Team 3 - Risk Management Plan - Tim Hortons Market Expansion

Risk Management Plan

Hong Kong Market Expansion

Managing International Projects – SCS2236-028 December 6, 2016

Team 3 Amanda Heydorn (Nairobi, Kenya)

Neda Bayat (Hong Kong, China) Putheary Tek (Amsterdam, Netherlands)

Shanna Pritchard (Toronto, Canada)

Risk Management Plan – Hong Kong Market Expansion December 6, 2016

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Table of Contents 1. Risk Management ............................................................................................................................ 3

1.1 Risk Management Overview ......................................................................................... 3

1.2 Risk Definitions ............................................................................................................. 3

2. Risk Register ..................................................................................................................................... 4

3. Risk Probability Impact Matrix ......................................................................................................... 7

3.1 Probability ..................................................................................................................... 7

3.2 Impact ........................................................................................................................... 8

3.3 Risk Value (Priority) ....................................................................................................... 8

4. Risk Breakdown Structure ................................................................................................................ 9

4.1 Risk Breakdown Tabular View ....................................................................................... 9

5. Document Control ......................................................................................................................... 10

5.1 Document Information ............................................................................................... 10

5.2 Document History ....................................................................................................... 10

5.3 Document Approvals .................................................................................................. 10

6. Appendix ........................................................................................................................................ 11

A1 Work Breakdown Structure ......................................................................................... 12

A2 Work Breakdown Structure Tabular View ................................................................... 13

A3 Risk Form ..................................................................................................................... 15


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1. Risk Management 1.1 Risk Management Plan Overview

The Project Manager, along with the project team will ensure that risks are actively identified throughout the life of the project. Risks will be assigned a risk owner, a member from the project team, who will be responsible to ensure that every effort has been taken to actively prepare for such a risk and an appropriate risk response, which will not cause project delay or cost overruns. The Project Manager will serve as the Risk Manager for this project. Each team member has been assigned to be Risk Owner(s) (as indicated in the Risk Register) and each Risk Owner generates the risk mitigation, contingency and performs a cost-benefit analysis of the proposed strategies. The Risk Owner is also is also responsible for monitoring and controlling and updating the status of the risk throughout the project lifecycle. Risk managers will provide status updates on their assigned risks in the weekly project team meetings. Any risks deemed urgent, will be reviewed by the project team and Project Manager/Risk Manager on an ad hoc basis.

A risk contingency budget has been established in advance to prepare for the possibility that some risks will not be managed successfully. There is a total of $450,000 USD (10%) contingency reserve in the project budget allocated for risk management activities. Any risk that arises requiring in excess of the 10% allocation, will require project sponsor and financial approval.

1.2 Risk Definitions Risks will be defined following the Project Management Institute’s (PMI) definitions and risk management strategies for the Tim Hortons® Hong Kong Market Expansion Project. As such, a risk is; “an uncertain event or condition that, if it occurs, has a positive or negative impact on a project objective” (PMI, PMBOK 4th Edition). Anticipated risks are documented during the project planning phase and documented in the Risk Management Plan. Emerging risks identified throughout the project lifecycle will be separately detailed in a Risk Form, with one risk form being completed for each risk. Once new risks are approved, corresponding documents will be updated (Project Plan and Risk Management Plan) and Stakeholders will be notified as necessary. To complete the identification of each risk, a risk management and response plan will be defined. Since risks can be either a threat or an opportunity to the project objective, potential risk responses will be as follows:

Threat Opportunity Response Definition Response Definition Avoid Eliminate risk or change project scope. Enhance Increase odds of opportunity occurring. Mitigate Decrease the probability of risk

occurring and/or its impact. Exploit Eliminate any uncertainty to allow

opportunity to occur. Transfer Transfer impact of risk to a 3rd party

(i.e. warranty, insurance, contracts). Share Partner with a 3rd party to ensure

opportunity will occur. Accept Accept the risk will occur. Accept Accept the opportunity will occur.


