A risk factor evaluation process is basically a managerial tool used in project management to keep certain functional areas of project implementation (like financial expenses, technical expertise, and schedule arrangements) in check. In coming up with a viable risk assessment criteria, the following objectives should be factored in to quantify different perils.
The first objective is checking the project cost variables; the second is to determine the variability of the project schedule and lastly, the third objective is risk assessment. This is done with the determination of the business risk or the project viability in mind because this objective is the ultimate goal of the entire risk management process.
Many researchers and project managers have often used a number of methodologies in risk assessment. Some of the most conventional methods used include the contingency evaluation approach, computer simulation programs and the program evaluation and review techniques (PERT).
These methods have been traditionally used to control identified project risks and generally, to maintain the quality of projects. To ensure the efficiency of these methods, it has been established that the above tools must be used in a continuous manner (Niels 2).
These statistics abound, this report seeks to carry out a risk assessment project for a commercial property to be developed in downtown Toronto by GLM Realtors. Major studies have already been carried out on the feasibility of the project and it has been established that the project is going to be successful after its completion. Considering the fact that the proper groundwork for the project has been covered, this report will undertake a risk assessment identification process with particular emphasis on how such risks ought to be managed.
Identification of Risk Factors
Unrealistic Schedules and Budgets
Unrealistic schedules and budgets can ultimately bring an entire project to a halt, considering budgets and schedules are the major blueprints to the implementation of project plans (Niels 2). Budgets essentially design the costs requirements for each facet of the project implementation process and if it is overestimated or underestimated; the project design and its antecedents may essentially be ineffective.
Unrealistic schedules also imply that there is minimal likelihood that the project will be completed in time (because from project scheduling, project activities are able to be properly coordinated and carried out within the right time) (Niels 3).
Continuing Stream of Requirement Changes
Requirement changes may significantly hamper efforts to undertake the project in due time and within the precise cost allocation because varied requirements potentially mean that there will be varied costs and varied time requirements for the accomplishment of given project tasks (Niels 4).
Requirement changes are however not distinctly odd because most projects tend to accommodate one or two requirement changes, but the problem with requirement changes is observed when they occur frequently (Niels 4). This is likely to be a major problem in the overall completion of the project, if it is not effectively checked.
Shortfalls in Performed Tasks
Many project managers have often encountered the problem of dealing with poorly performed tasks from any quarter of the project team (Niels 5). This risk basically outlines the danger of having to deal with the problem of a shortfall in performed tasks because the danger in such a risk is that poor project performance can come from any quarter of the project (Niels 5). The consequence of such a risk can often be evidenced in a number of functional areas across the board (Niels 5).
Strained Technical Architecture
Strained technical architecture is a common project risk especially if project requirements are not effectively considered in the project plan. Strained technical architecture often occurs when there are no facilitative technological requirements to coordinate the entire project.
This is often evidenced in many projects that rely on heavy IT skills but even the GLM Realtor project is going to significantly depend on such requirements (because a number of its functional areas like inventory systems still rely on such architecture) (Niels 6). The strained technical architecture can be evidenced in certain functional areas such as network coordination, communications with suppliers and communications with other external agents (among other significant functional areas) (Niels 6).
Insufficient Planning
Insufficient planning is also another possible risk in the project implementation process, in the sense that, certain functional areas of the project implementation project may not be included in the project blueprint (Niels 8). This becomes a sensitive risk because there will be no clear framework of the way such omitted functional areas are to be treated.
This may totally distort the overall coordination of the project functional areas, in addition to causing a lot of time wastage because team members would break from their duties to figure out the correct procedures to be followed in undertaking the omitted project functional areas (Niels 8).
Scope Creep and Gold Plating
Scope creep and gold plating is a common project killer in any project design that is not carefully planned to take care of such risks. Shaker explains that:
“Scope creep results from adding new requirements to the scope that are not aligned with the project charter or casually accepting requested changes without conducting a thorough analysis to assess the impact of accepting the change on cost, time, quality, risk, stakeholders, and customer satisfaction” (p. 4).
With regards to Gold plating as a unique risk in this project evaluation, Shaker also explains that “Gold Plating is the other side of the coin whereby the project manager will try to pamper stakeholders by adding fancy features that have never been included in the original scope” (p. 9). These risks are potentially detrimental to the project considering they affect the overall coordination of the project functions and the ultimate approval of the project by the client.
How to Handle Identified Risks
Scope Creep and Gold Plating
Scope creep and gold plating usually occur when projects are delineated or insufficiently strict, such that, the project takes a life of its own (Project Smart 1). It is therefore important for the project to be carefully designed in a strict manner so that any chances of scope creep occurring are sufficiently squashed.
