Introduction

Project risk management is a significant facet of project management. In order to attain the objectives of the project work, it is necessary to consider all possible risks, threats, and challenges that might occur while conducting the project. Along with this, it is the responsibility of the project manager to carefully design various activities of the project so that minimum risk occurs. Risk management can be defined as a procedure that enables the individual to understand and manage the overall risk relating to the project. It also enables to optimize success with amplifying the opportunities and minimizing threats. Risk comprises of threats and opportunities as well, both needs to be properly managed via risk management process (Kendrick, 2015). At the project level, risk management mainly focuses on individual risks that can affect the aim and objectives of the project. However, it is important for the project manager to understand various threats, challenges, and complexities of the overall project.

Risk management makes impact on different aspects of the project such as budget, schedule, quality of work, quantity, and communication of project managers with individuals involved and stakeholders’ engagement (Hopkinson, 2012). With regard to the present project of family kitchen remodeling, proper research, and analysis of kitchen remodeling work havebeen done. This paper also includes sources of uncertainty and risks in the project, along with describing the process of risk management. Moreover, some considerations are also given for project success. In the context of the subject of the paper, remodeling refers to the act of renovating the existing structure. Updating and renovating the existing structure consist of a number of steps and all the crucial aspects of remodeling work has to be considered by project managers for success of the project.

Understanding Risk Management through the Analysis of Family Kitchen Remodeling Project

The risk is inevitable while undertaking any project; hence, the project manager needs to assure that negative impacts of the risks are kept to a minimum. In the context of family kitchen remodeling, the project manager needs to make an efficient risk management plan so that the negative impacts of the risks can be avoided. Furthermore, suitable strategies for mitigating the risks can be adopted after identifying the risks associated with the project. The project manager needs to consider risk management framework for this purpose. It is a process of identifying, assessing, and managing the risk factors throughout the completion of the project. It intends on being proactive on possible risk events relating to the project (Hopkinson, 2012).

Figure: Risk Management Framework (Poyry, 2016)

This process consists of various steps such as identifying and assessing risks, analyzing risks, determining strategies to manage risks, developing and executing action plans, measuring and monitoring and finally, aggregating result, along with integrating those results with the decision-making process. Every step of the risk management process is of vital importance. The purpose of this framework is to identify possible risks, reduce, or minimize those risks using efficient methods and enable better decision-making with regard to the risks. There can be various internal and external sources associated with the project (Cameron & Raman, 2005). The first step in family kitchen remodeling is to identify the risks and origination of those risks.

Various risks that are associated with family kitchen remodeling project can be identified by the project manager. Chances of exceeding the budget of the project are high in remodeling event; therefore, some cost-effective measures must be employed by the project manager while executing the project. In addition to this, the lack of cooperation from team members, less participation of team members and unavailability of necessary products and appliances on time are also probable risk factors for this project. Along with this, there can be difficulties with installing the kitchen sink, and due to these issues, a timeline of the various phases of the project can exceed (Jordan, 2013).

The timeline can exceed due to error occurrence in installation and other processes. Other than this, damaged items in the kitchen that need replacement can also create risks to project completion with regard to time and cost. In order to achieve success in the project of kitchen remodeling, the project manager needs to take into account every critical factor. The project manager should ensure the safety of workers and customers while renovating the place. Factors such as slippery floors, food burns, falling of knives in the kitchen, burn due to dangerous machinery and equipment are also need to be considered while planning and designing the project work of family kitchen remodeling. As a whole, project risks mainly include technical risks, environmental risks, the performance of workers, quality of work, safety issues and schedule-related risk (Alleman, 2014).

Risk management system does not only intend to identify the risk in the project but also quantify the risk and mitigate the negative impacts of the risk. Under risk quantification, project managers evaluate the likely chances of the occurrence of risk and further impact of the risk on the whole project work. Furthermore, in the next step of risk response, project manager works towards eradicating the identified threats by eliminating the source of threats. It also includes minimizing the expected cost of the risk event by reducing its probability to occur during execution of the project. Apart from this, risk response stage involves accepting the negative impacts of the risk event and plan suitable strategies to deal with the risk factors. In the context of family kitchen remodeling, the project manager needs to design the risk matrix for the successful accomplishment of the project objectives (Jordan, 2013).

