Risk Strategy Management - Services & Trade - Case Study Example

APPRAISAL AND REVIEW OF THE RISK MANAGEMENT STRATEGY FOR A PROJECT Name Class Instructor Institution City State Date Risk Management Background Studies in the field of risk management can be traced back to right after World War II between 1955 and 1965. It was used as a way to protect individuals and companies from loss due to factors that can be controlled. During the 1950s, other forms of risk management began to emerge. In the 1970s, derivative began being used as instruments of risk appraisal. This went on to grow rapidly in the 1980s. (Askew, 2011, p.37). The 1990s saw the integration of international risk regulations, a time when the management of risk became necessary. The first risk management books published in 1963 and 1964. They mainly focused on pure risk. Our study focuses on Services & Trade (S&T). It is a leading interior and civil construction contracting company. It is based in Oman and is recorded as one of the biggest construction companies. Some of the services currently provided by S & L include turnkey interior fit-out, civil construction, MEP works, FF&E, OS&E, building materials trading, decorative painting and carved gypsum works. Projects executed by the company have been in hotels, palaces, villas, high-end residential and commercial projects. With operations in the Middle East and Europe, the sky is the limited for Service & Trade. Currently, the group’s turnover is exceeds US $200 million and the manpower is close to 4000. Some of the notable projects that Services & Trade has engaged in over the years include Sheraton Brussels Airport Hotel in Belgium, Dubai International Airport expansion Project and the Mandarin Oriental in Qatar. Introduction Risk Management is the logical method of evaluating and dealing with risk to ensure the achievement of objectives by organizations, individuals, and the society. It should be undertaken during the planning stages of a project so as to ensure that organizations are aware of the dangers that they may encounter and develop plans to mitigate these risks. "No construction project is risk-free. (Sir Michael Latham 1994). Service & Trade has developed an effective risk management policy with due consideration to the kind of projects that are to be undertaken. The various types of risk include market risk, credit risk, enterprise risk and operational risk. One of the challenges faced in this field is project management. (Fägerskiöld, 2006, p.83). It has to follow a methodical approach to encapsulate the eventualities from beginning to end. These steps are planning, identification, risk analysis, response planning and monitoring and control. Project managers are required to identify risks and trace them through to their consequences and put in place mitigation measures. Through this process, the PM will be able to ensure that the objectives of the project are met. Selection of the Type of project The company under study specialized in Interior and civil construction projects. We have therefore chosen this company as a case study with specific emphasis on the Jabal Al Akhdar Resort Hotel in Oman. This project was specifically on Joinery works. The selection of this project is based on the availability of information on the project. The Jabal l khaddar is a luxury resort hotel and spa constructed at a cost of $ 53 million. It is predicted to be the second 5-star hotel to be developed in this up-and-coming resort destination. It is owned by a major Omani government pension fund. T & S ran this project in conjunction with Dubai-based construction firm Al Jaber Engineering and Contracting (ALEC). It is set to be launched in 2016. Project specifics The main purpose of this project is to create a 5 star resort that assures luxurious, spacious, secure and homely facilities. Based in a mountainous and up-and-coming resort, it features breathtaking landscapes, enchanting terraced gardens, and balmy Mediterranean-style climate underpin the mountain region’s huge tourist appeal. It is equal joint venture between the Oman government tourism investment company. This project involves the construction of 30 hotel rooms, 106 pool villas, a health spa, recreational facilities, and specialty restaurant. It is located on the Jabal Al Akhdar Mountain which has an altitude of more than 2,400 m above sea level at some of its peaks. The temperature there is almost 20 to 25 degrees Celsius lower than what it is at the bottom of the mountain. It is to cover a total area of 23,015 square meters. Risk Management techniques used Dangerous actions can put contractors, workers, and others on or near the worksite to bodily injury and/or property damage. There are four different strategies that can be employed in risk management. They are listed as mitigation of risk, avoidance of risk, risk acceptance and transfer. Mitigation and response are the weakest part of risk management. The people involved in the business must be educated about the risks and be aware of imminent dangers they could encounter, take responsibility for these risks and put in place mitigation procedures in the event they do occur. Fire fighting is not one of the best relief efforts one can make. This would ideally mean that there was no proper identification of potential risk and the absence of proper procedure to deal with eventualities. This project has seen the employment of various risk mitigation risk measures including customized program designs, safer worksite environments and fewer schedule disruptions. Creation of Occupational Safety and Health committees with fair representation across the board have been used. The most important functions of safety committees is that the project management team has more eye on the ground to identify potential hazards and the the necessary actions taken. This information, through the safety committee, trainings and safety boards avails the information required to employees and contractors on the ground to help in the identification of risk. The risk management plan is also reviewed on a regular basis throughout the project to ensure that any new risk that may arise is properly identified and proper mitigation measures properly put in place. The Company provides workers on the ground are properly equipped with personal protective equipment for their personal safety. Workers are also responsible for taking care of their own health and safety, ensure that their demeanor does not adversely affect others, follow instructions on work procedure and safety, properly use the equipment in the ground for the right use and also comply with the set company policies and procedures. The company uses a set hierarchy of identifying risks through elimination, substitution, isolation, engineering