Project Management, Categories of Risks and Their Elements - Essay Example

Management 23 April Project Management Part 1. Difference between projects and processes A project can occur in many different forms as long as it describes the activities performed to meet specific objectives. These activities can be used to improve or introduce a particular service or product. Often, processes are part of projects and both of them have different, but related aims in managing. The main difference lies in the continuous character of a process, and the one off character of a project (Kolthof 178). As a temporally endeavor, projects have a definite beginning from inception of idea to end of the project when an objective is achieved or project terminated; hence a project becomes a one time undertaking. On the other hand processes take the form of a repeatable string of activities, meaning they can occur severally, either simultaneously or against one another. In the management of these two entities, they both function for the common good of the projects, but while the aims of managing projects are achieving the end result, process management focus on increasing efficiency and quality, which is difficult to achieve for the former. Repetitive character of processes gives value to the projects. 2. Project Risks Any project risk is associated with uncertainty and probability of losses that can cause it to fail. There are many risks and can further be divided , based on the risk classification and the type of the project. Cost Risk The risk is associated with the financial resource, which is a vital constraint in any project. Many things can cause cost risks, and though they can be related to the general project, the control of this factor is handled by the management of the project, who either underestimate, or overlook the cost associated with the activities in the project. It is mostly experienced in projects when unforeseen costs begin occurring due to poorly managed changes, or cost overruns exceeding the budgeted costs allocated to different activities. Some activities or processes could spend more financial resources, which could end up leading to adjustment of project scope, risking other problems just to limit themselves to the former of adjusted budget baseline. Schedule risks: It is very critical to ensure projects are completed and delivered in time to avoid conflicting with the intention of the end product. When the scheduled plans are not met, more time is definitely required, especially if the activity cannot be run concurrently with others. The risk is caused by poor planning and estimation of resources, and adjustment processes that could end up in shortfalls of resources. It risks failing the project, when the end products is delayed from meeting its objective or market opportunity in the late deliveries. External risks: The risk can occur anywhere and anytime to disrupt the operation of the project, which the management, just as the human resource and other stakeholders have no control of. These factors range from market, economic, legal, political, natural disaster, and social issues that could affect a project (Murch 93). In many cases, projects have had to be stopped due to political instabilities in a country or location, because the project has no guaranteed security. Sometimes, the implemented parts of the projects are destroyed in skirmishes causing additional costs in time and finances allocated to repair and move on. Scope risk: The scope of a project deals with the requirements, deliverables and goals of a project; hence the performance and quality of the project can be influenced by the presence of the risk. Any problem generated in the formation and documentation of these factors can be inherited in the future of the project, because the scope would be used as a baseline for referencing and reaching decisions. It can be associated with unsuitable thought of the scope, poor documentation and lack of unison among the stakeholders over the scope, which affects the technical effort put into place to provide the required level of technical functionality intended at the end of the project. It has commonly been referred to as scope creep, when it arises from the design phase and has a potential to generate other unknown risks. 3. Reasons why project team fails A project team is comprised of several people who perform different activities assigned to them, but are all responsible for planning and executing the project. In projects, teams are effective groups of people who are looked upon to perform thorough work, and support the project complete smoothly as intended. Insufficient leadership and management, lack of clear focus (vision and purpose) and common approach among the team members to accomplish the work, are central reasons why teams and projects can fail (McBride pcs-info.com). While a team can have rotated leadership, if the leader is not assigned, any team leader is expected to handle all the responsibilities of leading, motivating, solving conflicts among the members, planning, scheduling, and ensuring performance within the team. The general management is also required to offer enough support, and coordinate with the team and its leadership in achieving the general objective. Compelling visions and purpose guide the entire team to work towards a common objective, giving everyone a similar understanding, and reference point to help them keep on the right track. A team should also have an approach they use to accomplish the tasks, which is possible to deliver when a proper logical plan is in place. Failure to address these issues affects the performance of the team in the project. 4. Categories of risks and their elements The risk categories assist in organizing and isolating risks within the entire project. Projects differ, and despite the circumstances that surround them, common risks categorized into the organization, external, technical, and project management risks do occur (“Introducing project,” 10). The external risk category is the grouping of any unexpected uncertainty of loss arising outside the project (external to the project), but have an effect on it. The influencing variables are usually outside the control of the company and could be on macroeconomic, legal, and political factors among others. Examples of these include earthquakes and exchange rates in the market, which all fall on the environmental risk element. Another category is the organizational risks, which can occur due to factors within the organization’s scope and control. Organizations deal with personnel and different levels of interactions among the departments; hence the communication structure has to be effective to relay information to the expected persons in the organizations. It consists of regulatory risk elements that may occur when the laws and regulations of the location hosting the organizations changes, and ultimately influences the organization performance, either creating an opportunity or a threat to the success of the organizations’ projects. Project management risk category deal with the problems and uncertainties caused by neglect, reluctancy, decisions, and errors made in the running and supervision of the project. Some of the components are human resource under performance, cost, and time risk elements. The technical risks lead to failure of functionality and performance. They risk compromising the quality of the output, which are common cases in software projects. Operational and design inefficiency