Risk Management in Perth Area Bus Shelter - Case Study Example

RISK MANAGEMENT ASSIGNMENT Students Name Course Date Table of Contents Table of Contents 2 Project Description 3 Risk Identification 3 Degradation on the Existing Shelter that Has Been Unforeseen 4 Materials that Were Used in the Existing Shelter 4 Not Needed Structures 5 Miscalculations and Cost Overruns 5 Security of the Site and the Environ 5 Causes of risks 6 Lack of Maintenance 6 Lack of Bus Shelter Inspection 6 The Quality of the Used Material 7 Qualitative Risk Analysis 7 Risk Consequence Rating 7 Risk Likelihood 8 Risk Evaluation 9 Risk Impact on the Project 9 Risk treatment 10 Reduction as a Risk Treatment Strategy 10 Reduction of the Impact 11 Risk Register 11 Bibliography 14 Project Description Risk management is a common concern by almost all companies both profit making and non-profit making. Incase proper care is not taken; a lot of money and or lives may be lost to various accidents that would otherwise be prevented or reduced2. This project will identify potential risks that are likely to befall Perth area bus shelter. Where the construction is done an old shelter structure, which would have to be demolished. Perth metro area, which has a population density of 3.05 persons per hectare and with several busy roads, has a bus shelter that host several people due to its wider width and multiple inroads. There are lanes with wider width with wider pedestrian way that is overly crowded along with structure for buses becomes the best point for easing the jam. The area forms a potential ground for carrying out risk management project to reduce chances of multiple risks. Risk Identification In order to prevent or control risks that are associated with the Perth bus shelter, constructor had to move to the main site where the bus shelter is in order to find out risks that are likely befall the shelter. In the identification of risk, potential risks that are likely to interfere with the project are to be determined. It is important to know the reason as to why certain risks may affect the project affecting all activity. There are those risks that will affect the planning of construction and those risks that will affect the pricing. In an effort to identify such risks, in is important that the process begin from the worst risk that will be put in red to the less important risk that will be in green. There are several ways of identifying potential risks that associate with the construction of the bus shelter at Perth, such as an individual observation, brainstorming, individual experience, and many more. In this study, a visit was made to the site with the intention to identify as many risks as possible that can interfere with the smooth construction of bus shelter2. This effort resulted with five major project risks that were considered very vital in the construction of the bus shelter in Perth area. Having identified the five potential risks, multiple possible causes of the identified risks were also established to help in the control measures. Even though risks that have been identified are not equal on their possible impacts, emphasis will be placed on all of them. The five risks include: Degradation on the Existing Shelter that Has Been Unforeseen The unforeseen degraded shelter forms the high ranked risk in this project of constructing a bus shelter in Perth area. What makes it high rank is the fact that no one had an idea about the poor state of the structure, however, almost all users new it was relatively old. This would be disastrous as it posed the danger of falling on the waiting passengers when not expected and at the same time, constructors would be at risk when undertaking the process of replacing the shelter. Constructors would think that it was in a better state only to rely on the degraded part of the shelter in the process. The identified risk is represented by the red traffic color to lay emphasis on the weight of the risk. Materials that Were Used in the Existing Shelter Materials used in the construction of the Perth shelter are not recommended to be used in the constructions. Some of these materials either were prohibited or just not to the desired standards by the construction agencies. It implies that the condition of the shelter was not to the standard, and was risking the lives of the passengers and those who may be interested in the bus shelter. For example, the use of Asbestos in constructing bus shelter is not recommended and is usually considered none standard. Not Needed Structures There are those structures that are not needed for a standard bus shelter. Such structures may result to loss of space, be obstruction to the passengers and drivers, which may lead to accidents, and create additional costs1. Unlike in the upper case where the materials were of no recommended standard, this case has the whole structure does not meet the required standard and, when thinking of having a more safe bus shelter, the structure has to be upgraded to the required standard. Miscalculations and Cost Overruns There are several cases the result from a miscalculation of cost and several cases of cost overruns. There are multiple cases of the use of allocated funds in such a way that it does not complete the intended mission. It is very dangerous as the project may end up failing in the event that there is no any money in stock to