Introduction
The major proposed solutions towards controlling project risks are based upon a two-fold outlook framework i.e. the project’s uncertainty and the frequency of changes effective in the project’s lifecycle. Presumably, if a project has a relatively truncated level of uncertainty, a head-on, race-to-the-finish approach is most suitable, as only very little is expected to go wrong in the entirety of the project. The fast approach technique is preferred because it maximizes on the project’s present value, and consequently realizing the remunerations from the project as soon as is possible. Comparatively, established that a project runs an uncertainty risk, an appreciably different approach is preferable. A full-speed method would have such devastating outcomes on such a project and should thus be avoided. Thereof, the concept of controlling project risks is introduced. Uncertainty can take any form, the most pertinent being a risk, and to control the same gives the project a chance at success. There are three basic approaches towards controlling the risks conversant to the project: risk transfer, risk buffering and risk avoidance.
Risk Transfer
Transfer of risk is perhaps the most commonly sought after risk control method employed by project progenitors. Risk transfer is the action of allotting the project risks to another external party (besides the signatories to the project) that is knowledgeable with regards to managing the prowling risks. However, inasmuch as transfer of risk sounds like a smart move towards safeguarding the project’s wellbeing, there are perils. First, transfer of risk is in itself a risky undertaking if the quantitative breakdown of the actual risks has not been performed. The major delinquency here would be the interparty overburdening of risks because the extents of the risks are not quite known. Some miniature risks can be handled in situ but are instead transferred. This leads to time wastage and non-optimization of risk control methods.
Also, risk quantification is necessary for when rewarding the risk-bearing efforts of the bearer party. A justified and reasonable reward is paid to the bearing party and this criterion can only be derived from the risk analytics of the project. It is common project management practice for all the risks sufferable, and their magnitudes, be made known to all the current and interested parties to the project. It is advisable to avoid any form of unprecedented disclosures especially along a litigation decorum. Additionally, it is important for the project team members in charge of documentation and operations to ensure that all the risks have been allocated to the necessary parties accordingly. Some of the parties to whom risk is transferred include insurance companies and risk managing contractors.
Buffering of Risks
Buffering is a technique that involves setting up a contingency or an absorbency stratagem aimed at enthralling the effects of a risk. The contingency, also called a buffer, can take any form but mostly is in terms of monetary provisions. Practically, the larger the contingency, the better the chances are that a buffer-controlled project will not succumb to a given risk. Similar to a risk transfer, a buffer requires an intensive analysis on the quantitative nature of the risks to be mitigated. For instance, if a firm might spend $10000 with the provision that a risk occurs, and $5000 if no risk is involved, then the firm would be in a safe position if a contingency of $5000 is set aside. The contingency, with or without the occurrence of a risk, must be available on demand. In any case, presuming that the risk does not occur, no losses shall be realized; the contingency can be placed to other forms of use or perhaps injected into the project to improve its progress. It should be noted that a buffer only serves to attenuate the effects of a risk, but not totally prevent it. Therefore, if a risk is of high impact but has a low likelihood of occurrence, then this method is effective at the early detection and prevention of an oncoming risk.
The most common category of a buffer is a schedule buffer whereby, the contractor involved in the operations of the project shall fine-tune his labor force as well as the amount of funds available for the appropriation of the risk mitigation.
Risk Avoidance
Here, the project progenitors take the tough role of altering the project’s particulars so as to contain a certain risk by avoiding it altogether or by totally eliminating the same. In this technique, similar to the first two, an in-depth quantitative analysis is performed so that, in the selection of the mitigation strategy, the best alternative shall harbor the best of both cost and risk mitigation. Most projects have been employing the use of risk transfer in the risk management stratagems. The avoidance provision has been overlooked for most undertakings, yet, critical evaluations of both methods indicate that maybe the potency of both is at par. As a matter of fact, for progenitors with the knowhow with regard to risk management, the best method to implore would be the risk avoidance method. The idea behind altering a project is so that the opportunity cost for switching from one alternative to another is levelled with the ability of the selected alternative to reduce the risk.
Paper Review
Strengths
Weaknesses
Only little can be brought to light as far as the weaknesses encountered in the project paper are concerned. Maybe to state loosely, the author has not extensively narrowed into the details of the risks in lieu of the existence of military adulations. Perhaps, a little more information concerning what risks would transpire within military premises would be suffice. Since the main strategic location of the project is in a military confinement, more risks would be evidenced: attacks from enemies, indoor activity in the military barracks disrupting normal work, risks of injuries during training etc. The paper also doesn’t bear in-text citations, and this can lead to presumed plagiarism.
Suggestions on Improvement
Therefore, some improvements would be suggested for this paper. First, the scope should reduce too much generalization of concepts and narrow down focus to a specific concept. For instance, when talking about the project purpose, moneymaking would be too general a term, and something along the lines of a production line, a service-oriented project etc. would suffice. Additionally, it is good practice to promote paper neatness by justifying the work along the paper margins. This gives the entire document a more neat and organized appearance.
References
Fan, M. L. (2008). Choosing a project risk-handling strategy: An analytical model. International Journal of Production Economics, 700-713.
Fiet, J. O. (1995). Risk avoidance strategies in venture capital markets. . Journal of Management Studies, 551-574.
Giunipero, L. C., & Aly Eltantawy, R. (2004). Securing the upstream supply chain: a risk management approach. International Journal of Physical Distribution & Logistics Management, 698-713.
