File Name: adequate monitoring and evaluating a means of mitigating project risk .zip
- Risk Mitigation Strategies in Innovative Projects
- Risk Mitigation Planning, Implementation, and Progress Monitoring
- Accepting Risk
- Process of Risk Management
Cost saving and timely performance are of utmost importance to all stakeholders who are involved in a construction project that is owner, contractor, consultant and subcontractor. The prime causes of risks in construction projects involve delay and failure to complete the work at specified cost and within the agreed time frame. Unexpected delays in construction projects are caused by internal and external environments embedding several risk factors which may occur concurrently.
This chapter discusses the challenge imposed by the dispersed innovation that shifts toward replicating the positive traits of co-location and coupling it with the unique advantages of the global initiative. Key concepts in this chapter include project risk, risk pertinent to the innovative projects, importance of risk mitigation in innovative projects, different risk categorization involved in mitigating risk in innovative projects, risk mitigation planning, risk mitigation strategies in innovative projects, and risk evaluation and mitigation strategies REMS in various types of innovative projects including the lesson learnt from the innovative projects to handle project risk by adopting risk mitigation strategies. Key Issues for Management of Innovative Projects. Edited by Bernardo Llamas Moya, M. Dolores Storch de Gracia and Luis F.
Risk Mitigation Strategies in Innovative Projects
This chapter discusses the challenge imposed by the dispersed innovation that shifts toward replicating the positive traits of co-location and coupling it with the unique advantages of the global initiative. Key concepts in this chapter include project risk, risk pertinent to the innovative projects, importance of risk mitigation in innovative projects, different risk categorization involved in mitigating risk in innovative projects, risk mitigation planning, risk mitigation strategies in innovative projects, and risk evaluation and mitigation strategies REMS in various types of innovative projects including the lesson learnt from the innovative projects to handle project risk by adopting risk mitigation strategies.
Key Issues for Management of Innovative Projects. Edited by Bernardo Llamas Moya, M. Dolores Storch de Gracia and Luis F. In the current context of market globalization, where the world is emerging with new and more advanced technologies and increasing their competitiveness, companies are trying to offer more and more innovative products.
New projects or new ideas always give birth to new challenges, new risks which come across during the development and execution of a project. Different mitigation strategies exist to handle new risks. Moreover, increasing companies are now drifting toward project management tools and techniques to manage innovations, to ensure a better product quality, to meet deadlines, and to reduce the cost. Thus, decision makers along with academicians are trying to minimize risk by applying project management methods.
Risk identification is carried out through various processes depending upon the nature of the organization and projects which can be related to operations, technology, organizational procedures, etc. Once risks get identified, then techniques, strategies are observed, and contingency planning is done to lower the impact [ 1 ].
According to the ISO , risk analysis is a critical exercise for any project regardless of its size to manage risk. A risk analysis becomes an imperative element in the planning phase of the business development. The risk, defined as the likelihood of occurrence of a condition or event, may have a positive or adverse effect on project objectives. In projects, there are three categories of risks: a project risks; b product risks; and c business risks. Every organization or project must learn to adapt against the emergence of risk, business changes, and investments in anticipation of its likely futuristic occurrence.
However, risk significance is even more important for organizations working on innovative projects because the management must adopt strategies to overcome and mitigate the potential effects of risk which may be negative and alongside its related opportunity. Innovation brings itself with the prospects together with many types of risks such as strategic, technical, delivery, and enterprise [ 2 ].
Innovative products are usually ahead of time, strategic risks relate to the lack of investment, different business process understanding, and limited support from management [ 3 ]. Innovation is a key to organizational rejuvenation and success.
Novelty is central to innovation, but this inevitably implies risk. The risks are inevitable in all projects but are especially important in innovation for which a high failure rate is typical [ 4 ]. It is desirous from innovative management to identify the unacceptable risks as early as possible that often become apparent only in the later stages, at a greater expense.
However, a fear of failure would be detrimental to innovation; indeed, accepting the possibility of failure as an everyday reality is one of the defining characteristics of the innovation project. Any model for the process novelty needs to incorporate failure as a likely outcome.
In many other projects abandoning the venture is general but remote option, whereas in the innovative project, it is integral for good management. Risk management can help managers in making the critical decision to abandon a project, providing an active sieve of the good and poor prospects and helping direct the continuing research that is fundamental in innovation projects.
The risk is central to innovation, but it is often not managed explicitly [ 6 ]. Projects regardless of their type and size face risks. Hence, the project manager must find a win-win solution to lessen risks besides ensuring that the novelty rate is achievable, and the available resources are adequate to meet the expectations.
The risk mitigation strategy plays a vital role to keep the project on track for which identification of potential risks is a must. Modern innovation requires quality global resources at a rapid pace for which outsourcing—a concept very popular to bring about efficiency, seems a realistic option especially in the context of risk mitigation.
