Response 1 to Keith’s M7D1: When a Project Gets Risky

22Feb 2022 by
This is a response to my one of my peer’s discussion post.  Please read original discussion post and peer’s discussion response post instructions, as well as my original discussion post and ‘s original discussion post for perspective. Additionally, please use references, other references and attachments to support response.
Peer’s Discussion Post Response Instructions: 
Identify the peer’s position and identify whether the ideas would work. Why or why not?
Keith’s discussion Post:
Historically, you have done business with AAA Concrete and the husband and wife owners, Marvin and Betty. Unfortunately, they have decided to retire and have turned the business over to their three children. You have heard rumors that the children do not offer the same quality materials as their parents, which could pose a significant problem given that the restaurant will have a large concrete balcony for alfresco (fresh air) dining. Would this be considered a risk to the project? Why or why not? What, if anything, should you do as the project manager?Larson and Gray (2021) define risk as an uncertain event or condition that if it occurs, has a positive or negative effect on project objectives (p. 213). In this situation, the uncertain event was the concrete company utilized for other projects having the owners retire and turned over to their children. The negative effect this has on this specific project is the significantly reduced quality of work provided by the new owners. With the customer planning for a large concrete balcony for dining, poor quality concrete work could create safety issues for patrons of the restaurant. With this taken into account, this situation is absolutely considered a risk to the project. There are steps that can be taken as the project manager to mitigate this risk. When looking at a mitigation response strategy, Bissonette (2016) explains that the goal is to reduce the probability of occurrence for a risk, lowering the impact that a risk has on a project, or both. Understanding that the new ownership of this concrete company has proven to achieve inferior results from the previous owners, the current probability of occurrence would be high. To reduce this, other concrete companies should be evaluated that would produce a product that is of the adequate standards for this customer. A meeting with vital stakeholders, including the customer, should occur to explain the requested scope change. Just because a company has been historically utilized, doesnt mean it is necessarily the best or cheapest option. With lower quality concrete work, the customer would have to deal with potential safety issues, as well as increased maintenance and repair costs that wouldnt be present for higher quality work.One of the employees on the project has been approached by someone they know about purchasing a second-hand (used) commercial freezer and oven. The savings could be significant (around $50,000) compared to purchasing the new items. What should you as the project manager do in this situation? What support do you have for that decision? Does the availability of used appliances pose risk to the project? If accepted, would a change document be necessary?With a situation such as this, it would be a good idea for the project manager to have a conversation with the customer about the second-hand commercial freezer and oven. From the perspective of a new restaurant owner, the budget may be tight until the restaurant becomes established and a profit is made. With that in mind, it may be a great idea for the customer to proceed with an opportunity to save $50,000 from the project budget. Boyce (2003) details two components of technical risk management as a deliverable working and the cost for the deliverable being within the budget. If these pieces of equipment function well, it would put both of these components into a positive spotlight, which would result in a happy customer and other stakeholders.
However, the project manager should be responsible for bringing forth the risks associated with such a decision. Making this decision would bring about technical risks to the project. Larson and Gray (2021) discuss how these types of risks can result in projects to be shut down due to systems not functioning properly and requiring contingency plans to be established. For example, utilizing second-hand equipment will cause the equipment to no longer be covered under warranty, which could result in significant added costs down the road for the customer. Additionally, there may be added maintenance fees and a shortened lifespan, which can be amplified if they werent maintained well by the previous owners. Overall, conversations between the vital stakeholders should be held, with a formal scope change process being followed if the decision is made to go with the second-hand equipment. The reasons a change document would be necessary is due to the alteration made to the original plan. While looking at the project network, new items would have to be added, such as scheduling delivery of the second-hand equipment, which would have previously been handled by the manufacturer of the new equipment. Additionally, having a qualified technician examine each piece of equipment would be vital to making the decision.Provide a third scenario relating to risk. How would you handle the new instance as project manager?A third scenario involving risk in a project is the potential for a team member to leave the current job prior to completion of the project. The impact due to this risk gets even greater if the experience required for that position on the team is highly specific and technical, such as a system administrator of a particular system utilized by a business. By losing a highly trained individual, it could take a significant amount of time to find a replacement and train them to the same level to complete the project. If the project resources are thin and a single point failure for that function on the project team exists, it is best to plan contingencies into the project prior to commencement. Larson and Gray (2021) point out the importance of contingency planning as a method to reduce the negative impact from a potential foreseen risk becoming an actual event. In this situation, several steps can immediately take place, such as opening a new job ad and starting the hiring process. However, that wouldnt fill the gap in the intermediate period. In addition to hiring a new team member, an agreement can be worked out with other system administrator qualified people within the company and their organizational leadership to provide a temporary assignment change to this project team. For example, the system utilized for tagouts at my facility has a person who is trained and dedicated to issuing tags for the work being performed. Contingencies are in place for maintenance coordinators to fill in that position if the person is out for any number of reasons. The same would happen in the project situation mentioned above.
 
 
Instructions and References:
Risk is a part of every business and project. Identifying and eliminating as much risk as possible are the duties of the project manager. Maintaining change/version control documents to validate changes in project scope is essential to ensure that the project will be paid for and the customer will accept the project upon completion.Respond to the following:
You are the project manager for a new restaurant. The project includes construction of the physical building, equipping the kitchen to commercial standards, and ensuring that the kitchen has all essential elements and may be safely used to produce cuisine for customers. As the project progresses, you identify several areas with increased risk and approach the customer with suggestions for addressing the new risk. One area of concern is the change of management at a supplier. Historically, you have done business with AAA Concrete and the husband and wife owners, Marvin and Betty. Unfortunately, they have decided to retire and have turned the business over to their three children. You have heard rumors that the children do not offer the same quality materials as their parents, which could pose a significant problem given that the restaurant will have a large concrete balcony for alfresco (fresh air) dining. Would this be considered a risk to the project? Why or why not? What, if anything, should you do as the project manager?
One of the employees on the project has been approached by someone they know about purchasing a second-hand (used) commercial freezer and oven. The savings could be significant (around $50,000) compared to purchasing the new items. What should you as the project manager do in this situation? What support do you have for that decision? Does the availability of used appliances pose risk to the project? If accepted, would a change document be necessary? Justify your answer.
Provide a third scenario relating to risk. How would you handle the new instance as project manager? Please provide details.
Textbook:
Larson, E. W., & Gray, C. F. (2021). Project Management: The Managerial Process (8th ed.). New York, NY: McGraw-Hill Companies, Inc.
Chapter 7: Managing RiskChapter 13: Progress and Performance Measurement and Evaluation
 Thanks!

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