Project Report: Risk and Value Management for Prostay Ltd. Expansion

This report, prepared for Prostay Ltd., a UK-based nail polish manufacturer, examines the risks and value management associated with a proposed factory extension and expansion. As project manager, the report begins with a PESTLE analysis to assess political, economic, sociological, technological, legal, and environmental factors influencing the project. It then identifies and discusses potential technical and business risks, including tank leakage, stakeholder proposals, and production challenges. A quantitative risk analysis, utilizing an appropriate risk register and Expected Monetary Value (EMV) calculations, is conducted to evaluate these risks, considering their probability and impact. The report further addresses hazard identification, including environmental, technological, and operational hazards, and proposes a comprehensive disaster recovery plan with contingency plans and response strategies to mitigate potential disruptions and financial losses. The analysis aims to support informed decision-making regarding the project's feasibility and risk mitigation strategies.

Risk and Value Management
Name of the Student:
Register Number:

Table of Contents
Task 1............................................................................................................................................................................... 1
1.1 Need Verification for the proposed extension and expansion at your current site..................................................1
Overview................................................................................................................................................................... 1
PESTLE Analysis...................................................................................................................................................... 1
Task 2............................................................................................................................................................................... 3
2.1 Identification and brief discussion of Risks..........................................................................................................3
2.2 Quantitative Risk Analysis using an appropriate Risk Register............................................................................5
Task 3............................................................................................................................................................................... 7
3.1 Hazard identification and Profiling 10%.............................................................................................................7
3.2 Contingency Plans & Response Strategy..............................................................................................................8
References...................................................................................................................................................................... 10