are main elements of the category. Part 2 1. Why cost overrun occurs in project work There are varied reasons in projects that may lead to overspending of the financial resources, all of which are tied to the activities, processes, and general project completion. According to Vergara, poor cost control, lack of basis of estimation, and poorly defined scope of work are critical causes of cost overrun for any project (stevevergara.com). The management plays a critical role in making changes and adjustments to costs; therefore any errors in estimations, bills of quantities, and inflation material costs, while managing the project could lead to overlooking or failure to enter or allocate enough finances to accomplish a task. Meaning, the actual implementation of the project phases could consume more than allocated, if anything was left inappropriately unattended. Failing to have a basis of estimation would mean the project team would not have documented critical aspects, that would assist them in mitigating the project cost risk. A basis of the statement tells more on the funding of the project, allowances, pricing basis , cost, and value of the project, all which are essential in understanding the problem, providing a solution to the problem, and giving knowledge on how much it would cost. Misrepresentation and omissions of the scope of a project are also a cause of unplanned increased costs. Any missed out requirement may require to be added later, and that comes with additional costs having to be allocated to implement it. 2. Methods for duration estimation Estimation of project activity duration is one critical process of the project time management. Each activity requires time and resources to be completed, hence it is essential to determine the length of time an activity can take, to have a general estimation of the project estimated duration. According to Yusufzai, Delhi technique, expert advice, and three point technique are common methods used in estimating activity duration (scribd.com). The expert advice method is the easiest and commonly used in most small projects, where the team leaders and experts as key human resources in a past projects provide their expertise judgement on the existing projects. Their judgement supported by historical information work well where possible. Expert judgment is quick and can provide reliable estimates for most uncertain activities, considering that the expert can differentiate the current proposed factors to those of the past project experience. The disadvantages are that its difficult to quantify, fails to have an available expert, and the fact that it often caters as a compliment to other methods. The Delhi technique allows a group of people to assess the assigned tasks and estimate the duration on an individual basis, before collectively discussing their established findings. Following the technique, an estimate is reached after summarizing the extracted knowledge from the group. Multiple surveys are conducted to reach a consensus. The advantage is that it can generate reliable estimates due to various repetitions to reach a consensus after disagreements, but as a weakness, it can consume more time resources trying to agree. The three point estimate method projects the activity duration as an estimate of the continuous time. It is expressed in the program evaluation and review technique (PERT) that uses 3 duration estimates (pessimistic, optimistic, and most likely). The advantage of the method is the ability to provide boundaries on expectations, while the definite disadvantage is the more tedious work in the creation of all the three estimates (“project management,” projectmanagementguru.com). 3. Project crashing Its main purpose is to decrease the total period of time taken on a scheduled project. As a technique of developing schedules in projects, it allows assessing and analyzing the cost and schedule tradeoffs to realize how to acquire the greatest amount of compression in the total project duration, while minimizing the incremental costs (Project management institute 21). The process may require more use of the resources, even if it means withdrawing from other facets of the project to speed up the failing or delayed section of the project, so that the most value is generated out of the assigned project. One of the main reasons is to speed up a project, which may be demanded earlier than anticipated with regard to changes in the market needs. If the purpose intended for the project happens to occur earlier, the schedule of the project may be compressed to meet the new expectations. Another reason is where the project considerably lags behind schedule and may affect other activities either concurrently or in the future; such projects can be crushed to accomplish the main objective within the required time frame, and avoid further delays that would cause heavy penalties. Other reasons would be for adjustments, where the schedule initiation could have been too optimistic or facilitate transfer of resources to activities that that excessively require them in the projects. 4. Human factors Human factors are those activities and actions that involve human efforts and hold them responsible for the ultimate result, which they have influence over. It therefore involves the factors associated with the managers, team of experts, and other human resources (the people). Human factors are a set of principles that integrates significant concepts of behavior and motivation of a group of people. They into play right from pre planning, project approval, planning, implementation, transition, to production (Burke et al 1). The leadership performance as a human factor is concercened with managing, controlling and organizing the resources in a project, hence it is a critical role of pushing, marshalling, and influencing the performance of the project. When the leadership penetrates through, delegates power as required, and enforces discipline and accountability, most likely the project ends up successfully. Motivation of the workforce also spurs the employees to work accordingly, hence avoiding conflicts and delays in project implementation. Human factors like sufficient communication and reaching a supported decision facilitate smooth flow of instructions and execution of the requirements as reached upon. All together, when the human personnel and factors associated are well managed and controlled, the project’s objectives can be accomplished smoothly. Works Cited Burke, R., kenney, B., Kott, K., and Pflueger, K. “Success or Failure: Human Factors in Implementing New Systems.” educause.edu. 2001. Web. 23 April, 2013. “Introducing Project Risk Management.” euroi.ktu.lt. n.d. Web. 23 April, 2013. Kolthof, A. Foundations of IT Service Management Based on ITIL V3: an introduction, Volume 3. 3rd ed. Zaltbommel: Van Haren Publishing, 2007. Print. Mcbridge, T. “Why Project Teams Fail: Some Pitfalls to Avoid.” pcs-info.com. N.d. Web. 23. April, 2013. Murch, R. Project Management: Best Practices for IT professional. New Jersey: Prentice Hall PTR, 2001. Print. “Project management estimating tools and techniques.” projectmanagementguru.com. 2012. Web. 23 April, 2013. Project management institute. “Project Time Management.” pmstudy.com. 2012. Web. 23 April, 2013. Vergara, S. “What causes cost overrun on projects.” stevevergara.com. 1 December, 2011. Web, 23 April, 2013. Yusufzai, Z. “Estimating activity duration, resource requirement and cost.” scribd.com. n.d. 23 April, 2013. Read More