Risks in Project Management - Essay Example

Presented to:

Dr. Garry Blair

Project Management Organisation and Systems (PMOS)

Unit Code:

5U7Z0046

University

Submitted on 7 April 2016

Introduction

Assessing risks in every project is an effective approach of adding value, which necessitates proper management of the project. Nonetheless, this has not been an easy task for most project managers. Any event that will happen or occur to a project is considered an uncertainty and there is a criterion by which these events classify as risks (Cadle and Yeates, 2007). In most cases, project managers estimate the necessary resources they think are essential in achieving project goals with least knowledge of what may come up as risks with the future implementation of projects. Currently, the technology age has presented various approaches or opportunities for executing projects but with them also come many risks (Gardiner, 2005). However, despite the technology and the approach used in executing projects, project managers need to understand that risks are inherent characteristics of every project. Despite being part of projects, there is also the need to identify risks much earlier because without prior knowledge of the uncertainties a project is placed at higher risk thus, may not be able to meet the set schedule, or executed within budgetary constraints or deliver the expected quality. In particular, it has become a major concern for modern project managers since they barely have general risk lists to use as reference when evaluating and assessing risk situations in respective projects and this begs the question, the importance of risk factor identification in project management (Maylor, 2010). A risk factor can be defined as the situation likely to result in one or more project risk. Although a risk factor barely affects project targets, it increases chances of the uncertainties that may constrain achievement of the set project goals (Meredith and Mantel, 2009). In this case, it is imperative to critically analyse some of the risk factors, and as such, how the global environment has informed the professional practice of these factors.

Conflict over Resources

One of the risk factors that modern project managements must brace to confront is the conflict over resources and this uncertainty always arises in the middle or later stages of the project implementation (Hwang and Ng, 2013). The implication is that it is always not an expectation that new demands for resource use arise in later stages and project managers revert to giving such more priorities from the initially planned resource utilisation or allocation. In this regard, the risk becomes more serious when resources that had been planned for or allocated other areas of the project being diverted to the new areas of demand (Hwang et al., 2013). However, project managers always know least that reallocating resources from the initially planned areas may have an adverse effect on the project outcomes since such have been found to reduce the quality of the project or worse still, affect the entire outcome of the project (Hussein and Klakegg, 2014).

A better approach to counter such problems as resource conflict has not been an easy task but for the project management at the global environmental, it has become a professional norm for the project management team to include provisions for the conflicts of the resources in the entire project life cycle (Hwang et al., 2013). In this case, project management at the global environment is currently training managers to regard conflict over resources as a potential risk factor and as such, encourages planning accordingly, whereby secure agreements and project monitoring have become prerequisites for project managers. Therefore, with proper planning and monitoring, project managers develop a system that prevents any dispute over resources since the system of allocation does not favour other areas over other areas (Hussein and Klakegg, 2014).

On the other hand, management of issues pertaining to resource conflict has changed with the global focus on project management because modern project managers are compelled to achieve more with fewer resources (Hall et al., 2015). Therefore, a project manager now has the major obligation of better management of resources in a bid to achieve success. However, global project management teaches about leadership as a skill in project management because any approach that the manager adopts will determine if the resources are being used effectively (Hall et al., 2015).

Financial Risks

Project implementation not only depends on materials and resources used in achieving the stated goals and objectives, but success also depends on the allocated resources (Thomson Reuters, 2016). In particular, financial risk is a major risk factor that modern project managers have on many occasions identified as one of the constraints in meeting the aims and objectives of their projects. One of the questions that remain intriguing when executing projects is whether the stated project can deliver savings, as predicted in the scoping stage, or whether the funds requested will be sufficient in realising outcomes (Zwikael and Smyrk, 2015). However, management of financial risks has also changed or improved with the global project management systems. For instance, it is now more widespread and a norm for project managers to ensure that every financial quote comes from reputable or legible resources within the project area. Besides, financial risks, project managers are now advised to review similar projects and evaluate the resources required before making any allocations (Hartono et al., 2014). On the other hand, global project management has changed the way project managers deal with financial risks because there are various methods of verifying and monitoring projects to inform the financial expenditure and calculations (Zwikael and Smyrk, 2015). Moreover, global project management advises that professionalism should be upheld when managing financial risk by conducting sensitivity analysis as a way of accounting for the variability in the financial estimates or assumptions.

