NORTHCENTRAL UNIVERSITY

Project Risk Summary ReportGagandeep BediProject Risk Management/PROJ-420February 21, 2016Professor Hurst

ContentsIntroduction 34Project Description 34Objectives 45Project Scope and Objectives 56Scope56J & J Custom Home Builders Objectives56Risk Process Objectives 56Project Sizing Tool 56Stakeholder Analysis 78Top Risks, Actions, and Owners910Risk Breakdown Structure1011Probability-Impact Matrix1112Risk Register1213Project Status Summary1314Conclusions and Recommendations1314Appendix A1415Risk Breakdown Structure with Metalanguage1415Appendix B2021Probability-Impact Matrix2021Appendix C2223Risk Register for Project Jonathan family dreams home2223Appendix D2526Project Status Summary2526References2627

Introduction

The Jonathan family is currently living in a two-bedroom condominium which is no longer suitable for their growing family. They have been working with an architectural firm to design their dream home on a two and a half acre lot that is located on the outskirts of Fort Bend County, Texas. The Jonathan family has also secured a $632,400 bank loan for the construction of their dream home.To minimize risk, a risk management plan is needed for the Jonathan family dream home. The Risk Management Plan will be employed throughout the lifespan of the project and will outline what responsibility the project manager has during the project. It will also detail how to handle uncertain events that may affect or impact the project cost, schedule or performance. A Risk Management Plan offers many management tools and techniques that help the project manager track and monitor potential impacts that may affect the project.The project manager will be responsible for schedule all trade workers, estimating the material needs and inspecting the quality of all the product delivered to the construction site and the finished work. The project schedule will be created in MS Project and will be used to help validate what work has been completed and what work still needs to be done. The project manager will provide construction progress reports to the Jonathan family after scheduled tasks have been completed and discuss any necessary schedule impact with the Jonathan family so that project schedule can be updated.Project Description

This plan was created by a consultant who is working with J & J Custom Home Builders. Their main purpose was to develop an efficient risk management process that can be implanted throughout J & J Custom Home Builders projects so that J & J Custom Home Builders can reduce the construction time needed to build a new custom home because competition has grown over the last few years. The Jonathan family has met with one of the J & J Custom Home Builders sales representative to create their dream home.

The Jonathan family dream home will be will be 70 feet wide x 69 feet deep.

First floorSecond floor

formal dining room living room full bath coffered family room a gourmet kitchen breakfast nook an in-laws suite. three bedrooms two full bath master suite with sitting area master bath with vaulted ceilings Game room with attached Media room

Jonathan family will have 4,464 square feet of heated/living space.

three car garage Front wraparound porch Covered porch which is accessible from the master bedroom.

Unheated/living space

Objectives

High concern for the Jonathan family Having to find other accommodations if the construction is not completed on time. Staying within the $632,400 bank loan so there is no out of pocket costs. Rental expenditures because renting things like portable toilets and equipment can add to the cost of the project. Carrying a risk and liability insurance while the house is under construction. Subcontractors that just dont show up to do the necessary work. Meeting all local building codes. Moderate concern for the Jonathan family Bad weather that could delay the project. Weather needs to be monitored Finding mistakes in the construction work such as framing, electrical and plumbing. This is a concern because the project cannot proceed till the mistakes are fixed and the inspector approves the modifications. Utility connection delays such as water, gas, sewers Permitting and approval delays.Project Scope and ObjectivesScope

J & J Custom Home Builders will manage all of the predictable risks in a proactive manner in order to maximize the odds of achieving the project objectives while upholding an acceptable risk level. The acceptable risk level will be defined in the risk management plan which will outline different scenarios that may occur in the duration of this project. The risk management process is intended to engage all stakeholders appropriately and to create ownership in the project. J & J Custom Home Builders will communicate all the risk-based and milestone information directly to Jonathan family in a timely manner. The risk management process will allow J & J Custom Home Builders to monitor and control risk (Method123.com, 2016) so that they meet the project objectives.J & J Custom Home Builders Objectives