Task 1
1.1 Need Verification for the proposed extension and expansion at your current site.
Overview
In this report, a manufacturing industry named Prostay Ltd. is considered, which
manufactures Nail polish. I am representing this report as a project manager of this company.
This product is distributed throughout the UK and Europe. As the factory is located near three
housing estates and a small village, inside the Industrial Park of Triccky town in the UK. This
place has a total population of nearly three thousand people. The River Antieuro passes directly
alongside your factory site boundary. The river contains various kinds of fish and supports a
thriving local small-scale fishing industry.
This scenario shows that it is important for a PESTLE analysis to be carried out for
verifying the business case to look into the proposals provided by different shareholders, which
insists on building another factory in Eastern Europe for meeting the present demand. Because,
the PESTLE analytical tool helps to consider the external factors, which in turn helps to get the
idea of their impacts. Additionally, the current environment of the company can be verified with
this tool (Hopkin, 2018).
PESTLE Analysis
• P – Political
1) There are high possibilities that a large number of people might object the
extension of this factory facilities and expansion of its production activities, due
to the recent explosion incidents which have a serious impact on the local
population (Britton, 2019).
2) The Environmental and consumer-protection legislation might obstruct any such
expansion.
3) High political pressure from the fish industry, and the residential estates.
• E - Economic
1) There might be globalization, as there has been increased growth in product,
which requires greater movement goods throughout the other countries.
2) The economic environment might change as the current factor is failing to meet
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the production demands of the customers.
3) This can impact the economic growth, inflation and interest rates of the
stakeholders.
4) The fishing industry’s income can be impacted.
• S - Sociological
1) The recent explosion in the factory has caused serious health problems (i.e., due
to the spread of toxic fumes to the fishing village and its nearby residential areas,
faced serious health consequences like respiratory diseases.).
2) To add to this, the company is also failing to meet the increased product demands
in other European Union countries. Thus, some shareholders have proposed
factory extension in other location to meet the increasing demands, to increase its
market share.
3) Food safety and health problems.
• T - Technological
1) A technology to support fuel tank leakage is required, as the fuel leakage has
caused problems to the company.
2) The factory is near to the road and railway networks, which is utilized for
transporting the raw materials and the finished products.
3) Upgrading of the existing equipment is required (Jordão and Sousa, 2010).
• L - Legal
1) At present, the company is facing legal actions from various individuals and
interest groups.
2) This extension will need new factory building works and the installation of a new
state of the art factory equipment as well as the upgrading of existing equipment.
As the equipment is planned to be imported from other EU countries, the
European legislation will be applicable.
3) Lack of regulations, monitoring, and enforcement on quality standards of the fuel
tank.
• E - Environmental
1) The uncertain heavy rains have caused the river to overflow its banks and has
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flooded the factory site, resulting in a large leak from the fuel storage tanks into
the river.
2) Possibility of contaminating the river water.
3) The fishes in the river will be affected, as a result, the small fishing industry will
be impacted.
4) The stakeholders are at risk to invest in the production, due to the legal risks it is
facing.
Task 2
This task assumes that the company’s board of directors have approved the proposed
extension and expansion project. It is now required to identify the possible risks which could
affect the project and respectively a quantitative assessment of risks must be prepared. As a
project manager, the first step to avoid the risk is by controlling the known and predictable risks,
whenever required.
2.1 Identification and a brief discussion of Risks
The following risks are identified:
1) Technical risks
A technology to support fuel tank leakage is required, as the fuel leakage has
caused problems to the company. This has put the company in a legal mess, which
is why it is finding difficulty in the production of the product.
2) Business risks
The business is vulnerable to threat as the stakeholders are likely providing
different proposals for the expansion and extension, which needs time to set all the new
infrastructure.
The important risk driver identified is Performance risk, which refers to the degree of
uncertainty that the product will meet its requirements and be fit for its intended use.
This risk driver’s impact on the risk component can be divided as the following impact
levels:
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1) Catastrophic
2) Critical
3) Marginal
4) Negligible
This risk driver is assessed based on:
1) Impossible
2) Improbable
3) Probable
4) Frequent
Risk Summary Risk Category Probability Impact (1-4) Risk
Mitigation,
Monitoring,
and
Management
Plan
(RMMM)
There are
chances of
technical risks
due to tank
leakage.
It will affect the
environmental
conditions in
the
surrounding,
resulting in
legal issues,
social issues
Technical risks Probable Catastrophic
impact (1)
The
environmental
conditions need
to be monitored.
Necessary
management
plan must be
implemented to
decline the risk.
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and so on.
The business
is vulnerable
to threat as
the
stakeholders
are likely
providing
different
proposals for
the expansion
and
extension,
which needs
time to set all
the new
infrastructure
.
It will affect
production.
Business risks Probable Critical impact (2) An effective
production
management
plan must be
designed with
risk
management, to
meet the
product
demands.
2.2 Quantitative Risk Analysis using an appropriate Risk Register
The Quantitative Risk Analysis is a method of quantifying your highest priority risks in
order to determine the probability of achieving the overall cost and schedule objectives. For
instance, instead of ranking the probability of a risk as a three on a scale of one to five
qualitatively, the probability is estimated to be 50%. Instead of ranking the impact as a four, we
would say that the impact is three weeks or $40,000 (Hall, 2019).
Risk Registers are used to update the extra details of the risks (Planningforhazards.com,
2019).
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The Expected Monetary Value (EMV) tool is used to analyze the quantitative risk. It is a
method utilized for establishing the contingency reserves for a project’s budget and schedule.
The risks comprise of both threats as well as opportunities. The threats contain adverse
impacts on the cost, whereas the opportunities refer to the benefits which decrease the cost.
Therefore, the Expected Monetary Value (EMV) = Probability x Impact.
Risk Summary Risk
Categor
y
Probability Impact (1-4) Risk
Mitigation,
Monitoring,
and
Management
Plan
(RMMM)
1. There are chances
of technical risks
due to tank leakage.
2. Affect the
environmental
conditions in the
surrounding,
resulting in legal
issues and more.
3. Lacking
segregation of duty
Technical
risks
Probable
(20%)
Catastrophic
impact (1)
($60,000)
Environmental
conditions need
to be
monitored.
The necessary
management
plan must be
implemented to
decline the risk.
4. The business is
vulnerable to threat
as the stakeholders
are likely providing
different proposals
for the expansion
Business
risks
Probable
(40%)
Critical impact (2)
($80,000)
An effective
production
management
plan must be
designed with
risk
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and extension,
which needs time
to set the entire
new infrastructure.
5. Affects production.
6. Hardware failure
management, to
meet the
product
demands.
This evaluation requires impact cost and probability (in percentage). Thus, the
Opportunity is subtracted from EMV. Hence, the Total EVM shows the exposure of project risk
and the amount of Contingency Reserve.
After the Quantitative Risk Analysis is calculated, it is necessary to update the Risk
Register with the extra risk details.
Risk Register with 6 Risks
Ris
k
ID
Risk
descripti
on
Likeliho
od of the
risk
Impact
if the
risk
occurs
Severit
y
Owner Mitigatin
g action
Contingent
action
Progress
on actions
Statu
s
1 Project’s
purpose
and
requireme
nt is not
well-
defined.
Medium High High Project
sponso
r
Effective
define the
purpose of
the
project.
The problem
must be
escalated to
the project
board and
assess the
risk.
Rewrite
the
deliverable
s clearly
and submit
it to the
board.
open
2 Incomplet
e project
design
and
deliverabl
e
definition.
Low High High Project
sponso
r
Define the
project
scope.
Document
assumptions
made and
associated
risks. Request
high risk
items that are
ill-defined are
removed
Scheduled
design
workshops
open
7

