Risk Management

I have developed this risk management model that identifies the phases for application from project start up and inception. Risk management can be implemented during all project processes and overlaps in most. Risk can affect the overall project outcomes and has positive and negative values. Capital projects investment have a duty to focus on the initiative, client and adopt risk management techniques at the earliest opportunity during the appraisal and discovery stage of the initiative. In addition client and project management teams should be integrated during the appraisal stage (Lester, 2007). This will improve risk awareness, risk attitudes and create a risk culture. Stakeholders demand a greater return on investment (ROI) through improved efficiencies, risk reduction and exposure in the early stages, furthermore transparency through all phases of the initiatives lifecycle is demanded from key stakeholders and effected external stakeholders (Ernst & Young, 2012).  

Literature suggests the majority of risk can be reduced and managed in the early stages of the projects lifecycle. Inception and the visualization concept of the end operational product is a key indicator of requirement. The FEL & FEED have the obligation to manage the design and commissioning startup and cap the design before the planning phase; this will reduce the risk of change, cost, quality, safety, project performance and overrun. The implementation of 3D simulation, integration and information sharing will further enhance the design phase, client focus and FEL (Kerzner, 2010). OGC (2012) suggest that organizations moving towards maturity, have adopted project management as a core competence are more likely to manage risk better. In addition I have a theory that organizations that have moved through the transformational process into a leaner streamlined and efficient operator are more efficient in new learning’s and risk management. Moreover organizations improve risk awareness through senior management and leadership commitment in reducing risk and improving environments.    

 

Fig 1.0

 

References

Ernst & Young (2012) Capital Projects Life-Cycle Management for Oil & Gas, Capital Investment Journal [Online]. Available from: http://www.ey.com/Publication/vwLUAssets/Capital_projects_life_cycle_managemant_oil_and_gas/$FILE/Capital_projects_life_cycle_managemant_Oil_and_Gas.pdf (Accessed: 23 May 2012).

Kerzner, H. (2010) Project management best practices: achieving global excellence. 2nd ed. Hoboken, NJ: John Wiley.

Lester, A. (2007) Project management, planning and control: managing engineering, construction and manufacturing projects to PMI, APM and BSI standards. 5th ed. Oxford: Butterworth-Heinemann.

Office of Government Commerce, (2012) Portfolio, Programme and Project Management Maturity Model [Online] Available from: http://www.p3m3-officialsite.com/P3M3Model/P3M3Model.aspxf (Accessed: 23 May 2013).