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2. Risk Register

Risk No. R1 R2 R3 R4 Rank 1 2 3 4 Risk Category Environment Construction Marketing Legal Description Tropical cyclone

season (May to November, with peak time in July to September)

Construction delays affecting the opening/ transfer dates.

Adapting to local cultural considerations and needs.

Lawsuits from current coffee suppliers in Hong Kong and trademark/patent infringement.

WBS Category 2.2 2.2 1.5.1 5.1.3 Project Phase Execution Execution,

Performance & Control

Planning Planning, Execution, Performance & Control

Root Cause Weather Labour disputes, material and supply problems.

Culture IP, patents and trademarks not filed in Asia.

Trigger Natural weather patterns.

Contractors and materials

Consumer and cultural expectations.

Trademark and patent infringement.

Potential Response Accept Mitigate Mitigate Transfer Contingent Action(s)

-Prepare construction schedule with fast-tracking techniques to minimize delays. -Schedule activities that are impacted by weather, prior to July. -Use project buffers to help control project timeline. -Reschedule tasks in event of unforeseeable weather.

-Contract terms written clearly with time lines, quality and payment terms. -Detailed SOW, schedule planning and quality requirements. -Inspection of work at each construction milestone. - Labour contracts clearly written and defined.

-Research and survey target consumers to better understand their needs and expectations of an international coffee and bakery retail chain. -Develop and market the unique selling proposition for Tim Hortons® in Hong Kong.

-Initial research to identify possible areas of infringement. -Ensuring patents, trademarks and IPs are filed as custom in Asia, Europe and North America. - Transfer any potential legal suits to legal team.

Risk Owner QM QM PC PC Probability 10 8 5 9 Impact 6 6 9 5 Risk Value 60 48 45 45 Status (A/C) A A A A Opportunity/ Threat

Threat Threat Threat Threat


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Risk No. R5 R6 R7 R8 Rank 5 6 7 8 Risk Category Political Marketing Human Resources Procurement &

Logistics Description Pressure from

human rights organizations to not open locations in China/Hong Kong

Offensive marketing.

Labour disputes with contractors and employees.

Delay of trademarked Tim Hortons® supplies by Chinese customs.

WBS Category 1.2 1.2.4 2.2, 4.2 3.3 Project Phase Planning Planning Executing,



Root Cause China’s human rights track record.

Incorrect or incomplete market research.

Poorly written contracts, employee dissatisfaction.

Shipping timelines too narrow.

Trigger Political Cultural Legal Customs Potential Response Exploit Mitigate Mitigate Transfer Contingent Action(s)

-Develop local partnerships with charitable organizations. -Launch branch of the Tim Hortons® Foundation in China and smile cookie/camp day programs.

-Customs and cultural research prior to any product/marketing releases. -Local representative to review marketing and product labeling. -Implement focus groups to review materials and generate feedback. -Monitor social media for negative comments/ feedback.

-Ensure contracts are written clearly and concisely with schedule, scope, SOW’s and quality defined. -Use variety of contract types to suit type or work required and time line requirements (e.g. Fixed Price, Cost-Reimbursable, Time and Material). -Employment packages are in line or better than current market.

-Lease warehouse for storage of trade marked goods. -Procurement of trade-marked goods to occur early in execution cycle of project. -License local vendor to produce trademarked goods in China.

Risk Owner PM CPM PC PM Probability 4 2 3 2 Impact 8 10 6 2 Risk Value 32 20 18 4 Status (A/C) A A A A Opportunity/ Threat

Opportunity Threat Threat Threat


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Risk No. R9 R10 Rank 9 10 Risk Category Financial Franchise Description Hong Kong Dollar (HKD) volatility to US

Dollar (USD). Franchising interest and opportunities from Hong Kong investors prior to corporate store openings in Hong Kong.

