Paper Example on Project Risk Management

Introduction

A risk management plan is an important activity in any organization project by assessing certain uncertainties and developing strategies to mitigate or minimize the risk from occurring. Project risk management is a process and can be used by any organization to reduce any unexpected liability when undertaking a new or existing project (Smith et al., 2005). Projects or activities that have the ability to affect an organization in whole or part require a risk assessment and management plan in place (Smith et al., 2005). The decision on the strategy to use in the project risk management depends on the organization preference, the type of the risk and the implications of the risk management strategy on the organization. This paper will assess the risk in Coroplast faces in the adoption of SAP for inspection purposes and create a risk management plan to mitigate the uncertainties in the project.

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Project Overview

Coroplast is a multinational company which is headquartered in Wuppertal, Germany and has a facility that is operational in Rock Hill, South Carolina. Coroplast produces adhesive products, tape and wire harnesses used in the automotive industry and other commercial markets. In the Rock Hill facility, Coroplast has an ongoing project on implementing SAP which is an enterprise resource planning software that is able to incorporate different business functions to aid in management and decision-making processes. In Rock Hill, Coroplast has registered significant growth in the past two years which has necessitated the adoption of SAP software to make the inspection process easy and fast. The increased volume of products being handled in the facility makes the inspection process lengthy and SAP will help streamline the process by increasing the organization of the different organizational functions and record keeping. If not attended to, the slow inspection pace due to the growing volume of products being handled in the Rock Hill facility can become a hindrance to the organization production processes. There is a similar program in Wuppertal, Germany where SAP is used for inspection purposes and if the project is successful in Rock Hill it will significantly improve the organization inspection process in the South Carolina facility. The receiving and inspection process of the incoming products is an important activity in the Rock Hill facility and the SAP software will increase inspection and material reception efficiency in the facility. Currently, there are three shifts of the material receiving process and the implementation of the SAP software will help Coroplast to combine the shifts and maintain high quality and correct recordings of materials. The project implementation is scheduled to take one month.

Risk Assessment

Risk assessment is the process of identifying the inherent uncertainties in a project. In the case of Coroplast, the implementation of the SAP inspection project faces different risks that should be assessed to be able to develop an effective mitigation plan to minimize or avoid the risk (Cooper et al., 2014). The constraint identified in the assessment is the time constraint due to the low time allocated to the acquisition of skills by the technicians and Coroplast employees who will be operating the SAP system. Poor funding is also another potential constraint towards the implementation of the SAP project in Coroplast Rock Hill facility.

Qualitative Risk Assessment Matrix

The risk assessment matrix will be used to identify the severity of the two risks to identify the risk that is more probable and the one that needs a response. As such, the assessment matrix can help in promoting more effort on the risk that can have a great negative impact on the project (Dumbrava & Iacob, 2013). The risk probability table is used to identify the severity of each risk which helps in impact probability analysis. Below are the risk probability table and the impact matrix for Coroplast Rock Hill SAP project implementation technician incompetency and funding risks.

Analysis

The qualitative risk assessment using the probability matrix shows that technician incompetency has the highest probability of occurrence and severity. On the other hand, funding risk has a low risk of occurrence because the decision to create a single user SAP for the nine quality technicians has been adopted. The impact matrix helps in the interpretation of the severity probability further by determining the project that requires attention, close monitoring and random monitoring (Dumbrava & Iacob, 2013). As such, the technician's incompetency has a high likelihood of occurring which makes it a high risk that requires immediate attention. Funding scores the least in the impact matrix and random monitoring can be used to assess the possibility to increase funding for the project. The adoption of a single user SAP platform reduces the financial cost of the project implementation.

Risk Identification

Technicians' Incompetency

There is a significant risk that the technicians and employees who will be operating the new SAP system will not be competitive due to the low emphasize on training with training being done in 4 days only. SAP is an important but complex system that requires continuous and effective training to increase the competency of the operators. The few time that has been allocated in the project to train the technicians within Coroplast Rock Hill, South Carolina facility. The risk of technician incompetency due to the reduced training time will reduce the effectivity of the program in the facility. Poor handling of the SAP program to receive and inspect materials can lead to financial losses and also affect the organizational decision making. In addition, a delay in implementing the SAP system due to the operator's incompetence could inconvenience the facility operations. Therefore, it is important for Coroplast to develop a risk mitigation plan for the SAP software operation skills and competencies by ensuring that the employees are ready to operate the new system to carry out material inspection and receiving. In addition, the employees at Coroplast Rock Hill facility do not have the required experience to be able to effectively operate and manage the new system.

