Free Essay on Advanced Risk and Uncertainty Management

A risk is an uncertain event that occurs in the future, and which may affect the schedule, scope, cost, performance and the general quality of a project (Sage, 2015). The causes of risks are diverse and its effects may be one or more. According to Hillson & Simon (2012), the ultimate effect of a risk is to create the possibility of bringing negative or positive outcomes that are not certainly known.

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The Melbourne Metro Rail Project faces various risk ranging from the technical, commercial/procurement, interface, financial, legal and political risks. In this regard, there is a probability that the expected outcomes of the projects will be affected by the uncertain events and occurrences (Teller, Kock & Gemunden, 2014). Specifically, the risk of architecture and design of the project is likely to change the expected outcomes. As a result, it is critical for the government undertaking the project to categorically prepare a risk register, which will stipulate the risks, their severity, and likelihood of occurrence and how they are likely to adversely impact on the progress of the Melbourne Metro Rail Project (Verma, Ajit & Karanki, 2016). This methodology part, therefore, deploys the risk management model, which will help in risk identification, quantification, evaluation, implementation and control. The design of the risk breakdown structure will be made using the steps proposed in ATOM and PMBOK. In the end, a qualitative risk analyses will be performed.

The risk management model that has been used in the assessment of the risks that are involved in the project. According to the PMBOK proposed risk management steps, it is critical to first plan for the risks. Afterward, the risks are identified in the second step. This identification ensures that there was knowledge about the possible uncertainties. After identification, the risks are quantified in terms of the magnitude and the likelihood of occurrence. Additionally, an evaluation on how the risks are likely to impact on the project is done. Later, according to McNeil, Frey & Embrechts (2015), various mechanisms are structured with the aim of mitigating the effects of the risk. These mitigating interventions are then implemented with sufficient controls that help in ensuring that the risk events do not occur and if they do, that they do not adversely affect the progress and success of the project. The PMBOK guide constitutes a body of knowledge related to project management, which is generally recognized as good practice as the guidelines are applicable to most of the projects. Additionally, the value and utility of the guidelines are universally acceptable. The following are the detailed PMBOK proposed risk management steps.

Plan Risk Management

In this step, the risk management activities that the proponents of the Melbourne Metro Rail Project have devised are listed down as well as the responsibilities that are associated with the activities. Additionally, the budget that is associated with the RM activities is also stated. More importantly, the proper timing of the activities as well as the communication and reporting for them is also an important concept in this activity (Sage, 2015).

Identify Risks

This step includes listing the risks by identifying their characters, symptoms, root causes and triggers. Additionally, according to Sage (2015), it includes assembling all the stakeholders that will be involved in the Metro Rail Project and collectively identifying the probable project risks. Other than that, this step is also concerned with the description of the impact of the listed risks on the objectives of the project. Finally, McNeil, Frey & Embrechts (2015) states that this step includes writing detailed statements on the risks for the purpose of the next step. Indeed, the identified risks would be documented in the risk register. The following is the risk register for the risks in the Melbourne Metro Rail Project

No Name of risk Description of the risk Risk Category Risk type Probability(scale: 1-5) Impact (scale: 1-5) Urgency (scale:1-5) Risk score (1-10)

1. labor There might be lack of qualified laborer for the project resource threat 3 2 4 7

2. expertise The available laborers might not be professionals technical threat 4 2 5 6

3. Financial constraints There might be lack of finances for project completion resource threat 4 5 5 8

4. Tech. availability Lack of current technology on building the Metro Rail Project technology opportunity 3 3 3 6

5. Tech. limits Available technology might be limited technology threat 2 2 3 4

6. Resource availability Necessary materials might be deficient resource opportunity 3 3 4 7

7. Quality of materials Available materials might be of poor quality resource threat 2 3 3 6

8. Political goodwill Political temperatures might affect the project culture threat 1 4 3 4

9. culture Communities might have negative attitude towards the project culture opportunity 2 3 3 4