WBS Category 6 1, 6 Project Phase Planning, Execution Planning, Execution Root Cause Market volatility. Investment/

Franchising Trigger Market volatility/economy. Local franchising opportunities. Potential Response Accept Enhance Contingent Action(s)

-Source local products and labour to minimize impact. -Allow up to 5% of contingency budget to keep project on schedule and as planned. -Source materials and contracts to minimize impact of fluctuating HKD.

-Identify franchise opportunities (as they arise) and facilitate development of additional Tim Hortons® locations.

Risk Owner CPM PM Probability 1 1 Impact 2 1 Risk Value 2 1 Status (A/C) A A Opportunity/ Threat

Threat Opportunity

Key:

Risk Owner PM Project Manager Shanna Pritchard PC Project Coordinator Putheary Tek CPM Cost and Procurement Manager Amanda Heydorn QM Quality Manager Neda Bayat Status A Active C Closed


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3. Risk Probability-Impact Matrix

Figure 1: Probability-Impact Matrix – Green – Low Priority, Yellow – Medium Priority, Red – High/Very High Priority.

3.1 Probability The probability of a risk occurring will be based on the Risk Manager’s assessment, in collaboration with the risk management team, of the circumstances that would lead to the risk occurring. The probability will be evaluated as a percentage and assigned as score using the following table:

Category Score Description Very Unlikely <1 It is very unlikely to occur, <10%; however it should continue to be

monitored as there is potential for risk to occur. Unlikely 1 up to 2.5 It is unlikely to occur, 10-25%; however there is potential for this risk to

occur. Possible 2.5 up to 5 There is a possibility it will occur, 25-50%. Likely 5 up to 7.5 It is likely to occur, 50-75%. Very Likely >7.5 It is very likely to occur, 75-100%.


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3.2 Impact

The impact of the risk on the project will be based on the Risk Manager’s assessment, in collaboration with the risk management team, of the effect on cost, schedule and scope. The severity will be calculated and assigned a score using the following table:

Category Score Description Trivial <1 The impact on the project would be negligible. Minor 1 up to 2.5 There would be a minor impact on the project. <5% deviation in scope,

milestones or project budget. Moderate 2.5 up to 5 There would be a moderate impact on the project, 5-10% deviation in

scope, milestones or project budget. Major 5 up to 7.5 There would be a major impact on the project, 10-25% deviation in scope,

milestones or project budget. Extreme >7.5 There would be an extreme impact on the project, >25% deviation in

scope, milestones or project budget.

3.3 Risk Value (Priority)

Each risk will be prioritized on the risk value scoring calculation:

Risk Value = Probability * Impact

The risk rating and where each risk falls into the Probability-Impact table will be based on the following rating table:

Priority Score Priority Rating Colour 0-19 Low Green 20 – 39 Medium Yellow 40 – 59 High Red >60 Very High Red


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4. Risk Breakdown Structure

4.1 Risk Breakdown Tabular View

Tim Hortons Hong Kong Market Expansion

Risk Breakdown

1. Marketing Risk 1.1 R3 Local Culture 1.2 R5 Human Rights 1.3 R6 Offensive Marketing 1.4 R10 Local Franchise Opportunities

2. Construction 2.1 R1 Weather – Cyclones 2.2 R2 Construction Delays

3. Procurement and Financial 3.1 R8 Customs Delays 3.2 R9 HKD/USD Volatility

4. Legal and Human Resources 4.1 R4 Trademark Patents 4.2 R7 Contracts and Labour Disputes


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5. Document Control 5.1 Document Information

Information Document ID RMP-001-THME Document Owner Team 3 Issue Date December 6, 2016 Last Saved Date December 6, 2016 File Name Team 3 – Risk Management Plan – Tim Hortons Market Expansion

5.2 Document History

Version Issue Date Changes 1.0 December 1, 2016 Templates and format established, identified risks entered. 2.0 December 5, 2016 Risk definitions, Probability-Impact matrix and definitions

and remaining risks entered. 3.0 December 6, 2016 Final edits, formatting, document control and appendix

entered.

