Risk Identification Methods - Advantages and Disadvantages - Essay Example

Risk Identification Methods. Advantages and Disadvantages. Due to the fact we all tend recognize the value of the construction industry, as well as its considerable disclosure to risks and the value of the risk identification process, the main aim of this study is to evaluate the level of knowledge and application of risk identification methods in the construction parts of buildings, construction process itself, infrastructure operations and construction specialized services involved. The process of risk identification includes pointing out which risks could affect both the project and documenting their specific characteristics. Actors in risk identification process basically involve the following people: project team, team specializing in risk management, subject matter experts from different parts of the organization, clients, end users, many other project managers, stakeholders, and external experts. It is worth mentioning that risk identification is an cyclical process. The first repetition may be executed by a certain part of the project team as well as by the risk management team. The whole project team and initial stakeholders may undertake a second repetition. In order to achieve an unbiased examination, people who are not included in the project may execute the last iteration. Usually easy and sufficient risk reactions can be born and even applied immediately after the risk is identified. The process of risk management applies formulas and schemes to narrow in on and to recognize risk. What exactly schemes, formulas and templates are utilized, is usually established by the market that they are being performing in. Some general methods and ways of risk identification process that are used most commonly are: brainstorming, SWOT analysis, flowchart method, risk questionnaires and risk surveys. And each of these methods has a number of pros and cons. Brainstorming Brainstorming is perhaps considered to be the most often used risk identification scheme. The purpose is to acquire a sound record that can be referred when it comes to qualitative and quantitative risk analysis processes later on. The members of the project team often perform brainstorming technique, but nevertheless a multidisciplinary number of experts may also execute this very scheme. Being under the guidance of a facilitator, these particular performers create thoughts and ideas considering project risk. Origins of risk are recognized in wide measure and displayed for all for detailed examination during the meeting. Afterwards risks are then classified by risk type, and their descriptions are subject to be sharpened. Advantages: vast range of probable risks offered for consideration; also includes a number of stakeholders. Disadvantages: considerable time consuming, demands firm facilitator of control. Flowchart Method. The Flowchart Method is applied in order to display both graphically and sequentially the main events of an operation or process to recognize exposures, dangers and hazards. A great diversity of methods and techniques can be applied such as: product analysis, dependency analysis, site analysis, decision analysis and critical chain and critical path analysis. These very methods can depict connection within your company; they can easily point out problems and can define a critical path. These methods do not imply periodicity or roughness, but show secondary processes with potential in major loss, they have a restricted application to liability disclosures and generally, they tend to be too process-oriented. Advantages: these methods are great for determination connections within ideas. Flowcharts are very useful in cases analysis includes a number of branches. In case a person can create a flowchart asking yes or no questions to result in decision path one will consequently perform a sound analysis. Disadvantages: a flowchart sometimes turns very rapidly into solid confusion. If someone needs to involve many details, this method probably is not suitable. SWOT Analysis (Strengths, weaknesses, opportunities, and threats). This method ensures analysis of the project from each of the SWOT aspects to enhance the width of the risks identified. Advantages: this method is helpful for the organization to be competitive more sufficiently, position services and goods perfectly within the marketplace and create their remarkable selling proposition. Applying SWOT analysis to determine weaknesses contains another essential profit: knowing what exactly needs to be improved. Thorough determining the threats of a company provides a manager with certain actionable issues where he is free to concentrate his efforts in improvement with severity and exactitude. Disadvantages: the examination can be considered very simplistic, quite subjective and as a result not very useful. Secondly, as an organization explores its own inner circumstances, it might provide itself with too much credit or on contrary not enough credit in specified areas. Thirdly, the examination stresses much more on the overall process of gathering data, but nevertheless generating specific actions and decisions might be an exercise in disutility. Checklists and Surveys are perhaps the most utilized technique of risk identification, but it doesn’t have to mean it is the best one. Considering some specific industries, they may be the most suitable method to be used but for others, there might be found a more sufficient and adequate solution. Checklists and surveys are applied for search on a regular basis using a list to determine as many exposures, dangers, and hazards as possible. A number of professionals tend to like them due to the fact they are standardized, they might be applied by non-risk management managers with minimum training, data can be simply categorized and they can be applied to generate a history. Nevertheless they are not able cover all areas or movements, they give restricted financial impact picture, they do not concentrate on the exposures that they determine and they may not discover new exposures. Advantages: provides profit of past problems; preserves time resources through concentrating on substantial possibilities; very easy and transparent to discuss. Disadvantages: limits suggestions to experience of the past; past issues might not be applicable. Delphi technique. The Delphi method or technique is a path to achieve an overall decision of experts on a topic such as project risk. Experts are identified but nevertheless they take part anonymously.     