Risk and Project Management - Assignment Example

Name: Tutor: Title: RISK AND PROJECT MANAGEMENT REPORT Course: Date: Table of Contents Title: RISK AND PROJECT MANAGEMENT REPORT 1 Table of Contents 2 Executive summary 3 Methods of carrying out business have changed over the years. Risky ventures are the most profitable and businesses are currently seeking self actualization through expansion other than forming their own corporate social responsibilities. The report focuses on the effectiveness of risk management strategies companies implement and more specifically, the Coca-Cola Amatil Company. The report reviews its objectives in determining this efficiency through objectives and states the purpose for effecting it. The company background gives more information on Coca-Cola Amatil, its management, strategies and projects. The report background and problem statement will further explain the reasons and need for the study. Methodology section illustrates the methods used for data collection and their effectiveness, followed by an analysis and summary of the results and the whole report. 3 Introduction 4 Report purpose 4 Company Background 5 Project Background 6 Problem statement 7 Methodology 8 Technique 1: Surveys and questionnaires 8 Technique 2: Interviews 10 Technique 3: Reviewing agency records 11 Analysis 12 Summary 14 Conclusion 14 References 15 Jutte, B (2012). 10 Golden Rules of Project Risk Management. http://www.projectsmart.co.uk/10-golden-rules-of-project-risk-management.html 15 Turbit, N (2005). Basics of managing risk. 15 Appendices 16 Appendix 1: information Requirement 16 Appendix 2: Interview sheet 17 Appendix 3: Questionnaire sheet (In-House survey) 18 Executive summary Methods of carrying out business have changed over the years. Risky ventures are the most profitable and businesses are currently seeking self actualization through expansion other than forming their own corporate social responsibilities. The report focuses on the effectiveness of risk management strategies companies implement and more specifically, the Coca-Cola Amatil Company. The report reviews its objectives in determining this efficiency through objectives and states the purpose for effecting it. The company background gives more information on Coca-Cola Amatil, its management, strategies and projects. The report background and problem statement will further explain the reasons and need for the study. Methodology section illustrates the methods used for data collection and their effectiveness, followed by an analysis and summary of the results and the whole report. Introduction Risk management in projects is growing of its importance with the coming up of more uncertain but profitable projects. Growing companies such as the Coca-Cola Amatil company become more exposed to risks as they expand their operations. Managing risks enable such companies to carry out projects and deliver in time, while working within the budget and deliver quality as defined by the organization quality policies. Report purpose The purpose of the report is to analyze the efficiency on Coca-Cola Amatil risk and project management system. The situation has been provoked by the Company’s new project of leveraging the OAisys technology in Indonesia. Analysis of the risk management is carried out through five main objectives: To determine whether Coca-Cola Company considers risk management as part of their projects. To determine if the company has been identifying risks in the initial stages of its earlier projects. To examine the effectiveness of Coca-Cola risk management procedures in its earlier projects and its viability in the current projects. To identify any procedures that the company has implemented before to cater for earlier risks in other projects To find the ways in which Coca-Cola Amatil has communicated its risks to its employees and project managers are yet an important component of the report. Company Background Coca-Cola Amatil Company is the leading distributer of non-alcoholic drinks in Australia practicing in-house production of its supplies, soft drinks and mineral water. Other than its principal operating area in Australia, the company has penetrated in other countries like Papua New Guinea, New Zealand, Fiji and Indonesia. The Coca-Cola Company Managing director states that the company’s main strategy is aimed at increasing its market share in the beverage market in Australia. This is through identification of new opportunities and exploring the current open opportunities by increasing its proceeds. The company owned shares of interest of about 50% in the Pacific Beverages Pty Limited which it sold to SABMiller earlier 2012. The management of Coca-Cola Amatil (CCA) comprises of eight officials, led by the Company’s secretary, George Thomas Forster and has nine directors. Significant shareholders of the company include the Coca-Cola Company and its subsidiary holding 29.37% of the company holdings and Capital Group Companies which has 6.51% holding. CCL has also set major strategies on heavy investment procedures and Indonesia is the current target of the company. The target country has a reputation for strong Gross Domestic Product and a great population but with fewer ventures, suggesting greater opportunities for growth in the market. This is after the completion of a $65 million OAisys project conducted in the New Zealand and Australia. Since it is still expanding through investing in projects, CCL needs to frequently evaluate its risk management system for viability. Project Background Risk is involves a possibility of happening or not happening. According to Jutte (2012), risk management includes minimization of the impact of risks on a given project while confiscating the viable opportunities. Currently organizations that are targeting to expand need to prepare for bigger and highly risky exposures. Diversified operations lead to advanced risks to organizational projects. Projects risks include business interruptions, malicious interference, and transportation and production problems, supply chain interruptions and natural disasters which can adversely interfere with even the most stable projects. Terry James, the managing director of CCL notes that the way to expand ids