5.3 Document Approvals

Role Name Signature Date Project Sponsor Elias Diaz Sese Elias Diaz Sese December 6, 2016

Project Manager Shanna Pritchard Shanna Pritchard December 6, 2016 Project Coordinator Putheary Tek Putheary Tek

December 6, 2016

Cost and Procurement Manager

Amanda Heydorn Amanda Heydorn December 6, 2016

Quality Manager Neda Bayat Neda Bayat December 6, 2016


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Appendix


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A1 Work Breakdown Structure


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A2 Work Breakdown Structure Tabular View

1 Marketing 1.1 Marketing and Branding

1.1.1 Roll up the Rim™ 1.2 Consumer Engagement

1.2.1 Customer Surveys 1.3 Social Media Engagement 1.4 Analysis

1.5 Research & Feasibility 1.5.1 Regional & Cultural Considerations

2 Location & Construction

2.1 Construction 2.1.1 Build and Execute 2.1.2 Design Plans Finalized 2.1.3 Building Specs and Requirements (RQMTs) Defined 2.1.4 Contracts Finalized 2.1.5 Bids and Contracts Awarded

2.1.5.1 Legal Draws up Contracts 2.2 Purchase/Lease of Store Locations

2.2.1 Finalization of Contracts 2.2.2 Retail Locations Determined

3 Procument (PROC) and Logistics

3.1 Coffee Supplier 3.1.1 Tim Hortons® Coffee Blend 3.1.2 Bean Selection 3.1.3 Select and Award Contracts 3.1.4 Identify Suppliers

3.2 Food Suppliers 3.2.1 Select and Award Contracts 3.2.2 Identify Suppliers 3.2.3 Define Food to be sold

3.3 Trade Marked Goods 3.3.1 Delivery Schedule and Delivery Methods 3.3.2 Select and Award Broker Contract 3.3.3 Bids for Customs Brokers


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4 Human Resources 4.1 Training

4.1.1 Role Related Training 4.1.2 Safety Training 4.1.3 Induction

4.2 Hiring Managers and Team 4.2.1 Employement offers 4.2.2 Interviews 4.2.3 Rectruitment (RCRT)

5 Legal and Regulatory

5.1 Local Licensing 5.1.1 Food Service Retail Licensing 5.1.2 Restaurant Inspection 5.1.3 Trade Mark and Patents 5.1.4 Regional Incorporation

5.2 Contract Management 5.2.1 Finalizing of Contracts 5.2.2 Drafting of Contracts

6 Finance

6.1 Finalize and Monitor Project Budget 6.2 Obtain Budget Approvals 6.3 Prepare Procurement (PROC) Management Plan 6.4 Prepare Budget Plan for Project

7 Handover

7.1 Project Closeout 7.1.1 Lessons Learned 7.1.2 Transfer of Knowledge 7.1.3 Financial and Procurement (PROC) Closeout 7.1.4 Transfer of Ongoing Contracts to Stores

7.2 Corporate Stores 7.2.1 Regional and Store Management Transfer of Knowledge (TOK) 7.2.2 Property Management Awarded and Contract Finalized 7.2.3 RFQ's for Property Management


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A3 Risk Form

Project Details Project Name: Tim Hortons Hong Kong Market Expansion Project Manager: Shanna Pritchard Risk Details Risk ID: Raised By: Date Raised (M/D/Y): Risk Description:

Risk Probability: Risk Impact: Risk Value: Opportunity/Threat Risk Mitigation Recommended Preventative Actions:

Recommended Contingent Actions:

Approval Details Supporting Documentation:

Signature:

Date (M/D/Y): PLEASE FORWARD THIS FORM TO THE PROJECT MANAGER

Team 3 - Risk Management Plan - Tim Hortons Market Expansion

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