The Importance of Project Risk Management - Research Paper Example

? Full Paper Introduction In many organizations the Project managers are gone with a discouraging task in order to successfully achieve, observe, and control the projects of all levels. In addition, these Projects may differ in size and can involve many persons from hundreds to thousands to accomplish the given task. In fact, Information technology projects contain huge budget and may take several years to complete the projects. In the project management procedure, the project manager has to perform several different roles together for perfect finish. In this article different procedures along with their influence and risks involved over the projects are discussed. In order to control and manage risk, method and techniques are defined briefly in this article. The definition of Project Management as per the Project Management Body of Knowledge (PMBOK) Guide is “a temporary endeavour undertaken to create a unique product, service, or result and the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.”(Monoharan & Mansor, 2012). There are nine sub categories in project management out of which four are considered as the most important areas. The remaining four is assisting area and one is a general area. These areas are divided as: Scope management: management of work in order to complete the project. Time management: management of time needed to accomplish task on time. Cost management: management of budget regarding cost effective project. Quality management: All the requirements are satisfied and implied. Human resource management: management of employers for their effectiveness. Communications management: gathering information regarding project. Risk management: recognizing and answering to risks. Procurement management: outsourcing goods and services. Integration management: interlinks all project knowledge areas instantaneously. In order to lead a fruitful project, the Project managers need to shine in each of these nine areas. 2 The Project Management Process Project managers manages the project in a systematic way or method, however, various project management techniques are available that can be used. Likewise, activities that are included in the PMBOK for the definition of the project are “components of work performed during the course of a project” (Vida, 2012). The primary activities of the project management process are mentioned in the book called as Whitten & Bentley’s Systems Analysis and Design Methods. The book demonstrated negotiation of the scope, identification of tasks, estimation of durations of the tasks, specification of dependencies, managing the efforts of the team, resource assignment, controlling the project progress, monitoring the project progress and lastly, assessment of the project results and experience. Scope negotiation is a critical part of any project that needs management. Likewise, the scope of the project is associated with the working that is required to deliver the product or end result with the requirements of the customer. Project failure occurs due to creeping of the scope that transpires in case of some addition of features and functions regardless of the factor that impacts the end result of the project. Moreover, failure of the projects also occurs due to ambiguous or confusing requirements of the customer. If the scope of the project is not clearly defined, there is a high percentage that the outcome of the project will not satisfy project stakeholders as well as the customers. 3 The Importance of Project Risk Management Information Technology Project Management is a methodology or set of technique that is implemented for identification, analysis and countering risks throughout the project lifecycle and supporting every aspect of meeting the requirements and objectives of the project (Schwalbe, 2010). Moreover, Oracle White Paper pressures over the significance of project risk management and states that, “Projects are becoming increasingly more complex and costly, making it even more difficult to analyze and mitigate risks using informal methods” (Management, Environment, Sciences, & Council, 2005). However, the term fire-fighters are referred by Oracle for the project managers. Project managers are the risk-takers. They can be anyone of them mentioned below: Risk-averse: project managers do not achieve contentment if more payoffs are at risk. Risk-seeking: project managers contain a complex tolerance for risk and are extra contented if payoff is greater. Risk-neutral: project managers preserve stability between payoff and contentment. For example a case study using Calleam Consulting, Ltd. sites is observed that contains a number of crucial points and faults related to poor risk management (Gregor, Gregor, & Hart, 2005). The system was collapsed when the electrical fault occurred. This fault accompanied with multiple power failure leading towards roadblock. For this situation, filters are required in order to avoid electrical gushes (Gregor, Gregor, & Hart, 2005). Due to the time consuming process of delivery and installation, testing time was restricted. Therefore this incident study features poor risk management and needs more focused team for project management in order to reduce future faults. They also aspect poor schedule management that includes under develop complete risk management tactic. 4 Implementing a Risk Management Plan The PMBOK Guide defines the risk management plan “how project risk Management will be structured and performed on the project.” In addition, Risk management strategies include a number of details such as risk techniques according to the approved budget and timetable effects over the risk chasing events. The effects of risks may hit anyone anytime during the project and can be for short-term and long-term periods. Therefore, it is important to reduce risk successfully. In order to minimize risks, project managers must have good knowledge and comprehensive risk management plan. According to the Oracle White Paper, there is a homogeneous tactic for risk management and is defined as: “A collaborative risk identification process helps create buy-in on project assumptions and spreads awareness throughout the organization.” It is necessary to efficiently connect along with the project associates and stakeholders regarding the risks. Furthermore, new techniques and methodologies also have great impact as stated by the Oracle. 4.1 Michael D. Taylor’s Risk Management Approach The Michael D. Taylor, master project manager and having over thirty years of engineering and project management experience conducts a new technique in order to integrate qualitative and quantitative investigation into risk preparation. In the University of California Extension in Silicon Valley, Taylor is the Project and Program Management Certificate director. In this approach, solutions are given on the basis of organized and suspicions that generates possible risks. However, the risk management plan must be wide-ranging. As mentioned by Taylor “many risk management plans address only foreseeable risks and fail to address the unforeseeable ones” (How to Effectively Manage Project Risks, 2009). The Taylor’s approach includes five step procedure mentioned below: Risk identification. Qualitative analysis. Quantitative analysis. Risk response planning. Risk monitoring and control. In Taylor’s approach the qualitative and quantitative analyses are separated while in Oracle’s approach these procedures are included in general risk assessment phase. Taylor’s approach contains identify risks during initial procedure. In fact, this procedure is considered as the most typical step in risk management strategies. Moreover, according to the Taylor the procedure related to risk identification is a continuous task for project managers. A project manager uses several techniques such as, Flowcharts. Analogous project comparisons Risk checklists Work breakdown structures Brainstorming techniques Ishikawa diagrams Affinity diagrams Risk breakdown structures. These techniques are used for the risk mapping and determining the cause of risks. For the project managers, these techniques allow them to get focused on the project and the risks associated with the project. Also, these techniques provide good practical perceptibility for risk in project. The Taylor’s approach regarding qualitative analysis comes into limelight once the risk is identified. (Taylor & Bogdan, 1998) As mentioned by Taylor, “is always to be analyzed by the probability of the event occurring and the consequence if it does occur.” The risk must focus on the project’s schedule, cost, scope, and quality as mentioned by both Oracles’ approach. 5 Conclusion The project managers need to adopt numerous dissimilar roles and tasks in order to work on all the details and phases of the project. The likelihood and significance of the techniques are focused by the Taylor’s approach. Moreover, its approach regarding Project management is directive and includes several techniques to identify risk as compared to Oracle’s approach. However, to minimize the risks, project managers are required to implement Taylor’s techniques and strategies in risk management. References Gregor, S. D., Gregor, D. H. S., & Hart, D. N. (2005). Information systems foundations: Constructing and criticising ANU E Press. Management, C. O. A. U. S. D. E. P., Environment, B. I. C., Sciences, D. E. P., & Council, N. R. (2005). The owner's role in project risk management National Academies Press. Monoharan, K., & Mansor, Z. B. (2012). Review on project quality management planning: Software quality planning GRIN Verlag. Schwalbe, K. (2010). INFORMATION TECHNOLOGY PROJECT MANAGEMENT 6E Course Technology/Cengage Learning. Taylor, S. J., & Bogdan, R. (1998). Introduction to qualitative research methods: A guidebook and resource Wiley. Vida, K. (2012). The project management handbook: A guide to capital improvements Government Institutes. Read More