Figure: Risk Matrix for Family Kitchen Remodeling Project

The risk matrix is a useful tool in project risk management for evaluating the likelihood of various risks associated with the project, along with considering the impact and consequences of those risks. It is also referred as risk assessment matrix. It enables the project manager to understand the risk factors in the project work and helps in reducing those threats for the success of the project. Risk matrix for family kitchen remodeling project reflects that the total cost and timeline of the project can exceed from its established limit (Alleman, 2014). Risk response stage is concerned with developing and designing appropriate action plan so as to minimize the negative impact of risk event on the project. The project manager needs to design contingency strategies in this step of risk management. Few useful steps can be taken by the project manager to successfully complete the remodeling of the family kitchen. With regard to the identified risk factor, risk responses are given below:

  • The project manager should develop and implement cost-effective measures to fulfill the budgetary needs.
  • Workers should constantly be encouraged so their performance would not drop and project manager should allocate more participants to meet the timeline of the project (Measom, 2016).
  • The project manager should take the help of plumber during the installation of varied equipment in the kitchen to avoid delay in the project.
  • The project manager must keep alternate appliances and products in case of unavailability of required products to save time.
  • The project manager should tactfully design the kitchen by taking proper safety measures. The manager should avoid the usage of slippery floor, take care of knives place, and also avoid the contact with dangerous equipment, in the kitchen to avoid any accidents (Measom, 2016).

Risk Analysis:

Risk analysis is a significant component of risk management. There are two types of risk analysis that are qualitative and quantitative risk analysis. The qualitative analysis of risk prioritizes the identified risks of project with the help of predefined rating scale. This analysis also includes the categorization of different risks associated with a project. On the other hand, quantitative risk analysis refers to the further analysis of the major risks. In this process, quantitative and numerical rating is assigned for probabilistic analysis of a particular project.

The entire process of risk analysis involves the study and identification of risk components that are uncertain and may arise in the future. Therefore, risk analysis refers to the systematic study and review of the risks related to the project or action that brings uncertainty in a future course of action (Kendrick, 2015). It measures the level of uncertainty of future cash flows, and returns of the project. Therefore, the risk analysis is a significant step of risk management that identifies the risk and takes corrective steps to minimize the impact of that risk. Further, the risk is categorized as internal risk and external risk. Internal risk can be controlled by the project manager in comparison to external risk, which is beyond the control of management. However, risk analysis involves various key components that must be undertaken while analyzing risks that are described below:

Identify Risk:

The first major component while analyzing the risk is the identification of risk. The risk analyses process begins with the identification and anticipation of future risks. The risk assessment has been conducted for the whole organization by evaluating its current capabilities around the entire functional areas, which assess the likelihood of risk in different functional units of business and further assesses the impact and chances of those risks (Damodaran, 2008).

Source of Risk:

The next component after identifying the risk is the source or the cause of risk. The source of risk helps to trace the cause of risk, which helps to handle the risk effectively and reduces its overall negative impacts. The assessment of sources of risk helps the management to understand the cause of risk after which they are able to design the risk metrics and responses properly.

 Risk Estimation:

Risk estimation is the process of estimating the potential impacts and the likelihood of risks. It involves the projection of each risk, which was identified earlier by analyzing the historical data, experience, and available information. The projections reflect the possibility of occurrence of certain events and its impact that may put negative consequences on the functioning of the kitchen remodelling project.

Risk Evaluation:

Risk evaluation is the process of analyzing the level of impact on the different parts of the organization. Further, on the basis of thelevel of impact, the organization decides whether to avoid that risk or create strategies in the response of the risk (Moeller, 2011). The risks, which the organization can avoid, are undesirable risks and those, which the organization cannot avoid, are opportunities for the organization to gain the ability of dealing with these types of risk by developing new strategies. Therefore, the risk evaluation helps the project manager to decide whether the risk can produce an adverse impact on the project or not.

