 

Involve changes to existing systems, policies, legislation and/or procedures

Entail organizational change

Involve a single person or many people

Involve a single unit of one organization, or may span across organizational boundaries

Involve engagement and management of external resources

Require less than 100 hours or take several years

Projects versus Operations

In some organizations, everything is a project. In other organizations, projects are rare exercises in change. There's a fine line between projects and operations, and often these entities overlap in function. Consider the following points shared by projects and operations:

Both involve employees

Both typically have limited resources: people, money, or both

Both are hopefully designed, executed, and managed by someone in charge

So, what is a project and how do you know if you are managing one? 

A project is a temporary endeavor undertaken to create a unique product or service.' 

Temporary means that the project has an end date.

Unique means that the project's end result is different from the results of other functions of the organization.

Often projects are confused with general business duties: marketing, sales, manufacturing, and so on. The tell-tale sign of a project is that it has an end date and that it's unique from other activities within the organization.

Some examples of projects include:

Designing a new product or service

Converting from one computer application to another

Building a new warehouse

Moving from one building to another

Organizing a political campaign

Designing and building a new aircraft

The output of projects can result in operations. For example, imagine a company creating a new aircraft. This new aircraft will be a small personal plane that would allow people to fly to different destinations with the same freedom they use in driving their car. The project team will have to design an aircraft from scratch that may be similar to a car. This project, to create a personal plane, is temporary, but not necessarily short-term. It may take years to go from concept to completion but the project does have an end date. A project of this magnitude may require hundreds of prototypes before a working model is ready for the marketplace. In addition, there are countless regulations, safety issues, and quality control issues that must be pacified before completion.

Once the initial plane is designed, built, and approved, the end result of the project is business operations. As the company creates a new vehicle, it will follow through with its design by manufacturing, marketing, selling, supporting, and improving its product. The initial design of the aircraft is the project-the business of manufacturing it, supporting sold units, and marketing the product constitutes the ongoing operations part of the business.

Operations are the day-to-day work that goes on in the organization. A manufacturer manufactures things, scientists complete research and development, and businesses provide goods and services. Operations are the heart of organizations. Projects, on the other hand, are short-term endeavor that fall outside of the normal day-to-day operations an organization offers.

Once the project is completed, the project team moves along to other projects and activities. The people who are actually building the aircraft on the assembly line however have no end date in sight, and will continue to create aircraft as long as there is a demand for the product.

Project Management Body Of Knowledge

Project management is the supervision and control of the work required to complete the project vision. The project team carries out the work needed to complete the project, while the project manager schedules, monitors, and controls the various project tasks. Projects, being the temporary and unique things that they are, require the project manager to be actively involved with the project implementation. They are not self-propelled. Project management is comprised of the following ten knowledge management areas:

Integration Management includes unification, consolidation, communication, and integrative actions to control project execution, manage stakeholder expectations, and to meet project requirements.

Scope Management includes the process of creating the project scope document that describes the scope of the project and the scope of the product.  The key benefit of this process is that it provides guidance and direction on how the scope will be managed throughout the project.

Time Management deals with the ability to plan and finish the project in a timely manner. It involved defining project activities, estimating the resources required to perform the work, estimating the duration of activities, scheduling activities and ensuring adherence to the project schedule.

Cost Management includes the processes that establish the policies, procedures, and documentation for planning, managing, expending, and controlling project costs. The key benefit of this process is that it provides guidance and direction on how the project costs will be managed throughout the project.

Quality Management is to ensure that the project outputs are delivered fit for purpose. If outputs are not fit-for-purpose there is a possibility that planned project benefits will not be realized, or realized to a much lesser extent. It can be achieved by developing quality criteria for the outputs themselves and by ensuring that all project management processes are conducted in a quality manner.

Human Resource Management involve planning for managing the people, finances, and physical and information resources required to perform the project activities is vital, no matter what the project size or complexity. For small projects, this planning may not be documented, but for large and/or more complex projects, detailed documentation will enable better management of the resources, as well as transparency for the Key Stakeholders.

Communications Management includes the processes involved in developing an appropriate approach and plan for project communications based on stakeholders’ information needs, requirements and available organizational assets.

Stakeholder Management involves the identification of people or organizations that have an interest in the project processes, outputs, outcomes or benefits, and planning for how their involvement will be managed on an ongoing basis. It may be done very quickly for a small project, whereas a large and/or more complex project will require a formal stakeholder analysis, a Stakeholder Management Plan as part of the Project Business Plan and ongoing monitoring and review of progress. Stakeholder Management is closely related to communication strategy and planning.

Risk Management describes the processes concerned with identifying, analyzing and responding to project risk. It consists of risk identification, risk analysis, risk evaluation and risk treatment. The processes are iterative throughout the life of the project and should be built into the project management planning and activities. For small projects, a brief scan and ongoing monitoring may be all that is required. For large and/or more complex projects, a formalized system for analyzing, managing and reporting should be established, including the use of a Risk Register.

Procurement Management includes the processes associated with contract management and change control processes required to develop and administer contracts or purchase orders issued by authorized project team members; administer any contract issued by an outside organization (the buyer) that is acquiring deliverables from the project.

Project Management Life Cycle And Processes

One common attribute of all projects is that they eventually end. Think back to one of your favorite projects. The project started with a desire to change something within an organization. The idea to change this 'something' was mulled around, kicked around, and researched until someone with power deemed it a good idea to move forward and implement the project. As the project progressed towards completion there were some very visible phases within the project life. Each phase within the life of the project created a deliverable. For example, consider a project to build a new warehouse. The construction company has some pretty clear phases within this project: research, blueprints, approvals and permits, breaking ground, laying the foundation, and so on. Each phase, big or small, results in some accomplishment that everyone can look to and say, 'Hey! We're making progress!' Eventually, the project is completed and the warehouse is put into production. At the beginning of the project, through planning, research, experience, and expert judgment, the project manager and the project team will plot out when

Reviews for How to Control Risks Affecting a Project?

[Irshad Sugiarto · Rating: 5 out of 5 stars]

I love the content, another professional series from the same author.

[Amanda Sofea Binti Zulkhernain · Rating: 5 out of 5 stars]

Excellent book for anyone involved with managing and controlling risks in a project.