to invest and that risk aversive individuals have no chance in diversification. The growing risky ventures happen to be the most profitable and long-term ventures (Barkley, 2004). Risk and project management enables the organization to run its projects with efficiency, in time and budget, delivering quality results that the target and quality policy requires. According to Barkley 2004, risk management is more general and focuses on preparing the organization rather than the project. This because, viable organizational procedures will ensure that the organization is capable of handling all projects even the most risky ones. Edwards et.al (2005) states that projects become more complex with the changing times calling or more complex measures of managing risks. Projects change in structure, their financial and organizational arrangement, their demand on resources and advancement in technology. They are also focusing on attaining corporate social responsibility, adhere to the governance requirements and operate in due diligence. Coca-Cola Amatil is among the most diversifying companies which seek expansion through investment in viable projects. Taylor Josh, an IT journalist writing for ZDNet posted on the recent project that Coca-Cola Amatil Company is intending to partake in Indonesia. He states that the company just cleared the AOisys project in Australia and New Zealand which involved a $65 million financial outlay and about five years. The project is IT-oriented and focuses on improving operations in the Coca-Cola businesses in Indonesia as peer the current target. Coca-Cola Company partners with SAP, a multinational British IT company to implement the project. SAP (2010) writes that the Coca-Cola project involves all kinds of business vital processes. Coca-Cola Amatil (CCA) has a risk management policy and states that they have a developed risk management policy to make it formal and communicate the Company’s efforts in dealing with risks. The Company’s current intentions of expanding OAisys to Indonesia results to the need for analyzing its risk management system and determine its viability to handle the project with effectiveness. Problem statement Coca-Cola Amatil Company would like to expand its One Amatil information system (OAisys) to Indonesia, a country in the South-East of Asian continent. Carrying out projects require an outflow of cash which is prone to risks. Coca-Cola has been handling the OAisys project in Australia and New Zealand and therefore it is important to strengthen the system again before starting another project. While planning for the project, the company needs to determine the efficiency of its risk management system. To handle the problem at hand, some questions need to be addressed, such as: How will the company identify the risks that it is prone to? How will the company communicate the risks and at what level? How will the management prioritize risks and implement the plan? Methodology Data gathering methods The study required more accurate and complete data since it involves a target project of the company and laying-off of funds. In order to gather complete and accurate data which is within the budget, two gathering techniques were used. These techniques include the use of Surveys and Questionnaires and conducting interviews. By using a combination of the two techniques, adequate data is acquired for effective comparison and data analysis. Technique 1: Surveys and questionnaires Survey method is applicable in sourcing information from a group of people while applying same procedures conducted in writing, personally and through the telephone. In-house survey is appropriate where only staffs and individual evaluators who are specifically interested in the project are involved. The survey involved open-ended questionnaires to allow respondents to explain in their own words and expand on the responses. The technique was used to acquire information from internal players of the company’s projects to compare the views and opinions of the players. Chief risk officer was one of the respondents where the survey method was used. Information from the Chief Risk officer (Andrew Wearne) and the Chief information officer (Barry Simpson) were then compared. Similar survey procedure of administering questionnaires was applied (Appendix 3). In-house survey was used since the targeted people for survey were employees within the organization who were related to the specific project. The Chief Risk Officer is concerned with the organization’s risk management responsibility while the Chief Information Officer is directly concerned with the intended OAisys project since it is an IT-oriented project. For comparison purpose, open-ended questionnaires were issued to the officers to get their views. Information sources used were the project sponsor, Chief risk officer, Chief information officer and managing director (Appendix 1). The sample was selected through non-probable method since the project targeted specifically interested parties with responsibilities related to it. The Chief Officers of the two main departments and documents with the most relevant information were therefore selected. Advantages of survey method Surveys can be carried out through the telephone, face-to-face or by mail and therefore gives a variety of procedures to choose most appropriate. In-house surveys are cheaper and also save on time since it doesn’t need one to go out in the field to acquire information (Brace, 2008) Since the project is crucial and needs accurate data, open ended questionnaires are advantageous in giving qualitative data with broader explanations for efficient analysis. The qualitative data is also appropriate where the sample size is small. Survey method allows comparison of responses and thus an efficient and accurate conclusion is drawn. Disadvantages of survey method Surveys conducted by issuing the questionnaires might suffer the risk of respondents misunderstanding the questions (Pawar, 2004). This might lead to ambiguous responses by the participant. Open-ended questionnaires are also disadvantageous during analysis since they require more time to analyze the answers where others are ambiguous. Technique 2: Interviews Interviews involve a