Managing project risks and uncertainties

International journal of risk and contingency management, 2013

Risk is an inseparable event or occurrence to any project and it is a consequence of uncertainties and unknowns associated with the project and its execution. Past research studies generally focused on types of risks and risk management processes. This research effort, using a survey questionnaire, is an attempt to understand types of specific risk mitigation approaches that are commonly employed and their dependency with the type of an organization. This research effort also addressed relation between risk mitigation strategy of an organization and individual project manager's propensity to risk. Research results show that project risk management plan and it development is likely to be influenced by cost and time aspects of a project but not on the project scope. Further, results revealed that many organizations depend on contingency budget rather than a formalized risk management plan.

2018

This paper illustrates various activities, where identification of risk is a primary task before its actual occurrence whereas proper plan can be done and executed to handle the risk during project period and complete the project successfully. The study has been done to find out the common risk, during project. The study was based on data, having experiences of 5 to 20 years from various fields contributing in different project phases. During survey it was found that 72% of respondents think that the budget and resource provided for project are probably sufficient, with margin. It may not be 100% realistic but can be managed with some addition efforts. Budget is complete financial estimation of the cost required for each and every task to achieve the goal or success of the project over project life cycle. 60% of respondents believe that timeline provided by the institute for the project is not enough to compete the scheduling and planning of the project. According to 80% respondents...

2004

The paper presents a model for Project Risk Analysis and Management (PRAM) which embarks upon the problems of existing approaches and aims at rectifying these issues. The problems with the existing models are: either they are too complex to be used by all and every project manager or the approach is too simplistic to take into account the total picture and provide a quantified value of benefits of implementing PRAM. This causes PRAM to be viewed as an additional cost for a project while the benefits from PRAM could easily out pay the costs. The base of the model is Project Risk Network (PRN) which is derived and developed from Project Activity Network (PAN). The model emphasises on assessment of the impact of each risk and suggests a procedure which is a compromise between a relatively complex approach such as system dynamics or simulation and a very simplistic method like ranking of risks which treats each risk discretely and ignores the interaction between the risk factors. The model while simple takes into account risk transferability and accounts for total impact of risks on the project. The result of the analysis is a risk profile for each risk and a Total Project Risk Profile (TPRP) for the whole project. The results of the analysis not only could be used to assess the benefits of using PRAM but also could help in developing risk management decisions and strategies and answering a number of what if questions.

The aim of this paper is to discuss the phenomenon of uncertainty in projects and attempt to integrate it as part of project management. Despite the fact that project management discipline has gained a lot of attention in the past decade from both academia and practitioners, there is still considerable potential for development in this field. Recent trends in project management stress the need to re-address the issue of uncertainty. Though one can come across the notion of uncertainty in traditional project risk management literature rather often, there is no common understanding between the scholars as to what this term means. Based on the review of the existing research, I present my own definition of uncertainty as a crucial element in managing projects. The management of uncertainty is seen as a necessary condition for effective project management. Sources of uncertainty are wide ranging and have a fundamental effect on projects and project management. These sources are not confined to potential events, and include lack of information, ambiguity, characteristics of project parties, trade offs between trust and control mechanisms, and varying agendas in different stages of the project life cycle. There is a high level of uncertainty with both positive and negative effects in any project. The traditional approach to project management still puts a lot of emphasis on assuring conformance to time, budget and scope constraints. Considerations, such as continuous improvement, customer-centric thinking, reflective learning are often left behind. This leads to the fact that project companies become less flexible, unable to accumulate knowledge and experience necessary for coping with uncertainty. Moreover, in project risk management literature, there is no common understanding as to what uncertainty is. DEFINITIONs: Project: A project is a unique, transient endeavour, undertaken to achieve planned objectives, which could be defined in terms of outputs, outcomes or benefits. A project is usually deemed to be a success if it achieves the objectives according to their acceptance criteria, within an agreed timescale and budget. A project is a temporary endeavour designed to produce a unique product, service or result with a defined beginning and end (usually time-constrained, and often constrained by funding or deliverables) undertaken to meet unique goals and objectives, typically to bring about beneficial change or added value. [Wikipedia] A project is a series of complex, connected activities with a common purpose; our most common context is a project to develop or refine a program, but principles of project management apply to most projects. Often program and project are used interchangeably, but nominally, a program is a larger concept than a project. (A project is a sequence of unique, complex, and connected activities having one goal or purpose and that must be completed by a specific time, within budget, and according to specification). [UC davis, 2013] Management in businesses and organizations is the function that coordinates the efforts of people to accomplish goals and objectives using available resources efficiently and effectively. Management includes planning, organizing, staffing, leading or directing, and controlling an organization to accomplish the goal. [Wikipedia] Management is often included as a factor of production along with‚ machines, materials, and money. According to the management guru Peter Drucker [1909-2005], the basic task of management includes both marketing and innovation. Practice of modern management originates from the 16th century study of low-efficiency and failures of certain enterprises, conducted by the English statesman Sir Thomas More [1478-1535]. Management consists of the interlocking functions of creating corporate policy and organizing, planning, controlling, and directing an organization's resources in order to achieve the objectives of that policy. Project management: This is the application of processes, methods, knowledge, skills and experience to achieve the project objectives. Project management; is the process and activity of planning, organizing, motivating, and controlling resources, procedures and protocols to achieve specific goals in scientific or daily problems. Management is frequently used as an enabler for meeting an uncertain and turbulent environment. Consequently, the overall effectiveness of the project management process is essential for long-term profitability. The aim and final effects of project management are to predict the outcome, i.e. cost, time and quality. Uncertainty: We define uncertainty as a context for risks as events having a negative impact on the project's outcomes, or opportunities, as events that have beneficial impact on project performance. This definition stresses dual nature of uncertainty in potentially having both positive and negative influence on the project's outcomes. Uncertainty can arise from sources both internal and external to the project. [LeRoy & Singell, 1987] Uncertainty: in contrast, is an event or a situation, which was not expected to happen, regardless of whether it could have been possible to consider it in advance. In other words, uncertainty is when the established facts are questioned and thereby the basis for calculating risks (known negative events) or opportunities (known positive events) is questioned. [Own Definition] Uncertainty: This is a term used in subtly different ways in a number of fields; it applies to predictions of future events, to physical measurements that are already made, or to the unknown. Uncertainty arises in partially observable and/or stochastic environments, as well as due to ignorance and/or indolence. However, uncertainty is inherent in the objectives of the project itself, as we use assumptions and expectations in defining and realizing the outcome of the project. A project's ability to identify and react to uncertainty will influence the outcome of the project. [Wikipedia]

Advances in business information systems and analytics book series, 2018

As projects are associated with risks due to the presence of uncertainties and unknowns, risk management assumes importance in project success. This chapter is an attempt to examine various risk mitigation strategies that are commonly employed if different industrial sectors. The chosen risk strategy would also largely depend either on individual's or organization's propensity to take risks. The authors summarize the findings of a research study in this chapter. The research results show that effort and details of a risk management for a project are governed by risks associated with cost and time and not necessarily with the project scope. Also, many organizations prefer a contingency budget to the project plan to developing a detailed risk management plan.