MANAGING PROJECT RISK

Managing Project Risk



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Managing Project Risk

One of the most important factor that manager needs to take care about the project is the risk. A risk is a concept that can happen with any business and its occurrence would certainly create a positive or negative impact on the project. Another vital aspect of the risk is the probability and if it's less than 100%, then there might be a chance for the prevention of risk, however if there will be a 100% probability, then the risk will be there. The issue is the management of risk in a project. For the construction business, there is always a deadline for any project which needs to be completed. Some of the construction businesses finish their project before the ending of a deadline. Normally in a year, construction business faces peak time for the completion of their projects when there is a high demand from the customer but still they try to finish their project on time. However, the construction business needs to carry out risk assessment for their project in order to avoid any problem. (Hamilton, 2004, 117)

The classifications of the risks and its definitions are necessary for understanding the concept of risk. The preparation of risk management is necessary in order to identify the key contents of the risk factors. The four stages which are there in the Risk Management planning are:

Risk Identification

Risks Quantification

Risk Response

Risk Monitoring

Risk Identification is the first stage in Risk Management Planning. In this particular case, there is an identification of the risk factors and then the names of the various risks are found out. Therefore, the construction business would need to carry out the identification of risks to deal with the problems associated with it before time. In every business, there is a Department for Risk Management, which have a role to assess the risk factors prevailing within the organization and the external environment to refrain themselves from any serious issue. There are various kinds of risks in any given project and each one of them would be different from each other in the nature. All the risks will be discussed in detail in the following paragraphs. (Royce, 1970, 75)

The first one is the Business risks which are the current risks that are easily handled by the business. For instance if the construction business cannot meet their project deadline towards the end, they would need to retain their current setup for the next year. This will be a sort of a contingency plan developed by the business to use their current setup for the next year. There are some general risks which are there for every project and this is the reason why there are standard procedures developed to deal with that risk. There must be two parts for the risks. The first part will be related to the cause of situation, that is the business project did not meet deadline and the second part will be that the budget will be expanded ...