Free «Risk Management and Analysis» Essay Sample
Differentiate between avoiding a risk and accepting a risk. Indicate the implications to your project that each might have.
Avoiding a risk means eliminating any activity that signifies a danger for a project. Conversely, risk acceptance means continuing to work even though there is awareness about potential risk (Nikonov, n.d.). In any particular project, risk avoidance and acceptance have important implications. For example, in cases in which risk mitigation costs are too big (relative to payoffs), indulging in risk acceptance would be a mistake. If, however, mitigation costs are exceeded by potential losses, or if potential payoffs are too high, then risk acceptance might probably be the best choice.
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Evaluate the use of statistical analysis in determining project risk and how it might be applied to the human factors of a project.
Statistical analysis can be used to conduct a quantitative analysis of all factors that might suppose a risk for a specific project, including human factors (Mãzãreanu, 2007). Through statistics, numerical results expressing probabilities of risk (and consequences) are obtained; these probabilities can be analyzed and decisions regarding risk management strategy can be made. In the specific assessment of human factors, statistical analysis can be used to determine the effect of human error, workplace accidents, inefficient communications, etc.
Go to http://www.projectsmart.co.uk/10-golden-rules-of-project-risk-management.html, develop another golden rule and explain your reasoning.
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An eleventh golden rule in Project Risk Management would be to consider both strengths and weaknesses. It is true that in order to manage risk appropriately it is important to consider threats and opportunities (given that risks can constitute threats or can be transformed into opportunities), but in order to have a more complete understanding of the risk situation that a project faces, it is also important what intrinsic factors (innate to the project itself) can ultimately lead to those threats and/or opportunities. In other words, it is important to recognize that threats spring from a project’s weaknesses and that opportunities spring from a project’s strengths.
Consider how these 10 Golden Rules apply to all projects and apply three of them to your project.
The 10 Golden Rules apply to all projects given that risk is a factor inevitably present in all projects. Based on this reality, it follows that risk identification is necessary, specifically at the beginning of a project. Risks must be identified at the beginning of a project so that appropriate planning for responses/contingencies can be devised and the success of the project guaranteed. Furthermore, in order for responses/contingencies to be effective, it is necessary to analyze and prioritize risks; some risks are greater than others, but the only way of making an accurate prioritization of risk is through identification and analysis.
Of the six reasons that scheduling resources is important, select which one of the six reasons appears to be the top priority and justify your position.
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Of the six reasons why scheduling resources is important, the top priority appears to be costs. The success of a project depends on its ability to maximize returns while at the same time controlling and minimizing costs. If resource scheduling is not managed adequately, project managers will have a hard time procuring the required resources in the required time frames. The inevitable result will be resource bottlenecks, which will elevate costs and diminish returns; the project would end up failing.
Create a worst-case scenario for a project lacking a time-phased baseline. Also discuss if you were ever in such a situation, the outcomes of the situation and what you learned. The situation can be professional or personal.
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A time-phased baseline allows for a detailed, controlled method of controlling project progress, and more importantly, costs. Based on this, a worst-case scenario for a project lacking a time-phased baseline would be that the project’s costs increase uncontrollably and financial resources run out before the project is completed. I have never been involved in such a situation, but time-phased baselines apply to any situation in which resources are managed and deadlines must be met. For example, when I started working, I remembered that I had to pay the bills and buy groceries. However, I spent my money buying clothes and going out with friends. Come the end of the month, I was out of money and could not pay the bills or buy groceries. Hence, I realized that time-phased baselines are important.
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Discuss two of the five common reasons that projects crash. Relate your response to a project failure that you have experienced or witnessed.
When talking about the reasons why projects crash, it can be said that this commonly happens because of time constraints; if a project’s deadline is shortened unexpectedly project crashing becomes absolutely necessary. Another common reason for crashing a project is the inability to stay on schedule. When a project falls behind schedule it becomes necessary to crash the project so that it can get back on schedule; this becomes even more important in cases when contractual penalties for tardiness come into play. An example of project crashing would be the one time that I designed my own study plan project for one of my finals. Originally, I had six weeks to study, but unexpectedly, the professor modified the exam’s date and I had only four weeks to study. I had to crash my initial project and cover everything in four weeks what I had originally intended to cover in six weeks.
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Take a position on the following statement from the textbook author: “Reducing the project duration increases the risk of being late.” Support your position.
I agree with the author’s statement. When a project’s duration is reduced the team has less time to accomplish the same objectives. The tasks to be completed are also the same, as are the available resources, so in the end there is no time for thorough analysis and control. The success of the project ultimately depends on the skill, experience, and knowledge of those involved. The increased pressure increases the probability of human error (which naturally increases the risk of tardiness); if more people are brought on board the same applies given that most tasks cannot be carried out properly by people who are not deeply knowledgeable and skilled in the project’s demands.