08 Jan For this assignment, you are required to develop risk response measures for the risks identified and prioritized in the previous lessons and update the risk register from Week
Objectives:
LO1: The student will be able to define specific response measures for addressing project threats and opportunities.
LO2: The student will be able to monitor the effectiveness of implemented risk responses and identify secondary risks.
Prompt:
For this assignment, you are required to develop risk response measures for the risks identified and prioritized in the previous lessons and update the risk register from Weeks 3 and 4.
Instructions:
Please make sure to mention the corresponding risk response strategy for each measure. The project for this assignment is listed below.
Project Title: Building and opening a new Toy4All store
Project Description: Toy4All toy store chain wants to open a new store in a small town. For this project, the Director of the Projects Department assigned Mr. Play as the project manager, an employee with 5 years of service in the company. He will have to plan and coordinate all activities related to the new store's opening, which, unlike other existing stores, will be equipped with a children's playground. He will need to consider the activities: building the store, setting up the interior and the exterior, supplying the store with toys, defining the personnel structure, and preparing the store for the opening. Also, the details regarding advertising must not be forgotten. The project duration is 1 year and will end with an opening event.
Due to the professionalism proven when building previous stores, the company decided to work with the same building contractor (for the construction phase). By now, all licenses and permits required to start the work have been obtained.
The role of Mr. Play will not be easy. He was assigned due to his idea to include a playground in the store, which should lead to increased sales figures once applied. While the entire management has supported the idea, several heads of departments in the organization were not very pleased by his assignment, considering him too young and inexperienced for such a project. The most serious concerns are related to the project's impact on the already planned activities that will support sales in the holiday season.
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The Qualitative and Quantitative Risk Analysis
A major initiative for the famous toy store company is the enormous project of building and establishing a new Toy4All store. The enterprise includes a shop area and a children's playground. This unique addition boosts the store's attractiveness and supports the company's goal of providing a complete and engaging customer experience. The decision to integrate a playground anticipates higher sales by meeting the demands of the target demographic—families with small children.
As Project Manager, Mr. Play leads this important project. After five years of loyal work, Mr. Play brings expertise and excitement to the organization. He plans and coordinates all aspects of the new store's development as the project's main organizer. Toy4All, a well-known toy store chain, entrusted Mr. Play with this task owing to his experience building prior locations. This venture's success depends on the building phase, interior and outside setup, toy supply, staff structure, and a detailed advertising campaign. After one year, the project had a grand opening to celebrate months of preparation and execution. Along with Mr. Play, important sponsors provide vital assistance and resources to ensure project success. High stakes and the project's influence on the company's Christmas season sales increase complexity, so the project team must overcome hurdles and seize chances.
Project Risk Register
The comprehensive risk register for the project "Building and Opening a New Toy4All Store" helps predict, analyze, and manage any obstacles to project success. Risk IDs are assigned to each risk to provide a clear reference throughout the project's lifespan. The Risk Statement concisely describes each risk, helping project stakeholders identify possible dangers and possibilities (Bahamid et al., 2022).
Risk ID R1 acknowledges construction uncertainties by mentioning Construction Delays. The related Risk Statement shows the possible effect on the project timetable and prepares for further study. Probability and Impact evaluations are critical, providing qualitative estimates of probability and severity. Priority, computed from Probability and Impact, ranks hazards. R1, with moderate likelihood and significant effect, has moderate priority and requires a concentrated reaction approach (Bahamid et al., 2022). Mr. Play, the Project Manager, is the Risk Owner and must monitor construction progress and provide resources as needed.
As R2 discovers Supply Chain Disruptions, the register realizes the importance of an unbroken supply chain to retail store profitability. The Risk Statement describes disruptive problems and ramifications, highlighting the necessity for proactive steps. Due to its high likelihood and modest effect, this danger is a high priority. Diversifying suppliers, managing buffer stock, and finding alternate supply sources are the Risk Owner's duties as Procurement Manager. This systematic strategy identifies hazards and assigns them to team members who can actively mitigate or manage them.
Qualitative Risk Analysis
In a qualitative risk analysis of projects, each risk needs to be assessed for its likelihood and effect on a standardized scale. A three-level scale with low, moderate, and high degrees is used. This allows for an intricate assessment of the risks' probability and consequences. Probability assesses a dangerous possibility, while impact measures its severity (Choudhary et al., 2022).