from scope.
3 Unclear
project
schedule
Low Mediu
m
Mediu
m
Project
Manag
er
Discuss
the
schedule
with the
project
team to
have a
clear plan.
share the plan
at weekly
project
progress
meetings
Scheduled
workshops
open
4 No
control
over the
priorities
of the
staff.
Medium Mediu
m
Mediu
m
Project
Manag
er
Brief the
team
managers
on the
importanc
e of the
project.
The problem
must be
escalated to
the project
sponsor.
Bring in
resources for
backup.
open
5 Delays
from
contractor
s.
Medium High High Project
Manag
er
Enforce
penalties
for
delayed
contracts.
The problem
must be
escalated to
the project
sponsor and
the contract
manager.
Arrange
meeting
for
briefing.
open
6 Errors in
estimating
and
schedulin
g
Medium High High Project
Manag
er
Use
different
method
for
estimating
cost, then
track the
costs and
forecast
cost.
Build
10%
The problem
must be
escalated to
the project
sponsor and
the project
board. Then,
change the
budget/sched
ule on a
request. Pull
down the
contingency.
Project
Board
agrees
contingenc
y.
open
8

contingen
cy on cost
and
schedulin
g.
Task 3
3.1 Hazard identification and Profiling 10%
Disaster Recovery Plan
A disaster recovery plan against a few possible hazards to the company’s operations is
prepared. The plan will comprise of environmental hazards technological hazards. The format of
your report should include a profile of the hazards as well as the contingency plan and the
disaster response for each hazard. A disaster recovery plan is a structured approach with
instruction for responding to unplanned incidents. It is consists of the precautions to minimize
the effects of a disaster so the organization can continue to operate or quickly resume the
mission-critical functions. It is used to involve the analysis of the business process and continuity
needs. It performs the impacts analysis and risk analysis and also it establishes the recovery time
objective and recovery point objective (American Planning Association, 2019).
Environmental Hazards
The following are the environmental hazards:
1) The uncertain heavy rains have caused the river to overflow its banks, and have
flooded the factory site, resulting in a large leak from the fuel storage tanks into the
river.
2) Possibility of contaminating the river water, where the fishes in the river will be
affected, as results the small fishing industry will have an impact (Bessis, n.d.).
Technological Hazards
The following are the technological hazards:
1) A technology to support fuel tank leakage is required, as the fuel leakage has caused
problems to the company.
2) The company lacks upgrading of the existing equipment.
Operational Hazards
The following are the operational hazards:
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1) A variety of disasters can impact the ability of the company to operate effectively.
Financial Hazards
The following are the financial hazards:
1) Most of the disasters will cause the same amount of financial losses. It is more likely
to lose more money on the company.
Disaster Recovery Plan for the Identified Hazards
Following steps must be taken care in a disaster recovery plan:
For Environmental Hazards:
1) Identify the factors that influence the business recovery from natural disasters.
2) Ensure community actions to facilitate business recovery.
3) Ensure community resilience.
For technical Hazards:
1) Monitor and upgrade the existing equipment in the company.
For Operational Hazards:
1) Enforce systematic monitoring and surveillance.
For Financial Hazards:
1) Save and invest amount to recover the financial losses.
3.2 Contingency Plans & Response Strategy
The contingency planning is mostly utilized for the risks which have a low probability,
yet could cause high impacts, for instance, disaster.
Contingency plans are utilized by the projects managers who are smart enough to be
aware of the risks which could sideline any project or business. Without a contingency plan, the
rate of having a successful project is low. The use of contingency plans is widespread and
applies to any business venture. Governments, for example, use them to prepare for disaster
recovery or economic disruption. If you’re not working on a contingency plan when you’re
planning any enterprise, then you’re opening yourself up to unnecessary risk
(SearchDisasterRecovery, 2019).
There is a difference between a risk management plan and contingency planning. The
Risk management refers to identifying, assessing, avoiding, mitigating, transferring, sharing and
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