Risk assessment plan - Math Problem Example

? Lifecycle Engineering Lecturer: Address: Q1. Risk assessment plan outline In coming up with a risk management plan, there are several steps involved. The first step is identifying the risk factors involved. In this stage, the event, probability, impact, contingency, reduction and exposure is established. The event simply means an act or incidence that might happen, probability defines the likelihood of an event occurring, impact is the consequence of an event happening. Mitigation happens to be how much the probability of an event may be reduced. Reduction is represented mathematically as the product of mitigation and contingency, whereas exposure is the result of reduction subtracted from risk. In the initial steps, the project's risk management team has to identify the risks as well as their probabilities and consequences. The risks and threats are then analyzed and a risk profile created depending on the consequence and likelihood of occurrence. Impact Probabilities Level Descriptor Level Descriptor 1 Insignificant A Almost certain 2 Minor B Likely 3 Moderate C Possible 4 Major D Unlikely 5 Catastrophic E Rare Fig.1: Evaluation of threats and vulnerabilities based on likelihood and consequences Probabilities Consequences Insignificant 1 Minor 2 Moderate 3 Major 4 Catastrophic 5 A-almost certain High High Extreme Extreme Extreme B-likely Moderate High High Extreme Extreme C-possible Low Moderate High Extreme Extreme D-unlikely Low Low Moderate High Extreme E-rare Low Low Moderate High High Fig. 2: Combining likelihood and consequence estimates to evaluate risk based on profiling. The threats and risks that are involved in this project may be subdivide into three main categories based on the entity the most impact is felt (Westland, 2006, p. 292). The divisions may be environmental, personnel and the public. The contractor may have to execute his task with the railway being in use. Rubble and materials used overhead are a threat to the public, while the running railway is a risk to the experts on the project. Using the profiling, collapse of the bridge during construction may be catastrophic, yet rare thus falling in the high-risk category of the assessment profile. Probabilistic risk analysis (PRA) or quantitative risk analysis (QRA) or probabilistic safety analysis (PSA) is one of the most used methods of analysing risk in project development and operation (Bedford & Cooke, 2001, p. 210). The use of this technique supports and validates the improvement of control and mitigation measures against threats. Incorporating probability in the project risk management gives the problem a wider scope and allows the stakeholders a better grasp of uncertainty and the need to improve on the risk control measures chosen for a given project. Incorporating probability in the development process allows in the assessment of what may happen, its likelihood and the possible consequences in the case of its occurrence. The works of Kaplan and Garrick in defining uncertainties and risk in mathematical terms aids in programming. The definition of risk as a set of scenarios Si, each with a probability Pi and a consequence Xi, generate a risk curve based on the increase or decrease in severity (Goodwin & Wright, 2003, p. 49). From this, programmers can assess inputs through the variations of the severity, consequence and frequency. The Scenario represents the probabilistic sample space in which event is contained (both favourable and unfavourable) each with a chance of occurring. However, in the probabilistic equations, the chances might be equal or biased; in the risk, assessment equality of the scenarios is hard to come by. The chances of occurrence in pure probability are equated to frequency in risk management. The ideology behind introducing the probability of frequency allows the risk analysis to be conducted based on empirical data. If a given project, in a given period, suffers a number of threats and risks the probability of a certain threat can be equated to the number of times it has occurred given the frequency of all incidences. In empirical data, the probability concept remains unchanged in most scenarios, however the introduction of other techniques alter the meaning in a certain degree. Basing the definition of probability on the above, tools such as decision trees can be formulated (Berkun, 2005, p. 182). In risk analysis, the probabilistic impact sources from decision-making. In the planning process or stage, the decision making process is normally categorised into success or failure based on the outcomes. This is one reason why risk management is conducted in the planning phase of a project. In doing so, the chances of errors, in terms of failed mitigation and control parameters are reduced. By the use of probabilistic analysis, the overall effect of choosing a particular path in the development of a project can help in reducing the failure degree. In essence, the use of probability in risk management can help in developing a critical path for a project. Via the introduction of decision trees, the concept of probability in project development is easily understood. The tree diagrams are developed based on the goals of the project. They encompass all the possible paths via which the project gaols may be obtained. Via the introduction of mathematical equivalencies to the project options, a calculated advantage may be realised. In the process of assigning probabilistic value to the decisions in the project development activities, judgment is easy and swift. This is an added advantage to the managerial team of a project for the path and selected curse of action taken is supported by probabilistic analysis of threats and risks. This is an important aspect in life cycle engineering as the set up and operational costs needed in curbing and mitigating risk are reduced. Minimizing the chances