Impact of Risk Management on Project Selection and Scheduling

This report delves into the critical interplay between risk management and project selection, alongside its impact on production scheduling. The introduction highlights the importance of considering risk during project selection, emphasizing the limitations of funds and the need for effective risk management. The literature review explores various project selection techniques like mathematical and measurement models, including cost-benefit analysis, cash flow analysis, and weighted scoring models. It also discusses how ineffective risk management can affect project scheduling through factors like poor communication, outdated systems, and unreliable vendors. The research methodology section explains the data collection methods, drawing from journals, articles, and books. The discussions section summarizes the impacts of risk management on project selection and the factors that can be affected. This report provides a detailed overview of the key concepts and their practical implications in project management, emphasizing the importance of integrating risk assessment into the planning and execution of projects.

Running head: PROJECT MANAGEMENT
PROJECT MANAGEMENT
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Author’s Note

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Introduction
Risk management is a factor that is supposed to be considering during the process of a
project selection as well as the production schedule of the project that has been selected. The risk
management in the process of project selections requires considering two factors (Carvalho &
Rabechini, 2015). It is based on various points of decision making like the potential of
profitability as well as its cost in life cycle. This is because they have a very limited inflow of the
funds. Selection of project is usually considered as critical hence risk management creates huge
impacts on the selection of project (Kotula, Ho & Dey, 2015). Project selection is carried out on
the basis of numerous decision making points like the potential for profitability as well as the
cost of life cycle (Kerzner & Kerzner, 2017). The funds inflow is very limited; the selection of
project is a critical task. A key point for decision making which is mostly left out is the risk
level. During the process of project selection the process of risk management should be
conducted.
A production schedule can be defined as a specific plan in every time period like staffing,
production, inventory and many more (Kliem & Ludin, 2019). This schedule translates the
demands of customers into a particular plan that us build, this plan is carried out using various
planned orders in a specific genuine environment of component scheduling (Lientz & Rea,
2016). Production as well as manufacturing runs of various timelines. Organizations receive
various orders, in some cases concurrently and the steps are planned in the schedule of
manufacturing (Young, 2016). This is done in order to ensure that the part of various processes is
done by maintaining a proper sequence and in an effective manner.
Literature review

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Production scheduling is referred to making a schedule of various activities for the
products, various manufactured goods, assemblies and many more for a particular period.
According to Turner (2016), and some more researchers, this should be performed in every
planning phase like production planning, planning of material and planning of manufacturing.
Some of the activities of project scheduling are supposed to be carried out in every field, or for
some organizations, the purchasing logistics is carried out. The project selection usually has
various divisions, these divisions are to be performed in an effective manner along with carrying
out an effective project risk management so that any issues in the risk management do not occur
and hence the project selection does not have any delay (Turner, 2016). According to Hopkin
(2018), there are two considerations that are found out as impacts of risk management in the
process of project selection. Project selection is considered as one of the vital parts of the entire
process in project management.
As per Carvalho, Patah and Souza (2015), project risk management has numerous
impacts on the concept of project selection. Some impacts that have been identified by are poor
user adoption, unrealized benefits, unhappy clients, overspent budgets, project failure,
reputational damage and many more. User adoption is defined as the strategy of getting the team
members to carry out a specific process, using the tools that have been mandated and then stick
to a particular methodology (Carvalho, Patah & Souza, 2015). In case they do not do this, the
project would have poor results; this is because the colleagues have not been working to best
practice way to manage the risk. According to Samset and Volden (2016), project selection is
actually based various points of decision making like the potential of project for profitability as
well as its cost of life cycle. The inflow of various funds is usually very limited and selection of
project is a critical method. In case an organization is aiming in implementing a specific project

