APPENDIX A: ASSIGNMENT COVER SHEET

ASSIGNMENT COVER SHEET

Surname Ziqubu

First Name/s Mzwakhe Sanele

Student
Number 168968

Subject Project Risk Management

Assignment
Number 1

Tutor’s Name Mr. Dhiren Ghoorah

Examination Durban
Venue

Date Submitted 2021.04.22

√
Submission (√) First Submission Resubmission
27 Pine Street
Wyebank
Postal Address
Kloof

3610
E-Mail mzwakhesaneleziqubu@gmail.com or mzwakheziqubu@yahoo.com
035 874 8025 (Work)
076 062 8799 (Home)
Contact
Numbers 076 523 9643 (Cell)
PGDPM Year one 2021
Course/Intake

Declaration: I hereby declare that the assignment submitted is an original piece of work
produced by myself.

Date: 22.04.2021

Signature:
Contents
List of Figures 2
List of Tables 3
01 Question 1 4
1.1 What is a project life cycle? 4
1.2 Risk in Project Life Cycle 5-6
02 Question 2 7
2.1 Introduction 7
2.2 Techniques of risks identification 7
2.2.1 Life Cycle Phase Risk Identification 7-8
2.2.2 Risk Register 8-9
03 Question 3 10
3.1 Introduction 10
3.2 Benefits of Risk Mitigation 10-13
3.3 Golden Rules of Project Management 13
04 Question 4 14
4.1 Introduction 14
4.2 Principles of risk management in relation to Project A risk mitigation strategy 14-15
4.3 Conclusion 16
4.3.1 Importance of stakeholders in managing and/or mitigating risk 16-17
05 Reference List 18
List of Figures
Figure 1.1 : Illustrating the project life cycle 4
Figure 1.2 : Risk in the Project Life Cycle, source: Bobade (2015:58) 6
Figure 2.1: Life Phase Risk Identification, Source: Kloppenborg (2015) 8
Figure 2.2: Example of a Risk Register, Source: Schwalbe (2015) 8
01 Question 01
1.1 What is a project life cycle?
According to Karaulova, T., Kramarenko, S. & Shevtshenko, E. (2008:02), because
projects are unique undertakings, they involve a degree of uncertainty. Organizations
performing projects will usually divide each project into several project phases to
provide better management control and appropriate links to the ongoing operations of
the performing organization. Collectively, the project phases are known as the project
life. Each project phase normally a set of defined work products designed to establish
the desired level of management control. Typically project life cycle consists of 4 major
sections which can be broken down into other key parts of the project. The main
sections and their constituent parts are as follows:
CONCEPT (Idea)
PLAN (Design, Plan, Allocate)
EXECUTE (Carry out the plan)
TERMINATION (Deliver, Review, Support)

Figure 1,1: Illustrating the project life cycle

1.2 Risk in Project Life Cycle
According to PMBOK Guide – fifth Edition (2013:309) Project Risk Management
includes the processes of conducting risk management planning, identification,
analysis, response planning, and controlling risk on a project. The objectives of project
risk management are to increase the likelihood and impact of positive events, and
decrease the likelihood and impact of negative events in the project.
Project Risk Management processes are as follows:
 Plan Risk Management—The process of defining how to conduct risk
management activities for a project.
 Identify Risks—The process of determining which risks may affect the project
and documenting their characteristics.
 Perform Qualitative Risk Analysis—The process of prioritizing risks for further
analysis or action by assessing and combining their probability of occurrence
and impact.
 Perform Quantitative Risk Analysis—The process of numerically analyzing
the effect of identified risks on overall project objectives.
 Plan Risk Responses—The process of developing options and actions to
enhance opportunities and to reduce threats to project objectives.
 Control Risks—The process of implementing risk response plans, tracking
identified risks, monitoring residual risks, identifying new risks, and evaluating
risk process effectiveness throughout the project.
Figure 1.2 Risk in the Project Life Cycle, source: Bobade (2015:58)
Figure 1.2 presents a graphic model of the risk management challenge. The chances of
a risk event occurring are greatest in the concept, planning, and start-up phases of the
project (Larson and Gray, 2017:212). A risk occurring early in the project life cycle has a
lower cost than a risk occurring later in the project life cycle. The cost of a risk event
occurring increases rapidly and is at its highest as the project passes halfway through
the project life cycle during implementation. Larson and Gray (2017:212) quote an
example as follows: the risk event of a design flaw occurring after a prototype has been
made has a greater cost or time impact than if the event occurred in the start-up phase
of the project. It is therefore, prudent for the project team to plan for risk events and
decide on appropriate responses before the project begins.
02 Question 02
2.1 Introduction
Risk is inherent in project management and so is the need to control it. That
methodology is called risk management, which is as important as planning to making
sure a project comes in on time, within budget and of quality.