of risks and threats is beneficial to both the environment as well as the economic sector of the project (Kirkwood, 1996, p. 183). The logic behind the probabilistic evaluation is a necessary evaluation tool in conducting risk management for the project for it analyses the output in multiple values thus the scope of the assessment is wide. From the profiling, assigning the risks and threats mathematical equalities is important for calculating the risks. The assigning is to be done between the ranges of 0.0 to 1.0, where 1.0 is certainty, and this is to be done for the likelihoods (probabilities) as well as the consequences. With the probabilities the rare occurrences may range between 0.0 – 0.2, the unlikely, between 0.2 – 0.3 all the way up to the almost certain occurrence that may be assigned 0.9 – 1.0. Using the same criterion, the consequences are to be assigned mathematical values. This will help in the other stage of decision-making, using the decision tree diagram (Bowen, O'Grady, & Smith, 1990, p. 220). The decision tree is similar to the probability tree, but in this case, it represents policies as stated by Godwin (147). The policies are the decisions that the manger or managerial team has in regards to the achievement of a certain goal. Just as in probability, the decision tree spans and widens with the increment of decisions. The introduction of a new decision thus leads to an increase in the options a manager may take towards achieving a certain goal. There is no limitation to the available choices for a managerial team and the outcomes may be divided or integrated to cover different aspects of the project. The outcome could be analysed in terms of profit or the impact on the environment. The interpretation of the decision tree depends on numerous parameters and strategies of the project. One of the commonly used methods of interpreting the decision tree is the roll back technique. In this case, the analysis is initiated from the expected results, towards the objective or origin of the tree. The goal of the technique is to achieve the optimal policies for a given project given constraints of development. The expected monetary value (EVM) is one of the driving forces behind the use of the tree, as it is easily estimated by using probabilistic principles in calculating the expected returns or expenses on a particular choice of activities. Just as in programming, making decisions, using the decision trees follows a structure. The incorporation of risk and profits in the project needs a strategic and exhaustive systematic approach in decision-making. The similarities in logic and programming arise from the constraints and feedback that has to be analysed prior to moving to the next step. The process is mean to reduce the ill effects of the project. In life cycle engineering, this is a necessity through the life of a given project. The structure is necessary since the decision making trees may get complex and complicated as in the engineering field, there are numerous means of achieving a particular goal and the aim is to be effective, economic and efficient in accomplishing the task in question (Maxwell, 2008, p. 219). The introduction of constraints in the decision-making process aids in the integration of programming in the decision making process. The decision making structure constitutes of phases through which the analyst has to pass or fail the input. On failure, the input has to be looped back to the preceding step. In such a system, the resultant option has minimized if not eradicated threats and risks. The structure ensures that the final decision meets all the set criterion of the project requirements. The analyst’s decision structure is subdivided into five phases through which the feedback is evaluated to ensure it meets the necessary project demands. In the introduction of the intricate decision support system, once a decision is made the chances of failure are minimal and it means that the project is always progressing towards its objective in both the development and operation periods. The decision trees are important in making decisions on the mitigation measures to be assumed by the contractor. In this case, the contractor may be looking into the decision of using different raw materials or strategies in construction (Chapman &Ward, 2003, p. 29). The risks that are involved in the exercise vary depending on the choices that are made by the contractor. The location and the frequency of use provide some of the major challenges to the construction. There are alternatives to the contractor has when making the bridge, but not all of them are viable. Some of them may be much costlier and more risky. Since the contractor is dealing with limited resources, a choice has to be made based on calculations that provide the least risks, consumes minimal resources and takes the least time while ensuring quality. A project is an idea until it is executed. This translates to a project having stages through which it must pass through. A project is believed to have four major phases from the idea conceptualization through to death. The first phase of the project is the initiation phase. The initiation phase is comprised of a number of activities. The first step is the generation of a project idea. In most cases the idea results from the existence of a problem, thus the conceptualization step is often defined as the problem definition step. On realization of the problem, a response to the problem has to be funded and that comprises the project objectives and goals. A feasibility study is then conducted to ascertain the viability of the project, after which the project managerial team is selected. In the study, the environmental impact of the project is assessed by the developers and experts, though not conclusively (Berkun, 2005, p. 182). The next phase in project development is known as the planning phase. This phase