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which increases the capacity of a manufacturing plant, the project would include installing new
equipments as well as building workforce capacity (Heldman, 2018). After executing the project
in a successful manner for some months, the risk management is carried out, and then the project
is closed successfully. This happens when in a theoretical manner; the project provides value to
the sponsor of the project. In some cases, during the selection of project, the stakeholders do not
consider the risk of less demand of the product that has been manufactured. The excess plant
capacity that has been provided by the project would be wastage. In this case, the expenses spent
on new project could be used on another project which would give more returns. Hence it is
important to conduct the risk management as well as project selection in a simultaneous manner.
According to Heldman (2018), two project selection techniques that are commonly used are
mathematical models and measurement models. In various workplaces, the models of benefit
measurement are usually conducted, including the cost benefit analysis; cash flow analysis,
weighted scoring models and time value of money. According to Badewi (2016), the cost benefit
analysis gives organizations with a specific net gain. In order to compute entire gain during the
process of selection of project, the benefit value is subtracted from cost. While using this
particular method, it must be made sure that the total cost is calculated including the Life Cycle
Cost as well as Cost of Quality. The overall gain is completely proportional to the level of risk,
which depicts that more the risk, the gain is high as well. As a result the risk management as well
as project selection is factored in the ultimate decision.
According to Schwalbe (2015), every project is usually evaluated on the basis of the
criteria that have been set. Suppose the factors of a project decision are marketability, profit
potential, cost of quality, life-cycle cost as well as risk of not completing the project. Every
project is evaluated on the basis of these criteria. The potential of profit could be deducted from

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the provided cost benefit analysis. Risk of not completing a project is a factor which must be
considered while comparing the projects. This weighted scoring model, for the risk management
as well as project management is used for helping an organization to select a project. The cash
flow analysis is one more impact that the risk management has on the concept of project
selection. This analysis considers the payback period. Suppose an organization has invested
around $400,000 and they have cash flow prepared in a particular table. The data in the table
reads as year0: $400.000, year1: $40,000, year2: $3,600,000, year4: $350,000. Therefore the
payback period is of around 2 years. In case the payback for a different project that requires
around $400,000 investment is around a year and various factors are considered, the later project
is considered as a good selection. This is usually a simple scenario. As per Kendrick (2015),
there are many more factors which must be considered. Suppose, a project has a low risk of the
incompletion as compared to project 2, in this case the decision can change in the favor of
project 1. Risk management as well as project selection is required to be taken into
consideration. The net present value, as well as internal rate of return is utilized by organizations.
Usually the higher rate of net present value, the better the project. In case thus is used as a sole
criteria for the purpose of choosing a particular project, is not actually advisable, this is because
this method never accounts for the risks. Usually people perceive various risks with a negative
connotation. There are many positive risks in almost all the projects and an individual should
know the way to respond to them (Milosevic & Martinelli, 2016). Risk management as well as
project selection must account for various positive risks.
Research methodology
For this particular assignment, the data has been collected from various external sources
like journals, articles, books and many more. The data that has been derived from these sources

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is mentioned in details in this part of the assignment (Cain & McKeon, 2016). Risk management
is performed in order to know what has to be done and what is supposed to be done when a risk
takes place. Every small scenario is considered with equal importance and strategies are figured
out using which these risks would be mitigated (Osei-Kyei & Chan, 2015). It has been found that
scheduling of a project is not usually a matter of taking various steps and hence waiting for the
work to take place (Lock, 2017). The overall approach to their manufacturing schedule must be
organized around various systems and then processes which makes sense for their business
(Brustbauer, 2016). It has to be decided if it makes sense for the company to stay ahead of its
competitors in order to aggressively avoid the shortfalls of if they prefer the tightness of various
approaches of lean manufacturing (Marcelino-Sádaba, González-Jaen & Pérez-Ezcurdia, 2015).
The organizations track their success of various strategies as well as collaborate with their
coworkers for building a particular shared knowledge base. In some of the external sources it has
been found that the effective project scheduling can be affected by an ineffective risk
management. Some ways or factors that are a part of risk management and affect the project
scheduling are as follows
Communication: the effectiveness of the project scheduling is not considered to be
effective enough unless the crew is present in the loop and has knowledge regarding what is
important to be done (Brack, Altenburger & Schüürmann, 2015). The team must have a system
in proper place in order to convey an entire plan as well as relaying updates. Poor
communication results in extending a project schedule (Kerzner, 2018). It causes
misunderstandings among various members and this requires ample amount of time. This affects
the project scheduling. The schedule keeps consuming more amount of time (Liu, Zhao & Yan,