The better a project manager identifies and responds to risk, the better the outcome.
That’s why there are never enough risk management tools and techniques to have at
your disposal when planning for a project.

2.2 Techniques of risks identification

Over and above brainstorming, interviewing and reviewing of similar projects. The Risk
Management Consultants could have for identified risk using the below risk techniques.
 Problem Solving Approach
 Risk Categories
 Expert Judgement Based on Knowledge
 Structured Checklists (WBS)
 Life Cycle Risk Identification
 Flow Charts
 Analysing Historical Records and Closeout Reports
 System Analysis (SWOT)
 Root Cause Identification
 Scenario Analysis
 Safety Reports (Health and Safety Requirements)
 Structured Review

I will elaborate on two techniques which could have been more relevant to the risk
management consultants
2.2.1 Life Cycle Phase Risk Identification
The consultants could have identified risk using life-cycle phases. In the early life-cycle
phases, the total project risk is high because of lack of information. In the later phases,
the financial risk is the greatest (Kloppenborg:2015).
See below table below elaborating the life cycle phase risk identification

Table 2.1: Life Phase Risk Identification, Source: Kloppenborg (2015)

2.2.2 Risk Register
The primary output of risk identification is the risk register. When complete, the risk
register is “a document in which the results of risk analysis and risk response planning
are recorded.” At this point (the end of risk identification), the risk register includes only
the risk categories, identified risks, potential causes, and potential responses. The other
items are developed during the remainder of risk planning (Schwalbe: 2015).

Figure 2.2: Example of a Risk Register, Source: Schwalbe (2015)

The contents of a risk register, as illustrated in Figure 3.2 above, are described as:
 List of identified risks:
All potential events and their subsequent consequences as identified during the risk
identification process
 List of potential responses:
Potential responses to risk may be identified during the identification process
 Root causes of risk:
If possible, identify the root causes of risks
 Update Risk Categories:
Some categories of risk may need to be changed or updated to better reflect the risks
associated with the current project
 Trigger
Signals or precursors that help in determining I a risk event I about to occur (Schwalbe:
2015). The risk register is a living document. As a risk is identified, it is added. More
information regarding a risk can be added as it is discovered. As risks are handled, they
can be removed because they are no longer of the same level of concern. On smaller
projects, a spreadsheet works fine for a risk register. On larger, more complex projects,
some organizations use databases (Schwalbe: 2015).

03 Question 03
3.1 Introduction
A strong project risk management plan allows managers to look at the entirety of their
project from numerous perspectives including: Resource; Technical; Cost, Schedule;
Scope, Process/Procedure; Internal Threats; External Threats to name a few. Through
a lens of what could go wrong, the project team will identify, assess, respond to, and
assign personnel to monitor each risk worthy of continued observation. Individual risk
responses will roll up into large scale project contingency plans.
However, with “Project A”, risk management approach of mitigating the risk was not
adhered therefore exposing the organization to the risks identified by the report which
caused significant loss to the organization as the schedule overran therefore incurring
huge lost earning and missing the ‘first oil predicted date.
If the organization did adhere to the risks identified by the risk management consultants,
they would have benefited in mitigating the following risks: -

3.2 Benefits of Risk Mitigation

Identification of Troubled Projects

Risk management makes it easier to identify troubled projects. Single risk events will be
identified, assessed and responses planned. These events aggregate into an overall
project risk score.
From initial planning, red flags will be raised by virtue of high probability/high impact
risks events. Additionally, the trajectory of the project itself can be assessed by virtue of
its risk trajectory. If project progression results in an accumulation of risk – it’s clear that
this is a troubled effort and there won’t be any substitute for decisive action.
There are Fewer Project Surprises
A robust risk effort simply reduces surprises. Of course, there will always be surprises
that arise in spite of risk management – the so called the unknowns. But there does not
have to be as many and they don’t have to be as painful. Risk management forces the
project team to be in touch with its event horizons and prepared to deal with risk events
as they occur.

Better Quality Data for Decision Making

In a nutshell, better quality data means that in order to perform project risk management
properly, you’ll require data to analyze your situation. If you’re going to evaluate
schedule risks as it was the case with Project A, you have to have scheduling
information. Hence, you need the capability in place that allows said evaluation. If
you’re going to assess technology risks, you need to have technical information
available. Not having information on hand to be able to assess risks is certainly a fact
of life depending on where you are in the project life-cycle. But now you definitely know
you don’t have it. You know what you need, and that lack of information is itself
something needs addressed.

