The strategic objectives of organizations are accomplished through portfolios. Risks impact the success of the portfolio and the ability to achieve objectives. Risk balance of project portfolios can be remarkably effective in aligning portfolios with strategic objectives. Risk balance of project portfolios is crucial in improving organizational learning and preventing risks of one project from occurring in another project ( Ghasemi, Sari, Yousefi, Falsafi & Tamošaitienė, 2018) . Risk management at the portfolio level requires exercising management judgment and a balanced approach. This assignment is a discussion of the risk balance of project portfolios by considering a current project, TEXRail that has appeared in the news media. The assignment also contains an assessment of the senior management's developing organizational capabilities.
Risk Balance or Policy that Senior Management Plays for a Risky Project
Transformational projects require vision to oversee the future challenges of a project and having the confidence to develop a plan to eliminate the challenges as well as the courage to move forward despite the challenges. Senior management in a risky project utilizes a rich toolkit with proven techniques to identify, analyze, and monitor project risk. The toolkit operates on the principles of managing financial risks and is more efficient in the management of stakeholder expectations, setting contingency plans and budgets, and developing early warning systems.
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The senior management often relies on traditional project control methods to mitigate risks as well as risk transference and contingency planning to instill the confidence, vision, and courage to deliver. Risky projects require significant risk-taking. The senior management is liable for balancing significant risks whether social, legal, or financial prospecting for significant value generation across multiple stakeholders. The projects have a wide range of challenges such as having a considerable impact outside and inside the organization, are highly visible, and considerably threatens the ability of a team to deliver (Turner, 2017). The senior management uses risk toolkit in the identification of the likely challenges and how to address them. The leaders fight through project silos, conflicting agendas, time pressures, unrealistic stakeholder expectations, and public skepticism.
The senior management draws some leadership behaviors for survival beyond the risk toolkit. The managers develop abilities to navigate the power network externally and internally as well as establish integrated thinking in the project’s culture. In addition, the managers develop the ability to negotiate stakeholder’s personal agendas and project goals into alignment.
A risk-balanced portfolio is developed after assessing the riskiness of every candidate project. The senior management and key stakeholders conduct a review of various projects and establish a portfolio balancing risks. All projects’ risks are balanced against rewards and the appropriate projects providing the right level of reward are selected.
Project Scope
The TEXRail project is a new rail line in Fort Worth, Texas. The project is a commuter rail line measuring 27 miles and extends to Dallas-Fort Worth Airport and Grapevine from downtown Fort Worth. The project budget is approximated as $ 1 billion including eight stations. The project was expected to begin services in late 2018 and is expected to serve more than 8000 riders on a daily basis at nine stations by the end of its first operational year and 14000 riders by 2035.
The railway systems have become the spine in every country's transport infrastructure. The systems are associated with the lowest level of environmental pollution and the highest level of power efficiency. The railway systems facilitate traveling in a country by reducing travel time and contributing to the development of businesses along their corridors ( Otoko, 2017) . The systems have a high carrying capacity to cater to the huge passenger demand and drastically reduces land acquisition for the same load because of the less space it requires to carry the same number of passengers.
Major Risks Associated With TEXRail Project
Technical Risk
The technical risk of the TEXRail project includes construction and engineering risks, and the project’s dependence on technical complexity. The project is associated with the values of the existing environment and the project’s potential to impact public safety and health. The project could harm the construction workforce as a result of working at heights, with electricity, with chemicals, and within confined areas. The workforce operates heavy equipment within operating rail and road corridors as well as manual labor using tools and heavy lifting.
The project has health and safety risk to the project operations workforce. The safety and health values of the operations workforce are related to the efficient and safe operation of the project and a safe working environment. The main risks of the project to people during operation are associated with infrastructure malfunction, emergency situations such as natural disaster, acts of vandalism or terrorism, and collision of the line because of unknown track obstruction or maintenance activity. The project has safety and health risk to the values of the community and stakeholders. The project has potential threats to air quality, noise, vibrations, access, human and public health, and amenity or quality of life.
Financial Risk
Huge railway projects encounter financial risks because of funding and budget constraints, inflation, and changes in exchange rates. The financial risk is largely contributed by securing funding and cost overrun. The risk stems from the way assets of the company are financed. The risk to equity investors increases when some of the assets are financed with debt because the equity investors are paid after all the debt holders are paid.
Levels of Uncertainty and Complexity for the Project
TEXRail is a large infrastructure and its success significantly impacts participant’s operations as well as the state and local communities. The project is characterized by high uncertainty and complexity because of its political sensitivity and involvement of a large number of stakeholders. The project is constructed under ambiguous conditions full of uncertainties, complexities, and extremely tight budgets and deadlines.