The qualitative analysis contains a moderate likelihood of Construction Delays (R1) because of uncertainties in the construction project. This considers delays but not feasible ones. The implication for this is significant due to project timing. Multiplication of Probability by Impact gives a low priority. Although it is improbable, the project team understands that the potential effect requires stringent monitoring and aggressive control.
There is a large chance that Supply Chain Disruptions (R2) may occur, as indicated by Qualitative Analysis. Disruptions are likely due to the complexity of modern supply chains and external factors like global events. There can be some impact on the project itself, though it is mild. High Priority for R2 shows that this matter necessitates immediate attention as well as extensive mitigation approaches. Understanding how likelihood and effect affect priority helps the project team allocate resources and efforts.
A careful qualitative analysis determines which risks are most important relatively. When allocating resources, this technique prioritizes high probability and high-impact risks. The priority levels help the project team draw up response methods based on each risk's attributes. Consequently, qualitative analysis is essential in creating a sound project risk management framework that corresponds to possible problems faced by the team.
Risk Priority Calculation
R1 (Construction Delays): Probability (Moderate) x Impact (High) = Moderate Priority
R2 (Supply Chain Disruptions): Probability (High) x Impact (Moderate) = High Priority
R3 (Personnel Recruitment Challenges): Probability (Moderate) x Impact (High) = Moderate Priority
R4 (Inadequate Advertising): Probability (Moderate) x Impact (Moderate) = Moderate Priority
R5 (Playground Approval Issues): Probability (Low) x Impact (High) = Low Priority
R6 (Negative Public Reception to Playground): Probability (Low) x Impact (Moderate) = Low Priority
R7 (Unexpected Regulatory Changes): Probability (Low) x Impact (High) = Low Priority
R8 (Holiday Season Sales Impact): Probability (High) x Impact (High) = High Priority
R9 (Store Opening Event Logistics): Probability (Moderate) x Impact (Moderate) = Moderate Priority
R10 (Technology Failures): Probability (Low) x Impact (Moderate) = Low Priority
These calculations align qualitative estimates and quantify risk priorities. For successful risk management, priority levels help the project team allocate resources and efforts. High-priority risks need proactive mitigation, whereas lower-priority risks may be addressed reactively. Risk management is targeted and efficient throughout the project's lifespan using this strategy.
Quantitative Risk Analysis
Quantitative risk analysis employs Expected Monetary Value (EMV) to evaluate financial risk. EMV is computed by multiplying the probability of a risk by its monetary impact (Ali et al., 2021). Therefore, we will develop an EMV scale that rates the likelihood and impact of risks.
EMV Scale:
Low: $10,000 or less
Moderate: $10,001 to $50,000
High: $50,001 or more
EMV Calculation:
R1 (Construction Delays): Probability (Moderate) x Impact (High) = EMV (Moderate)
EMV = $30,000 (Moderate probability) x $100,000 (High impact)
R2 (Supply Chain Disruptions): Probability (High) x Impact (Moderate) = EMV (High)
EMV = $50,000 (High probability) x $40,000 (Moderate impact)
R3 (Personnel Recruitment Challenges): Probability (Moderate) x Impact (High) = EMV (Moderate)
EMV = $30,000 (Moderate probability) x $80,000 (High impact)
R4 (Inadequate Advertising): Probability (Moderate) x Impact (Moderate) = EMV (Moderate)
EMV = $30,000 (Moderate probability) x $30,000 (Moderate impact)
R5 (Playground Approval Issues): Probability (Low) x Impact (High) = EMV (Low)
EMV = $10,000 (Low probability) x $100,000 (High impact)
R6 (Negative Public Reception to Playground): Probability (Low) x Impact (Moderate) = EMV (Low)
EMV = $10,000 (Low probability) x $40,000 (Moderate impact)
R7 (Unexpected Regulatory Changes): Probability (Low) x Impact (High) = EMV (Low)
EMV = $10,000 (Low probability) x $100,000 (High impact)
R8 (Holiday Season Sales Impact): Probability (High) x Impact (High) = EMV (High)
EMV = $50,000 (High probability) x $100,000 (High impact)
R9 (Store Opening Event Logistics): Probability (Moderate) x Impact (Moderate) = EMV (Moderate)
EMV = $30,000 (Moderate probability) x $30,000 (Moderate impact)
R10 (Technology Failures): Probability (Low) x Impact (Moderate) = EMV (Low)
EMV = $10,000 (Low probability) x $40,000 (Moderate impact)
Each risk's financial impact is estimated by EMV. Risk response and mitigation resources increase with EMV risk. Effective project risk management is enabled by the EMV scale's financial effect ranking.
