Risk Workshop and Risk Management Component
Before conducting the risk workshop, it is important to complete a number of pre-workshop activities. The initial step is to determine who should attend the risk workshop. The project’s risk champion, the project manager (PM), and the project sponsor should determine who, from among the project’s key stakeholders and important members of the project team, ought to attend the risk workshop (Hillson & Simon, 2012). According to Hillson and Simon (2012) the ideal number of workshop participants is between 10 and 16, with larger groups preferential to smaller. In the event that there are too many workshop participants to work effectively as a single unit, the workshop can be divided into subgroups “at key points in the workshop to maximize participation and productivity” (Hillson & Simon, 2012). In the case of Environmental Quality International (EQI) in Siwa, Egypt, in addition to the standard participants, the PM, risk champion, and sponsor, carefully selected leaders from the community in Siwa, Egyptian state leaders, project financiers, and project team leaders should be invited. Because of the tribal nature of the inhabitants of the oasis, it will be important give the tribal leaders adequate time to choose representatives. Once the list of risk workshop attendees has been finalized, the agenda must be set. Hillson and Simon (2012) suggest that the agenda be determined and circulated “sufficiently in advance of the workshop to ensure that all invited attendees are available and are aware of the workshop’s purpose and timetable.” Also, by preparing and sharing the agenda well in advance of the workshop, participants may be able to prepare by reading pre-briefing information, workshop objectives, the project business case and/or the project charter (Simon & Hillson, 2012). Additionally, workshop participants can be requested to determine a list of what they consider to be substantial threats and opportunities to their own aspects of the project (Simon and Hillson, 2012). This can help the initial stages of the workshop get started quickly.
Risk Workshop Agenda
The risk workshop will be based on the agenda in Hillson and Simon (2012) at right and detailed below.
Because EQI usually confines itself to a consulting role, and this is its first foray into project execution, the introductions phase of workshop is more important than usual. EQI’s consultants will be meeting with community leaders, state leaders, financiers, and other company and project leaders. This important element will be afforded extra time, 2 hours,in this project, with its blending of cultures and potential for misunderstandings higher than many other projects.
Next, the project objectives will be confirmed in order to ensure that everyone is on the same page and preempt later misunderstandings. This will be approximately 20 minutes. EQI’s Siwa project objective is to promote financially, ecologically, and historically sustainable development in Siwa (Story, 2009). The next phase of the workshop will be to confirm the scope of the risk process within the workshop, which should take approximately 30 minutes. For this workshop, EQI wants to focus only on the risks that affect the company’s financial investments, ecological, or historical preservation objectives. Schedule and profitability are secondary, in that if project schedules are met and the project is profitable earlier than anticipated, this is not considered a successful outcome if the other objectives have been sacrificed or otherwise compromised. Next is to establish the ground rules, which will take about 30 minutes. This is important because the various stakeholders may have different perceptions of how the process will work.
Next is the risk management briefing. This important step, approximately an hour in this project, outlines for all participants the main aspects of the project risk management process (Hillson & Simon, 2012). After the risk management briefing is the expectations and results session, in which the outcomes of the outcomes and actions to come out of the workshop are clarified (Hillson & Simon, 2012). In this Siwa project, this will require some extra time, approximately an hour, as many of the participants will be new to the project risk management process. The next step is the identification of risks, a critical session for the success of the workshop. In this session, project risks will be brainstormed, followed by an analysis of assumptions and constraints, and it will be concluded with a standard risk checklist (Hillson & Simon, 2012). This important phase is afforded a full three hours in the Siwa project, in order to reconcile the varied risk perceptions of the stakeholders involved.
After the identifying risks step, the next stage is to rationalize risks. This involves the merging of like risks, removing non-risks, and removing risks that do not fit within the scope of the risk management workshop (Hillson & Simon, 2012). Risks are also assigned a unique identifier in this stage. This will take about about and hour and a half in EQI’s Siwa project and is important in order to consolidate and refine the identified risks. After rationalizing the risks, the risks are described using meta-language. This step involves rewriting the risks in a standard simple to understand language that all stakeholders should be able to understand. Hillson and Simon (2012) recommend the following language:
“As a result of <definite cause>, <risk> may occur, which would lead to <effect on objective(s)>.”
In EWI’s Siwa project, this meta-language needs to be prepared in both English and Arabic. This should be accomplished within an hour for English, with Arabic translations prepared shortly after the conclusion of the workshop. Next, the risks are recorded. This step should take approximately 30 minutes, and can be accomplished after the conclusion of the first day of the workshop.
The morning of the second day of the workshop, the first session is a short, approximately an hour-long recap of the previous day’s work along with an explanation of the assessment scheme (Hillson & Simon, 2012). As with the special importance of earlier steps in the agenda, this seemingly simple step needs extra emphasis in EQI’s Siwa project due to the inexperience of the stakeholders involved. Following the explanation of the assessment scheme, the next stage of the workshop is the assessment of probability and impacts. This is a critically important step in the risk workshop. Probabilities are estimated for each identified risk and then impacts for each are determined (Hillson & Simon, 2012). This stage should take four hours in the Siwa project to allow the inexperienced participants to work out the probabilities and impacts.
