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Advanced Forms of Risk Management and Proactive Planning

Autor:   •  August 30, 2017  •  3,563 Words (15 Pages)  •  406 Views

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The risk factor for each risk is calculated using the following formula, where P = the likelihood of the event and C = the average of the consequence ratings (cost, schedule and performance) for the designated risk: Risk Factor (RF) = P+C – (P*C)

Risk Factor Rating Table for RCMD ERP Project

Consequence Ratings

Risk

Likelihood Rating

Cost

Schedule

Performance

Average

Risk Factor Rating

Technical

The vendor’s software is not capable of accommodating 85% or more of current RCMD processes and terminology

0.50

0.70

0.70

0.70

0.70

0.85

The project fails to deliver the promised functionality during the testing phase

0.50

0.50

0.90

0.70

0.70

0.85

Inaccurate or incomplete migration of data from current systems to the new ERP

0.80

0.30

0.50

0.30

0.37

0.87

The vendor’s business fails during the project and the vendor is no longer capable of meeting its contract obligations.

0.10

0.90

0.90

0.90

0.90

0.91

Project Management

Project manager inexperience with projects of this scale

0.30

0.50

0.50

0.50

0.50

0.65

Scope creep related to the desire to add business processes during the project

0.30

0.70

0.50

0.10

0.43

0.60

IT staff burnout is possible because this group is required to handle both routine duties and implementation

0.70

0.30

0.50

0.70

0.50

0.85

Organizational Risks

Labor disputes (this is a particular risk as the HR department is currently creating new job categories for MD to resolve issues related to maximum work times per the current labor contract) (University of Phoenix, 2015).

0.50

0.10

0.50

0.10

0.23

0.62

Changes in executive leadership or project management leadership

0.30

0.10

0.50

0.50

0.37

0.56

External Risks

Fluctuating raw material prices may cause RCMD to raise prices and customers’ needs. This could result in a lack of capital for the ERP project.

0.50

0.70

0.90

0.50

0.70

0.85

Competition is able to capture Riordan’s share of the market before the ERP can be implemented and make business processes more efficient.

0.50

0.10

0.10

0.10

0.10

0.55

Risk Log

The risk log or risk register for the RCMD ERP project indicates the risk priority rating, description, risk factor rating, assessment category, and status for each identified risk. The project manager keeps the watch-list risks on the agenda of all project status update meetings. The project manager also keeps these risks on easily accessible documents so that as he or she holds impromptu status checks and meetings with project team members, there can be a pulse check on the most sever risks. As the project advances, some project risks diminish or become irrelevant. The project manager notes these risks as closed and ceases to bring them in to discussion at status update meetings.

Risk Register for RCMD ERP Project

Risk Priority

Risk

Risk Factor Rating

Risk

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