controls, administrative controls and as mentioned above, personal protective equipment. In the event of emergencies, there are set policies and procedures to ensure the right and necessary action is taken to avoid injury and the loss of life. As preparation the following actions are usually taken before hand: Identification of emergency points Display of emergency procedures at visible points Installation of fire extinguishers at the appropriate places and regular inspection of the same Running training drills involving all the workers and safety personnel. In case there is an emergency situation or a fire, there are set procedures that need to be followed by all workers on site. These are: Immediate stoppage of work and evacuation of the area Assistance of any visitors who may not be familiar with the site Reporting of the incident(s) to the appropriate emergency numbers for assistance Notification of management and supervisors Immediate assembly at the designated assembly point and proper roll call to account for all personnel Provision of first aid where necessary and evacuation of any severe cases to the nearest health facilities. The Company also provides first aid equipment and trains employees on the use of the same. The first aid boxes and strategically placed and inspected regularly to ensure that all equipment is always available and not past the expiry date. In the event of an incident, first aid personnel are mandated to first and foremost stabilize the affected persons, call for emergency assistance from the closest hospital depending on the extent of the injuries and inform the management and supervisors immediately. High risk construction work requires special risk management procedures especially for them depending on the type of work. The high risk works include falls from heights, demolitions, falling objects, trenching, electric works, working in or near plants and scaffolds. Comparison with standard processes Most construction projects will set out certain parameters in the form of checks and balances to ensure efficient running of operations. These are referred to as project controls. These are guiding principles that provide well-organized coordination, supervision and running of a project. These include risks, communication and roles and responsibilities. (Gray, 2002, p.282). Risks are continuously changing as the project goes on and hence the controls need to be also evolving. Risk and doubt pose both opportunity and challenges. All areas of a project are usually evaluated against this criterion to ensure proper procedure is in place to mitigate any accident or disaster. Recommendation for changes It is important for one to have professionals always on hand in the event something goes wrong. Therefore, part of the team engaging in this project should be certified professionals or in the absence of such, hire the right professionals. These persons should be charged with ensuring risk is being accessed on a regular basis. For example, safety officers should constantly be on the lookout for any potential hazardous materials or objects. The presence of emergency medical teams, or easy access to, would ensure proper medical care is given to anyone involved in an accident. Training of the teams on site with safety tips and measures to keep the workplace safe can also be used. Appointing various employees into a safety committee would create a sense of ownership and will also increase the number of people on the ground that can identify, solve an existing problem with regard to safety or call on a more qualified person in case they need assistance. Site visit reports Site visits are necessary because one will be able to inspect and assess the progress of a project, evaluate the work of contractors on the ground and also identify potential hazards on the ground. (Deans, & Metcalfe, 2013, p.313). These inspections are used to assess compliance of contractors with the set agreements especially on compliance and milestones. The objectives of a site visit report include; i. scrutinizing specific contraction activity ii. plan conformance iii. work quality conformance iv. review and analyze contractor application for payment v. change order approval Conclusion The understanding that risk management is critical to a business is necessary. Efficient management of risk enables the business to put in place risk control policies. Business that efficiently handle risk have a better chance of registering economic investments, better output, enhanced achievements and improved judgment. Effective management of risk will also ensure that a proper risk management process is put in place. An individual shall be in an excellent view to assessing the procedures that a project team needs to put in place to manage risk effectively and to analyze and make any necessary recommendation for the improvement of the process. It is also broad and methodical way of recognizing, examining and take the appropriate action to mitigate risk to achieve project objectives. (McDonnell, 2001, p.28). Construction companies apply qualitative rather than quantitative methods of risk assessment. In project risk management, risk impact may be compared against probability and from this mitigation decisions can then be obtained from predefined limits to guarantee risk acceptance. The framework can also be made better by merging both quantitative and qualitative methods of risk mitigation. Monitoring controls can also be out in place to ensure compliance to set policies and procedures, review action plans, and accountability as set out. Controls provide a framework for the management and monitoring of a project covering areas such as risk, cost and schedule estimation and project needs. References Askew, D. (2011). The Principles of Risk Management. Acton: Australian National University. Barbra, C., Joyce, K., & Marion-Davis, A. (2009). Strategic review of Risk Management in England post-2010 (Marmot Review). Task group, 8. Deans, S., Williams, R., & Metcalfe, A. (2013). How Risk Factors are Managed in Great Britain. Journal of Family Issues, 0192513X13484274. Deans, S., Metcalfe, A., & Williams, R. (2015). Logical Issues in Risk Management. Economics,31(1), 208-214. Fägerskiöld, A. (2006). Support of Risk Factors. Scandinavian Journal of Economic Sciences, 20(1), 79-85. Gray, B. (2002). The Risk Issues in Small Businesses and Startups. Entrepreneurship in the community, 10(2), 112-122. Gore, S., Newborn, M., & Jarrod, D. (2011). A new approach for Risk Management Factors. Business Digest, 53, 10-1. Carlson, S. & Nero, J.Y. (2002a) Agency and Structure: The Impact of Risk Factors in Business. Sociology of Finance and Economics 24: 1 20. McDonnell, B. (2001). 2001 The Nature of Risk. Southward: Southward Council. Read More