Projects
In projects, some elements may fail to meet objectives, go wrong, while others achieve their respective project targets or simply put, go right. Identifying both items is critical during the project life cycle since they influence the overall outcome. The identification of both items that could go wrong or right in a project relies hugely on risk assessment. Risk assessment mainly involves risk identification and evaluation of potential risks’ impacts (Watt, n.d). The identification process entails developing a checklist of the risks and accessing their likelihood of occurrence.
The identification of project risks can be sourced-based, which entails pinpointing the areas where risks are most likely to arise, such as technical, cost, schedule, and people. After isolating areas where failure or success is likely to arise, risk managers perform risk evaluation, accessing the likelihood of the risk to take place and estimating the loss realizable from its occurrence (Watt, n.d). One of the analytical tools used to evaluate risk is Failure mode and effects analysis (FMEA). This model defines the risk index (RI)=probability (P)*severity (S) * detection (D) (Croxatto & Grueb, 2017). The higher the RI, the more an indication that it is a wrong item hence demands greater attention.
In more complex projects, the risk evaluation process may involve a frequent series of meetings during the lifecycle of the project to assess possible areas of failure or inadequacies at different project phases. The method of identifying risks areas in such projects may involve statistical models since there are multiple risk combinations which would complicate a one-time calculation (Watt, n.d). An example of such a statistical model would be the Monte Carlo simulation, which experiments a possible range of outcomes through a multi-combination of risks based on the likelihood of occurrence. The results of the simulation then help the project management team in identifying what would go wrong based on the probability of its occurrence. For instance, a Monte Carlo simulation output of 13% would indicate the chance that a person may not be available and that a technical deficit may also be experienced.
After risk evaluation, the project managers usually develop contingency plans to address the inadequacies or items that may have been forgotten and present risks, famous as risk mitigation. Risk mitigation is a plan that reduces resultant loss from risk occurrence and involves; risk avoidance, risk sharing, risk reduction, and risk transfer (Sorger, 2011). Risk avoidance is the establishment of a strategic alternative with a higher success probability, albeit, usually at a higher cost. The commonest risk avoidance tool is the adoption of existent, proven technology as opposed to employing new technical approaches.
Risk-sharing entails sharing project activities and risks through a partnership with others. For instance, international projects may involve the reduction of legal, political, legal, and labor risks through the establishment of joint ventures with local firms of a country where such items have been identified as the project inadequacies or risks. Risk transfer, however, is the shifting of project inadequacies and risks another party or firm. For instance, if a company realizes a threat, it may purchase insurance, therefore transferring its inadequacy it to the insurance company.
Overall, the process of establishing what could go wrong or right with a project relies on risk identification, which uses analytical tools to assess the probability of a risk occurring and measuring the impactful loss from the occurrence. In the event a project manager identifies a gap through an item that was forgotten, they can address this through risk mitigation which involves, risk transfer, risk avoidance, risk sharing, or risk reduction.
References
Croxatto, A., & Greub, G. (2017). Project Management: Importance for Diagnostic
Sorger, S. (2011). Marketing Planning. Prentice Hall.
Watt, A.