Keep the project on schedule and on budget. Meet Jonathan family expectations. Use quality craftspeople and materials in the construction of the Jonathan family Be responsible for correct and accurate construction timetables.Risk Process Objectives

To design a high-quality home for the Jonathan family and not to exceed $632,400 within six months because their current living condition is no longer adequate for growing family and the risk level for this project is medium

Project Sizing Tool

According to Hillson & Simon, the project sizing tool helps us divide projects into three classes which are small, medium, and large. They use these classes allow us to take a project and assign the appropriate level of risk management associated with that type of task such as "Projects with the value less than $50,000 are automatically defined as small, and projects with the value greater than $5,000,000 million are defined as large. Projects valued from $50,000 - $5,000,000 Million are assessed against the ten criteria below. The criterion scores of 2, 4, 8, or 16 are totaled to give an overall project score, indicating project size as follows" (Hillson & Simon, 2012). 75Large ProjectAn extended ATOM risk management process is required

35 74Medium ProjectA standard ATOM risk management process is required

< 35Small ProjectA reduced ATOM risk management process is required.

Information retrieved from (Pma.doit.wisc.edu, 2016)

Project Sizing Tool

CriterionValue = 2CriterionValue = 4CriterionValue = 8CriterionValue = 16CriterionValue = 32Criterion Score

Strategic Importance1616

Commercial Complexity44

Essential ConstraintsAnd Dependencies44

Requirement Stability88

Technical Complexity22

Project Duration44

Project Value44

Project Resources88

Total50

The total project size equals 50 which classify the Jonathan familys dream home as a Medium-sized project according to ATOM risk management process.At every projects start institute a project management control organization that is appropriately sized to the complexity and risks of the project which also includes legal, regulatory and reputation type considerations (Kaplan, 2016). By following this process, an organizational breakdown structure is made. The organizational breakdown structure describes responsibilities and accountability for all contributors and it helps the project manager control and maintains a systematic method for getting the work done on time and without any delays. Following this process increases the likelihood that the project will be completed on time.Stakeholder Analysis

The stakeholder analysis is a great way of classifying and analyzing the stakeholder by their power and their interests. The stakeholder analysis system allows the project manager to rank each of his or her stakeholders as "high-interest stakeholders are Key Players. Low power and low-interest stakeholders are least important (Stakeholdermap.com, 2016).

StakeholderArea of InterestAttitude(+/-)Power(+/-)Interest(+/-)Stakeholder Type

HomeownerQuality home built / timeline is met+3+3+3Savior

Bank Construction loan / mortgage +30+3friend

City (building dept.)Permitting for construction the home+2+2-1Sleeping Giant

Utility (Power, Water, sewer)Permitting/Constructing temporary and final utility services

-1+2-1Time bomb

Private inspector (hired by the Homeowner)Checks the works all the GeneralContractor Sub Contractor(work for homeowner)+3+1+1Savior

BuilderManages all trades and Building codes Inspection+3+3+3Savior

Sub - contractors

Concrete Responsible for all foundation work-2+3+2Saboteur

FramerResponsible for constructing the shell and the roof of house-2+3+2Saboteur

Wiring Responsible for laying out electrical outlets and switches from the blueprints.-2+3+2Saboteur

DrywallInstall all the required drywall in the house and textures all the walls if necessary.-2+3+2Saboteur

Painting Paint the house in the colors of clients choosing-2+3-1Time Bomb

Finish CarpentryInstall all the baseboards and trim-2+3-1Time Bomb

LandscapingInstalls all the sod and the plants-2+3+2Saboteur

GeneralcontractorDoes the closing walk through with the homeowner to make sure that everything has been completed to the homeowner's satisfaction so that it can be corrected before the house is turned over to the homeowners?+3+3+3Savior

Escrow CompanyThe escrow company will have the homeowner to complete the mortgage paperwork. After all the paperwork is complete the keys will be given to the homeowner.+3-1-1Acquaintance

