Pro-active: Risk and Opportunity Management - Revision history

Tkokotas at 18:54, 17 November 2018

2018-11-17T18:54:25Z

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			''Developed by Nicolaj J. B. Thomsen''


	== Abstract ==		== Abstract ==
	'''Pro-active risk and opportunity management''' (P-AROM shorten for the sake of this articles length) considers negative and positive events in a project whereas risk and opportunities are the outcome of the events respectively. The purpose being mitigation of risks and enhancement of opportunities in the early phase of the project hereby gaining higher return of investment for the stakeholders. <ref name="Geraldi"/> Risk control is a tool used as P-AROM to fulfil its purpose. To obtain risk control a process with four stages is used. First step in the process is to identify the risks, then assess the risks, treat the risks and at last review the treatment of the risks which result in risk control. The fourth step of the process, review, is done for analysing the success rate of the risks responses/treatments.		'''Pro-active risk and opportunity management''' (P-AROM shorten for the sake of this articles length) considers negative and positive events in a project whereas risk and opportunities are the outcome of the events respectively. The purpose being mitigation of risks and enhancement of opportunities in the early phase of the project hereby gaining higher return of investment for the stakeholders. <ref name="Geraldi"/> Risk control is a tool used as P-AROM to fulfil its purpose. To obtain risk control a process with four stages is used. First step in the process is to identify the risks, then assess the risks, treat the risks and at last review the treatment of the risks which result in risk control. The fourth step of the process, review, is done for analysing the success rate of the risks responses/treatments.

Kittymaumau at 20:48, 2 October 2017

2017-10-02T20:48:17Z

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	== References ==		== References ==

	<references>		<references/>

	<ref name="Geraldi"> Geraldi, Joana and Thuesen, Christian and Stingl, Verena and Oehmen, Josef (2017) How to DO Projects? A Nordic Flavour to Managing Projects		<ref name="Geraldi"> Geraldi, Joana and Thuesen, Christian and Stingl, Verena and Oehmen, Josef (2017) How to DO Projects? A Nordic Flavour to Managing Projects

Kittymaumau at 20:47, 2 October 2017

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	<references>		<references>

	<ref name="Geraldi"> Geraldi, Joana and Thuesen, Christian and Stingl, Verena and Oehmen, Josef (2017) How to DO Projects? A Nordic Flavour to Managing Projects		<ref name="Geraldi"> Geraldi, Joana and Thuesen, Christian and Stingl, Verena and Oehmen, Josef (2017) How to DO Projects? A Nordic Flavour to Managing Projects
	Version 1.0, Publisher: Dansk Standard </ref>		Version 1.0, Publisher: Dansk Standard </ref>

Kittymaumau at 20:44, 2 October 2017

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Show changes

Kittymaumau at 12:50, 2 October 2017

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	This tool can be used in any projects but with a high demand on cost it is often seen optimal in medium to large project e.g. the new super hospitals ~~being build~~ in Denmark. The unpredicted cost overruns fund was initially at 7-8$%$ in the ~~capital region of Denmark~~ as a result from a pro-active risk management analysis. This was later changed to 10-15$%$ in the project process due to higher amount of unpredicted expenses <ref name="RegH"/>. Which is know as reactive risk management that do changes and solutions due to complications in a on-going project. ~~Due to unknown unknowns~~ pro-active risk and opportunity management ~~can not predict~~ every possible ~~event~~.		This tool can be used in any projects but with a high demand on cost, it is often seen optimal in medium to large project e.g. the new super hospitals construction projects in Denmark. The unpredicted cost overruns fund was initially estimated to 7-8$%$ of the budget as a result from a pro-active risk management analysis done for the projects in the capital region of Denmark. This was later changed to 10-15$%$ in the project process due to higher amount of unpredicted expenses <ref name="RegH"/>. Which is know as reactive risk management that do changes and solutions due to complications in a on-going project. Thus a limitation of pro-active risk and opportunity management is that prediction of every possible scenario is impossible. Pro-active risk management is not limited to the construction industry it can be used for any industry and project, due to it providing necessary analysis of complications that can occur.