Mitigate and Monitor Risk:        

The last component of risk analysis is to mitigate those risks, which produce negative impacts on the functioning of the organization. Further, after mitigating risk, the project manager should make effective efforts to monitor those efforts, which are implemented to reduce the adverse impact of the risk. The monitoring of efforts that are implemented in the project helps to find the gap between the efforts suggested and actually implemented. Therefore, monitoring of risk helps to evaluate efforts that are implemented to reduce the adverse impact of risks.

Plan for Accommodating Changes in the Kitchen Remodeling Project

 

 

 

 

 

Assessment of Risk and Opportunity Management Process for Kitchen Remodeling Project

In context of the present project of family kitchen remodeling, proper research, and analysis of kitchen remodeling work have been done. This paper includes the risk management process that will assist the project manager in dealing with external, as well as, project related risk situations. In order to understand the risk management process,  it is vital for project managers to categorize and prepare a plan in advance for risk management process that will contribute in successful completion of kitchen remodeling project (Cameron.& Raman, 2005). For accomplishing this objective, the paper provides a detailed description of sources of uncertainty in the project and the process of risk management. In the context of the subject of the paper, remodeling refers to the act of renovating the existing structure. Updating and renovating the existing structure consist of a number of steps and all the critical aspects of remodeling work has to be considered by project managers for success of the project (Simmonds, 2004).

The risk management process includes various steps such as identifying and assessing risks, analyzing risks, designing strategies to manage identified risks, developing and executing action plans, measuring and monitoring and finally, aggregating result, along with aligning the derived results with the decision-making process. Every step of the risk management process is of crucial importance in completion of the project. The purpose of this framework is to identify possible risks, reduce, or minimize those risks using efficient methods and enable better decision-making with regard to the risks. There can be various internal and external sources associated with the project (Cameron & Raman, 2005).

 

 

 

 

 

 

 

Figure1: Risk Management Process

Source: http://www.pmbypm.com/pmbok-risk-management-process/

Risk management process follows 5 critical steps for determining the probable risk events in the project and for controlling them to ensure the success of project. The steps are discussed in detail in the paper for assisting project manager in kitchen remodeling project:

Step 1: Planning:

            The project manager can start with preparing plans for risk management. This includes planning for:

  • A list of risk management practices or activities.
  • Responsibilities that are associated with risk management practices.
  • Budget set for risk management process.
  • Schedule of risk management activities.
  • Communication and reporting framework for risk management activities (Heldman, 2010).

 Step 2: Identifying the risks:

Before starting the project, it is essential for the project manager to identify the potential risks in the kitchen remodeling project and develop strategies to mitigate the identified risks in the project. Project manager should utilize his past experiences in related projects

and should discuss the issue with other participants in the project for seeking their suggestions, for eliminating the recognized risks from the project (Hill, 2009). The project manager should identify the risk characters in remodeling project and; their symptoms and causes. Further, the impact of uncertainties on the project activities should also be investigated.

Step 3: Analyze and Prioritize:

            After identification of the potential risks, project manager is required to critically explore the likelihood and consequence of every risk. With this he will develop an understanding of the of risk attributes and their potential to affect primary objectives of kitchen remodeling project. There are different tools that can be used for analysis purpose:

Qualitative Risk Analysis

  • Risk probability and impact assessment
  • Risk data Quality assessment
  • Risk categorization
  • Experts judgment

Quantitative Risk Analysis: Quantitative analysis focuses on identifying the most influencing risks and determining the areas that require more attention and resources. Quantitative analysis tools are:

  • Sensitivity analysis
  • Decision tree analysis
  • Expected Monetary Value analysis
  • Monte Carlo Analysis

After this, project manager should prioritize the identified risks that will assist in eliminating or minimizing the impact of these risks on project’s quality (Bartlett,2004).

 

 

 

 

 

Step 4 Strategize:

The next step in risk management process for family kitchen remodeling project is to plan the risk responses in advance for prioritized risks. This should include:

  • Determining risk responses for identified threats from external environment.
  • Determining risk responses for opportunities created by the external environment (Hillson, 2012).