There are many benefits of using a stakeholder analysis to help influence and shape your project:

The stakeholders can influence the projects at an early stage because it allows the stakeholders to the support project and this will allow the stakeholders to improve the quality of the project. Getting backing from the stakeholders can help the project win more resources by making it the more successful. By communicating with stakeholders early and frequently, you can ensure that they fully understand what you are doing and understand the benefits of your project this means they can support you actively when necessary (Mindtools.com, 2016). If the project manager can foresee the stakeholders reaction to the project he or she can build their reaction so it is a win-win situation for everyone.Top Risks, Actions, and Owners

Top RisksActionsOwners

The project has a firm budget of $632,400 and if the costs exceed the BudgetAvoid scope changes (gold plating)Project manager

Scope definition risk

Inaccurate or incomplete Scope definitionThe Project manager will pass the overage to the Jonathan family and get change orders approved before the work is performedJonathan family

Design riskInaccurate or incomplete design can cause rework construction delaysThe Project manager will transfer his or her risks back to J & J Custom Home Builders and hold them responsible for completing the work and fixing any of their mistakesJ & J Custom Home Builders

Resource risk

If the proper resources (manpower and equipment) are not available on site Project manager should have an alternative resource available and book all the manpower and equipment as they are neededProject manager

Labor risk

Because of the housing boom in Houston, there is a shortage of craft workersThe project manager should have alternative resources available and book all of the same trades together so that all of the work is done one right after the other.Project manager

Communication risks

Communication is a vital part of being a project manager this means that he or she needs to know the work progresses and when it will be doneThe project manager should check with the contractors every week to see the status and update documents or else it will delay the project.Project manager

Quality risks

The Jonathan family wants what was designed so quality compliance is a must. Plumbing, HVAC, and electrical have to be inspected so any code violation can be caught and fix so it doesnt cause delays in the schedule Project manager

Materials risk

The project manager will have to check all the delivered materials for damages Contingency plan

The project manager identifies the damaged products and reorders/returns the product when needed.Suppliers and Vendors

Construction risks

Stage 1: The site excavation has to complete by March 15, 2016

Contingency plan

The Project manager will transfer his or her risks to the contractor and hold them responsible for completing the work and fixing any of their mistakesContractor manager

Insurance

Protects the property from damage which is effective at the commencement, procurement, and transportation to the site.

Insurance claims and schedule relief from the client of Force MajeureProject manager

Contingency funds

Many project manager will setup Contingency funds to help them cover cash flow shortages, a debt service reserve fund can be set up by a line of creditAvoid using the Contingency fund as much as possibleProject manager

Risk Breakdown Structure

The risk breakdown structure (RBS) identifies, evaluate risks in order for them to be clearly understood managed successfully. The risk breakdown structure aids the project manager/ risk manager and stakeholders in identifying and comprehending how the risk is classified and assessed. The risk breakdown structure tends to produce an unstructured list of risks that often does not directly assist the project manager in knowing where to focus risk management attention (Hillson, 2002).The risk breakdown structure uses a qualitative assessment for prioritizing recognized risks that come from estimating the possibility of the impact, thus exposing the most significant risks to the project manager. The risk register is shown in Appendix A.

RBS Level 0RBS Level 1RBS Level 2

0. Project Risk1. Technical Risk1.1 Scope definition1.2 Design

1. 2. Management Risk2.1 Resourcing2.2 Communication2.3 Quality

2. 3. Commercial Risk3.1 Suppliers and Vendors

4. External Risk4.4 Insurance4.5 Contingency funds

There are many ways the J & J Custom Home Builders can identify the risks:

1. Previous project historyJ & J Custom Home Builders can use their previous project to identify the potential risks that may come across in the previous project.

2. Brainstorming With the project management team subject matter experts to get analyze what risk might affect the project.