help in the complete of the project apart from the originally located in the budget. At some occasion, the problem is not the problem of the overrunning cost but the miscalculation of the required cost. When the cost of construction is not accurately constructed, there is likelihood that the project may fail due to underestimation. Security of the Site and the Environ Bus shelter in Perth area is located next residential areas, which means that any construction works and traffic effects of the shelter will have great effect on the health of residents. When constructing shelter, the drilling on the ground by heavy machines may cause vibrations for that can create cracks on the walls of a residential house. Such cracks create a potential disaster as the structure becomes weakened, and may end up falling on residents resulting to deaths and loss of properties. Pollution such as air pollution among many other types of pollution that results from the construction and screeching of the vehicles in the bus shelter will of health problem and people living within the area may sue the contractor for that. Causes of risks Having identified all the potential risks that are associated with a bus shelter in a Perth area, there is a need to identify potential causes of such risks. Identification of such causes is very essential as it will form the basis for the analysis of the potential risks. The impact and the probability of risk occurrence can be decreased when causes of risks are identified objectively. It, therefore, means that much emphasis and effort will be put on the causes of the identified risks. Since the major risk is the degradation on the existing shelter that has been unforeseen, the paper will only describe major causes of this major risk: Lack of Maintenance The structure without proper maintenance and repair as required by the standard schedule is one of the causes of the degraded structure, which may not have been seen. When repair and proper maintenance is carried out as per the set schedule, there is no doubt that the risk occurrence will be significantly reduced. Lack of Bus Shelter Inspection When property inspection is not carried out meticulously or in a more thorough way, there are high chances that the shelter will be degraded without being easily noticed. It is only when the shelter is put under thorough and or meticulous inspection that it may remain safe for quiet a longer period. The Quality of the Used Material When the quality of the material used does not much the original specification, as illustrated in the fast risk above, there comes a potential cause of risks3. Quality of the material is very important as the nature of the structure require very strong material that will be able to contain the effect of multiple moving and stationary vehicles within the shelter. Qualitative Risk Analysis Having identified the event and causes, the next step is to analyze levels of the identified risks and prioritize them as per the action. It will require proper assessment of risk levels for every event that has been identified in the first phase of risk identification. Risk Consequence Rating The main purpose of this paper is to have a thorough study on the risk that is rated as having severe consequences. Reason for giving emphasis to this risk is the fact that its occurrence will interfere with the entire project, the budget, scope, and the entire timeline. When the shelter is weak, there may be a change of the project from refurbishing shelter to the construction of the whole bus shelter. When that happens, all projects will have to stop until the whole problem is fully solved. Construction of the bus shelter has risk to the structures that exist around the proposed shelter. Consequences Rating consequences Description Negligence Impact of negligence on the objects Minor Those minor effects that can be easily controlled Moderate A number of objectives are affected Major Some crucial objectives may not be achieved Severe Major objectives becomes impossible Risk Likelihood The probability of the risk occurring is very high. The higher probability of the risk occurring is caused by the age of the structure around the bus shelter area, which was very old. The building regulation is stricter in the contemporary world than in the olden days when the structure next to the bus shelter was constructed and as such refurbishing the structure to conform to the set 1standards may be very difficult to meet. Risk is due to the old age of the shelter, which would be degraded and as such, it would definitely need replacement. Likelihood Rating Almost certain The occurrence of the event is most certainly expected Likely In most circumstances, the event will most probably occur Possible At same time, the even should occur Unlikely At some time, the event could occur Rare Even can only occur in a very exceptional circumstances Risk Evaluation Probability-Consequence Risk Matrix is used in this paper to help in the evaluation of the identified risk. Probability-Consequences Risk Matrix   Insignificant Minor Moderate Major Catastrophic Almost Certain         1 Likely   5       Possible     4 2   Unlikely       3   Rare         Risk Impact on the Project Catastrophic consequences in the project would be caused by unforeseen degradation of the structure that requires replacement. The reason for the catastrophic consequences