Step 5: Monitor and Control:

The last step in risk management process is to monitor projects performance and implement controlling measures. The project manager should have a clear picture of the situation in which kitchen remodeling project is developing in reality. For accomplishing this purpose, it is essential to keep a record of identified risks, monitor the effectiveness in risk responses and identified emerging risks in the project. This can be assured by the project manager by meeting following requirements:

  • A regular review of the project’s progress
  • An effective reporting network
  • Transparency in the project’s
  • Release of contingency in circumstances where individual risk pass without their occurrence.

Monitoring and controlling should be done continuously and should include:

  • Monitoring the identified risks.
  • Risk controlling through planned and unplanned consequences.
  • Investigating effectiveness of the risk process (Hillson, 2012).

 

 

 

 

 

 

 

Appendices

Risk Management Template

s. no Risks involved Likelihood

(High/Medium/Low)

Effected tasks Assumptions Mitigation Strategy Level of priority
1. Lack of coordination among the workers: Coordination among the workers may result in low quality of work Low Construction and designing It will help in maintaining coordination among the workers. The project manager should encourage the practice of teamwork among workers and should ensure that there is proper communication among them High
2. Products and resources unavailability: Appliances and products are unavailable due to budget problems Medium Delay in the work, and leads to incomplete task Products and resources will be available The project manager should plan the project effectively from the initial stage by applying Project Evaluation and Review Technique (PERT) and Critical Path Evaluation (CPM) strategies High
3. Problems in plumbing work: Loopholes in the kitchen sink and faucet Medium It will create ineffective working conditions Plumbing work will be improved The project manager should identify the loopholes as soon as possible and should take suggestion from technicians to resolve the problem effectively High
4. Time-line may exceed: Time allotted for completion of the project may be exceeded High Dissatisfaction in allotting future tasks Time-line will not be exceeded for the project work The project manager should keep a track record of day to day activities of the workers to make sure that activities are completed within assigned time limits High
5. Learning curve involved with the project team members High Improper design analysis of construction work Learning curve will include all the team members Training to new laborers should be provided to help them in managing their work effectively Medium
6. Damaged items that need to be replaced and reordered Medium Delay in accomplishing construction work Damaged items will be replaced and construction work will not be affected The damaged items should be replaced effectively so that the project’s performance is not hampered. High
7. Items need to be readjusted while remodeling work is being done High Time will be consumed in this process that may result in delays Items can be readjusted easily, which will result in timely completion of work The project manager should revise and develop plans continuously. Further, extensive planning should be done for designing and procurement stages in order to minimize the readjustment situations Low
8. Workers disengagement during work: There are communication barriers among the workers regarding the work Low Leads to delay in completion of construction work Communication barriers will be improved that it will enhance workability Establish time schedule to ensure regular communication among the workers and efforts to be made to remove communication barriers. In addition to this proper communication channels should be established High
9. Material: If granite material is used in kitchen remodel, then, a health risk could be realized due to amounts of radon gas emitted from elements in granite stone. Medium Construction work will be affected Granite material will not create health risks Charcoal device can be used to measure actual emission of the radon gas and controlling measures can be implemented accordingly High
10. Scope definition: Requirements for project are not completely defined and described for the kitchen remodel project, then, scope creep may occur. Medium Designing and construction of the project work Requirements for the project scope will be clearly defined Project’s scope should be defined in its planning stage and in goal setting process. The project manager should be alert to analyze the changes in project’s scope and should manage the change effectively. High
11. Resources – Team members do not support and help is not available to finish project Medium Construction and analysis of design Resources will help team members in completing the work The project manager should ensure there is agreement with the project sponsors and the members on the main objectives of the project. High
12. Conflicts between the workers and manager: There are personal reasons for conflicts between them. Low Financial problems leading to the delay in project Taxes will be not be increased by township The management team should resolve the personal conflicts between workers by identifying the reasons and  suggesting solution for the same Medium
13. Inaccurate estimates for remodeling project: Estimates regarding the completion of project do not match with actual expenses Medium Quality of work will be affected There will not be personal conflicts between workers and manager With changes in the project’s scope and due to occurrence of uncertain events, project’s budget need to be altered. For dealing with this problem, the project manager should review the budget continuously High
14. Lack of change management system: Workers are unable to manage the changes Low Delay in the project work Estimate will be accurate for the project work The manager should use leadership skills for convincing the team members regarding the benefits of changes made High
15. Unskilled workers: Unskilled workers ruin the complete project Medium Instability in construction work Workers will be able to manage changes Unskilled workers should be properly trained to execute their assigned tasks efficiently Medium
16. Wastage of construction material: Material management lack in the whole project work (Edwards & Bowen, 2013). Low Project work quality is reduced Unskilled workers will be appointed for the project work Optimum utilization of available construction material Low
17. Unavailability of training for the workers: Workers do not have proper training the remodeling work Low Wastage of material could result in loss of investment Construction material will be utilized properly Training sessions should be organized to develop skills and expertise of the workers Medium
18. Substandard material: There is a possibility of delivery of low quality material for the construction work (Kendrick, 2015). Medium Quality of work will be affected Trained workers will be hired for the remodeling work The project manager should match the quality of materials received with the standards set High
19. Negative attitude of workers towards the work Medium Delay in the work and quality of work is reduced Substandard materials will be checked prior to work The project manager should assign responsibilities for the tasks to the project participants with accountability and proper due dates High
20. Carelessness during the work: Carelessness during the construction work result in accidents (Wysocki, 2013). Medium Unstable working conditions for the project Workers will not have negative attitude towards the work The project managers should implement safety measures and should invite feedback on safety issues Low
21. Technology components are of low quality Medium Delay in work completion Duration will be sufficient and there will be no need for extension The use of updated technology will help in identifying the most suitable solution to solve the issues. High
22. Lack of management and control between the householder and workers Medium Leads to loss of trust in the workers There will not be loss of personal property of householder The project manager should determine the communication channels required for informing the householder regarding the project’s progress. High
23. Plan exceed budget cost: Remodeling cost can exceed the budget limit High Delay in the completion of work There will be effective management control between householder and workers Analogy, parametric test, expert opinion, Wideband Delphi, activity based costing and range estimating should be used while planning budget.

