Evaluating Systems, Risk, and Structure in Organizational Management

This report explores the application and relevance of systems thinking tools in organizational management, focusing on general systems management, risk management, and portfolio alignment. It emphasizes the importance of identifying, evaluating, and mitigating risks using tools like brainstorming and dynamic thinking. The report also discusses the significance of organizational structure, culture, and maturity in achieving business value and aligning projects with overall business strategy. Furthermore, it examines the BP Deepwater Horizon Oil Spill as a case study, highlighting the consequences of inadequate risk evaluation, poor decision-making, and the absence of a robust risk management system, ultimately advocating for the integration of system thinking in project management to prevent such disasters.

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Table of Contents
Introduction:...............................................................................................................................................1
General Systems Management:.................................................................................................................2
Risk management and engineering risk:....................................................................................................2
Identification of Risks..............................................................................................................................2
Evaluation of risks....................................................................................................................................2
Risk mitigation.........................................................................................................................................3
Organizational structure, forms and culture:.............................................................................................3
Portfolio alignment:....................................................................................................................................3
Business value:............................................................................................................................................3
Portfolio management process cycle:........................................................................................................4
Organizational Maturity:............................................................................................................................4
Reasons of the incident of BP Deepwater Horizon Oil Spill and Offshore Drilling:...................................5
Conclusion:..................................................................................................................................................6
References:.................................................................................................................................................6
Introduction:
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Systems thinking is a problem-solving tools and techniques that is based on system design and
analysis which helps to find ideal solutions to complex issues and assists to avoid unintentional
consequences (Sherrer, 2010). There are several tools that helps to analyze and provide various
information and understanding when applied in project of any organization. These tools include:
Brain storming tool, dynamic thinking tools, computer-based tools and structural thinking tools.
This paper includes application and relevance of several tools in the management of the
organization by using various ideas and theories like general systems management, portfolio
alignment, risk management system etc.
General Systems Management:
It is a vital concept that helps to develop organization and manage projects on the basis of
several function that are involved in an organization. It also reflects positive outcomes from any
project that is managed with the help of system thinking tools. There are several subsystems of
the general systems management that includes: matrix of the subsystem, goals, project
orientation, transformation, permanence (Kerzner, 2013).
Risk management and engineering risk:
It is very crucial to manage risks of ever project managing risks basically consists of two
important factors that involves risk assessment and strategy of risk mitigation. Risk management
and risk engineering are two important aspects that can regulate function issues and errors within
the organization. According to AS/NZS 15288 Systems engineering – Systems life cycle
processes these two aspects can reduce possible risks and functional issues that occurs during the
project within an organization. Hence the two methods i.e. system development and system
engineering incorporate various security aspects in order to engineer risks and risk management.
Identification of Risks
It is a process in which a checklist is used in order to find risk factors and the probability of
occurrence of these risk factors that has negative impact on the project. Many organizations
develop a checklist of the risks from their past experiences that has damaged their project. It
helps project mangers to identify the risks and to create plans to projects in a way that these risks
can be avoided (Kerzner, 2013). The experts in the organization, past experiences of team
member of project and experience of that project in the company are the valuable resources that
helps to identify potential risks of the articular project. Risks can also be identified on the basis
of the category that includes: technical, schedule, weather, political, financial, client etc.
Evaluation of risks
After the process of identifying risks, these risks are evaluated by project managers or project
team in terms of its probability of occurrence and possible loss it might cause. The critical risks
that have high impact and needs mitigation can be narrowed down on the basis of its high
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negative impact on the project. These critical risks need high attention from project management
team while preparing risk management plan or risk mitigation plan.
Risk mitigation
After the process of identification and evaluation of risk, risk mitigation is the next step of risk
management plan. In this step risk mitigation plan is developed by the project team which is a
plan to avoid or decrease the negative consequences of the unpredicted event. Risks can be
mitigated by: risk avoidance; sharing risk; reduction of risks and risk transfer. These techniques
are an effective tool to reduce specific risks and its profile of the project. This mitigation plan of
risk includes several approach of risk mitigations for each recognized risk actions and events that
the team will take in order to avoid or eliminate it (Peters, 2014).