	~~The super hospitals case is a construction project but pro~~-active risk management is not limited to the construction industry~~. It~~ can be used for any industry and project, due to it providing necessary analysis of complications that can occur.
	This article will explain the methodology of pro-active risk and opportunity management with an additionally amplification of the method in real cases.		This article will explain the methodology of pro-active risk and opportunity management with an additionally amplification of the method in real cases.

Kittymaumau at 11:48, 2 October 2017

2017-10-02T11:48:07Z

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	This tool can be used in any projects but with a high demand on cost it is often seen optimal in medium to large project e.g. the new super hospitals being build in Denmark. The unpredicted cost overruns fund was initially at 7-8$%$ in the capital region of Denmark as a result from a pro-active risk management analysis. This was later changed to 10-15$%$ in the project process due to higher amount of unpredicted expenses <ref name="RegH"/>. Which is know as reactive risk management that do changes and solutions ~~are done~~ due to complications in a on-going project. Due to unknown unknowns pro-active risk and opportunity management can not predict every possible event.		This tool can be used in any projects but with a high demand on cost it is often seen optimal in medium to large project e.g. the new super hospitals being build in Denmark. The unpredicted cost overruns fund was initially at 7-8$%$ in the capital region of Denmark as a result from a pro-active risk management analysis. This was later changed to 10-15$%$ in the project process due to higher amount of unpredicted expenses <ref name="RegH"/>. Which is know as reactive risk management that do changes and solutions due to complications in a on-going project. Due to unknown unknowns pro-active risk and opportunity management can not predict every possible event.

	The super hospitals case is a construction project but pro-active risk management is not limited to the construction industry. It can be used for any industry and project, due to it providing necessary analysis of complications that can occur.		The super hospitals case is a construction project but pro-active risk management is not limited to the construction industry. It can be used for any industry and project, due to it providing necessary analysis of complications that can occur.

Kittymaumau at 11:47, 2 October 2017

2017-10-02T11:47:17Z

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	== Abstract ==		== Abstract ==
	'''Pro-active risk and opportunity management''' considers ~~risk~~ and ~~opportunity~~ events in a project ~~with~~ the purpose of ~~mitigating the risk~~ and ~~enhance~~ the ~~opportunities before they occur. Risk events occur from uncertainties within a project whereas negative outcome is a risk for~~ the project ~~but positive outcomes can become opportunities~~ for the stakeholders ~~of the project~~. <ref name="Geraldi"/>		'''Pro-active risk and opportunity management''' considers negative and positive events in a project whereas risk and opportunities are the outcome of the events respectively. The purpose being mitigation of risks and enhancement of opportunities in the early phase of the project hereby gaining higher return of investment for the stakeholders. <ref name="Geraldi"/> Risk control is a tool used as pro-active risk and opportunity management to fulfil its purpose. To obtain risk control a process with four stages is used. First step in the process is to identify the risks, then assess the risks, treat the risks and at last review the treatment of the risks which result in risk control. The fourth step of the process, review, is done for analysing the success rate of the risks responses/treatments.

	~~To gain risk~~ control ~~for~~ a pro-active risk and opportunity management a process~~/model~~ is used. First step in the process is to identify the risks, then assess the risks, treat the risks and at last review the treatment of the risks which result in risk control. The fourth step of the process, review, is done for analysing the success rate of the ~~risk response~~/~~treatment~~.