question answer responses of an interviewer and an interviewee. Open-ended or semi-structured interviews involve extensive questions that are arranges in a manner to allow a flow in the conversation. A guide lists the intended questions and ways of administration in a certain order. The project is crucial, involving cash outflow and therefore requires accuracy in analysis and drawing conclusions through detailed information. It involves acquisition of program details and processes from stakeholders. Information source used in this case was the Aon’s Chief Claims officer (Appendix 1). Detailed information was acquired from stakeholders in the company, partners and bodies of governance through interviews (appendix 2). This involved interviewing the Aon’s Chief Claims Officer, Mark Ronan. Coca-Cola Amatil has partnered with Aon which provides the insurance services and has many times updated the company on risk management issues. This makes the organization a major stakeholder from where to acquire process information. Advantages of interviews Open-ended interview questions provide for a wide range of information to be used in analysis and imminent information. Just like open ended questionnaires, the respondent is able to expand their opinions and views. This also allows the interviewer to think and add more questions and information to the previously structured procedure. Interviews involve the presence of the interviewer, therefore, the interviewee is able to bring up ideas that they think are of importance and those that they don’t understand (Kvale, 1997). They are also able express their opinions in their own words. Disadvantages of interviews Although open-ended interviews are convenient and provide more detailed information, they are n expensive method. According to Pawar (2004), interviews are not expensive in terms of finances, but also time consuming. It may require technical expertise such as an external evaluator to help in analyzing methods. The method is likely to compromise privacy of the interviewees. Technique 3: Reviewing agency records This technique involves a review of documents within the organization that contain relevant information for the project and other information collected periodically for the purpose of the project procedures. Some records can also be created during the study. Pawar (2004) notes that agency records give information on activities, decisions and changes in policies related to a given program. Any information on closely associated stakeholders, their numbers, performance and personality is also provided by the records. Information sources that the technique employs are organization charts, work plan, grant proposals, stakeholder’s files, Risk Management Policy Statement and Annual reports. The review provided information on risk management policies, the current and previous projects and information on implementation of risk control measures. Advantages of reviewing agency records This method is cheap in collecting data. According to Pawar (2004), the method requires use of organizational documents which are already prepared and only a number of employees and evaluators are required to gather the information. Other organizational activities related to the procedures continue as usual and are not affected. Disadvantages of reviewing agency records Inaccessibility of these documents by outsiders poses a challenge to a study since External evaluators are not able to use the documents. Information provided by the documents might be irrelevant, incorrect or deficient. Information obtained is also limited to the collections which might not be consistent at that time. Reviewing these records my require lot of time form the participants. Analysis The techniques for data gathering were appropriate, basing on the nature of sources of data and the main data needed. Open ended questionnaires and interviews provided adequate data for analysis and assured accuracy. The objectives of the research were thus attained from information of stakeholders and partner organizations. Barry Simpson, the Chief Information officer of the company stated that the project is an extension of the previous project in Australia and New Zealand. Having carried out a $ 65 million project which commenced in 2008 and ended earlier 2012, the management identifies the need to review their system and determine its viability to handle another major project. The Australian Compliance report (2011) indicates that Coca-Cola Amatil has extensively invested in simulation procedures place to ensure the continuity of the business for the past two years. The company’s Chief risk officer, Andrew Wearne stated that the organization understands the effects that risk can cause to its business operations, which he says is important for every business. Early risk identification enables the organization to device ways of preventing or minimizing the impact of risk (Khatta, R.S, 2008). Andrew Wearne notes that the company’s directors are concerned with any impacts a risk is likely to have on the business and conduct simulation tests to enable them device adequate measures. Barkley, (2004) note that, procedures that a company applies to is previous projects enables it to develop stronger muscles to risks in its future projects. The procedures that the company has implemented before to cater for earlier risks in other projects will also be established in the report. It is expected of any participating party to communicate any risks identified that may influence the project. Jutte (2012) notes that, the main reason why projects fail is inadequate or lack of communication within the project organization. Project risks must be included in the agenda for project meetings. Summary Coca-Cola Amatil has implemented risk management procedures through Simulation processes where its managers create and experience a situation of such a risk and develop control measures which will be used in the actual situation (Maidment, 2011). The company is in partnership with the Aon Company which covers its risks. The Chief Claims Officer Ronan, commends the Coca-Cola Amatil company for its quick responses on risk-related issues quoting the case of Kwedale. This enabled the company to win an award for