3. SWOT AnalysisThe strengths, weaknesses, opportunities and threats (SWOT) analysis tool helps the organization identify their strengths, weaknesses, opportunities and threats within the business. The SWOT analysis tool evaluates what the organization can and cannot do as potential opportunities or threats and Once The SWOT analysis is concluded, and SWOT analysis controls what may help the firm in achieving their objectives, and what difficulties must be overcome or reduced to attain anticipated results.

4. Monte Carlo analysisThe Monte Carlo system is a quantitativeanalysistechnique that lets people use to comprehend the impact of risk, ambiguity in financial, budget, and other estimating models in Forecasting Models

Probability-Impact Matrix

The probability and impact matrix seems to be the difficult concept, but in fact, it is actually something that people use in their life frequently. The probability and impact matrix comes into play when the project manager or team members define a specific task or activity that may contain a particular amount of risk which needs to be quantified. In the probability and impact matrix, the different tasks are given two sets of criteria by rating each task in the likelihood that it will occur and the probability and impact matrix is used because it allows the project manager or project team to combine the probability and impact components on the same scale. The matrix lets the project manager or project team to see the probability and impact of each task by ranking them low, medium or a high-level risks so that they can handle accordingly. The higher the matrix score, the higher the risk level associated with the item that is being analyzed (Mabutas, 2016). The risk register is shown in Appendix B.The probability and impact matrix is important because it helps the project manager figure out what task might give him or her the biggest amount of trouble in acquiring the necessary resources for constructing the Jonathan family dream home. This matrix will use contractor bids/quotes and factor in the availability of local craft workers since both cost and time are major factors in this project. The project manager will create a ranking of alternate contractors/workers so that if one cannot do the work an alternate can be pulled in quickly to do the work. Risk RegisterAll corporate and organizational projects face risk at one time or another (CIO Staff, 2016). The risk register plays an important role in the risk management process. This is because it is made up of risk breakdown structures which contain the Risk Identification (Risk Event, Cause, Effect), Qualitative Risk Assessment (Probability, Impact), Risk Response Plan (Response Strategy, Trigger, Response Actions), and Monitoring and Control Plan (Risk Owner, Interval or Milestone Check, Status: Date and Review Comments). This process requires the project manager to seek out input from team members as well as stakeholders for their identified risks, their severity, and the actions steps that must be taken because the risk register is a control document that is created in the early stages of projects. The register will play a vital role in the Risk Management Plan by helping the project manager keep track of changes and address any problems as they arise. The Risk Register is commonly shared between project investors to make them aware of any risk and issues that the project is facing thus providing a means of tracking the solution to many risks and issues. It also helps in tracking new project risks and to make recommendations on what course of action is needed to solve any problems listed on the Risk Register. The Risk Register helps the project managers and the project stakeholders in making decisions the most appropriate way. A risk needn't be a threat to your project, it is simply an issue that can arise during the project; if effectively managed, it shouldn't prevent your project from attaining its goals and objectives (CIO Staff, 2016). The risk register is shown in Appendix C.

Project Status SummaryThe project status summary report allows the project manager or the project team to monitor and control tasks that are performed throughout the lifetime of the project and will be used in the project status summary meeting that will be conducted bi-weekly or more frequently if needed. The purpose of this report is to effectively communicate project status at regular intervals to project stakeholders. It also helps guard against unforeseen bombshells that may come up in the project and discusses items such as schedule, issues, scope, resources and other project items and risks that needed to be addressed. The risk register is shown in Appendix D.Conclusions and Recommendations

Jonathan familys dream home has been finished in concurrence to Risk Management progress which was implemented from the early stages of the project lifecycle. J & J Custom Home Builders is a growing company who will utilize the Risk Management progress to develop new relationships with their design and sales team, craft workers, suppliers and vendors to speed up the construction time and to minimize errors. It is been an experience for J & J Custom Home Builders in using the risk management process especially in identifying the risk that can endanger the project timeline. I highly recommend that J & J Custom Home Builders continue to use and practice the risk management process in order to respond to different market conditions that will impact future projects and J & J Custom Home Builders needs to hold Risk management workshops in order to train the rest of the project managers in the Risk management process.