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2016). Hence the poor communication in the process of risk management affects the concept of
project scheduling.
Outdated systems: in case a business is growing at a healthy rate, the systems as well as
software would become obsolete; this is because the processes that are managed would be
evolving in a continuous manner (Kerzner, 2019). For the purpose of continuous and successful
project scheduling, evaluation of process as well as information system is carried out periodically
and update then as per required. Outdated systems result in creating more risks; these needs to be
solved and the systems are to be updated using numerous softwares (Heagney, 2016). This
affects the project scheduling by increasing the overall schedule that has been decided by the
team before proceeding with the task.
Unreliable vendors: in case the vendors do not come through along with these materials
they need in a particular time frame that has been promised, they could find with the people and
machinery scheduled for various processes which cannot proceed forward (Van, 2018). When an
organization needs inventory on an urgent basis, it must be made sure that the vendors have the
knowledge regarding the fact that the timing is very critical. In case they do not come
consistently, other vendors are found. It has also been found that poor risk management has
numerous impacts in the concept of project scheduling (Delmon, 2017). In some cases the
vendors creates problems in risk management, they do not fulfill their duties according to their
commitment and hence they are to be changed after the project has started. This usually results in
changing the vendors and which as a result changes the project scheduling. It requires even more
time compared to the expected time span.
Discussions

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The previous parts of literature review and research methodology discusses regarding the
fact that risk management has numerous affects on the concept of project selection. Managing
risks results in affecting various factors (Binder, 2016). Some of the factors include costs; it
results in decreasing costs because it ensures wise and good reaction to the first defined issue.
The second factor that is affected includes the quality of products or services of an organization
(Kotula, Ho and Dey 2015). When an organization has an idea that it would face issues regarding
raw materials suppose the organization plans to utilize another supplier which would help them
to provide similar quality along with not losing their image with their customers (Golini,
Kalchschmidt & Landoni, 2015). Another factor that is affected includes scope of the project,
when risks are defined an organization might result in making their scope or a goal clear so that
they would reach their goals without any extra effort and facing any risk (Hwang, Shan &
Supa’at, 2017). Schedules and plans are also included among some factors that would be affected
with the implementation of risk management in a specific project. Suppose the plan b is
continued with some new schedules for the delivery times, finance aid, suppliers and many more
issues which contribute in achieving their goals (Hillson, 2017). Risk management has the main
aim of monitoring the risk factors that pertain to cost scope and schedule to a project which
effects quality in the Triple Constraint or the triangle of project management (Muller, 2017).
Going through various findings it has been found that the project management has numerous
impacts on the entire project and resolving various issues requires some time and this as a result
affects the schedule of a project (Remington & Pollack, 2016). The schedule of the project
usually gets extended as an impact of the risk management.
Conclusion

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From this assignment it has been concluded that decision making regarding a projection
selection a crucial task, it is important to carry out risk management before that. The risk
management in the process of project selections requires considering two factors. It is based on
various points of decision making like the potential of profitability as well as its cost in life
cycle. This is because they have a very limited inflow of the funds. Selection of project is usually
considered as critical hence risk management creates huge impacts on the selection of projection.
Projection selection can be done by following various points belonging to the process of decision
making. An important part in the field of decision making that is mostly ignored is risk level.
While carrying out the process of projection selection, risk managements is a must to be
conducted. Production schedule is a plan that is carried out for staffing production and many
similar tasks. The schedule helps in translating the demands of various customers in a specific
plan which is build; this particular plan is done with the help of various planned orders in an
environment of the component scheduling. Production and manufacturing has different timelines
followed by them. Projection scheduling is divided into various parts such as procurement,
personnel and machinery. This assignment discusses regarding the concepts of projection
scheduling, production schedule. It further discusses regarding the impacts of risk management
on the project selection. The risk management can be described as the process where risks in a
specific project is managed using various strategies. This concept of risk management affects the
selection of a project; this assignment describes these impacts in a detailed manner.

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