entails the development of the plan into more detail. The managerial team is obligated into establishing the steps to take towards the completion of the project. The scope of the project is defined, the work to be conducted is outlined and the budget is developed. The materials that are to be used, technical help, time and expenses are the most important considerations in this phase. This is the phase where risk management is introduced to the project. The risks and threats are identified and graded based on their frequency and severity. Combatting measures are then established to ensure that the identified threats and risks pose minimal damage potential. In addition to risk management, all stakeholders are consulted in this phase to ensure everyone is on-board. The third phase in the project’s life cycle is the execution phase. This is where the plan of the project is realized. It represents the bulk of the project since all construction work is done during this stage. It is arguably the most time consuming phase of the project, it stretches from acquiring the material to be used in the development of the project to the completion of construction works. Some alterations of the design are a common occurrence in the project execution phase. Sue to this a lot of consultation and reporting is evident (Bowen, O'Grady, & Smith, 1990, p. 320). The communication between teams is important to facilitate performance in the phase. Q2. An incorrectly drawn project network is shown below. a). Eliminate the problem that the activities have the same starting and ending nodes by dummy activity nodes. A D F J C B E G H I b) Add dummy activities that will satisfy the following immediate predecessor requirements shown in the table below. A D B E F J C G H I Q3. A University is planning the a renovation and rebuilding project for the Canteen Building The activities that would have to be undertaken before work can begin are shown in the table below. a) Develop a PERT/CPM network for this project. A C D F B E G H b). Identify the critical path. From the network diagram, the critical path is B-C-D-F-H, taking a period of 47 weeks c). Develop the activity schedule for the project. d) Does it appear reasonable that physical work of renovation and rebuilding could begin 1 year after the decision to begin the project with the site survey and initial design plans? What is the expected completion time for the planning project? It does not appear logical for the rebuilding and renovation tasks to be done after a year (Detwarasiti & Shachter, 2005, p. 217). The expected project completion time is 47 weeks (assuming a year is comprised of 48 weeks), thus the end of the year signals the operation Phase of the project. Q4. The Central Administration is installing a new computerized office system. The activities required to complete the project are described in the table below. a) Construct the network for the project. A B C F D E b) Develop an activity schedule for the project. c) What are the critical path activities, and what is the expected project completion time? The company is considering completing the project in 6 months or 26 weeks. What crashing decisions would be recommended to meet the desired completion time at the least possible cost? Work through the network, and attempt to make the crashing decisions by inspection. The critical path for the project follows A-B-C-F, taking 31 hours (normal). The activities include are planning, ordering and installing equipment and testing the system.in attempting to complete the project in 6 months or 26 weeks, introducing a compete crash program may be effective but too costly. A cheaper combination has to be obtained (Portny, 2000, p. 321), in the case of path ABCF, crashing activities A and C results to the least possible cost while managing the 26 weeks duration. c) Develop an activity schedule for the crashed project. b) What is the added project cost to meet the 6-month completion time? The cost of the normal project time along the critical path is $ 310, 000, whereas that of the crash program is $410,000; an added cost of $100,000 to meet the 6 months schedule. Q5. You are managing the project described in the table below. The activities and their predecessors are given, together with the duration and resource requirement of each activity. A is the initial activity and I is the completion activity. a). Construct a project network. A B C D F E G H I b). Determine the critical path for this project. A-B-C-E-H-I c). Construct a Gantt chart to show the activities in time. d). Determine a resource allocation assuming that all activities begin at the earliest possible time. Assuming the ratio of one solitary unit per unit time then the resources shall be as follows. Works Cited Bedford, T. & Cooke, R. (2001) Probabilistic Risk Analysis: Foundations and Methods. Oxford: Cambridge University Press. Berkun, S. (2005) The Art of Project Management (Theory in Practice). Boston: O'Reilly Media. Bowen, J., O'Grady, P. & Smith, L. (1990) A constraint programming language for Life-Cycle Engineering. Artificial Intelligence in Engineering, Volume (5), 4, 206–220. Chapman, C. B., Ward, Stephen C. (2003) Project risk management: processes, techniques, and insights. New York: John Wiley & Sons. Detwarasiti, A. & Shachter, R.D. (2005). Influence diagrams for team decision analysis. Decision Analysis, volume number (2), 4 pages 207-228. Goodwin, P. & Wright G. (2003) Decision Analysis for Management Judgment. New York: John Wiley & Sons. Kirkwood, C. W. (1996) Strategic Decision Making: Multiobjective Decision Analysis with Spreadsheets. Duxbury Press. Maxwell, Dan. (2008) Decision Analysis: Find a Tool that Fits. OR/MS Today, Volume number (35) 5, pages 138 – 265. Portny, S. E. (2000) Project Management for Dummies. New York: For Dummies. Westland, J. (2006) The Project Management Lifecycle, Kogan Page Limited. Read More