is due to the old age of the structure. In the planning of the activity and the quote, the situation has not be accounted for and so it will be a real disruption to time frame, scope, and the allocated budget of the whole project. Risk treatment After the identification and ranking of risks as per the possible impacts and their probability of occurrence, there is the need to develop and manage various needs of controlling these risks. There are various strategies of treating risk and they include reduction, avoidance, retention, and transfer4. Out of the four strategies, reduction strategy is considered the best strategy to treat the risk at hand. 2The reason is that reduction strategy is functional, competent, and many more. Going by the nature of the risk and the probable consequences, the most preferable strategy is reduction; however, the strategy is costly and lengthier than other strategies. The constructor gets the opportunity to get to important issues and get the best way to solve them in time hence minimizing its probability and impact. The strategy is considering two major factors, which include the probability at which the risk is likely to happen and the impact of the risk occurring. Reduction as a Risk Treatment Strategy Reducing the probability of risk occurring: Reduction strategy gives a deeper and detailed analysis along with the proper inspection condition. 3 Ensure that the materials used conform to the originally intended. There is usual cases where the materials used in the construction does not conform to the required standard and substituted with inferior and a cheaper material. The reputation and the experience of the constructor building the shelter need to be checked if he or she still practices construction. Ensure that there are no cracks and water penetration on the floors and cemented walls of the bus shelter. In the case where the contractor dose not have the required personnel then only specialized engineering team need to be contacted to carry out required inspection. Reduction of the Impact Extra task need to be allocated for some float time within the schedule should there be a need. This should not interfere with the already planned bus structure. Contingency percentage need to be allowed to allow for extra cost that might happen The constructor should provide for an alternative plan, also known as fallback plan. The fallback plan is one of the quickest means of recovering and minimizing the effect that may be caused by the risk on the timeline and scope of constructing bus shelter. Risk Register From the identification, analysis, and treatment of the risk it is necessary to have a risk register where the information on the identified risk is contained for ease in tracking. In this stage, the identified risk is presented in a register from where all the most important risk about the Bus shelter in Perth Metro is found. Tabulated detail on identified risks, their analysis, and how the risks are to be treated is shown by traffic light system.4 Risk Register Risk Id Risk No 1 Risk Title Degradation on the existing shelter, which is unforeseen that should be demolished and replaced     Risk Status Open Risk Owner Construction Company Limited Risk Owning Organizations Construction Co. Ltd, bus owners, passengers, and those living around WBS References Bus shelter construction at Perth Metro area   The impact of the risk can begin from day one and lasts until the last day of the project.   Other risks can be easily triggered for example time overruns and cost of carrying out the project Risk Description The risk occurs due to lack of proper inspection or simply poor document   Risk is ranked in terms of impact and probability of its occurrence   The major consequences is the likely cost, scope and time of the project Associated Risk Time overruns and time scope inflation Probability There is a high probability of risk occurring Impact The risk’s impact on the timeline project, scope and cost of the project will be high   The quality will be least affected Risk Response Address of the risk to be done by the constructor   After occurrence of the risk, implementation of the response action will be taken   Agreement on the response action by the stakeholders, such as constructor, passengers, and bus owners, is implemented   When the risk occur, the fallback plan is to be implemented to see to it that the intended objective is achieved Fallback Plans A thorough prior preparation need to be done by the constructor to work as a tool to achieving the main goal   When compared, time will be least affected than scope and cost throughout the prefect fallback plan implementation. Bibliography Borodzicz, Edward. Risk, Crisis and Security Management. New York: Wiley, 2012. Crockford, Neil. An Introduction to Risk Management (2 Ed.). Cambridge, UK: Woodhead-Faulkner, 2010. Hubbard, Douglas. The Failure of Risk Management: Why it is Broken and How to Fix It. John Wiley & Sons, 2011. Parnell, Geoff. “Lecture 3: Project Risk Management.” PowerPoint lecture notes. https://lms.curtin.edu.au/webapps/portal/frameset.jsp?tab_tab_group_id=_3_1&url=% 2Fwebapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_14549_1%26url%3D. 2013. Retrieved on May 23, 2014. Project Management Institute: A Guide to the Project Management Body of knowledge 4th edition. Bentley, W.A.: Curtin University, 2010. Read More