10. Legal cases Issue of land disputes and wayleave might arise legal threat 1 2 4 3

Figure 1: Risk Assessment Register

Perform Qualitative and Quantitative Analysis Risk Analysis

This is the next logical step in the risk management plan. In this step, the risks are listed and prioritized for any future action to be taken. In this step, the probability of each risk is analyzed based on how likely or not it is for the risk to occur. Additionally, the likely impact of risk if it occurs is also focused. In this regard, Hillson & Simon (2012) opines that the adverse effects of the risk if and when it occurs are properly analyzed. The other ground that is used to analyze the risk in this step is the urgency of the risk. In this regard, there is need to look at the probable period that the risks that are related to the Melbourne Metro Rail Project will be likely to occur. Finally, the risks are prioritized based on the factors mentioned above. Specifically, they are arranged based on their probability, impact, urgency and severity.

Plan Risk Responses

After the risk have been analyzed and prioritized, the management as well as the stakeholders of the Melbourne Metro Rail Project will have to arrange on how they are going to respond to the risks in order of their priority. In this regard, the risk responses would either be aimed at the threats as well as the opportunities that have seen in the evaluation. The threats are the negative effects that are likely to be brought about by the risks. The opportunities, on the other hand, are the avenues for exploitation that have been exposed from the analysis of the risks. As a result, it is critical to for the stakeholders or the risk management team to look at the two sides of the risk so that they can have an effective risk response mechanism and procedure.

Control the Risks

The control of the response mechanisms should be done continuously due to the continuous change in the nature, severity, urgency and impact of the risks. Therefore, the risks being unpredictable and uncertain, it is always proper and prudent for the risk management team to continuously control the risks and the response mechanisms so that they are properly in control of the risks(Teller, Kock & Gemunden, 2014). Specifically, risk control includes the planned and unplanned responses. In this regard, the uncertainty of the risks might require the management team to consider devising control measures, which had not been earlier planned in the risk responses section. Additionally, according to Verma, Ajit & Karanki (2016), monitoring would involve the evaluation of the risk process effectiveness. In this regard, any response mechanism that will not be able to respond to the risks will be changed with a better one that can address the risks in a more efficient and effective manner.

The following is the risk breakdown structure that was made after following the PMBOK steps.

80772075565 Environment Natural Environment Site and facilities Local services Political environment Legal environment Cultural environment 1369695116840132207059690 Technical Labor availability Expertise Costs 79819591440Project risks 130302091440 Organization and Management Financial constraints Organization stability Organization experience Organization culture Organization location Management experience 133159569215 Commercial & procurement Requirement definition Requirement uncertainty Requirement complexity Relationship with the customer

132207081915 Technology Technology availability Technology maturity Technology limits Personnel/Material resources Personnel skill set Personnel experience Resource availability Quality of material resources

Figure 2: Risk Breakdown Structure

To conclude, the building of the Melbourne Metro Rail Project requires the management of the risks and uncertainties that are likely to arise. In this regard, the management would require the use of the risk management model which involves risk planning, identification, analysis (qualitative and quantitative), planning of responses and the application of control mechanisms. This project faces risks of different magnitudes, severity, impact and urgency. These can however be stored in a risk register as well as being arranged in the risk breakdown structure. This aids in ensuring that proper risk management mechanisms are formulated.

References

Hillson, D., & Simon, P. (2012). Practical project risk management: The ATOM methodology. Management Concepts Inc..

McNeil, A. J., Frey, R., & Embrechts, P. (2015). Quantitative risk management: Concepts, techniques and tools. Princeton university press.

Sage, A. P. (2015). Risk modeling, assessment, and management. Y. Y. Haimes (Ed.). John Wiley & Sons.

Teller, J., Kock, A., & Gemunden, H. G. (2014). Risk management in project portfolios is more than managing project risks: a contingency perspective on risk management. Project Management Journal, 45(4), 67-80.

Verma, A. K., Ajit, S., & Karanki, D. R. (2016). Advanced Methods in Uncertainty Management. In Reliability and Safety Engineering (pp. 493-554). Springer London.