FIT5057 Project Management: Risk Analysis and Mitigation Strategies

This report provides a comprehensive analysis of risk management in projects, focusing on the identification of potential risks and the development of effective mitigation strategies. It examines the critical role of risk management in achieving project objectives, particularly in the context of IT projects, which often face challenges such as cost overruns, schedule delays, and scope creep. The report delves into case studies, including the experiences of Levi Strauss and other organizations, to illustrate the consequences of poor risk management and the benefits of proactive planning. It highlights the importance of factors like proper documentation, stakeholder management, and technical expertise in ensuring project success. The report also provides statistical data on the frequency and impact of project failures and concludes by emphasizing the importance of a robust risk management framework for achieving successful project outcomes.

Running head: ANALYSIS OF RISK MANAGEMENT
ANALYSIS OF RISK MANAGEMENT
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1ANALYSIS OF RISK MANAGEMENT
Table of Contents
Introduction:...............................................................................................................................2
Analysis of poor management and solution:..............................................................................2
Enhancement of project performance....................................................................................5
Statistics.................................................................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8

2ANALYSIS OF RISK MANAGEMENT
Introduction:
Risk management is an essential factor to implement a project successfully by
achieving the objectives. In general, risks factors are the main obstacles that can affect the
implementation of the project successfully. If risks are not analysed properly then the project
may be implemented but later the consequences of the risks can cause harm to the
organization. Therefore, identifying the probable risks, mitigation for those risks before
implementation is effective. The IT projects faces many challenges due to the competition
among different industries. The larger projects of IT can run over time, over budget
especially the software projects. The quality of the IT projects need to be of enhanced and
polished as quality of the projects can have great impact on the implementation.
Analysis of poor management and solution:
The planning before implementation should be analysed strictly by identifying the
possible risks and designing of mitigation measures. According to the earlier survey, Levi
Strauss had to face a great loss for which three distribution centres were kept close for few
weeks and even the information officer had to resign. Therefore, typical planning for
identifying the probable risks, the potential impact and probability of assumed risks should be
prioritized.

3ANALYSIS OF RISK MANAGEMENT
Case Study 1
The IT department of the Levi Strauss have realized that the network system has got
outdated which was causing due to presence of various incompatible systems. As a solution
the executives of the organization decided to use System Applications and Product system
with the budget less than $5million, which is an ERP software to achieve better processes for
handling the IT network. Later, a major customer of the Levis Strauss wanted an improved
supplying chain management system but due to the insufficient processes the system was
facing problems to fill the order details. As a result, there was a great loss of $192.5 million
for compensation with the resigning of chief information officer.
Justification of the Project regarding benefits, current worth, profit in return,
estimated costs should be applied in the projects otherwise failure can occur in the later part.
Identification of the risks should be done by every employee for the screening process. When
the screening gets over, the project manager can prioritize the risks sequentially to focus. If
these initial and simple methods are avoided then the IT projects may fail.
Effective cost is one of the most important measures of a project that need to be
focused as there are many cases which has proven that improper planning can lead to cost
overrun (Schoenhardt, Pardais & Marino, 2014). And the origin of this impact has few factors
related to risks, which are: external risk, improper project management, neglected technical
issues of the project and wrong estimates.

4ANALYSIS OF RISK MANAGEMENT
External risks are caused by modifications in the project based on technological
conditions, additional requirements of the stakeholders. Generally, project manager deal with
lot of projects hence, sudden additional changes in any projects can make the projects run
over scope and time.
Case study 2
Technical complexities can make the IT projects face a huge downfall. For instance,
in 2006, a renowned automobile glass company was facing some issues in financial IT
system and to solve this issue the order management got switched from Oracle to Metrix for
managing the ERP system. Later this project led to bankruptcy which means that the
technical complexities should be analysed with thorough procedures.
If the scope of the project is not defined properly then risks can occur. When the
estimates are planned then that need to be designed properly otherwise inappropriate
estimates can lead to project risk (Alinaitwe, Apolot & Tindiwensi, 2013). Strategies can
malfunction if importance is not given on the scheduling.
Various IT projects were there which turned into ‘black swans’ due to the budget
overruns at an extreme level of 200 percent (Krupa, & Jones, 2013). Due to the improper
management it has been analysed that various IT projects run over time, software projects
that are implemented run over schedule, due to switching of methods, change in
requirements.