Communication is Elevated
Firstly, data has to be comminuted, the team uses it for decision making. Second, and
of interest to us here communication of risk information will demand its own
communication channel. A properly implemented risk program will specify requirements
for communicating risk information up and across the organization. This means that
project sponsors and key stakeholders are on top of information as it unfolds.

More Accurate Budgets

Better data quality is indeed a linchpin of several risk management benefits. Once risk
information is available, it will have a positive impact on budget accuracy.
Further, it will allow a contingency budget to actually be calculated, or at least
qualitatively arrived at, rather than simply assigning a standard contingency ‘fee.’
Clear Expectations
Everybody wants their technology project to succeed as envisioned. And everybody is
pretty much always disappointed. If the stakeholders fully understand project risks, then
activation of risk contingencies, however difficult, are at least seen as logical and
planned if not pleasant.

Team Focus
The project planning process in general and the risk management process in particular
will engage and focus team members outside of their respective specialties. I will say
that based on my experience, nothing engages individual team members like being
assigned ownership of a risk and responsibility for its monitoring and with reference to
Project A, it would have helped team members to be more vigilant of the risks therefore
focus on the task at hand.

Integration into Risk, Issues, and Changes

Successful project management needs to manage uncertainty but also engage the
known problems that emerge during project execution by a combined Risk-Issue-
Change process. Project risks represent potential problems and project issues
represent known problems. The short version of Risk, Issue and Changes is that risk
management identifies the potential problems, if and when these become reality, they
convert into issues. Issues are then managed, with possibility that their impact will
require project changes.

Proactive vs. Reactive

If the project is meeting its obligations as envisioned in a risk management process,
Then the team will respond proactively to risk events as they occur. If the team has not
met its risk management obligations, the team will be reactionary, acting in an ad hoc
manner to events that have not been identified as risks and will not benefit from any
predetermined corrective actions.
 Historical Data
The accumulation of documented risk information can be used to generate a lessons
learned and risk information support database – consisting of both procedural and risk
management assist information. This would be used as a reference in future projects.
Ideally, this will improve not only project level risk management, but project
management across the organization.

3.3 Golden Rules of Project Management

Over and above the benefits mentioned above, there are golden rules in project risk
management which the organization responsible for Project A, could have utilized than
be able to benefit in mitigating the risk The golden rules are as follows: -
Rule 1: Make Risk Management Part of Your Project
Rule 2: Identify Risks Early in Your Project
Rule 3: Communicate About Risk
Rule 4: Consider Both Threats and Opportunities
Rule 5: Clarify Ownership Issues
Rule 6: Prioritize Risks
Rule 7: Analyze Risks
Rule 8: Plan and Implement Risk Responses
Rule 9: Register Project Risks
Rule 10: Track Risks and Associated Tasks

04 Question 04
4.1 Introduction
Effective risk management involves commitment to risk management by stakeholders,
top management, the project steering committee, the project manager and project team
members. An adequate project management approach. A capable project manager
should take responsibility for risk management, and he or she and the project team
should have an understanding of the technical and non-technical issues and/or
contingency measures should be considered (PMI, 2017)
4.2 Principles of risk management in relation to Project A risk mitigation strategy.

Understanding the project context

Every project is affected to varying degrees by various factors in its environment for
example, Project A was mainly to supply the 11KV power to the drilling System Module
and Derrick Equipment Set through the re-entry of the 10Z tie back well.
There are also marked differences in communication channels, internal culture and risk
management procedures. The risk management should therefore be able to add value
and be an integral part of the organizational or project succession process.

Involvement of Stakeholders
The risk management process should involve the stakeholders at each and every step
of decision making. They should remain aware of even the smallest decision made. It is
further in the interest of the organization to understand the role the stakeholders can
play at each step.
Organizational Objectives: When dealing with a risk it is important to keep the
organizational objectives in mind. The risk management process should explicitly
address the uncertainty. This calls for being systematic and structured and keeping the
big picture in mind. Because stakeholders were not involved, they were not aware of the
risk associated with the project. One of the stakeholders in the Project A are the
organization employees who were involved in the implementation stage. When they
were busy with hook up, commissioning and IAT work, they were all focused in
completing the job (but not aware of the associated risks) however because they were
not informed of the risk associated with the work the stakeholders found themselves
reacting to situations which could have been identified, quantified and managed
accordingly. Therefore, affecting the critical path hence impacting on the date of the
date of the “first oil”.