A facilitator applies a questionnaire to collect thoughts and ideas on the essential project risks. The reactions are collected and are afterwards transported to the experts for analyzing and comment. Consensus on the basic project risks can be achieved in several lapses of this operation. The Delphi method stands to help in reducing dislocation in the data and prevents any person from influencing on the outcome. Advantages: suggests a vast experience of experts; might be wide ranging. Disadvantages: may be time consuming in cases experts are far away; may also be costly if experts are to be paid; advice may turn to be not concrete enough. Bringing all methods together. Taking into consideration all risk management programs in general, one of the most effective and sufficient technique to identify risk in any company is to use a certain combination of existing methods. On each and every engagement (regardless of client size) managers tend to use an established set of methods and techniques unless otherwise required. There are industry based checklists and surveys that lend a helping hand when it comes to initial framework of risk identification as well. When the framework is set, physical inspections are to be performed, interviews of the employees, reviews of procedures and policies, contract reviews, loss data examination and consequently insurance policy review. Through mixing all of these methods, apparently there is a little possibility for risk to appear through this defensive net. Summing it all up I have to admit that this risk methodology will be of great help for the organizations in the process of risk management in the product design operation. Its application will make it possible to consolidate the product design process and risk management; create advantageous surroundings for the utilization of the risk management programs; determine and examine the risks taking into account their dependence as well as reasons and effects and consequently forecast the probability of a project considering the present and future conditions. The detailed analysis showed that the technique of risk identification named Checklist is the most commonly used, next positions are occupied by Flowchart and Brainstorming. The other interesting thing to point out is that the Delphi Technique was considered by me as one of the least used practically, when it is frequently listed in professional literature. 2. Applying Critical Chain Methodology Critical Chain project management method gives the following main profits to any kind of project organization: · Projects can be completed as soon as possible · The project team’s readiness and sufficiency will definitely increase due to the fact they will be working in surroundings that are convenient with ambiguity and that escapes from micro management. · Managers at all levels such as project managers, resource managers, and executives will be provided with an easy, sufficient macro-level method for assessment project productivity and generating resource reactions and decisions using green-yellow-red buffer management technique. · A number of executive workers will be provided with an effective instrument for creating decisions on projects grounded on project priority and capacity of organization applying the project capabilities of synchronization. The real life situation where the Critical Chain methodology would be very suitable is as follows: For example a person gets a project to construct a certain building. So in this case it would be sound idea to create the schedule grounded on the critical path method, and begin working on it. During the fulfillments of this project, a person happens to know there are certain obstacles: Not enough material to use such as cement for instance, or A number of the equipment required by this program is attached to other projects, or One of the most effective and key members is dragged out for other essential objectives by management. And taking into account all the abovementioned it would be essential to think of what will follow. Well apparently and quite expected there will be a considerable delay in the project. It is important to determine where exactly the problem was, and ask if the critical path has identified the resources needed for the project. No, it hasn’t. So what is the origin of the problem and what exactly was wrong? And the nature of the problem appears to be in the distribution of the resources. The project schedule itself was created very optimistically, believing that all the important resources would be prepared whenever they were required. But unfortunately this was impossible in this very situation, as the project appeared to be in trouble. 3. Waterfall and Agile methodology Due to having man common points with construction and manufacturing workflows, waterfall methodology is a consistent design process. This implies that just as much as each of the eight stages (conception, initiation, analysis, design, construction, testing, implementation, and maintenance) is finished, the professionals are to move on to the next stage. Because of this process being consistent, after a step has been finished, professionals are not able to go back to a prior step through avoiding damage of the entire project and beginning from the roots. There’s no space for movements or mistakes by all means, thus a project result and a costly plan is obliged be established at the starting point and then followed very thoroughly. Waterfall methodology benefits 1. This method focuses on accurate record preservation. These records allow the ability to prosper basing upon the present program in the nearest future. 