Identification of the possible problems in a project and the evaluation of their importance, drawing project plans and how to deal with those problems are known as Risk Management. It is a process in which organization will identify and manage the risk factor of the projects. Project team will categorize and prioritize action for risk elimination or containment for the project and quantify the likely effects of risk on project time-scales. The main objective is to minimize the bad effects of unforeseen events by avoiding the risk or drawing up plans for dealing with them.
To identifying and managing the project risks that may cause a project delay, it is convenient to identify these important risks
- Inherent difficulties of estimation
- Assumptions made during the planning process
- Unforeseen events or hazards occurring
Risk Management is carried out in analyzing phase and Identification activity risks phase. Project cycle starts with selecting the project. After selecting the project, project team will identify ‘project scope and objectives’ and ‘identify the project infrastructure’. Next step is analyzing project characteristic. This is the critical phase of project with maximum risk. After analyzing project characteristic project team will identify the products and activities for the project and estimate effort for activity. For each activity project team will identify the activity risk. This is other main step in this type of management. All the calculation should be accurate because based on that project team will finish project at appropriate cost and given time.
Next steps for project are allocation of resources, review or publicize plan, execute plan and lower level planning. Lower level planning is the last phase of the project. If there is some problem in lower level, this detail will send for estimation or review for identification the product and activities.
There are five models
- Planning
- Control
- Monitoring
- Directing
- Staffing
Planning consists of drawing the plans for the project. For small project, risk planning is made by the project manager but for medium and large projects company used to appoint a full-time manager.
Control is the main the main functions of the manager in minimizing the risk and problem throughout the project. This function also includes quality control.
Monitoring should be the ongoing activity. It start with analyzing phase of the project and it goes up to the last phase of the project.
Directing is concerned with the day-to-day management. On daily basis direction is required for running project.
Staffing is also an important model. It is very useful for risk aversion and problem solving strategies.
It will not be effective unless project team is risk-oriented. There should be a healthy environment so project members can freely discuss the risk that might affect a project. For effective management, it is important that project members are encouraged to identify the risk and discuss those issues as early as possible.
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