Financial uncertainties in project management, as an area of greater emphasis, has been brought to attention lately and highlighted the importance of controlling risks due to the recent financial crises that highlighted the need for controlling or mitigating financial risks (Thomson Reuters, 2016). In fact, with the management of projects at the global level, there has been a proper documentation of the benefits of proper financial risks management in projects that organisations least considered previously as significant in the management of risks in projects (Hartono et al., 2014).

Goals Conflict

Project management does not only involve dealing with one department. In most cases, it is inclusive of other sub-units working towards achieving the main goal and objective of the project. In such a scenario, a major conflict that has been identified by project management experts is that conflicts in goals to achieve are bound to occur, especially when a particular sub-unit has a different way of perceiving the stated goals (Ahola et al., 2014). In this regard, the goals conflict is a major hindrance towards the achievement of better outcomes thus, modern project managements are best advised to always embrace common agreements with different departments involved in the project implementation. Nevertheless, despite sharing common objectives, project teams sometimes have different internal goals and these may be in conflict with other groups (Zwikael and Smyrk, 2015). As such, conflicts in goals manifest in various ways that include work duplication, making decisions without consulting other teams impacted by such decisions and pushing of work. On the other hand, conflicts in goals may arise because of the failure by teams to come to a consensus on their internal goals, and this always arises because of poor understanding, improper internal prioritisation, lack of clarity in shared responsibilities, as well as the absence of common rules for communication (Kendrick, 2015). In addition, internal goals take prominence when there has been an aggressive timeline for the project and such projects are characterised by each team having to absorb itself in completing the specified work without paying attention to the shared responsibilities with other teams thus resulting to goal conflicts (Unger et al., 2012). The implication is that although the team shall have achieved the internal goal, the overall project goal suffers from this conflict.

On the contrary, global project management has also come to the aid of modern project managers by advising on some of the best or professional approaches to use when handling goal conflict issues (Ahola et al., 2014). For instance, it is professional to define the scope as well as setting the boundaries between teams. In this regard, professional project management emphasises the need to set out the roles and responsibilities of the project teams in a clear manner that left little room for conflict. Nonetheless, it is quite professional to make sure that internal goals are aligned with the shared responsibilities so that each team can attend to the internal or sub-unit goals while at the same time, performing the shared roles and responsibilities (Kendrick, 2015). Besides, it has also become a global approach for project management for managers to organise joint workshops as a way of ensuring that each team is taking part in making key decisions. Moreover, in every organisation, a globalised approach defining professionalism in project management stipulates that there is a need to establish a proper communication plan and as such, stating out the common rules for communication (Unger et al., 2012). Furthermore, in every organisation, project management emphasises the need to promote the interests of the project over those of the team and such are being used as global professional in project management to avoid inherent risks.

