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Managing of Risks and Quality in Projects

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Managing of Risks and Quality in Projects 8th International Quality Conference May 23rd 2014 Center for Quality, Faculty of Engineering, University of Kragujevac 1) MANAGING OF RISKS AND QUALITY IN Bojan Stojcetovic Milan Misic1) PROJECTS Zivce Sarkocevic1) 1) Abstract: On each project affects a large number of risk Dragan Lazarevic events, its managing is difficult and requires many Danijela Zubac1) interventions. Risk events also greatly affect the quality of the project. Delivering the project with demanded 1) High technical school of quality customer should be primary objective of project professional studies, Zvecan, manager. But to achieve that it’s necessary to manage Serbia quality in all project activities. Managing of risk and [email protected] quality in projects is described in paper that follows. Keywords: projects, quality management, risks management 1. INTRODUCTION 2. RISK Risk and quality management has Risk is an uncertain event or condition been designated as two of the main areas that, if it occurs, has an effect on at least of the Project Management Body of one project objective. Objectives can Knowledge (PMBOK) by the Project include scope, schedule, cost and quality Management Institute, which is the largest [1]. Outcomes of risky events can be both, professional organization dedicated to the positive and negative. project management field. It is impossible to imagine a project The presence of risk creates surprises without risk. Of course some projects will throughout the project life cycle, affecting be high-risk, while others have less risk, everything from technical feasibility to but all projects are by definition risky to cost, market timing, financial performance, some extent. strategic objectives and of course quality. Those involved with launching, Since all projects are exposed to risk, sponsoring and managing projects in successful projects are the ones where that organizations should welcome risk in their risk is properly managed. Systematic projects, since it enables and supports application of risk management change, innovation and creativity – as long methodology and its extension to the entire as it is taken sensibly, intelligently and organization can provide a significant appropriately, and as long as it is managed competitive advantage in an increasingly effectively. It is also important to uncertain world. remember that not all risk is bad, since the Every project has an anticipated level concept includes both threats and of quality for the project deliverables. The opportunities. Within the project context, details and specifications set out by the this means that there are uncertainties that customer determine what the expected matter because if they occurred they would level of quality is. But risk event can hinder achievement of project objectives threaten planned quality. For that reason (threats), but there are also uncertainties it’s necessary to manage both quality and whose occurrence would help to achieve risks in projects. those objectives (opportunities). The risk of the project is characterized 8th IQC May, 23 2014 51 by three key factors, namely: [2] project team members and risk event - phenomenon, activity management, clients and or event that could have a customers, suppliers and negative impact on the project; subcontractors.All of these probability of risk - the individuals and groups are likelihood of the risk event; unpredictable to some extent, and the size of the stake - the size of introduce uncertainty into the the loss, which can occur when projects on which they work. the event is achieved. Stakeholders - These are a particular group of people who 2.1. What projects makes risky? impose requirements, There are numerous risks which can expectations and objectives on the affect on project. Some of them can be project. Stakeholder requirements presented in one of following groups: can be varying, overlapping and common characteristics of sometimes conflicting, leading to projects; risks in project execution and external environment. acceptance. Factors in all projects which make Change - Every project is a them inherently risky include: change agent, moving from the Uniqueness - Every project known present into an unknown involves at least some elements future, with all the uncertainty that have not been done before, associated with such movement. and naturally there is uncertainty Some of environmental factors are: associated with these elements; market volatility; Complexity - Projects are competitor actions; complex in a variety of ways, and emergent requirements; are more than a simple list of client organizational changes; activities to be performed. There internal organizational changes; are various kinds of complexity in political; projects, including technical, economic; commercial, interfaces or social; relational, international project technological; each of which brings risk into the legal; project. international; Assumptions and constraints- environmental; Project scoping involves making demographic factors. a range of guesses about the future, which usually include both 2.2. How to manage risks in projects? assumptions (things we think will Although some risks can have positive or will not happen) and impact on projects it is necessary to constraints (things we are told to manage risks because mostly of them are do or not do). Assumptions and harmful and can have negative influence constraints may turn out to be on project. wrong, and it is also likely that The objectives of project risk some will remain hidden or management are to increase the probability undisclosed, so they are a source and impact of positive events and decrease of uncertainty in most projects. probability and impact of negative events People - All projects are in the project [1]. performed by people, including 52 B. Stojcetovic, M. Misic, D. Lazarevic, D. Zubac There are numerous approaches for and to reduce threats to project risk management and in this paper will be objectives; presented PMBOK methodology. Perform qualitative risk Project risk management include analysis – there are numerous following processes: risks but not all of them have Plan risk management – this same impact so it’s necessary to process is very important. In this prioritize risks. This process process project manager should allow it by assessing and provide necessary resources and combining risk probability of time for risk management occurrence and impact; activities. Result of this process is Perform quantitative risk risk management plan which analysis – is the process of the describes how risk management numerically analyzing the effect will be structured and performed of identified risks on overall on the project; project objectives. Identify risks – this process Monitor and control risks – should determine which risks may include implementing risk affect the project and document response plans, tracking identified their characteristics. This is risks, monitoring residual risks, permanent process because risks identifying new risks, and can appear through its life cycle; evaluating risk process Plan risk responses – each risk effectiveness throughout the event may demand different project. Project should be responses. In this process we continuously monitored for new should develop options and risks. actions to enhance opportunities Figure 1 - Risk management processes 8th IQC May, 23 2014 53 2.3. What are the possible strategies for ensures that each risk requiring a response risk response? has an owner monitoring the responses, Risk response is the process of although the owner may delegate developing strategic options, and implementation of a response to someone determining actions, to enhance else. opportunities and reduce threats to the Risk response strategies are presented project’s objectives. A project team in table 1. and it is divided into two member is assigned to take responsibility groups. for each risk response. This process Table 1 – Risk response strategies Strategies for threats Strategies for opportunities AVOID - Risk can be avoided by removing EXPLOIT - The aim is to ensure that the the cause of the risk or executing the project opportunity is realized. This strategy seeks to in a different way while still aiming to eliminate the uncertainty associated with a achieve project objectives. Not all risks can particular upside risk by making the be avoided or eliminated, and for others, this opportunity definitely happen. Exploit is an approach may be too expensive or aggressive response strategy, best reserved for time‐consuming. However, this should be the those “golden opportunities” having high first strategy considered. probability and impacts. TRANSFER - Transferring risk involves SHARE - Allocate risk ownership of an finding another party who is willing to take opportunity to another party who is best able responsibility for its management, and who to maximize its probability of occurrence and will bear the liability of the risk should it increase the potential benefits if it does occur. The aim is to ensure that the risk is occur. Transferring threats and sharing owned and managed by the party best able to opportunities are similar in that a third party deal with it effectively. is used. MITIGATE - Risk mitigation reduces the ENHANCE - This response aims to modify probability and/or impact of an adverse risk the “size” of the positive risk. The event to an acceptable threshold. Taking opportunity is enhanced by increasing its early action to reduce the probability and/or
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