Organizational structure, forms and culture:
It is vital for any management system to maintain and regulate appropriate structure and culture
in an organization to gain success and revenues. There is a systematic hierarchy in the
organization in which there is a top-level management who generally makes decisions and pass it
to the subordinates via managers. The structure of the organization can have impact on many
factors like purpose, employee performance, culture, task complexity, size and external
environment. The type and quality of the services and product of the organization helps
management system to choose appropriate structure of the organization. The operational function
of the company also determines its culture, norms and structure (Kerzner, 2013).
Portfolio alignment:
Project alignment associated with the business strategy of organization is the most important task
of project portfolio management. It is important to align all the on-going projects of organization
with the overall strategy of business. Alignment of project leads to have positive influence on the
performance of project portfolio management (Systems Engineering Guide, 2010). The two
independent mechanisms portfolio steering and portfolio establishment impacts project
alignment. It is one of the most popular and rapidly increasing management practice which is
mostly followed by modern business organization. Most of the organization follows traditional
notion and don’t follow this process. therefor there is an increasing significance of
implementation of strategic portfolio alignment in project management. Portfolio alignment uses
technique called ‘Road mapping’ to align planned business plans to operations in an
organization.
Business value:
Business valuation is often done to measure the value of the owner’s interest or business in an
organization. Therefor e a business evaluation can be defines as the process that examines
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several economic factors using predetermined formulas of a business. It is generally done by the
third-party accountants by using various methods to determine the value of any business. Each of
the process defines value in monetary terms.
Projects of the company are most important thing of the viable organization, whereas project
managers are the essential for the success of business project and company. Therefore, project
manager should learn to order that the value of business is properly understood and defined.
When the project managers are involved in executing any projects then, they must follow these
steps in order to provide better business value: to understand vision of project; to be clear about
its value; convert the business value and vision to the team of project; to effectively deliver value
of business, foster team environment and lastly measure the value after the completion of project
(Kerzner, 2013).
When project managers focus on delivering value while delivery projects then their discipline
becomes more valuable to the organization, these companies becomes more vibrant as they are
providing enhanced value to their consumers and will continue to believe that the project
management is a most important factor of growing bottom line of the organization. When they
focus on customer, the most important part of the project management is to deliver business
value.
Portfolio management process cycle:
Project portfolio management process is the continuous process of managing and selection best
set of initiatives that are project oriented that provides maximum return on investment or
business value. It is a decision-making process that is dynamic and allows management to gain
consensus on the finest utilization of resources to concentrate n projects that are strategically
aligned and achievable with their objectives and goals.
Project portfolio management cycle involves four basic step that involves: inventory; analyze;
align and manage. Inventory phase involves identification of strategic objective, determining all
organizational and projects resources, data, budgets, priorities and project attributes; categorizing
projects, determining gating process and lastly mapping business projects to strategic goals
(Guide to the Systems Engineering Body of Knowledge (SEBoK), 2017). Analyze stage
involves: establishing metrics, summarizing project cost, schedule, budget, data and resources.
Similarly align phase includes eliminating redundancies, prioritizing, risk mitigation, prioritize,
alternative model project portfolios and aligning projects with strategic goals and resources.
Lastly it involves managing phase which incudes cancel, delay and reschedule of projects, cancel
projects, revise project budgeting schedules, initiating new projects and launch portfolio changes
and portfolio process.
Organizational Maturity:
Every organization must be concerned about understanding the present level of maturity.
Without enough maturity, functions, processes, decisions cannot be performed vigorously.
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Organizational maturity is an evaluation of capability and readiness of an organization which is
expressed through its processes, technologies, people and constant measurement practices in the
place (Kerzner, 2013).