Also as observed above, chances of delineation should be reduced in the general formulation and implementation of the project design so that instances of scope creep and gold plating are equally avoided. In another regard, research studies done to investigate the occurrence of scope creep and Gold creep (cited in Project Smart 9) have noted that the two often occur if there is weak project requirements and a vague description of the project outline; right from the onset of the project development plan.
The same studies have also concluded that scope creep and gold plating often occur because all stakeholders are not included in the implementation of the project (Project Smart 9).
These two variables therefore need to be carefully factored into the overall development of the project blueprint so that scope creep and gold plating is effectively eliminated. In other words, the project requirements should be carefully articulated so that weak areas are avoided in determining the same. Finally, all stakeholders need to be constantly consulted at different stages of project implementation.
Insufficient Planning
Insufficient planning can be effectively avoided if project developers “grow a third eye” when formulating the project plan. This means that a comprehensive foresight needs to be included in the project design stage so that all significant facets of the project are incorporated into the planning stage. Considering the fact that chances of human error are unavoidable; it is important that the planning process is not done a by an individual but rather a group.
When planning is done in groups, there is an increased likelihood that all functional areas will be included in the project plan and any possible errors will be detected. Also, it helps to compare the project plan with previous project plans of a similar nature and contrast their functional areas with the company’s design project plan. This will identify any shallowly developed areas in the project plan.
Strained Technical Architecture
Strained technical architecture can be effectively avoided if all the project demands are communicated to the IT department. A lack of proper communication may consequently causes a strain in technical architecture as described in pervious sections of this report.
Considering a strain in technical architecture is partially caused by a lack of synchrony of the IT infrastructure and the practical demands of the project; it is important to engage the internal IT department (of the organization) and avoid instances of outsourcing such functions to third parties.
This element is important because third-party IT departments may fail to know the project demands of the organization when designing the IT infrastructure. It is therefore important that an internal IT department carry out the given task because they are well versed with the company’s project demands (and therefore they can incorporate such demands when designing the IT infrastructure).
Shortfalls in Performed Tasks
A shortfall in performed tasks may arise from a number of factors defined by employee dynamics. Similarly, these are the factors that affect employee output in any given organization; let alone a given project. Improving performance tasks therefore incorporates a number of human resource strategies that can be effectively employed to improve employee morale.
This will incorporate an introduction of incentives to given team members, whether in monetary compensation, or through human commendation. However, if this fails to work, a more radical approach should be employed. In particular, employees required to carry out given tasks should be required to sign performance contracts that will ensure guaranteed performance; otherwise, compensation will not be given.
Continuing Stream of Requirement Changes
A continuing stream of requirement changes can be avoided through having a clear picture of the project requirements. To ensure a clear picture is obtained in designing the project plan (and in ensuring the project has a sustainability power) it is important to engage more experienced personnel; preferably, those who have had significant experiences with such kind of projects in the past.
Alternatively, the company can consult experts who have more knowledge in the project requirements of the company. This will avoid instances of requirement changes, which are often synonymous with inexperienced project managers.
Unrealistic Schedules and Budgets
The problem of unrealistic budgets and schedules often occurs because of a bottom-top approach to project design development (Harkins 5). This often occurs because lower level employees lack the required foresight to detect any instances of impracticalities. To avoid this inherent risk in project management, it is important for a top-bottom approach to be employed in designing the project blueprint.
However, this does not mean that lower level employees should not be consulted at all (because they should). However, between the two categories of employees, managers often have the bigger picture. Moreover, it is management’s role to increase more resources like time, money and the likes, in case there may be a need to do so.
Conclusion
Risk management in project management is an important element in the effective running of project tasks. In carrying out the GML Realtors’ project, this report identifies the most important risks that need to be covered in ensuring the project runs without any hitches.
Most of the risks identified in this report are risks that are more detrimental to the overall running of the project tasks because they have the potential of touching virtually all areas of the project tasks. The risks identified are also quite general, in the sense that, most project managers can apply them and effectively realize commendable results. This report therefore comprehensively identifies specific project risks for GML Realtors.
Works Cited
Harkins, Susan. Nontraditional Cures for Keeping a Project on Schedule and On Budget. 2009. Web.
Niels, Elyse. Project Risk Factors. 2005. Web.
Project Smart. Managing Scope Creep: Don’t Gold Plate My Project! 2011. Web.
Shaker, Kareem. Scope Creep And Gold Plating Are Two Sides Of The Same Coin. 2010. Web.