Operation Management Paper
Autor: Joshua • April 17, 2018 • 2,325 Words (10 Pages) • 782 Views
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Table 1: Risk Mitigation Strategy Comparison
Commercial Millwork
Commercial Construction
Corporate Event Planning
Upstream Oil and Gas
Accepts Risk?
✓
✓
✓
✓
Shares Risk?
✗
✓
✗
✓
Transfers Risk?
✓
✓
✓
✓
Minimizes Risk?
✗
✓
✗
✓
The risk mitigation strategy of accepting risk is applicable to all four industries; however, the risks accepted are widely spread. Common to commercial millwork, commercial construction, and upstream oil and gas is the acceptance of labour risk, which includes acquiring and maintaining skilled employees in the hopes to reduce human error. The greatest acceptance of risk in commercial construction deals with weather risk and unforeseen acts of God. On the other hand, in corporate event planning, risks associated with strict deadlines are the most widely accepted risks. Across the three industries of corporate event planning, commercial construction, and upstream oil and gas, the acceptance of financial risk is also evident whereas risks associated with scope changes are accepted in commercial millwork.
In contrast to other strategies of risk mitigation, only two out of the four industries share risk. This may differ due to corporation and project size. Commercial construction and upstream oil and gas have significantly larger projects. Conversely, commercial millwork and corporate event planning are smaller industries with relatively smaller projects. This is also consistent with the findings from the simplified scorecard of project risk management, as seen previously in the report.
Across all four industries, risk is transferred. Various risks are transferred to companies that are better suited to handle and mitigate the risk. In all four industries, low probability risks with potentially high impacts are transferred to insurance companies. On the contrary, all industries except corporate event planning transfer risk to subcontractors (in the industries of commercial construction and upstream oil and gas) or to the owners (in commercial millwork). The risks transferred to subcontractors or owners are considered to be medium impact risks with a low to medium probability.
Again, all four industries minimize their risks with their risk management plans. In corporate event planning, risk is minimized through contract clauses and clearly defined exit strategies. In commercial millwork, risk is minimized with extensive training to produce knowledgeable employees. Similarly, in commercial construction and upstream oil and gas, risk is minimized through extensive safety policies in highly regulated industries. Also included in the safety policies for these two industries is the proper use of Personal Protective Equipment (PPE) at all times when on the job site.
Table 2. Simplified Scorecard of Project Risk Management
Title (Value)
Commercial Millwork
Commercial Construction
Corporate Event Planning
Upstream Oil and Gas
Amount of Experience Required (30)
2.5 = 75
3 = 90
2.5 = 75
4 = 120
Literature Similarities (10)
2 = 20
4 = 40
4 = 40
5 = 50
Effective Risk Mitigation (25)
4 = 100
4 = 100
5 = 125
2 = 50
Tools and Techniques Use (25)
5 = 125
5 =125
4.5 = 112.5
4 = 100
Size of Project (10)
3 = 30
5 = 50
2 = 20
5 = 50
Overall (500)
= 350
= 405
= 372.5
= 370
*1 = Lowest, 5 = Highest
We used a simplified scorecard to determine which industry values and best uses risk management in project management. We broke risk management into five categories, amount of experience, similarities to literature, effective risk mitigation, tools and techniques used, and size of projects. The amount of experience required pertains to how much experience is necessary to effectively asses and mitigate risk. We valued this the most because knowing the risk and how to mitigate it improves your risk mitigation plan. We believe experience is needed most in upstream oil and gas because of the high impact and large quantity of risks. We compared the correlation between literature and industry place; valuing correlation the least because a disconnect often exists between theory and practice. Upstream oil and gas has the largest amount of literature and the closest correlation to it,
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