Outsourcing extends the proficiencies to take on complex and pioneering projects, and over the period has proved to be an excellent risk mitigation strategy. However, despite it being the best resource across the globe, outsourcing also has presented with the challenges of managing the means in new turbulent economic scenarios.
In recent times, a detailed scrutiny has been carried out to seek the portfolio of the outsourced IT companies [ 7 ]. Some of the studies have focused on the level of complexity and cost and time overrun, and the primary emphasis of which has remained on developing a model that can establish a relationship between the complexity, the related risks, and its implication on overall objectives. Its foundation stands not only in identifying risks at commencement but also the mitigation strategies alongside by allowing for the interaction of the three and all that in the framework of Expected Utility Theory [ 8 ].
A similar concept is also given due consideration in the context of the impact of innovation on the environment in the long-term sustainability of nanotechnology argues in the risk governance approaches to mitigation of risks with clear and well-structured risk assessment and management criteria to risk governance [ 9 ].
For undergoing any innovative project, as for instance the development of London Heathrow Terminal 5, a lot boils down to the dynamic capabilities of the firms or the organization under consideration to take on the innovative projects. Pioneering projects are often strategic in nature and often made complex owing to the number of stakeholders involved in the project. It therefore requires the whole project to be broken down into phases for better contemplation of fragility of the innovative projects and the list of stakeholders involved in strategic management, ultimately balancing out demands on both ends [ 10 ].
Project complexity has direct linkage with the innovative nature of the project. Hence, it is important to assess the prospective level of difficulties that may arise due to the very character of the project.
As a result, this could save the delays in project completion and keep in check with the budgets besides keeping repute in a cut-throat competition as in the case of Boeing Dreamliner [ 11 ]. Sometimes it comes to sourcing alternative ways of energy from the traditional fossil fuel where the idea itself is innovative and has strong linkages in diversifying the risk regarding risk expansion and decreasing dependencies. Identifying alternative sources of energy is a risk mitigation process other than insurances are very complex and requires work at multidimensional levels of complexity.
Risk management can aid good managers in making the critical choice of abandoning a project. It provides an efficient filter of good and poor prospects and helps in continuation of research that is essential for innovative projects.
The risk is not often managed explicitly but is crucial to innovation. Encouragement of people in generating ideas is a difficult task, and excessive use of risk management may discourage radical suggestions and stifle this critical stage. While defining the suitable and profitable method of risk management, every project has to consider the data available, costs and management worth of the outputs of the additional analysis.
Likewise, innovative project has to balance the likely effect on creativity. Risk management is inherent in the innovation process, but there may always be significant in making it more unambiguous by incorporating models of innovation and project risk management [ 6 ]. The usage of newly acquired information, data, or knowledge for the development of a fresh product of service is referred as innovation [ 6 ]. Novelty is vital for innovation but unavoidably involves risk.
Risk can occur in any project, but it plays a great role in innovation, and failure rate in such projects is common. Proficient innovation management should be able to ascertain excessive risks as early as possible but time and again risks only become evident in later stages, at a significant cost.
Nevertheless, fear of failure can be damaging to innovation; in fact, tolerance to the possibility of failing as reality is one of the essential characteristics of innovation projects.
Incorporation of failure, as a likely consequence, is often required in a model designed for change. Contingency theory in the context of innovative projects is of the view that a project can trail different number and as it is about the state-of-the-art projects, it may not be following the seasoned phases from the generation of an idea to launch.
So the biggest challenge lies in identifying a particular configuration that can get employed and resource allocation as per the setup and the reasoning behind it in ensuring the overall success of the pioneering project [ 13 ]. In the public sector, the stake is the public, and the success of social sector projects is the resultant outcome regarding its implication on the life of an ordinary man.
Social sector projects, in general, do not face funding challenges, while risk mitigation often is assessed on equalities impact assessment EIA. Added innovative decision-making process of social risk impact assessment SRIA must have a preference over EIA which does not take due account of a sector that could face adverse impact due to service cuts [ 14 ]. Innovation has a lot to do with the risk management. Exploration of the relationship between the two done with a notion that the whole process of risk management splits into stages with a strong emphasis on when to perform laborious risk management processes and when to go with simpler methods to optimize effectiveness [ 6 ].
While considering the risk mitigation policies, the biggest challenge is identifying the root cause of such projects. In this scenario, any system that may get formulated must not only be focusing on the production side of things but must also take into consideration the co-benefits [ 15 ].
It is hard to deny the prospective impact of the innovative projects on the intangibles. For example, it is apparent in the case of health, environment safety, and overall sustainability. It is also opined by many that the creators and inventors of technology, more often than not, do not have the skill set and capability to foresee the risks that may get associated with the development of new technologies, especially the impacts on the intangibles. Furthermore, it can be stipulated that incorporating the risk mitigation strategies beforehand and before the launch of new innovative technologies in the market can bring about the much desired competitive advantage to such corporations [ 16 ].