	Risk as definition is probability P times the impact I giving the formula:<ref name="dumb"/>		Risk as definition is probability P times the impact I giving the formula:<ref name="dumb"/>
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	<math>R=I\cdot P</math>		<math>R=I\cdot P</math>

	~~Therefore is key~~ elements in risk management to control the probability and impact that events will occur and have. For pro-active risk management the key is to predict and manage these two values, done with different models and methods described further in this article. ~~The prediction will have the effect of~~ mitigation of risks and ~~enhanced opportunity events~~.		Key elements in risk management is to control the probability and impact that events will occur and have. For pro-active risk management the key is to predict and manage these two values, done with different models, tools and methods described further in this article. Which result in mitigation of risks and enhancement of opportunities that will insure cost and time benefits and increased scope quality.
	This tool can be used in any project ~~an example could be~~ the new super hospitals being build in Denmark. ~~Here the~~ unpredicted cost overruns fund was initially at 7-8% as a result from a pro-active risk management analysis. This was later changed to 10-15% in the project process due to higher amount of unpredicted expenses.<ref name="RegH"/> ~~This~~ is ~~known~~ as reactive risk management~~, the opposite of pro-active, which taggels events~~ in on-going ~~projects and find solutions~~. Due to unknown unknowns pro-active risk management can not ~~be perfect and adress~~ every possible event.

			This tool can be used in any projects but with a high demand on cost it is often seen optimal in medium to large project e.g. the new super hospitals being build in Denmark. The unpredicted cost overruns fund was initially at 7-8$%$ in the capital region of Denmark as a result from a pro-active risk management analysis. This was later changed to 10-15$%$ in the project process due to higher amount of unpredicted expenses <ref name="RegH"/>. Which is know as reactive risk management that do changes and solutions are done due to complications in a on-going project. Due to unknown unknowns pro-active risk and opportunity management can not predict every possible event.

	The super hospitals case is a construction project but pro-active risk management is not limited to the construction industry. It can be used for any industry and project, due to it providing necessary analysis of complications that can occur.		The super hospitals case is a construction project but pro-active risk management is not limited to the construction industry. It can be used for any industry and project, due to it providing necessary analysis of complications that can occur.
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	== Limitation of the ~~tool~~ ==		== Limitation of the Tool ==
	The limitation of pro-active risk and opportunity management is the need for preventive risk management. There will always be unexpected events within a project where a preventive action must be taken to get the project back on track. This means that pro-active risk management is not sufficient for stakeholders to invest in which means that risk management rely heavily on a good budget. Furthermore is the process of pro-active risk management costly due to the high amount of labour and hours to identify, assess and treat possible events. Due to the cost of risk management project with low budget can experience limitation in possible death of the risk management. Thus providing higher risks of uncertainties and limited options to exploit opportunities.		The limitation of pro-active risk and opportunity management is the need for preventive risk management. There will always be unexpected events within a project where a preventive action must be taken to get the project back on track. This means that pro-active risk management is not sufficient for stakeholders to invest in which means that risk management rely heavily on a good budget. Furthermore is the process of pro-active risk management costly due to the high amount of labour and hours to identify, assess and treat possible events. Due to the cost of risk management project with low budget can experience limitation in possible death of the risk management. Thus providing higher risks of uncertainties and limited options to exploit opportunities.



	== Annotated ~~bibliography~~ ==		== Annotated Bibliography ==
	'''How to do project?''': Covers the basics of project management with focus in projects and the four perspective of projects; purpose, people, complexity and uncertainty.		'''How to do project?''': Covers the basics of project management with focus in projects and the four perspective of projects; purpose, people, complexity and uncertainty.
	'''Using Probability – Impact Matrix in Analysis and Risk Assessment Projects''': Had the focus of risk management with different tools such as impact/probability matrix with the R=I*P match model. The article further developed understanding of risk managements importance within projects and used tools to determined impacts measures of different risk events.		'''Using Probability – Impact Matrix in Analysis and Risk Assessment Projects''': Had the focus of risk management with different tools such as impact/probability matrix with the R=I*P match model. The article further developed understanding of risk managements importance within projects and used tools to determined impacts measures of different risk events.