 

 

High

 

Figure .3

 

References

Alleman, B. G. (2014). Performance-Based Project Management: Increasing the Probability of Project Success. New York:AMACOM Div American Mgmt Assn.

Bartlett, J. (2004). Project Risk Analysis and Management Guide. New York: APM Publishing Limited.

Cameron, I. T. & Raman, R. (2005). Process Systems Risk Management. San Diego:Academic Press.

Damodaran, A., (2008). Strategic Risk Taking: A Framework for Risk Management. New Jersey: Pearson Prentice Hall.

Heldman, K. (2010). Project Manager’s Spotlight on Risk Management. John Wiley & Sons.

Hill, G.M. (2009). The Complete Project Management Methodology and Toolkit. London: CRC Press.

Hillson, D. (2012).Managing Risk in Projects: Fundamentals of Project Management. Burlington: Gower Publishing, Ltd.

Hopkinson, M. (2012). The Project Risk Maturity Model: Measuring and Improving Risk Management Capability. Burlington: Gower Publishing Ltd.

Jordan, A. (2013). Risk Management for Project Driven Organizations: A Strategic Guide to Portfolio, Program and PMO Success.J. Ross Publishing.

Kendrick, T. (2015). Identifying and Managing Project Risk: Essential Tools for Failure-Proofing Your Project. New York: AMACOM Div American Mgmt Assn.

Measom, C. (2016). Chorn. Kitchen Hazards and Kitchen Safety.Retrieved September 08,2016, from http://smallbusiness.chron.com/kitchen-hazards-kitchen-safety-40195.html.

Moeller, R., R., (2011). COSO Enterprise Risk Management: Establishing Effective Governance, Risk, and Compliance (GRC) Processes (2).New Jersey: John Wiley & Sons.

Poyry (2016). Risk management framework. Retrieved September 08,2016, fromhttp://www.poyry.com/investors/governance/risk-management-and-control/risk-management-framework.

Simmonds, K. (2004). Competitive bidding: Deciding the best combination of non-price features. Operational Research Quarterly 19, 5-15.

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