5.) Explain the difference between budget reserves and management reserves. 6.)

Question

5.) Explain the difference between budget reserves and management reserves.

6.) how are the work breakdown structure and change control process is not used? Why?

Ex 2.) Assume you have just been assigned to a project risk team of five members. Because this is the first time your organization has formally set up a risk team for a project, it is hoped that your team will develop a process that can be used on all future projects. Your first team meeting is next Monday morning. Each team member has been asked to prepare for the meeting by developing, in as much detail as possible, an outline that describes how you believe the team should proceed in handling project risks. Each team member will hand out their proposed outline at the beginning of the meeting. Your outline should include but not be limited to the following information:

Team objectives

Process for handling risk events

Team activities

Team outputs

Explanation / Answer

5) Reserves are generally funds which have been allocated for management of risks of various types, which may be encountered by a company. Allocation of funds for operations projects are included in the budgetary allocation which does not include Reserve funds. Reserves are for "just in case" situations and only utilised when one of the many possible risks, becomes a reality. Preserves can be categorised into two types, namely, the budgetary reserve, which is also known as the contingency reserve, and management reserve. In spite of them both me allocated for management of risk the categorisation helps to monitor and control utilization of each reserve more closely, by introducing additional approval and easier identification.

The contingent reserve is allocated for management of risk which have been identified by the project team after due consideration of all possible foreseeable risks that the project may encounter. These ress easily identifiable and the triggers are closely monitored which when activated the control comes into effect through acquisition of approval for utilisation of Reserve fund to manage the risk. management reserves are mostly created for risks which are not identifiable or foreseeable. There any risk which cannot be predicted but may cause derailment of a project, if adequate funding to manage the risk is not available. the release of Reserve funds for these has to be sanctioned by Senior management.

6) Even though on the surface work breakdown structures and change control appear to be two entirely unconnected tools and processes where is definite connection between the two in various ways. The work breakdown structure of any project essentially demonstrates and details The breakdown of every work item and how these work items relate to each other. Change control on the other hand, basically ensures that the project proceeds as per plan and is accordingly executed through monitoring and control measures implemented at every step of the project. As the name signifies change control is meant to identify any change or deviation from the plan and control it at the earliest. Change control required constant monitoring and implementation of change wherever required therefore it essentially implement changes in the existing work breakdown structure at any required level. When this change control is implemented within the work breakdown structure it becomes a change control project and results in a change in the output and deliverables of the project along with the scope of the project. The work breakdown structure of any project is essentially its backbone and it is crucial that change to this be implemented only if it is extremely essential to the success and completion of the project. the work breakdown structure is the foundation on which the scope the schedule and the budget of the project or based, therefore any change in this can result in simultaneous impact on every factor of the project resulting in the entire project being redrawn.

Each type of risk to be prepared by each team member reserve allocation to be included:

Any project however well planned, can always encounter unexpected problems. However well prepared we may be for unexpected events it is essential that a process be clearly laid out for tackling such events to minimise subsequent losses, tangible or intangible. Any unexpected event or condition that effects the outcome of a project can be termed as a risk. Risks maybe negative or positive, the positive can be termed as an opportunity, however both need to be handled with utmost care, through identification, monitoring and immediate action to control resultant damage. When a project is in the planning stage known risky elements can be handled by avoiding the risk, mitigating the risk, transferring the risk or accepting the risk. It is essential to plan ahead for a risk. As a risk is an uncertain and unforeseen incident which greatly impacts the outcome of the project undertaken, it is essential that a plan be in place on the strategy to be implemented for handling such risk, as the incident maybe sudden and have large impact leaving little scope for immediate reaction or planning.

Risk mitigation plan is meant to minimise the negative impact of the risk or completely eliminate it. The first step in any plan for management of risk is the identification of the risk event. Brainstorming through involvement of every person involved in the project is the best possible way of creating a comprehensive list of various risk that could be encountered during the project. The list should be comprehensive and well segregated on the basis of categories such as, cost, schedule, client, weather, financial, technical contractual, political environment and consumer. Preparing a risk breakdown structure with each table starting with the heading and proceeding with increasing level of detail can provide a comprehensive referencepoint for risk management.

Once a risk has been identified every risk needs to be evaluated for the impact it could have on the outcome of the project through analysing the probability of occurrence and the potential for loss associated with the event. On this basis, risk can be subdivided into impact risk and low impact risk, with maximum focus on critical risks which can derail the entire project. Risk within a project is directly proportional to the complexity of the project point for example a project which is largely dependent upon emerging Technology will be exceptionally high risk especially under the technology heading the risk grading would be as critical, signifying that this is to be the central focal point during the entire length of the project with constant monitoring.

Once the evaluation plan has been completed the next step in the plan is to identify procedures which will need to be implemented for mitigation of the risk encounter to ensure minimal impact. As mentioned earlier, mitigation of risk can be accomplished through avoidance, sharing, reduction and transfer of risk. Strategic management of risk mitigation approach can deliver excellent results for elimination as well as reduction of risk. Alternative strategy for transfer of the risk through subsequent transfer of a part of the project to another vendor, sharing of risk by partnering with another vendor who would bring excellent value addition to the project, reducing risk by introducing sufficient funds into the project and avoiding risk by selecting a more reliable vendor instead of a cheaper option.

Contingency plans consists of an alternate project plan for achievement of the goal of the project when a critical risk has defied all control measures. In a similar way contingency funds are one side to side by the project management team in case of occurrence of financial risk related to substantial increase in cost of the project.

Therefore, comprehensive risk management plan goes a long way in ensuring the success of a project by management of any emerging risk, swiftly and efficiently Before any major impact upon the project quality and completion.

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