Risk management strategies are critical as they contribute to the success of the projects in following ways:.
Indent and priority of risks enable the project managers and staff to focus on the most essential aspects which have the most impact on the project. Risk mitigation actions reduce overall project risk thus accelerating project completion. Due to an earlier completion of projects, the projects cost less, besides the risk reduction actions may further reduce project costs. Projects which enforce risk mitigation strategies have more predictable completion schedules and experiences few surprises.
The risk extenuation strategy helps PM set contingency budgets and thus review the adequacy of the budget as the delivery progresses. Risk identification allows all personnel to record their perception of what could go wrong and offer ideas on how to avoid or reduce the impact of such problems.
Risk mitigation also helps in achieving business objects and maximizing shareholder value. Risk mitigation strategies are the conceptualized action plans, and it is the process of developing options to enhance opportunities. It performs a thorough evaluation to reduce the likely threats, vulnerabilities, or impairments that can distress a business operation, a project, or any form of the undertaking. A suitable response to each risk should be specified and recorded in a risk register.
Studies have indicated several project risk management actions identified, and these may be summarized into categories reflecting the particular characteristics of innovative projects [ 17 , 18 ]. Risk management is a major component in project success. It is an important activity that should get applied to all projects as fundamental part of every facet of managing the project, in every phase as well as a process group. Fast-track project implementation can also help mitigate three significant threats to risks associated with costs, scheduling, and safety and quality renewable energy parks.
Some of the most common cost risks that are faced when needing to expedite a project include the accuracy of cost estimates, delayed or miss appropriate funding, complications from schedule compression, and the dearth of vendor competition.
Through the fast-track project delivery, risks in cost estimates get minimized through adequate preliminary engineering and scheduling. When the team can identify budget issues early in the design process, cost estimates are more thorough, eliminating threats from potential, costly surprises. When modularizing equipment, it is vigorous for the project team to involve merchants early and to launch an equipment expediting plan to avoid potential scheduling barricades caused by equipment deliveries or damage during transportation.
Fast-track projects also alleviate issues caused by work area congestion by developing an hour-by-hour roster that ascertains areas of trade overlap and enables the project team to make alternate plans to eliminate this overlap.
Rapid prototyping is an essential part since suitable comparisons might not be available in the market or within the organization.
The risk like grid connection, delays in start-up, or maintenance issues can be sorted out after critical analysis of these prototypes.
Relevant political, policy, and regulatory risks for wind parks include: The risk of ex-post facto adjustment of support. Continuous inconclusiveness on prospective policy support or regulatory requirements concerning solvency capital requirements.
The risk of expropriation or war like developing countries. Risk management instruments or mitigation strategies for political, strategic, and regulatory risks are:.
Risk Mitigation Planning, Implementation, and Progress Monitoring
Definition: Risk mitigation planning is the process of developing options and actions to enhance opportunities and reduce threats to project objectives . Risk mitigation implementation is the process of executing risk mitigation actions. Risk mitigation progress monitoring includes tracking identified risks, identifying new risks, and evaluating risk process effectiveness throughout the project . Keywords: risk, risk management, risk mitigation, risk mitigation implementation, risk mitigation planning, risk mitigation progress monitoring. Risk mitigation planning, implementation, and progress monitoring are depicted in Figure 1.
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Definition: Risk mitigation planning is the process of developing options and Risk mitigation progress monitoring includes tracking identified risks, identifying new risks, and evaluating risk process effectiveness throughout the project . These guidelines are appropriate for many, but not all, projects and programs. Risk.
According to its definition, Risk Treatment is the process of selecting and implementing of measures to modify risk. Risk treatment measures can include avoiding, optimizing, transferring or retaining risk. The measures i. At this level, security measurements are verbal descriptions of various security functions that are implemented technically e. Software or Hardware components or organizationally e.
In the context of the scope, time, cost, and quality constraints, failure is not uncommon in project management. While there is no dearth of research on project risk management, the manifestation of barriers to project risk management is a less dwelt topic. This paper represents various risk categories and barriers to risk management in domestic and international projects through literature survey and feedback from project professionals. After analysing the various modelling methods used in project risk management literature, interpretive structural modelling ISM and MICMAC analysis have been used to analyse interactions among the barriers and prioritize them. The analysis indicates that lack of top management support, lack of formal training, and lack of addressing cultural differences are the high priority barriers, among many others.
Process of Risk Management
Risks are potential future events or conditions that may have a negative effect on achieving program objectives for cost, schedule, and performance. They are defined by:. The most important decisions to control risk are made early in a program life cycle. During the early phases, the program works with the requirements community to help shape the product concept and requirements. PMs and teams should understand the capabilities under development and perform a detailed analysis to identify the key risks. Where necessary, prioritizing requirements and making trade-offs should be accomplished to meet affordability objectives. Once the concept and requirements are in place, the team determines the basic program structure, the acquisition strategy and which acquisition phase to enter, based on the type and level of key risks.
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