Risk Analysis Assignment

Flavia Torres
101413363
October, 19 2022
Introduction

Risk Analysis and Management is an important step in Project Management and its
function guarantees the least number of surprises during the course of the project. It is a
valuable phase for the success of the project and minimizes the occurrence of risks, in
addition to reducing the consequences that may occur.
According to the PMBOK, "Project Risk Management includes the processes of
conducting risk management planning, identifying, analyzing, responding to and controlling
risks on a project" (PMBOK®, 6th edition).
In this work will be cited and analyzed three risks with different degrees of
importance and contingency plans related to the Pilot Production of modified concrete by the
company ADL Process Inc.

Risk # 1 - Low Performance of the Employees allocated to the project.

The first risk is the Low Performance of the Employees allocated to the project. As an
Assumption, we can mention that during the project, the departments will have all the
necessary resources.
Production will require significant adaptations from employees in a very short period
of time (120 days). For example, Sales and Marketing teams are dealing with a new product
and the Engineering team will be dealing with a new raw material. Other Employees will be
moved to an appropriate place for production.

1.1 - Risk Probability Matrix:

Risk Probability Matrix

Risk # 1 Low
performance of Low = 1 Moderate = 2 High = 3
employees
Probability < 30% 30 – 60% 60 – 90%
The chance of
underperformance is
60%. Production will
require significant

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 employee adaptations
in a very short period
of time.

1.2 - Risk Impact Matrix:

Risk Impact Assessment Matrix: Low employee performance - The chance of low
performance is 60%. Production will require significant adaptations from employees in
a very short period of time. For example, Sales and Marketing teams are dealing with a
new product and the Engineering team will be dealing with a new raw material. Other
Employees will be moved to an appropriate place for production.
Project Constraint Low = 1 Moderate = 2 High = 3
> 30% cost
< 10% cost increase 10 – 30 % cost increase
increase
Costs of hiring and
Cost
training employees may be
necessary to improve
production performance
> 15% time
< 5% time increase 5 – 15% time increase
increase
In case of low
performance of
employees, the
Time delivery time
may be thirty
days longer.
Which means
25% more than
the deadline
Minimal scope Significant scope
Moderate scope change
change change
If there is low
Scope performance of employees,
the scope may change in
the schedule, cost, among
others
Quality Quality degradation Quality degradation is Quality
barely noticeable evident degradation
makes the

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 deliverable
unusable
If there is low
performance of employees,
the final product may
have a lower quality than
expected

1.3 - Risk Response

Risk Priority Matrix

Risk Risk priority score
Risk # Probability Impact
Description (P x I)
Risk # 1 Low 3 3 9
performance
of employees

● It's a Known, Internal, Inherent and Negative Risk.

● Identify which sectors are underperforming.
● Talk to the Managers and Staff assigned to the project.
● Identify the reason for low employee performance.

Response Strategies:
This is a High Priority risk and the strategy will be Avoid: taking actions to eliminate
the risk or its impact. This is a primary risk.
Therefore, when talking to the Managers, we will suggest hiring one more
professional for each team and talk to HR about the profile of these professionals. They must
understand what will be produced about. Also, as a PM, I suggest hiring an External
Specialist to work with the team. As the production has a short deadline, a good incentive can
be a bonus for project time.
This risk can give rise to a positive secondary risk, as the company will have a team
prepared to deal with future projects in the area.

Risk # 2 - A New Raw Material is not of good quality as expected

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 The Second risk is that the New Raw Material is not of good quality as expected. The
company will need to acquire a raw material for the first time and will negotiate with new
suppliers. One assumption is that engineers can modify the machines for production of the
new product.
The experience with new suppliers can be unfriendly and the raw material may not
meet the expected quality criteria. It may be necessary to buy raw material from another
supplier, which would increase costs and delay the schedule.

2.1 - Risk Probability Matrix:

Risk # 2 A new
raw material is
not of good Low = 1 Moderate = 2 High = 3
quality as
expected
Probability -> < 30% 30 – 60% 60 – 90%
The chance that the
new raw material will
not have the same
quality as the raw
materials that the
company usually buys
is 50% - possible.

2.2 - Risk Impact Matrix:

Risk Impact Assessment Matrix: A new raw material does not have the expected
quality. The company will need to acquire a raw material for the first time and will
deal with new suppliers. The purchase may not meet the expected quality criteria.
Project Constraint Low = 1 Moderate = 2 High = 3
> 30% cost
< 10% cost increase 10 – 30 % cost increase
increase
It may be
Cost necessary to
purchase a raw
material from
another supplier

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 > 15% time
< 5% time increase 5 – 15% time increase
increase
It may be
necessary to wait
for new raw
Time
material in 10
days. Which
means 18%
more than the
deadline.
Minimal scope Significant scope
Moderate scope change
change change
What is expected of the
Scope final product will not
change, but there may be
changes to important steps
such as schedule, cost, etc
Quality
degradation
Quality degradation Quality degradation is
makes the
barely noticeable evident
deliverable
unusable
Quality If the raw
material does
not have the
expected quality,
the product will
not be as agreed

2.3 - Risk Response:

Risk Priority Matrix

Risk Risk priority score
Risk # Probability Impact
Description (P x I)

Risk # 2 A new raw 2 3 6

material is not
of good

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 quality as
expected

● It's a Known, Internal, Inherent and Negative Risk.

