Answer Question 1, 2 and 3 PROJECT MANAGEMENT IN PRACTICE It\'s a risky business

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Answer Question 1, 2 and 3

PROJECT MANAGEMENT IN PRACTICE It's a risky business Four friends wanted to start a business. After much discussion, they had hit upon the idea of launching a mail-order toys and games business. They were in the development stage of their business plan and wanted to be sure that they had been thorough with their planning. To reinforce this, they had just received a letter from a group of venture capitalists, agreeing to fund the start-up. It concluded its review of their plan by stating: The business plan presents a credible opportunity for all involved and we are prepared to approve the funding request, subject to a risk analysis being carried out on the project to start the business. The group were stunned - the funding that they had been hoping for was suddenly a reality. Just one thing stood in their way - that damned risk analysis process. They started with identifying the key risk elements that could face the business during its start-up phase. They considered the process between the time that they received the funding and day one of trading. What could possibly go wrong? Lots of things. They brainstormed the possibilities and recorded them. They then considered the effect that these would have on the project as a whole. The list they generated provided them with too much to do - they would spend all their time trying to prevent things going wrong and not enough making sure that the positive steps towards the business opening were happening. They needed to prioritise the events. As importantly, what would happen, when they eventually occurred? Who would be responsible for each of them? On what basis could they rank each risk, in order to identify the most important risks for which they would develop mitigation and ownership? They decided to use a table to show the risk event, its likelihood and severity, and then multiplying the two ratings together to provide a risk priority number (RPN). This would then allow ranking of the risk elements. For the three highest ranked elements, the group then generated a mitigation process with someone in the group taking ownership of that process. The result of their deliberations is shown in Table 10.8 As can be seen, the top three risks were identified and mitigation tasks put in place to either prevent the risk event happening or to reduce its effect. The initials of the 'owners' of that risk in the last column show who has agreed to monitor that set of events and ensure that the mitigation is put into place before the project suffers from that event occurring Table 10.8 Simple risk management table Risk event Likelihood Severity RPN (rank) Mitigation Owner ochure not ready in time for 32 (2) Identify rapid printing fims AL Website not ready in time for business launch 36 (1) Website to be ready 3 weeksSL prior to launch for testing use simple version first Banking facilities not ready 20 (5 Place orders immediately f KM

Explanation / Answer

Qn 1.

the other possible methods for generating ideas for risk identification can be

a. hiring a consultant for Risk identification

b. refrrring to case studies of other firms who are into the same business

c. Preparing a process map to identify all the process. this will help in focussed discussion on each process to identify risks

d. Having a facilitated workshop with a moderator, who can reguklate the direction of discussion and to identify relevant risks

e. Anotehr method is to include all stake holders in the brainstroming session. venture acpitalists also can be called. their experience nd risk eposure can also be used for identifying risks

Qn.2

The method used is secientific. it identifies the likelyhood and severity of risks and assigning a number to it. This inturn is multiplied to arrive at the RPN nuimber which is ranked to identify high risks and prioritise them.This is one of the best ways to priotitise risks for risk responces.

Qn3.

Once the risks are identified, prioritised and action plan is arrived at, A risk tracker can be made to decide on when each of these actions to be completed.A timeline has to be decided and week on week targets and progress updation is required

Risk register needs to be looked at to see ifany of the risks is materialised. Also revisit the risk identification process periodically to see if any new risks are there. New risks may also be created out of a risk mitigation plan . Hence this is important to be tracked.

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