Risk Prioritization
Successful risk management requires risk prioritization to concentrate resources on the biggest threats and opportunities (Hillson & Simon, 2020). Priorities were calculated using qualitative research-based risk probability and impact. Ranking these hazards by importance will establish a hierarchy of possible concerns. Priority risks demand immediate attention and aggressive mitigation. Priority is highest for risks that have a high likelihood and effect. Supply Chain Disruptions (R2) and Holiday Season Sales Impact (R8) should top the project team's list of priorities. Therefore, mitigating these risks is essential for project success because they are more likely to occur, carry serious consequences if they do occur, and are a combination of both these factors. By addressing primarily the top-priority risks, issues can be solved, resources assigned effectively, and targeted response measures adopted in order to enhance resilience, hence ensuring project success. The project team should prioritize such risks as Supply Chain Disruptions (R2) and Holiday Season Sales Impact (R8). They are likely to happen; besides this, their consequences are great, which means that it is necessary to mitigate them so that projects may go successfully.
Response Measures
Strategic response strategies are needed to mitigate high-priority risks identified in risk prioritization and assure project success. Risk ID R2 has a high probability but a moderate impact on supply chain disruptions. It is recommended that an integrated action plan be prepared. This mitigation strategy, coupled with a contingency plan, keeps away from any interruption in supply chains. Proactive attention will reduce its impact on toy availabilities on retail shelves prior to Christmas, thus avoiding delays.
The Sales Manager takes several steps to respond as Risk Owner for ID R8, Holiday Season Sales Impact, which has a high probability and impact. That means marketing in this area must push sales ahead of the holidays. Also, these promotions should be coordinated with Marketing and events so that they fit into the market plan. Plus, the store needs a strong communication strategy to manage holiday customer expectations and maintain its image. These strategies are the ones currently addressing immediate holiday sales concerns and matching both company image and customer interactions. Working on every single one of these risks can help identify appropriate measures to deal with the issue at hand and assign unambiguous ownership for all team members involved with project management, hence making it proactive and resilient.
Conclusion
In conclusion, risk analysis conducted on "Building and Opening a New Toy4All Store" identified potential challenges as well as opportunities available. Qualitative and quantitative assessments, prioritization of risks, and planned responses have provided an all-rounded picture of the project. Managing supply chain outages and holiday sales effects requires proactive risk management. Projects need constant risk monitoring and management. Risk management is needed for project success. Pushing beyond individual risks and using pre-existing options may help team members move through uncertainty quickly, resulting in on-time completion under budget and exceeding stakeholder expectations. Expecting setbacks creates a robust project environment where risks are managed proactively, resulting in project success.
References
Ali, A. M., Al-Ablani, B. A., Mekky, M., Al-Ghimlas, N. A., & Alam, M. M. (2021). Risk Assessment of Bridge Construction Project through cost management phases. Journal of Industrial Engineering International, 17(1), 42–51. https://doi.org/10.30495/jiei.2021.1922802.1098
Bahamid, R. A., Doh, S. I., Khoury, M. A., Kassem, M. A., & Al-Sharafi, M. A. (2022). The Current Risk Management Practices and Knowledge in the Construction Industry. Buildings, 12(7), 1016. mdpi. https://doi.org/10.3390/buildings12071016
Choudhary, N. A., Singh, S., Schoenherr, T., & Ramkumar, M. (2022). Risk assessment in supply chains: a state-of-the-art review of methodologies and their applications. Annals of Operations Research. https://doi.org/10.1007/s10479-022-04700-9
Hillson, D., & Simon, P. (2020). Practical Project Risk Management, Third Edition: The ATOM Methodology. In Google Books. Berrett-Koehler Publishers. https://books.google.com/books?hl=en&lr=&id=4XznDwAAQBAJ&oi=fnd&pg=PP1&dq=Risk+prioritization+is+a+crucial+step+in+successful+risk+management