● Look carefully for good suppliers.
● Make a reserve plan.

Response Strategies:
This is a High Priority risk and the strategy will be Avoid: taking actions to eliminate
the risk or its impact. This is a primary risk that can give rise to secondary risks.
A meticulous research among suppliers can tell us about: product availability, quality
standards, delivery time performance, payment terms, reputational risk, relationship with the
immediate responsible within the supplier company, ease of contact with the person
responsible for the account, between others. Another suggestion is not to buy all the raw
material at once. Manage time and, if the raw material is approved, place new orders that do
not delay production.
The first risk can give rise to the second if the plan doesn't work. We may need to deal
with risks such as, for example, the new suppliers are not good or secondary material will not
be delivered on time and it can be necessary to invest in a raw material supply reserve plan.
One of the strategies is to close partnerships, whenever possible, with more than one
professional or supplier company. Another response to risk is to invest in transparency in
communication with suppliers and demand compliance with the contract.

Risk # 3 - Conflicts between the Coordinators of the Executive Management Committee

The third isk is Conflicts between the Coordinators of the Executive Board. One
assumption is that all five Directors of the Committee have Management Specialization.
Korina Khan, CEO of ADL Process, and five directors, one from each department,
committed to identifying and allocating resources to support the project and complete it in
120 days. All five department directors pledged their support for this plan and will serve as
members of an Executive Steering Committee along with Korina herself. However,
divergences may arise in the resource allocation decision.

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3.1 - Risk Probability Matrix:

Risk Probability Matrix

Risk # 3 Conflicts
between the
Coordinators of
the Executive
Low = 1 Moderate = 2 High = 3
Steering
Committee on
how to distribute
the resource.
Probability -> < 30% 30 – 60% 60 – 90%
The chance of
conflicts between
coordinators in the
way of managing
resources is 10 % -
Rare

3.2 - Risk Impact Matrix:

Risk Impact Assessment Matrix: Conflicts between the Coordinators of the Executive
Steering Committee. The Coordinators have a good relationship history in previous
projects. But for the new product, they will be responsible for a new role, allocating
project resources. There may be conflicts in the form of distribution
Project Constraint Low = 1 Moderate = 2 High = 3
> 30% cost
< 10% cost increase 10 – 30 % cost increase
increase
It may be necessary
to make some
Cost individual
intervention or
mediation between
the directors of the
committee
Time < 5% time increase 5 – 15% time increase > 15% time
increase

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 Dealing with conflict
between directors
can delay the
project schedule by
five days. Which
means just over 4%
Minimal scope Significant scope
Moderate scope change
change change
Minimal change
Scope
because the goal and
end product do not
change.
Quality
degradation
Quality degradation Quality degradation is
makes the
barely noticeable evident
deliverable
unusable
The objective and
Quality
the final product do
not change and the
Degradation of the
quality would be
almost
imperceptible

3.3 - Risk Response

Risk Priority Matrix

Risk Risk priority score
Risk # Probability Impact
Description (P x I)

Risk # 3 Conflicts 1 1 1
between the
Coordinators
of the
Executive
Steering
Committee.

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 ● It's a Known, Internal, Inherent and Negative Risk.
● Talk to the Directors of the project and identify vulnerabilities.
● Manage crises.
● Identify the reason for conflicts and work to eliminate it.

Response Strategies:
This is a Low Priority risk and the strategy will be Accept: acknowledge the
possibility of the risk occurring, but do not take any action unless/until it does. This is a
primary risk.
The ideal is to communicate twice a week with the Committee and observe the
dynamics of the meetings, the strategies and the decisions taken. Once a week, meet with
each director to see how expectations are progressing.
If conflict occurs, mediation, if the directors accept it, can be a measure to resolve the
conflict. Also remind them of the common goal. In the event of many complaints to a
Director, it may be necessary to suggest that he be removed and someone else replaces him.

Risk Priority Matrix for three risks

Risk Priority Matrix

Risk Risk priority score
Risk # Probability Impact
Description (P x I)
Risk # 1 Low 3 3 9
performance
of employees
Risk # 2 A new raw 2 3 6
material is not
of good
quality as
expected
Risk # 3 Conflicts 1 1 1
between the
Coordinators
of the
Executive

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 Steering
Committee.

References

Project Management Institute. 2017. A Guide to the Project Management Body of

Knowledge (PMBOK Guide). 6th ed. Newton Square, PA: Project Management.

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