Introduction
Projects are prone to a lot of risks. Risks can jeopardize the successful completion of projects. Large projects are more prone to experiencing these risks as compared to small projects. It is always important to acknowledge the possibility of different types of project risks when embarking on a project. The important of this acknowledgement is to help come up with project risks managements that can mitigate against the different types of risks. There are different types of risks and risk management types. This paper examines two case studies, the Yi-Wan Railway construction project and the Northern Gateway Tool Road Construction Project, and analyzes different types of risks and risk management tools.
Types of Risk
Resource risk- The Yi-Wan project is a China-based project constructing a railway for China. The project takes a centralized project management approach, but the possibility of resource risk is undeniable based on the different stakeholders involved in the risk. The project has a number of stakeholders responsible for the resource management of the project. They include the government, the ministry of finance and the construction board. The project has not witnessed a suitable supportive environment for the project. Resources for this project include a dozen of employees, financial resources and skilful resources. The three play an important role in ensuring the success of the project. The inadequacy of these resources is a financial risk for the project.
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Schedule risk- A project can experience schedule risks based on several reasons. The northern Gateway Tool Road Construction is a construction project of New Zealand. The project is experiencing schedule risk. A huge involvement of bodies and other external factors makes the project lag behind the scheduled timeline for its completion. The interconnection between different segments of the project such as the inclusion of Leighton construction in the same construction is making the project stay behind schedule because various deliverables cannot be completed as they rely on each other.
Scope risk- Scope risk is another project risk that is evident in both the two case study. According to these case studies, the scope risk is mainly brought about by unexpected changes in the project that affects the initial scope of the projects (Bissonette, 2016). The changes in the Yi-Wan project governance and the full risk nature of the Northern Gateway Tool Road brings along scope risk. Both the two case studies are witnessing changes in project segment dependencies and integration issues.
Technical risk- Technical risk is one of the most common types of risk in large projects. The nature of China and New Zealand project makes them both susceptible to technical risk. Technical components laid to ensure that the construction is completed may not work out eventually putting the project at risk of incompletion within the stipulated duration. Security risk in Yi-Wan construction project, for example, introduces the risk of instability which is also another component of technical risk.
Risk Response Strategies
Risk response strategies are risk counter strategies meant to respond to risk in a bid to avoid, lessen the impact or to curb the risks. The different types of responses evident in these case studies include;
Mitigation- This is a strategy that aims at lessening the impact of the different risks identified in a project. The probability of the risks, in this case, is decreased. For example, additional skilful employees for the case of the Yi-Wan to mitigate against resource risk is an example of a mitigation risk response strategy.
Avoidance- Sometimes when a risk is bound to affect the continuity of large project immensely the best response strategy would be the avoidance strategy (Xiang, Zhou & Ye, 2012). This strategy is best when a risk is identified during the early stages of a project. Example of risks that is best works on include schedule and scope risks. The Northern Gateway Toll road project managers can reconsider the avoidance of inclusion of Leighton construction Company to avoid schedule risk.
Transfer- This strategy is applied to cases where one lacks a key project element that jeopardizes the operations of a project (Edwards & Bowen, 2013). The risk of unavailability of the project element is then transferred to a third party. The Yi-Wan railway construction project, for example, can consider transferring environmental risk associated with the railway construction to the government of China.
Collaboration risk response strategy- A project can collaborate with different stakeholders to ensure that an identified risk is a curb or lessened. It can be in the case of using a collaboration mechanism to increase contractors and financial resources. This strategy also works best if a risk is identified in the early stages of project construction.
Recommendations (Implementing the Risk Solution)
When using the avoidance strategy, the best way of ensuring that the strategy is implemented is through changing an entire project scope. Mitigation response strategy, on the other hand, works hand in hand with an increase in financial resources to ensure its implementation. This can be done by increasing the number of donors and stakeholders (Pritchard, 2014). Collaboration risk response strategy, on the other hand, requires identification of potential third-party interest and laying for them down all benefits they are likely to accrue if they help shoulder or curb the risks. To implement the transfer risk response strategy, a project is mandated to identify and analyze the risk appropriately, determine the suitability of a third party and involve all agencies and bodies with interest in the project.
Conclusion
Project risks are hazardous to the completion and success of projects. The different types of project risks facing projects in the case study include schedule, scope, and technical and resource risk. Risk response strategies can offer a solution and include collaboration, mitigation, avoidance, and transfer among others as discussed in this paper.
References
Bissonette, M. (2016). Project risk management: A practical implementation approach. Newtown
Square, Pennsylvania: Project Management Institute . ISBN 9781628251159 Retrieved from http://search.ebscohost.com.csuglobal.idm.oclc.org/login.aspx?direct=true&db=nlebk&AN=1244316&site=ehos t-
Edwards, P., & Bowen, P. (2013). Risk management in project organisations . Routledge.
https://www.routledge.com/Risk-Management-in-Project-Organisations-1st-Edition/Edwards-Bowen/p/book/9780750666299
Pritchard, C. L., & PMP, P. R. (2014). Risk management: concepts and guidance . Auerbach Publications.
https://www.crcpress.com/Risk-Management-Concepts-and-Guidance-Fifth-Edition/Pritchard-PMP-PMI-RMP-EVP/p/book/9781482258455
Xiang, P., Zhou, J., Zhou, X., & Ye, K. (2012). Construction project risk management based on
the view of asymmetric information. Journal of construction engineering and management , 138 (11), 1303-1311.
https://www.researchgate.net/profile/Pengcheng_Xiang/publication/273432718_Construction_Project_Risk_Management_Based_on_the_View_of_Asymmetric_Information/links/56c833ad08ae1106370531cd.pdf?origin=publication_detail