5ANALYSIS OF RISK MANAGEMENT
Enhancement of project performance
To prevent the failure of the projects, the management team need to have best
practices by having quality checking regularly and the delivery of the projects should be
within shorter period of time. The entire team should work efficiently to identify the risk to
achieve the goals of the project. The team members should have enough knowledge to work
on it, they should be motivated by increasing their incentives. Strategy planning should be of
high priority for every employees (Brewer & Dittman, 2013). Quantitative and qualitative
analysis should be done on the IT projects as there are many technologies involved. The
technologies should be tested properly to actually implement on the projects.
For high performance the project management team focuses on the stakeholders such
as partners of the project, IT executives (internal stakeholders) because their active
participation is required in order to prevent disruption of the project. Executive management
can support in successfully implementing the project on the basis of authority (Kerzner,
2017). Stakeholders with inappropriate demand and with less support should not be selected
(Beringer, Jonas & Kock, 2013). After creating contracts with the selected stakeholders the
potential risks should be identified and proper mitigation of the future risks should be applied
to the projects.
As a solution, the planning should be done in such a way that the budget should be
estimated according to the probable loss such as 400% and what percent of benefits will be
the outcome. If the benefits would be of 50% then what back up plan can applied to achieve
the remaining percent benefits.

6ANALYSIS OF RISK MANAGEMENT
The management team should focus in preparing effective stages to serve high quality
products as done by few organizations. Some organizations follows master plan to achieve all
the objectives within shorter period of time. Dedication of all the employees toward the
success of the project can result in effective project with shorter delivery life cycle (Burke,
2013). When a project is started then the every team member can have equal participation for
clear visibility of the scope, schedule, to identify probable risks of the project.
Statistics
According to the survey, the statistics includes that IT projects can experience cost
overrun, schedule overrun and scope overrun. According to both the case studies, the shifting
requirements and the technical complexity can cause the IT projects run more than 56 percent
over budget and more than 5 percent over schedule. Due to the poor risk management, a
massive blow in the budgets have been observed especially in the software projects. On an
average this can be estimated that IT projects can have cost overrun of 200 percent and
around 70 percent of schedule overrun. As mentioned earlier in the case study 1, $5million
projects made a loss of $192.5 million and it can also be called ‘black swan’. Some IT
projects are also there which led to bankruptcy, as mentioned in the case study 2 for an
instance example.
It is definitely clear that, the failed IT projects had inefficient project scope, as the
entire documentation of the objectives, functions, quantity, time required and available
resources is required before proceeding. Hence, thorough screening process in the
documentation part is required with active participation of the employees.

7ANALYSIS OF RISK MANAGEMENT
Conclusion
After analysing the incidents of failed projects this can derived that poor risk
management can play a major role in failing the implementation of the projects. There are
various risk factor that affects the completion of the project. Unsatisfactory performance,
neglecting minimal risks, avoiding testing before application, lack of visibility of the project,
inactive team performance and lack of support from IT experts are some factors that can lead
to project failure. Therefore proper documentation and analysing of every identified risks
from every team member should be implement for achieving success

8ANALYSIS OF RISK MANAGEMENT
References
Alinaitwe, H., Apolot, R., & Tindiwensi, D. (2013). Investigation into the causes of delays
and cost overruns in Uganda's public sector construction projects. Journal of
Construction in Developing Countries, 18(2), 33.
Beringer, C., Jonas, D., & Kock, A. (2013). Behavior of internal stakeholders in project
portfolio management and its impact on success. International Journal of Project
Management, 31(6), 830-846.
Brewer, J. L., & Dittman, K. C. (2013). Methods of IT project management. Purdue
University Press.
Burke, R. (2013). Project management: planning and control techniques. New Jersey, USA,
26.
Kerzner, H. (2017). Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.
Krupa, J., & Jones, C. (2013). Black Swan Theory: Applications to energy market histories
and technologies. Energy Strategy Reviews, 1(4), 286-290.
Meredith, J. R., Mantel Jr, S. J., & Shafer, S. M. (2017). Project management: a managerial
approach. John Wiley & Sons.
Schoenhardt, M. B., Pardais, V. C., & Marino, M. R. (2014, December). Why projects fail
(and what we can do about it). In 2014 10th International Pipeline Conference.
American Society of Mechanical Engineers Digital Collection.