Risk Management and Their Types - Assignment Example

Risk management helps to avoid errors and project failure determining the major areas of possible threats and risk probability. Regardless of whether we are considering internal costs or external costs, the processes are the same. Clearly, on the majority of projects (including project X) where there is very limited plant or equipment being used, the main cost will be associated with the people in the internal project team, appointed contractors, and subcontractors (Burkun, 2005). The subsequent analysis of the differences or variances and the action taken are a vital part of the control mechanism.

External Risks. These risks are difficult to eliminate or avoid, but they have a profound impact on the project and its result. Internal Risks. These risks have a great impact on the project and its success, but they can be easily eliminated and avoided. Achieving the task requires clear definition, good planning, clear roles and responsibilities, appropriate resources, and regular reviews as the project proceeds. Quality Risks. There is even evidence that, despite the formal utilization of quantified cost-benefit approaches, the practical implementation of safety and quality may be achieved by informal means.

V Resource Risks (The baseline schedule is closely connected with the efficiency levels which are driven by the normal productivity that can be expected from the type of person or equipment allocated to each activity, and the efficient allocation of the person or equipment is driven by the project schedule) VI Schedule Risks. Breakdown is not chronological and does not involve itself in worrying about what has to be done, it merely breaks down the objective of the project into some sensible and convenient groups (Frame, 2002). Also, it is important to note that within each department managers will find a hierarchy translated into a part of the project schedule structure.

In sum, all risks are interrelated which has a great impact on the project and its scope. To produce or provide these items to a required quality level, at an appropriate time and within acceptable financial constraints, organizations create several essential functions. The main problem is that not all the risks can be eliminated or avoided (e.g. contractor delays or rising cost of raw material). In this case, the role of a project manager (and key employees) is to predict and plan possible time and cost constraints.