Kittymaumau at 19:21, 30 September 2017

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 The limitation of pro-active risk and opportunity management is the need for preventive risk management. There will always be unexpected events within a project where a preventive action must be taken to get the project back on track. This means that pro-active risk management is not sufficient for stakeholders to invest in which means that risk management rely heavily on a good budget. Furthermore is the process of pro-active risk management costly due to the high amount of labour and hours to identify, assess and treat possible events. Due to the cost of risk management project with low budget can experience limitation in possible death of the risk management. Thus providing higher risks of uncertainties and limited options to exploit opportunities.
 == References  ==
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 Analysis and Risk Assessment Projects, Publisher:  Scientific Papers (www.scientificpapers.org)
 Journal of Knowledge Management, Economics and Information Technology </ref>

Kittymaumau at 19:20, 30 September 2017

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	== Annotated bibliography ==		== Annotated bibliography ==
			'''How to do project?''': Covers the basics of project management with focus in projects and the four perspective of projects; purpose, people, complexity and uncertainty.
			'''Using Probability – Impact Matrix in Analysis and Risk Assessment Projects''': Had the focus of risk management with different tools such as impact/probability matrix with the R=I*P match model. The article further developed understanding of risk managements importance within projects and used tools to determined impacts measures of different risk events.
			'''Paradigme for styringsmanual for Region Hovedstadens Kvalitetsfonds Byggeprojekter''': This was a given article from a project leader within the new super hospitals being build in Denmark. It simply contains information of how the project is delegated with meetings, pro-active risk management, budget, scope etc.
			'''Lecture from project management MEP-4''': This was a power point from the bachelor course project management provided by DTU. The power point and lecture details the perspective uncertainty with definition, tools, how to react and the four stages towards risk control; identification, assessment, treatment and review.
			'''Guidance on project management''': Is from an DS/ISO standard that concentrates in explaining how that standard way of treating project management should be done. Furthermore definition of tools and perspectives within management is elaborated on. This source was used to better understand risk controlling.
			'''Managing construction projects''': This is a book on project management within constructions. Used in detail to understand risk responses and probability/impact matrix. The book itself covers a lot with in project management such as managing stakeholders, budget, scope, schedule etc.
			'''https://simplicable.com''': Was a source that described preventive actions and change request. With examples and definitions of the two.
			'''Lecture from Planning and management in construction, Lean construction and last planner system''': A lecture in the course Planning and management in construction provided by DTU. This lecture explained how pro-active management if beneficial for project and companies. Further elaborating on tools that was used in real cases.

Kittymaumau at 18:54, 30 September 2017

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	'''Risk responses''' is from the treatment of the risks phase, thus providing stakeholders with five choices of responses.<ref name="MCON" /> First '''Accept the risk''' simply accept that this risk can occur without further engagement, this is often chosen with risk that have a low probability. Second '''Eternalise the risk''' is delegating the risk to a subcontractor often done when the contractor has more experience or better knowledge of the dependant risk. Third '''Mitigate the risk''' this is done to minimise the probability of the risk to occur often done by changing scope of the project. This is the most used response to risks and thereby one of the greatest reasons for pro-active risk management has such a high importance for the project manager. Fourth '''Insure or hedge against the risk''' done to prevent risks such as fires where the impact will be high but the probability is low. The solution is not always available due to the insurance companies acceptance is needed. Fifth '''Delay the decision''' is done when more information is analysed to give a better outcome of the treatment.		'''Risk responses''' is from the treatment of the risks phase, thus providing stakeholders with five choices of responses.<ref name="MCON" /> First '''Accept the risk''' simply accept that this risk can occur without further engagement, this is often chosen with risk that have a low probability. Second '''Eternalise the risk''' is delegating the risk to a subcontractor often done when the contractor has more experience or better knowledge of the dependant risk. Third '''Mitigate the risk''' this is done to minimise the probability of the risk to occur often done by changing scope of the project. This is the most used response to risks and thereby one of the greatest reasons for pro-active risk management has such a high importance for the project manager. Fourth '''Insure or hedge against the risk''' done to prevent risks such as fires where the impact will be high but the probability is low. The solution is not always available due to the insurance companies acceptance is needed. Fifth '''Delay the decision''' is done when more information is analysed to give a better outcome of the treatment.

