Farah Allen Risk Paper #2 2/24/13

This case study evaluates the approach used in the evaluation of tender submissions. The application is used successfully for large high technology procurements. It is basically a two part process or two phase system. In Phase I, the goal is to establish a risk baseline that individual tender responses can be compared to. Phase 2 builds on Phase 1 where the goal is to compare the individual tenders approach to the potential effects of risk on the project. The two phase process is a systematic process which helps to ensure the greatest attention and effort is focused on the high risk areas for the project.

1. Which case study does a better job at identifying risks? Explain why.

Phase 1 and Phase II use the same process for identifying risk; therefore there is an equal level of performance. Determining which case study does a better job of identifying risks is made much easier by applying the definition. Risk identification determines what might happen that could affect the objectives of the project, and how those things might happen. The process should be comprehensive to ensure all key elements have been identified. The preferred method for risk identification is brainstorming. In Phase I and II the project team uses a risk WBS as noted in figure13.2 for Phase I and figure 13.11 in the text. The risk WBS was developed using brainstorming as discussed in Chapter 2, and each risk WBS item

is reviewed. Any required clarification is provided by the team member most familiar with the risk. The primary objective for Phase I is to establish and document a risk baseline against which individual tender responses can be compared. The primary objective for Phase II is to provide comparative guidance to the tender evaluation team on the potential effects of risk on the project, given each tenderers approach. Phase II builds on Phase I, but as previously noted, includes its own risk identification. Any risk omitted from Phase I has the same probability of being identified in Phase II. The assumption of this response is that the project elements process will be comprehensive at each Phase. If Phase II depends on risk identification from Phase I, then Phase I would do a better job at identifying risks (Cooper, Grey, Raymond, & Walker, 2005).

2. Which case study does a better job at quantifying risks? Explain why.

Both case studies use the same process, so they are equally effective. Risk quantification is applied equally in both Phase I and Phase II. The project team evaluates the likelihood and impact for each identified risk to create a risk factor. This process enables a comparison between each risk. Effective quantification applied in Phase I provides an understanding of project risks which are then used for evaluation in Phase II. With the equal probability of identifying risks, there is also an equal probability of quantifying risk factors.

3. Which case did you find easier to follow with regards to the risk assessment? Explain why.

Phase I was slightly easier to follow with regards to the risk identification and evaluation. It

is the first step in the process, so all methods seemed easy to apply. Phase II took a little more time to determine if the methods applied to Phase I were to be equally applied to Phase II, but once determined, application of the method was the same.

4. Which had the more compelling assessment of risk? Explain why.

Probability aside, Phase I had a more compelling assessment of risk. The brainstorming session to identify risk would seem to be more comprehensive in Phase I. The assumption is that the project team would not really do a thorough second pass for Phase II risk identification. By the time the process begins for Phase II, the assumption that all risk was previously identified would more or less turn the input from Phase I into a checklist. While using a checklist is a good tool for recurring projects with the same characteristics, it would be ineffective for use in vastly different projects where risk would vary.

5. Explain how these two cases were different and how they were similar.

These two cases are different in that they each have a unique objective. The primary objective for Phase I is to establish and document a risk baseline against which individual tender responses can be compared. The primary objective for Phase II is to provide comparative guidance to the tender evaluation team on the potential effects of risk on the project, given each tenderers approach. They are similar in that they support the same project, using the same forms, and use the same measurement scale for quantification (Cooper, Grey, Raymond, & Walker, 2005).

Conclusion

This case study evaluates the approach used in the evaluation of tender submissions as applied for large high technology procurements. The purpose is to provide the requesting organization with a better understanding of the risk involved with the project. It evaluates the two phases used to ensure the greatest attention and effort is focused on the high risk areas for a project. Following the steps in each process, it is clear that each phase follows basically the same process. The only difference is that Phase I provides input to Phase II. However, the process provides an opportunity for a second review to identify and quantify risk in Phase II. The only caveat is that the project team may assume all risk was identified in Phase I and may simply accept the prior evaluation without further consideration. This systematic process is effective if properly documented and implemented in both phases.

References

Cooper, D., Grey, S., Raymond, G., & Walker, P. (2005). Project Risk Management Guidelines: Managing Risk in Large Projects and Complex Procurements. Chichester: John Wiley & Sons Ltd.