Project Risk Management and Contingency Plans

Introduction

Risk management is an integral part of project management and can be very beneficial to any project. If one deals with the developments during project execution in a proactive manner through minimizing the impact of threats to projects and grabs the opportunities that come by, he or she will be able to deliver the project on time on budget and with preferred quality. Risk management should be a part of any project which is very essential for its success. In the absence of risk management in a project, management may encounter a number of faulty approaches which may reduce the quality of the project.

Risk management plan

There are mainly four stages to risk management planning which are:

Risk identification

This stage involves identification and naming the risk involved. The best approach to identify the risk is a workshop with business and IT people.

A combination of brainstorming and reviewing of standard risk list can also be included in this stage. There are different types of risks associated with any project which should be identified and got solved. Example can be business risk and general risk.

Risk quantification

There are two dimensions for quantification; one is the impact of the risk and the other is the probability of the risk. If probability is high and Impact is low, it is a medium risk. If probability is low and impact is high then it is a high risk. Priority must be given to it.

Risk response

A risk plan must include strategy and actions like what is needed to be done who to do it and when it would be completed Risk responses can be as under:

  1. One can somehow avoid the risk
  2. Transfer the risk to some one else
  3. Take action to lessen the impact of the risk
  4. Accept the risk and manage it well

Risk monitoring and control

In this stage all the risk that has been identified would be monitored and a control kept over it. The status can be changed any time. (Turbit, 2009).

Generally risks happen in projects in many ways. The changing policies of the Government affect the entire functioning of the project. It may even lead to the cancellation of the entire project. Another risk involved among the external factors is the non- availability of technologies. So every organization, before commencing the project must ensure proper availability of sophisticated technologies. Otherwise there is a chance of abandonment of the entire project in its early stage.

Another important risk factor, which affects the smooth running of the project is lack of efficient communication system. There should be a proper communication channel to have a smooth and healthy communication between its members. The application of telecommunication system will be helpful for the interaction among the members of the project. Risk may also occur due to lack of a clear mission by its management. To avoid this risk, an organization must have a clear mission regarding its day to day affairs. Lack of availability of fund is another important risk factor for a project. So an organization must find the sources of finance before its commencement. One more type of risk is the scheduled risk.

This type of risk may happen due to the non-availability of engineers, workers and raw materials. These types of risks can be mitigated by making available of all the necessary ingredients. Another major risk factor is resource risk. The non-availability of resources such as men, materials etc. may affect the functioning of an organization as a whole. So the project manager has to foresee and identify all the risk factors mentioned above and avoid them.

Contingency plans

Contingency Plan plays an important role in the development of a project. A project has to be planned and executed keeping in view the situations likely to be encountered in future. Contingency Plan is a plan for major possible developments that can reasonably be anticipated in the principal geographic sub areas of the command. (Contingency plan 2009).

Execution of Contingency Plans

Execution system should contain action plans as in the real situation. Execution systems are particularly useful in times of uncertainty. Execution functions include selecting an action from a set of possibilities based on the current state of the environment and on the outcome of previous actions. Execution system is to be viewed as an onboard system that takes a plan that assumes a certain level of certainty and expected outcome and executes it in an uncertain and dynamic environment.

Execution Language is a representation of commands and plans that provides a representation for reasoning about environment state and the effects of executed commands. Execution Language provides a representation for monitoring mission constraints and encoding responses if these constraints are violated. Plan execution framework varies both due to the different capabilities of the execution systems and due to relationships with decision making frameworks.

As a step in the direction of addressing these issues, we are developing a general plan execution language called the Plan Execution Interchange Language (PLEXIL). PLEXIL extends many execution control capabilities of other systems. It provides an interface to multiple planners.

We have contingency reserve of 20% of the project cost. If there is any cost associated with lack of time, 50% of the total amount is taken into consideration. 25% of the amount will be given to meet contingency factor such as non-availability of raw materials. Rest of the amount is given to meet the unforeseen circumstances.

Reference

Contingency plan. (2009). Answers. Web.

Turbit, N. (2009). Risk management basics. Project Perfect: Project Management Software. Web.

How to Cite This?

Choose the style

Reference

NerdyRoo. (2021, November 2). Project Risk Management and Contingency Plans. Retrieved from https://nerdyroo.com/project-risk-management-and-contingency-plans/

Work Cited

"Project Risk Management and Contingency Plans." NerdyRoo, 2 Nov. 2021, nerdyroo.com/project-risk-management-and-contingency-plans/.

1. NerdyRoo. "Project Risk Management and Contingency Plans." November 2, 2021. https://nerdyroo.com/project-risk-management-and-contingency-plans/.


Bibliography


NerdyRoo. "Project Risk Management and Contingency Plans." November 2, 2021. https://nerdyroo.com/project-risk-management-and-contingency-plans/.

References

NerdyRoo. 2021. "Project Risk Management and Contingency Plans." November 2, 2021. https://nerdyroo.com/project-risk-management-and-contingency-plans/.

References

NerdyRoo. (2021) 'Project Risk Management and Contingency Plans'. 2 November.

Copy this

One of the best students granted us this essay, so that we share it with you. If the paper can be helpful for your studies, feel free to use it but don’t forget to cite it correctly.

Are you the author of this work? Did you change your mind and wish it to be deleted from NerdyRoo? Contact us here.