Trust Issues as a Risk Factor

Effective implementation of a project always depends on the ability of the project team to work together, including those affected by the projects or the relevant stakeholders (Meng, 2012). However, most of the project managers least take into consideration that trust issues are equally an important risk factor that can impact on the overall outcome of the project especially if teams and the stakeholders are not in agreement. Trust issues are a result of project managers failing to anticipate having issues and failing to establish and maintain trusts with the team as well as the project stakeholders (Manu et al., 2015). As such, a major risk factor comes results from the failure to establish a good relationship during the planning and initiation stage of the project. However, at the global environment, there are certain norms or values of professionalism that needs to be upheld to avoid trust issues as a major impediment towards project management of projects. It is more professional to embark on building long-term trust with the teams rather short-lived relationships with the project teams (Teller and Kock, 2013). In particular, the building of trust begins with organising face-to-face meetings as a way of getting the opportunity to get the most efficient channels of communication to engage with the team. On the other hand, trust issues are more common with cross-boundary or cultural communication requiring a proper understanding between groups from different backgrounds. In fact, at the global level, the primary approach to managing or mitigating trust issues as a major risk factor in project management is by organising workshops that enhance teamwork and create a strong bond within the project’s team (Meng, 2012). Trust issue is a major project impediment because the failure by the team to establish a common ground of agreement results to conflicts on, how the project is to be implemented and which channels of command to follow (Manu et al., 2015). Therefore, for professionalism purposes, a project manager has to build a strong team that transcends boundaries to work towards achieving the set goals and objectives.

Strategic Risks

Another important risk factor facing modern project managers is the strategic risk of a project failing to align its goals and objectives to the existing strategies of the organisation (Thamhain, 2013). For instance, a question may be asked on the extent to which the financial resources will be used appropriately or if there is the potential that they will affect or hinder the ability to deliver other corporate goals. However, a globalised approach will compel managers to uphold some professionalism when handling projects at the global level. Consequently, one of the approaches is making sure that the project links to the current strategies and policies of the organisation (Eweje et al., 2012). Effectively, organisations have different approaches or strategies and such should not be ignored when executing projects at the global level. On the other hand, at the global scale, it is best advisable for the project managers to follow the processes outlined within the organisation when executing projects (Patanakul and Shenhar, 2012).

Operational-Safety Risks

Operational safety risks are part of any project especially those that human or manual labour. In this regard, a project manager must identify or plan early for the operational or safety risks before they become major drawbacks to the project (Gardiner, 2005). Cases of loss of life or major health risks and safety impacts can be major risk factors for any project and as such, may be a major hindrance towards proper implementation of the project. However, when managing projects at the global level or global environment, it is necessary to adhere to the safety and risk assessment protocol available for every organisation as such must be followed to avoid health and safety risks (Hwang and Ng, 2013).

Recommendations for Project Management at the Global Environment

To project managers, there are certain codes of professionalism that must be upheld when managing projects at the global level. First, it is quite professional to check on the existing risk assessment tools and protocols when developing a project management plan (Kardes et al., 2013). On the other hand, it is also essential to conduct stakeholder analysis that help in making sure that the project related issues are discussed with the right people. Besides, stakeholder analysis helps in building trust and creating a strong project management team. In some instances, trials may be used in building the understanding of project risks and how such can be mitigated or at least, managed. Moreover, having trials is necessary for project risk management because it will help identifying important risk factors like financial risks as well as assessing the impacts of the risks on the overall project outcomes (Smith, 2014). Besides, it is quite professional for a project manager to list some of the significant project risks and identify some of the strategies to be used in mitigating the risks.

Conclusion

In summary, risks are inherent to any project, and a major concern is that modern project managers are always ill equipped to handle them because they do not have lists of the possible risks or factors increasing the likelihood of a risk to happen. A risk factor in this regard has been defined as the element that increases the chances of the risk to impact on the overall aims and objectives of the project. Therefore, the discussion has identified some of the significant risks including financial risks, conflict over resources, goals conflict, and trust issues with the team, strategic risks, and operational safety risk factors. On the other, it is imperative to discuss those risks and establish approaches to handle them professionally at the global environment, which implies that project managers need to identify or abide by some of the professional standards when handling the risk factors. In particular, at the global environment, building trust is necessary to establish effective teams, proper financial risk management begins with a proper evaluation of the need for financial resources, and resource conflicts are managed by having a team that collectively works towards achieving the goals of the organisation without focusing on internal or individualised goals. Besides, every project manager should establish a protocol for assessing the risks as well as a list of stakeholder to discuss the risk issues or situations with and develop solutions to addressing the risks.