Appendix ARisk Breakdown Structure with Metalanguage Cause are all in yellow highlight Risk The risk is in Bold Font Effect impacts are in blue highlightRBS Level 0Project level risksRBS Level 1Risk CategoriesRBS Level 2Detailed risks

Project Risk - Budget Budget riskThe project has a firm budget of $632,400 and if the costs exceed the Budget the Jonathan family will risk finical impacts since they will have to pay out of pocket.

Project Risk Technical Technical riskScope definition riskInaccurate or incomplete Design drawings can lead to Poor Design Quality. Denotes that those who carry out the work do not have the essential data or have the wrong information to do the job. May put the project schedule in jeopardy.

Project Risk TechnicalTechnical riskDesign riskInaccurate or incomplete design can cause rework construction delays that may put the project schedule in jeopardy which might endanger the homeowners closing date and increase their out of pocket costs.

Project Risk ManagementManagement risksResource riskIf the proper resources (manpower and equipment) are not available on site on a time it can risk the project being delayed and cause delays to all the other actives and incur additional costs.

Labor riskBecause of the housing boom in Houston, there is a shortage of craft workers which adds risk that the required trade worker will not be available which could result in other trades schedule being schedule to other jobs.

Project Risk ManagementManagement risksCommunication risksCommunication is a vital part of being a project manager this means that he or she needs to know the work progresses and when it will be done if the project manager does not know the status of the work it can delay the other trades and impact the overall schedule and the project can collapse.

Project Risk ManagementManagement risksQuality risksWhile the Jonathan family was designing their dream home want it to be quality compliance but Quality is not maintained making the home compliance can be very expensive and may exceed the budget and have a high maintenance cost.

Project Risk ManagementManagement risks Materials riskThe project manager will have to check all the order materials for damages if there is damage the project manager has to have the product redelivered which can cause delays that can impact the closing date.

Project Risk ManagementManagement - Construction risksConstruction risks Stage 1: The site excavation has to complete by March 15, 2016 if the excavation is not complete it will delay the entire project.

Stage 2: The framers have 2 to3 weeks to complete all the exterior and interior wall with all the exterior sheathing, vapor barrier, windows, and doors installed. If the weather during this period is too hot or cold the work will have to be delayed which could cause a delay in all other phases of the project

Stage 3: The roofer will install all the decking, flashing and shingles on the roof rafter. If the weather during this period is too hot or cold the work will have to be delayed which could cause a delay in all interior house work.

Stage 4: The plumber will have 1 to 2 weeks for running all the plumbing throughout the house. If there are any plumbing violations that were found by the municipality inspector this could cause a work shut down the project which could cause delays in all other phases of the project and it would have to fix before the would be allowed to proceed.

Stage 5: The electrical installer will have 1 to 2 weeks for running all the electrical wiring in the house, placing outlets and the breaker box. If there are any electrical violations that were found by the municipality inspector this could cause a work shut down the project which could cause delays in all other phases of the project and it would have to fix before the would be allowed to proceed.

Stage 6:The HVAC installer will have 2 weeks for running all the HVAC equipment and the ducts in the house. If there are any HVAC violations that were found by the municipality inspector this could cause a work shut down the project which could cause delays in all other phases of the project and it would have to fix before the would be allowed to proceed.

Stage 7:The bricklayers will get approximately 3 weeks to lay all the brick for the first story. If the weather during this period is too hot or cold the mortar will not cure correctly which will have to be torn down again and redone.

Stage 8:The siders will get approximately 2 weeks to install all siding for the second story If the siders cannot complete the installation of the siding this could cause a delays exterior painting.

Stage 9:The Drywall installer will have 3 weeks for installing all the insulation and the Drywall because there is a housing boom there is a limited quantity of skilled workers to finish the job within the time allotted.

Stage 10:Since there are shortage carpenters will arrive to install all the interior doors, molding and any staircase railings and balusters which should take 1-2 weeks the risk is that it will delay the painters and the finishing trades which may push out the closing date affecting their current accommodation.