After the risks are assessed, the risks are categorized using the projects work breakdown structure (WBS) and the risk breakdown structure (RBS) (Hillson & Simon, 2012). This allows for the identification of “risk hotspots, common causes of risks, and common affected areas of the project” (Hillson & Simon, 2012). The risks are mapped onto the RBS to show the causes and the WBS to show the effects, with threats and opportunities recorded on separate documents (Hillson & Simon, 2012). This process will take 2 hours in EQI’s Siwa project.After the risks have been properly categorized, the final active stage of the workshop is to nominate risk owners for each risk. In the nomination of risk owners step, a person is chosen to manage a particular identified risk for the project. That person is give the appropriate resources and the necessary authority to deal with the risks as they arise (Hillson & Simon, 2012). This stage should last about an hour in EQI’s Siwa project, as the disparate areas of risk should be fairly easy to assign. Lastly, the workshop is concluded with the close the workshop stage of the agenda. In this final step, feedback is solicited and a summary is read out. An important output of the risk workshop is the initial risk register.
After the risk workshop concludes, the findings of the workshop are compiled and entered into the risk register, the “document in which the results of risk analysis and risk response planning are recorded” (PMBOK Guide, 2013). This important document will be referenced and revised throughout the project to meet emerging risks. EQI’s Siwa project has the following first five entries in its risk register:
Top Five Threats
Justification of Probability and Impacts of Threats
While it is difficult to ascertain the probability of an economic downturn on a global or even regional scale, according to Story (2009), the Egyptian economy is strengthening but is still vulnerable to local downturns. While the probability of a downturn that is severe enough to effect the project is low, the impact is considerable when access to financing is considered. The HIGH impact, LOW probability combination makes economic downturn an amber risk for the Siwa project (Hillson & Simon, 2012).
The water table in the oasis continues to be depleted. This precious resource is not easily replenishable. Population growth, the growing use of Western toilets, and the export of the local water all serve to drain the local aquifers (Story, 2009). Drought is highly likely during this project, but can be mitigated by buy water from other regions in Egypt and having it trucked in to meet construction and other limited project needs. High probability, LOW impact items such as drought are green risks in the risk register.
Flooding is a much less likely, but much higher impact risk for the Siwa project. Past flooding caused major damage to the region in 1926 and in 1983 (Story, 2009). In the VERY LOW probability that flooding was to occur, the impact would be VERY HIGH, possibly jeopardizing the future of the project.
Terrorism hasn’t been much of a problem in Western Egypt, as it has been in the much more heavily populated Nile River basin, in cities like Cairo and Alexandria. However, Siwa is located very close to the Libyan border in Egypt (Story, 2009). This location, along with rising political and religious violence in Egypt and Libya, make it a VERY LOW, but VERY HIGH impact risk for this project.
Corruption is likely to be minor nuisance throughout the project in Siwa. The provincial capital is geographically isolated from Siwa, however functionaries there are likely to want their share of company revenues. This MEDIUM likelihood event is a LOW impact risk for the project, however, as the project legal team can identify legal methods of dealing with local civil and tribal leaders.
It is important that opportunities, as well as threats, be identified during the risk workshop. Opportunities are risks, that if they occur, have a positive effect on one or more project objectives (Hillson & Simon, 2009).
Top Three Oppurtunities
Justification of Probability and Impact for Opportunities
In the VERY LOW probability event that EQI were to win recognition for its work in sustainable development, it would have a HIGH impact on the project’s objectives. The firm would be able to use its new found credentials to negotiate better financing deals, as well as possibly make it eligible for development grants. While this green opportunity on the double probability-impact matrix would be a boon for the company, it is highly unlikely as the firm lacks experience in executing projects (Story, 2009).
Based on the long term climate of the region, it is a LOW probability event that it will rain during the project at the Siwa oasis. However, if it does rain, and it is in an amount that doesn’t cause flooding and subsequent damage, and is significant enough to be useful, then this MEDIUM impact risk would allow the company to lower water costs for both construction and organic crop projects (Story, 2009). This risk is also green on the matrix.
A more likely opportunity for the company to take advantage of during the project is free publicity. This publicity, a MEDIUM probability event made via travel, trade, culinary, or environmental publications, or even social media would provide a limited, LOW, impact for the company. Ideally EQI would leverage the positive publicity to increase consumer interest and integrate the goodwill with its existing marketing in the project.
Hillson, D., & Simon, P. (2012). Practical project risk management the ATOM methodology. Tysons Corner, Va.: Management Concepts.
Project Management Institute. (2004). A guide to the project management body of knowledge (PMBOK guide). Newtown Square, Pa: Project Management Institute.
Story, J. (2009). Environmental quality international in Siwa. Fontainebleau, Fr.: INSEAD.