	The two outputs shown in figure 4. is elaborated on further. '''Change requests''' is the state where the outcome of the treatment has been decided to change a direction or decision from the original project plan. A simple example could be a firm producing televisions, that discovers the remote produced does not have sufficient possibilities for clients to control the television as wanted. A change request would then come from the product development team for including the features wanted.~~[[File:Pokeyoke.png\|300px\|thumb\|Figure 5. Poke Yoke example.<ref name="rolf"/>]]~~		The two outputs shown in figure 4. is elaborated on further. '''Change requests''' is the state where the outcome of the treatment has been decided to change a direction or decision from the original project plan. A simple example could be a firm producing televisions, that discovers the remote produced does not have sufficient possibilities for clients to control the television as wanted. A change request would then come from the product development team for including the features wanted.
	The second output from risks control is '''corrective actions''' which is an action taking within a firm for either manufacturing, systems, documentation or procedures to reassure quality of scope, be within budget and no time delays. E.g. could be a product resource that stops delivering here actions must be taken to either work more efficient with the resources provided or get a new delivery where stakeholders has to accept the related extra cost.		The second output from risks control is '''corrective actions''' which is an action taking within a firm for either manufacturing, systems, documentation or procedures to reassure quality of scope, be within budget and no time delays. E.g. could be a product resource that stops delivering here actions must be taken to either work more efficient with the resources provided or get a new delivery where stakeholders has to accept the related extra cost.
	Both the outcomes would often be a reactive risks management thus meaning that pro-active risks management have limitations.		Both the outcomes would often be a reactive risks management thus meaning that pro-active risks management have limitations.

			[[File:Pokeyoke.png\|300px\|thumb\|Figure 5. Poke Yoke example.<ref name="rolf"/>]]
	A third risk control output, not shown on the figure, is a pro-active risks management orientated action known as '''preventive actions'''<ref name="simpli" /> this is a action taken to prevent negative events. The action is based of analysis of the product or from managers experience. E.g. the car company Toyota has one of the worlds best developed production systems. Which has been under development since 1950's with the goal of efficient and fast production <ref name="rolf" />. The production system is a product of well performed pro-active risks management that has improve the companies value and efficiency. Solutions that has been made in the production of Toyota cars is e.g. Poka Yoke which insures that wrong assembling can not occur. This is done by making connections between two components impossible to do wrong as shown in figure 5. Prevention action often have a high return of investment due to changes made in the early stages of a project is cheaper rather than later.		A third risk control output, not shown on the figure, is a pro-active risks management orientated action known as '''preventive actions'''<ref name="simpli" /> this is a action taken to prevent negative events. The action is based of analysis of the product or from managers experience. E.g. the car company Toyota has one of the worlds best developed production systems. Which has been under development since 1950's with the goal of efficient and fast production <ref name="rolf" />. The production system is a product of well performed pro-active risks management that has improve the companies value and efficiency. Solutions that has been made in the production of Toyota cars is e.g. Poka Yoke which insures that wrong assembling can not occur. This is done by making connections between two components impossible to do wrong as shown in figure 5. Prevention action often have a high return of investment due to changes made in the early stages of a project is cheaper rather than later.


	== Limitation of the tool ==		== Limitation of the tool ==
			The limitation of pro-active risk and opportunity management is the need for preventive risk management. There will always be unexpected events within a project where a preventive action must be taken to get the project back on track. This means that pro-active risk management is not sufficient for stakeholders to invest in which means that risk management rely heavily on a good budget. Furthermore is the process of pro-active risk management costly due to the high amount of labour and hours to identify, assess and treat possible events. Due to the cost of risk management project with low budget can experience limitation in possible death of the risk management. Thus providing higher risks of uncertainties and limited options to exploit opportunities.