Project Risk Management

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Project Risk Management (PRM) entails a process of identification, response and analysis of risk factors of a project and its objectives. PRM assists in control of the upcoming events and it is rather proactive than reactive (Gil & Tether, 2011). Project risk management has been regularly practiced by several states for many years. For instance, Chilean government decided on building of the four new soccer stadiums in a twelve months span with the support of aggressive standards of project management.

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Complete overhaul of public infrastructure coincided with the return of Chile’s democracy in 1990. The demands that have been drawn by the need for country’s development and growth sustainability further motivated the nation. The Ministry of Public Infrastructure of Chile (MOP, Ministererio de Obras Publicas), has made substantial internal changes to upgrade the seaports, roads, airports, public buildings and water systems. Supported by the Chilean president, Michelle Bachelet, government’s major objectives to attract sporting events and improve national infrastructure had an enormous impact on Chile’s history. The country won the right to be the host nation for the Federation Internationale de Football Association (FIFA) tournament Under-20 Women’s World Cup in 2008. The president sponsored project had results that Chilean residents were highly anticipating.

The four cities selected in a FIFA open-bid process for the construction of stadiums were La Florida, Coquimbo, Chillan and Temuco. However, there were some primary failures the government faced while strategizing for the construction of stadiums. Notably, the four cities did not comply with the strict regulations of FIFA, which government had to fulfil in a year. Building of the four stadiums was challenging because the government had only nine months to see them come to fruition. Another challenge lied in the never-changing project personnel despite an adequate investment of funds and a project portfolio ten times larger than envisaged. Now, the MOP had new complex projects with limited skillful project managers to accomplish them. Itwas paramount for the Chilean human capital to mobilize its strengths for the improvement of projects’ efficiency.

Uncertainty Level and Complexity of the Project

The level of uncertainty and complexity associated with the project were surreal. First, the failure of the four cities to comply with the FIFA rules had repercussions. The vagueness caused by this is evident in government’s requirements to fulfil the qualifications of the proposed stadiums in a year. This clearly depicts the task of the government and its ability to complete the stadiums’ constructions. Secondly, the team available for planning and executing faced risks in terms of the number of projects. The funds allocated for the project required utmost attention of the full team to manage the potential risks. Lastly, a great number of projects with aggressive deadlines caused difficulties in accomplishing them due to the lack of skilled personnel. Additionally, the development of projects resulted in the need for extra funds to complete them.

Project Communication

Associated costs, timelines and requirements set by the Chile’s MOP are too multifaceted to use outmoded principles and practices of project management. Modernization was a requisite for the MOP to fulfill its objectives. MOP travelled to countries such as Mexico and Spain to gain new ideas and methods of value maximization for its projects and team performance. Nonetheless, the MOP built a solid team having a central focus on command and one project manager. The project gained support of the staff from the project management office (PMO), which assigned 250 workers for each stadium and 1000 for the entire project respectively.

MOP aligned its staff from different levels of organization according to the standards of PMI. This was essential to help keep all involved parties focused on achieving the common goal. The team included a project manager, field workers, information and communication platforms, and PMO. The PMO provided overall coordination and practical support. In addition, the MOP implemented various technologies in each stadium, which included document management tools that supported online communications.

Risk Identification for Selectionism and Learning

Project learning entails flexible adjustments of the project approaches to the environmental changes that might occur. Whereas selection is the availability of strategic solutions to the predicament in case of uncertainty at hand. The government of Chile developed several solutions to the risks that emerged during project implementation. Aquired knowledge of the FIFA regulations for the stadium construction resulted in the demolition of older stadiums that did not meet the standards. Consequently, this led to the beginning of the bidding process and awarding of contracts to break the ground for the new soccer venues.

Further, innovative outsourcing exercised by the MOP was critical. Diverse specialists were mainly outsourced for the certain parts of the project. Therefore, saved money decreased emerging communication issues and assisted in covering the project faster.  

Project Unknowns

Turner (2014) classifies the project unknowns in two categories: a known unknown and an unknown unknown. Chilean government faced both categories of the unknown in their project. For instance, the benefits of the project completion for country’s residents were a type of a known unknown. Chilean government used advertisement to inform its customers about the benefits of the stadiums. Government communicated how the stadiums will lead to potential businesses and improve the living standards of the residents. On the other hand, determining the span of the project depicts an unknown unknown. For example, the use of posters and billboards is one of the ways the government can use to inform its potential customers. In addition, it can arrange a conference meeting to educate the customers about the project unknowns. The project unknowns that the Chilean government faced resulted in the development of a contingency plan. 

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