Reasons of the incident of BP Deepwater Horizon
Oil Spill and Offshore Drilling:
The main reason behind the disaster of BP Deepwater Horizon Oil Spill and Offshore Drilling
was the inadequacy in risk evaluation process and poor decision taken related to the well design
which as only taken at the last phase. Another reason was the cement slurry that was designed in
the absence of supervisors or engineers to close the bottom of the well. The evaluation of seal
was not done properly as it was evaluated by personnel without proper trainings and experience.
There was flaw process of securing the well i.e. drilling mud from wellbore was removed
unnecessarily which could have prevented the formed hydrocarbons to enter inside the well. So,
if the mud was present inside it the blowout could have been prevented (Guide to the Systems
Engineering Body of Knowledge (SEBoK), 2017).
The initial warnings about the blowout was ignored and there was a lack of effective response
after the blowout began. So, the lack of poor management system regulatory and technical
system resulted in such disaster. If there was a proper risk management system that involves risk
identification, analysis and risk mitigation, occurrence of this could have been prevented. That is
why it is very vital to create appropriate risk management plan to successfully execute any
business project (Fahrenkrog, Haeck, Abrams, & Whelbourn, 2003). There should be continuous
risk evaluation of any process that is undertaken in a project. There should be well trained
workers and effective and efficient management system to look over the project.
Projects can only be properly regulated if there is a proper evaluation of project on regular
interval. For the successful project systematic procedures and processes should be followed
properly. There should be proper and coordinated communication among the people who are
associated with the project.
Another reason for the incident was that BP did not considered system thinking. There was high
engineering risk which created this dreadful situation. the inappropriate designed cement slurry
and removal of mud from well shows that there was an engineering risk which was not evaluated
( National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, 2011).
Engineering risk assessment is very critical in the project as even a small flaw in the design
could affect the whole project leading to failure of project or occurrence of risk events.
In this incident it was found that there was inadequate engineering risk assessment and
evaluation of risks by experts or supervisors. The Company did not use any system thinking
approach and tools and techniques of it during this project. They did not even consider to create
risk management plan for risk mitigation and to identify possible risks that could hamper the
project a din this case caused huge disaster. Therefore, the system thinking can provide support
to determine the relationship within the several components ( National Commission on the BP
Deepwater Horizon Oil Spill and Offshore Drilling, 2011).
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It is significant to apply system thinking to undertake any project of an organization to give full
attention to the feedback obtained and make right decision by analyzing the interrelationship
between several components.
Therefore, on the basis of above argument, it is evident that was lack of proper management
system, ineffective regulatory and technical system that led to this huge industrial disaster. It is
responsibility of project managers to plan project after evaluating, analyzing every possible risk
and after implementation of plan there should be effective strategies to successfully execute it.
Engineers should make sure that there is no defect in the design. Therefore, it can be said that
system support helps to make right plan and decision for the project. The tools of system
thinking which could have helped BP is Behavior Over Time Diagrams. It could have helped it
by identifying the relation between the several variables over aa period of time. Similarly,
Double Q Diagram of brainstorming tools would have helped them by providing both sides of
the problems in a visible and balanced manner. This also provides qualitative and quantitative
information which helps by making easier to look at whole system and the impact of one system
into another. Hence utilization of these system could have prevented the disaster.
Conclusion:
From the above discussion it is evident that there are several systems thinking tools that can be
applied in a project to analyze relation between several components of the project of the
organization. As the main aim of any business organization to achieve success it is important for
the team member to analyze, evaluate various aspects of the project and to make appropriate
strategies to successfully execute it by using several theories discussed above. It is also crucial of
every organization to have effective and efficient management system, regulatory system,
technical system that works in a way to regulate risks event and successfully execute projects. If
these systems are not effective then it can lead to occurrence of disasters as we can see in case of
BP Deepwater Horizon Oil Spill and offshore drilling case. Hence it is important for any project
to have proper risk management system, portfolio alignment, project management system etc.
which helps organization to achieve its goals and objectives.
References:
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