Reporting risks regularly

In risk management communication is the key. The authenticity of the information has to
be ascertained. Decisions should be made on best available information and there
should be transparency and visibility regarding the same. IF the other stakeholders
were aware of the risks and were reported accordingly, the risk would have been
mitigated.

Roles and Responsibilities

Risk Management has to be transparent and inclusive. It should take into account the
human factors and ensure that each one knows it roles at each stage of the risk
management process. Although the responsibilities were clearly defined, the
organization failed to inform the team members of the risk associated with the project
hence the main focus was to complete on time without acknowledging the risk factors
that could be detrimental to the completion date of the project.

Support Structure and supportive culture for risk management

Support structure underlines the importance of the risk management team. The team
members have to be dynamic, diligent and responsive to change. Each and every
member should understand his intervention at each stage of the project management
lifecycle. Early Warning Indicators: Keep track of early signs of a risk translating into an
active problem. This is achieved through continual communication by one and all at
each level. It is also important to enable and empower each to deal with the threat at
his/her level.

Review Cycle and look for continual improvement

Keep evaluating inputs at each step of the risk management process - Identify, assess,
respond and review. The observations are markedly different in each cycle. Identify
reasonable interventions and remove unnecessary ones.

Supportive Culture
Brainstorm and enable a culture of questioning, discussing. This will motivate people to
participate more.

Continual Improvement
Be capable of improving and enhancing your risk management strategies and tactics.
Use your learning’s to access the way you look at and manage ongoing risk.
4.3 Conclusion

4.3.1 Importance of stakeholders in managing and/or mitigating risk

Risk professionals often have difficulty clarifying the role of stakeholders in risk
management. Whether one chooses the route of communication and consultation as
per ISO31000 or Information and consultation according to the COSO framework, the
role of stakeholders in risk management must be clearly defined.

Freeman (2004) defines stakeholders as any groups or individuals who are crucial for
an organization’s survival and can affect and be affected by an organization’s
objectives. Every organization exists to deliver on a particular value, to achieve this the
leadership needs everyone involved to understand risks associated with the pursuit of
delivering that value. In practical terms involving stakeholders in the risk management
process means seeing risk management through the same lens.

Internal and external stakeholders can be any of the following: Company employees:
management and staff, The Board, third parties, Customers, Shareholders (can be
represented by board), Labour representatives. The Project A had stakeholders
involved all of the above mentioned stakeholders

Risk professionals often complain about not getting buy-in from stakeholders, buy-in on
the other hand is not realized by informing people but rather by involving them. The
benefits of involving the stakeholders is that the risk professional can share the value
proposition of the organization with people who are equally interested in the future of
the organization although in some cases for different reasons. Project A should have
involved all of the above mentioned stakeholders so to get the buy in of mitigating the
risk.

Risk professionals should remember that key decision makers in an organization are a
handful of people who very often focus on strategic matters. Risks are better managed
when all who form the value chain are on the same page with key decision makers. The
unfortunate case with Project A is that, the decision makers were not able to make
informed decisions that will mitigate the risks that were associated with the Project A
project.

The benefits of involving stakeholders include

 Effective risk controls, treatment strategies and active monitoring due to the
perspectives mentioned above.
 Sharing of responsibilities towards controls and monitoring by all who are
involved.
 All areas in the value chain become involved in the implementation of the risk
mitigation processes.
 Informed and lasting solutions to risks mitigations are realized.
 Ultimately risk mitigation becomes embedded in the day to day running of the
organization.
5 References
1 Karaulova, T.; Kramarenko, S. & Shevtshenko, E. Risk Factors in Project Management
Life Cycle, 6th International DAAAM Baltic Conference.

2 Project Management Institute, (2017) A Guide to the Project Management Body of

Knowledge (PMBOK® Guide) –Fifth Edition, Project Management Institute.

3 Bobade, A. 2015 Organisational Influence and Project Life Cycle. Available from:
https://wwwslideshare.net/anandbobade/pmp-chap-2-org-influence-and-project-life-
cycle (accessed: 22 February 2021)

4 Larson E.W & Gray C.F, (2017) The Management, The Project Management Process,
seventh Edition, McGraw Hill Irwin

5 Kloppenborg TJ (2015), Contemporary Project Management. USA: Cengage Learning.

6 Van der Walt, G, and William, (2015), Guide to Project Management, Second Eddition,
Juta & Company ltd.

7 Clements, J.P and Gido, J. (2012), Successful Project Management, Six Eddition,
Cengage Learning.