2. Application of the waterfall methodology, the customer understands what to expect. He is likely to form an outline of the size, price, and period of time for the project and he is expected have a certain idea of what the program is to do in the end. 3. In the case of turnover of the employees, strong documentation of waterfall methodology opens the doors for minimal project impact. As any other methodology waterfall system is provided with a number of restrictions such as: 1. After a step has been finished, people who are engaged in a process of development are not able to go back to a prior stage and undertake any changes. 2. Waterfall method is mainly based on primary demands. Thus the project is considered to be doomed if these demands are not fulfilled. 3. In case a certain requirement mistake is determined, or a movement is needed, the project is obliged to begin from the very start with totally new code once again. 4. The entire product is tested at the very end and if bugs are written much earlier, but found much later, their emergence might have affected greatly the way other code was created. Apart from this the opportunity to delay severe testing is often very tempting, due to the fact that these delays give permission to short-term wins of remaining on-schedule. 5. The plan doesn’t seem to take into consideration needs of a customer. If he happens to realize that they require much more compared to initial thought, along with demand change, the project will result in late and significantly impact budget. There are specific situation when the waterfall methodology is considered to be very suitable. 1. A transparent picture of what the conclusive product should be is provided. 2. In case clients don’t have the right to make changes in the framework of the project once it has started. 3. When the definition itself, not the speed, is path to success. Agile methodology Agile is considered to be a certain “solution” to the limitations of the waterfall methodology. The Agile methodology follows an incremental technique instead of a consistent design process. People engaged in development process begin with a facilitated project design, and then start to operate on small modules. Working on these modules is fulfilled within weeks or months, and at the end of each approach, project priorities are assessed and tests are executed. These approaches give a chance for bugs to be found, and clients’ feedback to be involved into the design until the following sprint is began. The lack of primary design and steps in the process is usually criticized due to its cooperative origin that is mainly concentrated on principles themselves rather than process.  Basic criteria for the Agile methodology 1. The Agile method gives a chance for movements to be performed after the primary planning procedure. Re-writes to the program very are expected when the client makes decision to undertake changes,. 2. Due to the fact that the Agile methodology permits you to undertake changes, it becomes much more simple to supplement characteristics that will keep you updated with the recent changes in the industry in question. 3. After each sprint comes to an end, project priorities are assessed. This gives a chance for customers to supplement their feedback in order to get the product they desire right a way. 4. The process testing at the termination of each sprint makes sure that the bugs are found and got rid of in the development process. They are not to be found in result. 5. Due to the fact that the products are examined so accurately with Agile methodology, the product might as well be launched at the termination of any cycle. Consequently, it’s much more expected to reach its date of launch.  Disadvantages of Agile Methodology 1. Provided there is a less successful project manager, the project is likely to become a series of code sprints and in case this happens, the project is to come in with a considerable delay and over budget. 2. Due to the fact that the primary project is not provided with a certain plan, the product on a final stage may be different than what was primarily planned. There are specific situations when the Agile methodology would become the most suitable. 1. When fast manufacturing process is much more essential than the quality of the final product. 2. In case customers are able to change the measure of the project. 3. When there isn’t a clear picture of what the final product should look like. 4. A company is provided with skilled developers who are flexible and can think independently. 5. In cases the product is initially intended for a market with fast changing standards. The main privilege with applying Agile management technique in the design process of a construction project seems to be the fact of involvement of the customer or a client. Consequently it comes down to the client’s fortune and satisfaction with the final result, and in case the client is involved on a regular basis and able to offer changes to the product while the project is undergoing increase and prosperity, I think projects would be more successful. The Agile methodology makes it possible for the client to think about the image and the aim and most importantly about the details and concrete decisions for the project during its duration. This, by all means, requires more responsibility from the client than other construction projects nowadays. It also requires more from attitude from the client as they need to spend more time and forces on the project than they are used to.  To sum it up the application of Agile project methodology in the design process of construction projects can reduce the level of uncertainty and help greatly in determination managing the risks. It can aid structure and manage the design process through scheduling well-prepared meetings, applying time management and enlarge both the client’s engagement and the team member’s motivation.   Works cited Advanced CCPM Project Management without the Complexity and Cost. (n.d.). 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