the best company in risk management in 2010. The company quickly restored Highly Intensity discharge (HID) lighting and minimized the risk of possible fire. The CCA manager for risk and Insurance noted that the company performed 75% of its intended proposals in only four to six months. Conclusion Analyzing the viability of a company’s risk management system is important for a growing company. Ventures are vital for expansion of investments and organizations can not fear investing because of risks. A viable risk management system serves as the shield for the risks that its business operations are exposed to. The management plays a major role in ensuring that risk management policies are met and implemented. Risk management policies of a company are also communicated to the managers and project participants during project meetings. The general company staffs are communicated to through the risk management policy. References Khatta, R. S. (2008). Risk management. New Delhi: Global India Publications. Barkley, B. T. (2004). Project risk management. New York [u.a.: McGraw-Hill Professional. Jutte, B (2012). 10 Golden Rules of Project Risk Management. http://www.projectsmart.co.uk/10-golden-rules-of-project-risk-management.html Maidment, N : Australasian Compliance Institute (AIC)(2011). Risk management: a case study of Coca-Cola Amatil and Aon. AIC http://csnz.org/Folder?Action=View%20File&Folder_id=68&File=Risk%20management%20Coca-Cola.pdf Turbit, N (2005). Basics of managing risk. Edwards, P.J., Bowen, P.A., & Edwards, P.J (2005). Risk Management in Project Organizations. Taylor & Francis. Cox, B. G. (1995). Business survey methods. New York: Wiley. Kvale, S. (1997). InterViews: An introduction to qualitative research interviewing. Thousand Oaks. Sage Publ. Pawar, M. S. (2004). Data collecting methods and experiences: A guide for social researchers. Elgin, IL: New Dawn Press. Appendices Appendix 1: information Requirement Required Information Information Source Names of key stakeholders Project Sponsor – person, internal Organizational charts – internal document Media publications (investSmart) – document external Risk management Compliance information Australian Compliance report- Document, External Chief Risk Officer - Person, Internal Risk identification in earlier projects Aon’s Chief Claims Officer- person External. Grant proposals- Document, internal Company’s risk procedures effectiveness and viability Work-plan- document, internal Chief Information Officer - person, internal Media publications – document, external Risk measures implementation Stakeholders’ files – Documents, external Risk Management Policy statement- document , internal Risk communication procedures Risk Management Policy statement- document , internal Annual reports- documents, internal Chief Risk Officer - Person, Internal Company background / history Managing director- person, internal Organizational file – document, internal Online-search Risk communication procedures ISO 31000- Document, external CCA Risk Management Framework and Guide Risk Management Policy statement- document , internal Annual reports- documents, internal Appendix 2: Interview sheet Interviewee name: Mark Ronan Interviewee title: Aon’s Chief Claims Officer Objective To determine whether Coca-Cola Company considers risk management as part of their projects and if that is the case in the intended project Questions 1. How is the company embracing risk management in its projects? 2. What is the company’s stand on its current project? 3. How efficient is the risk management procedure in relation to the Company’s projects? Objective To determine if the company has been identifying risks in the initial stages of its earlier projects. Questions 1. What the Company’s initial procedures or new projects? 2. How does the management put in place risk measures for new projects? 3. What are the initial risk measures for the current projects? Objective To examine the effectiveness of Coca-Cola risk management procedures in its earlier projects and its viability in current projects Questions 1.How has the company been dealing with risks in previous projects? 2.How effective was the risk measures previous projects? 3. Are there any previous risk measures that the company has applied in current projects? Objective To identify any procedures that the company has implemented before to cater for earlier risks in other projects. 1. What are the risk management procedures currently implemented in the Company? 2. Are there any partnerships that the company has in relation to risk management? Appendix 3: Questionnaire sheet (In-House survey) Complete this sheet for Questionnaire delivery method only Total population (Size) 4 major interested staff Sample Population (Size) Sample selection method Non-Probable selection Objective To determine the background and history of the company Questions 1. What is the Coca-Cola company principal operating area? 2. What other countries is the company serving? 3. What are the company’s strategies and how are they formulated? 4. What are the recent projects that the company has ventured and is venturing into? Objective To determine whether Coca-Cola Company considers risk management as part of their projects and if that is the case in the intended project Questions 1. How is the company embracing risk management in its projects? 2. What is the company’s stand on its current project? 3. How efficient is the risk management procedure in relation to the Company’s projects? Objective To examine the effectiveness of Coca-Cola risk management procedures in its earlier projects and its viability in current projects Questions 1. How has the company been dealing with risks in previous projects? 2. How effective was the risk measures previous projects? 3. Are there any previous risk measures that the company has applied in current projects? Objective To find out the ways in which Coca-Cola Amatil has communicated its risks to its employees and project managers Questions 1. Is the company complying with the International Standard for Risk management (ISO) 31000? 2. Are stakeholders and project participants aware of expected risks? 3. How does the company inform key players of the exposures in projects? Read More