Risk and Procurement Management Strategies in BAA Terminal 5 Project

This case study provides an in-depth analysis of risk and procurement management within the BAA Terminal 5 project. It identifies potential risks such as financial, information, supplier-related, communication, operational cost, and contract risks, along with mitigation strategies and tools. The study highlights the use of a risk management plan, including a risk register and KPIs for measuring risks like gross profit margin. It also discusses the importance of the T5 agreement in engaging suppliers and ensuring transparency. The application of Monte Carlo simulation in decision-making is explored, emphasizing its role in managing uncertainty and optimizing project outcomes. Ultimately, the report concludes that effective risk and procurement strategies are crucial for overcoming challenges and achieving project success. Desklib offers a wealth of similar resources for students.

RISK AND PROCUREMENT MANAGEMENT ASSESSMENT 1

TABLE OF CONTENTS
 INTRODUCTION
 MAIN BODY
 RISK MANAGEMENT PLAN
 INTERPRETATION
 Identification of risks and risk register for mitigating them
 Usage of Monte Carlo simulation and their usage in decision-making
 CONCLUSION
 REFERENCES

INTRODUCTION
 Risk can be understood as a future uncertainty
about veering the awaited earning or the awaited
outcomes.
 Risk creates the overall impact over the project,
due to this there might chances for human life loss.
 Procurement process define as the discipline
spanning which manage all the interrelated
activities of the business.
 Procurement risk management guard the
organisation from the anticipated risks.
 It covers the case study about the BAA terminal 5
project at Heathrow airport.

MAIN BODY
RISK MANAGEMENT PLAN
Identified risk Probability of the risk Mitigation strategies/ tools
Financial risk High Suitable designing of budget as well as
to use worksheets, budget
implementation tools
Information Medium Secure it on computer, data backups.
Multiple suppliers High Involve the partners in the risk planning,
ensure the quality of supply, diversify
suppliers.
Communication risk High Have trust and transparency in message
delivery, use digital tools as email, other
software to develop interaction.
Operational cost risk Medium Prepare strategy and research first to
reduce the cost
Contract risk Medium Enhance the compliance with clauses,
secure the contract with data
encryption.

INTERPRETATION
 It is identified from the above risk management plan that these are the
risk which may encounter during the project.
 KPI for measuring the risks are-
 Gross profit margin KPI for the financial risk, for the BBA's project, in
this project manager can proceed to use the Gross profit indicator for
measuring the finance.
 It refer as how much revenue does achieve on the sales before the
expenses.
 In this Supplement agreement define the part in which there is clause
which identifies the skills and capacity of the supplier to include in the
T5.
 T5 also supported by the other policies and documentations which are
commercial and core policies.
 This agreement also states that there should be high transparency
between the Members of the BAA and the suppliers. So that the work can
be done in a effectual manner.
 It is also important to have transparency because of the cultural aspects

Identification of risks and risk register for
mitigating them
On the basis of case study of BAA, it can be said that it is facing procurement and supply chain related problems and for solving such
problems, it has developed its own T5 agreement with the main aim of engaging suppliers and team members
Types of risks Likelihood to occur Impact of risks Mitigation actions
Traditional procurement High High By changing the way of performing functions, this risk can
be mitigated.
Financial risks High High It is important for this company to make use of just in time
and total quality management approaches by which it can
protect itself from additional inventory and warehousing
costs.
Insurance risks Medium High For mitigating this risk, this company has already
developed its own T5 agreement in which it has mentioned
all legal requirements along with insurance.
Supplier performance Medium High T5 agreement is one of the best ways of improving
performance of suppliers. This agreement can help out
suppliers in knowing their roles and responsibilities.
Along with this, manager of this company can engage
suppliers in all important decision making process in order
to make them feel valued.

Usage of Monte Carlo simulation and their
usage in decision-making
Monte Carlo basically a simulation technique to modelling the waiting times and queue length and also to determine the
complete uncertainty in projects. The planning and execution of major airport program i.e. Terminal 5 at Heathrow can
be highly complex and required lots of planning expertise, legal and environmental information, good design structure
and appreciation for serviceable features. With the help of Monte Carlo simulation the project is appropriately able to
engage their suppliers.
 It helps to generate commercial management for aviation programmes that may vary with scale. Hence, this
project also requires strategy, acumen, insight and a detailed understanding about the process in order to achieve
success. There are certain key factors that greatly prompt the airport development such as:
 Capacity and traffic demand projection
 Key considerations in terms of revenue, capital, aeronautical and non-aeronautical revenue.
 Restrictive requirements
 Enhance return for investors

CONCLUSION
From the above report it is concluded that the effective risk and procurement
strategy can help out to overcome any risk.
This report mainly covers the case study which is for about the terminal
project.
The following study has identified the risk which can be determined and
mitigate properly in order to reach to the project success.

REFERENCES
 Books and Journals
 Wu, F. and et.al 2020. Risk-Averse Portfolio Procurement Strategy Under Large-Scale
Promotion Online. IEEE Transactions on Engineering Management.
 Damayanti, E. and Nasihien, R.D., 2020. Risk Management Of EPC (Engineering
Procurement Construction)“Siberut Agregated Biomass Gasification Power Plant”
Project in Civil Engineering Design Stage. In Journal of World Conference
(JWC) (Vol. 2, No. 1).