Project’s complexity and uncertainty come from the systematic approach to project management. The TEXRail project costs $ I billion and is expected to play a huge role in various sectors such as transport, healthcare, sporting events, manufacturing, and science. The project represents a significant proportion of the country's economic activity and profoundly impacts the environment, social cohesion, and productivity.
The complexity of the TEXRail project is caused by technical challenges, changes in operational requirement and design, regulations, disputes over responsibility, and increases in cost. Complexity tends to increase with project scale leading to uncertainty and the inability to forecast occurrences, difficulties, and unanticipated opportunities that occur in later stages of the project. The complexities and uncertainties are caused by transition resistance, unachievable project goals, and objectives by stakeholders, disagreements between stakeholder on project outcome and benefits, optimistic biases on project scope, and inadequacy of required skills in human resources to execute the project.
Types of Project Learning Addressed
The project learning addressed is that complexities come from systematic approaches. Therefore, a project scope must be developed to manage uncertainty and complexity. Project scope management entails developing a plan for describing the definition, development, monitoring, and control for the project ( Dunović, Radujković & Škreb, 2014) . The project requirements following the scope of the management plan are collected from stakeholders which forms the basis for defining the product and project scope. The accepted scopes are monitored for effective implementation and are controlled through the change control board.
The project requirements are the backbone for subsequent project activities like cost, schedule, procurement, and quality. The conditions are required to be elicited, analyzed, and documented to create the baseline of the scope ( Dunović, Radujković & Škreb, 2014) . Uncertainties should be removed in requirements at early stages of project development to avoid complexities in the project. The success of a project is dependent on the stakeholder’s involvement in providing wants and needs.
Organizational Mindset and its Impacts on the Project
The organization in charge of the TEXRail project has a growth mindset. Individuals with a growth mindset believe in developing their abilities. The project has undergone various phases successfully reflecting that the management believes that qualities can change and intelligence can be developed further through input from others, good strategies, and hard work. A growth mindset is developed through talent and intelligence (Miller, 2016) . The organization values growth and learning and has a culture that is more innovative and collaborative.
The managers and leaders are enabled by the growth mindset to support and cultivate their employees. These managers reward efforts as well as outcomes, ask for feedback and use it as learning opportunity, admit their mistakes and learn from them, and actively seek ways to improve. Managers with a growth mindset forecast skills needed in their teams in the future to eliminate uncertainties and complexities in the project.
Recommendations to Infrastructure Changes
The TEXRrail organization must create a culture that values risks. The management must accept that the world is a violating place full of uncertainties where things can change rapidly to cause bad things as well as good. Risk balance of project portfolio has considerable benefits to a project such as agreement on a shared and common process for approving and proposing investments, improved active participation communication among all stakeholders, and early identification of troubled projects. Risk management in a project also enhances consistency in transparency and prioritization and rationalization of existing investment that can provide savings to the values of the portfolio.
The organization should encourage the development of a growth mindset. This can be achieved through talent management, leadership development, and performance reviews (Miller, 2016) . The employees increasingly demand more from their employers. To achieve a project’s success, employers must be creative, innovative, and not afraid of taking calculated risks.
The organization should avoid uncertainties and complexities by ensuring efficiency in project scope management. The project requirements start with the identification of stakeholders who are involved actively in decomposition and elicitation of consumer needs into the requirements. Requirements include capability and expectations of the product that must be sufficiently detailed and documented for the technical team to effectively prepare engineering requirements.
Reference
Dunović, I. B., Radujković, M., & Škreb, K. A. (2014). Towards a new model of complexity–The case of large infrastructure projects. Procedia-Social and Behavioral Sciences , 119 , 730-738.
Ghasemi, F., Sari, M. H. M., Yousefi, V., Falsafi, R., & Tamošaitienė, J. (2018). Project Portfolio Risk Identification and Analysis, Considering Project Risk Interactions and Using Bayesian Networks. Sustainability , 10 (5), 1609.
Miller, C. (2016). Expectations Create Outcomes: Growth Mindsets in Organizations. Retrieved from https://www.kenan-flagler.unc.edu/~/media/Files/documents/executive-development/unc-white-paper-growth-mindsets-in-organizations.pdf
Otoko, G. R. (2017). International Journal of Engineering Sciences & Research Technology.
Turner, B. (2017). Strategies for tackling the high risk/high profile project. Paper presented at PMI® Global Congress 2007—North America, Atlanta, GA. Newtown Square, PA: Project Management Institute.