Stage 11:The painter will have 1-2 weeks for priming and painting all the exterior and interior walls with the color chosen by the homeowner. If the weather during this period is too hot the work will have to be delayed since the paint will dry too quickly and cause will a lot of rework.

Stage 12: The cabinet installers will have one week to install all the cabinets in kitchen and bathrooms if the cabinets are not installed by their due date they can delay the finishing trades which can schedule impact.

Stage 13:The flooring company will have 2 weeks to install all the required flooring throughout the house if the flooring is not installed by their due date it will impact the finishing crew such as installing all plumbing and light fixtures.

The project manager will have to order the required Materials at different stages of construction the risk is that if the materials are not delivered on time it can cause major delays in the construction which will impact the closing date.

Project Risk CommercialCommercial RiskSuppliers and VendorsThe Supplier or Vendor will enter into a new contract every time they start a new project the biggest risk is that if the project manager picks a Supplier or a Vendor who cannot meet the project delivery date will mean that the project manager will have to find new supplier or vendor to replace the one who cannot perform while impacting the cost and schedule.

Project Risk CommercialCommercial RiskCash flow riskEvery time a suppliers or vendors enter into an agreement with a project manager for a housing project they face the risk of not getting paid for the Material that they provided and this means that they want part of the money upfront and the rest when it delivered which can impact the project cash flow.

Project Risk ExternalExternal RiskInsuranceProtects the property from damage which is effective at the commencement, procurement, and transportation to the site. If any of the goods gets damaged while being delivered or shipped to the job site this means the project manager has to reorder that part which may push the same schedule out thus impacting the closing date.

Project Risk ExternalExternal RiskContingency fundsMany project manager will setup Contingency funds to help them cover cash flow shortages, a debt servicereserve fund can be set up by a line of credit the biggest risk is that this money could be misused or overused impacting the companys cash flow

Running head: PROJECT RISK SUMMARY REPORT25PROJECT RISK SUMMARY REPORT26

Appendix B Probability-Impact MatrixNegative impactPositive impact

PVHI2.4(0.09)1.1 (0.18)2.2(0.36)VHIP

RR

OHI4.2(0.28)1.2 (0.56)HIO

BB

AMEDT 2.1, 2.3, 3.2, 4.1(0.40)OMEDA

BB

ILOLOI

LL

IVLO3.1(0.08)VLOI

TVLOLOMEDHIVHIVHIHIMEDLOT

YY

Green RisksAmber RisksRed Risks

Risk #DescriptionProbabilityXImpactTotalType of Impact

1.1construction delays can happen Inaccurateor incomplete ScopeVHI0.9XMED0.20.18Negative

1.2rework can cause construction delaysHI0.7XVHI0.80.56Negative

2.1availability of skilled personnelMED0.5XMED0.20.10Negative

2.2labor shortages can make it hard to keep theproject on trackVHI0.9XHI0.40.36Negative

2.3damaged goods could lead to construction delays because it would need to be reorderMED0.5XMED0.20.10Negative

2.4Unexpected weather conditionsVHI0.9XLO0.10.09Negative

3.1Failure of supplier delivering design materialsVLO0.1XVHI0.80.08Negative

3.2Cash flow riskMED0.5XMED0.20.10Negative

4.1Insurance - for protecting the property fromdamageMED0.5XMED0.20.10Negative

4.2the overuse of the Contingency fundsHI0.7XHI0.40.28Negative

PROBABILITY% = Total *100

+/- IMPACT ON PROJECT OBJECTIVES COST

SCALEPROBABILITYTIMECOSTQUALITY

VHI71-99%>20 days>$200KVery significant impact on overall functionality

HI51-70%11-20 days$101K-$200KSignificant impact on overall functionality

MED31-50%4-10 days$51K-$100KSome impact in key functional areas

LO11-30%1-3 days$10K-$50KMinor Impact on overall functionality

VLO1-10%