Synopsis of Risk Mitigation Measures

Risk management plans are approaches that should be put in place to mitigate the risk identified (Cooper et al., 2014). In this case, the risk management plans will seek to mitigate possible incompetence of the SAP system operators in Rock Hill facility due to lack of prior skills which could negatively affect the program implementation as well as the results of the inspection and material figures an aspect that could negatively affect the facility operations. Mitigation measures should be put in place to improve operator's competence which will have a significant role in the implementation of the SAP project. The choice of the mitigation measure will depend on the feasibility of the measure as well as the outcome of the measure if it is implemented. It is important to align the risk mitigation measure with the organization goals and objectives.

Risk Management Plans

Risk management is the approach that Coroplast Rock Hill facility will use to mitigate the identified risk. The risk mitigation measure will depend on the viability of the plan and the possible outcomes upon the implementation of the mitigation plan.

1st Risk Management Plan

Sending SAP Technicians from Headquarters

In Wuppertal, Germany, Coroplast already has a SAP system in place and can use the expertise of the quality technicians who are already trained and have competency in SAP operation and management to develop the skills of Rock Hill, South Carolina SAP technicians for the first 4 months of the SAP operation. The time provided in the project timeline to prepare the employees is not enough to develop high competency of the employees in charge of the SAP operations.

Viability

The option of bringing in SAP specialists to work with the specialists based in Rock Hill facility is more viable due to the reduced cost of this option and also their knowledge of Coroplast activities will ensure that less orientation is required. The viability of the mitigation measure is high due to the alignment of culture as well as the practices. The resident SAP specialists in Rock Hill will slowly gain competence by working with Wuppertal specialists who have gained competence and experience in using the application to carry out material inspection and recording. Knowledge and experience are acquired over time and will help Rock Hill facility to continue its operations without experiencing any operational problems that could have been rampant due to the low experience of the resident technicians who are to be trained on SAP operations.

2nd Risk Management Plan

Hiring New SAP Specialists for SAP Inspection and Recording Incoming Materials

The second mitigation approach to the problem of low competence by resident SAP technicians is hiring new SAP technicians to help with operations in Rock Hill facility new SAP application. Unlike the first mitigation measure, this measure requires an increased budget to fund the hiring process and will also take time to orient new SAP technicians on different elements of inspection in the facility that will be handled using the new SAP application. However, in the availability of a surplus budget for the program, it is possible for the Rock Hill Coroplast facility to hire new SAP specialists to carry out the inspection activities.

Viability

The approach of hiring new specialists is less viable compared to the first mitigation measure on poor SAP technician incompetence due to the cost of training and orienting new employees on different organization activities and products to be factored in the SAP program. The time to the implementation of the program is limited which makes it less likely for Coroplast to recruit and orient new SAP technicians.

Comparison of the Proposed Risk Management Plan with the Real World Standards

The risk management standards are the specific strategic processes that are aligned with the organization objectives and helps in the identification and mitigation of a risk using the best practices. The standards are a guide to ensure that the mitigation of the risks is done in the proper way (Sales et al., 2018). The risk management standards should be introduced at the beginning of the risk management process.

ISO 31000:2018 Standard

This standard provides the principles and guidelines on the implementation of risk management. Under this standard, the value is the key driver of the risk management and also features continuous development. In the development of Coroplast Rock Hill facility SAP implementation risk mitigation on the incompetence of the employee's, value has been considered in the creation of mitigation measures by ensuring that the recommended plan promotes continuity while reducing the organization costs in managing the risk (Sales et al., 2018). Therefore, the mitigation measures are in line with the revised 2018 risk management standards.

Conclusion

Project risk managers are given the responsibility of ensuring that the organization activities and projects are for the best of the organization because risk can be detrimental to any organization. The risk management plan creates strategies to protect an organization and the project outcomes by transferring the risk to another party, avoiding the risk or accepting some portion of the risk. Rock Hill facility SAP implementation main risk is the incompetence of the resident employees. The most viable mitigation measure is the use of headquarters S...