In the May/June issue of ISA’s InTech Magazine, Diane Trentini discusses the top five upfront project considerations for risk management (click the link to read the full article).
Risk identification and assessment includes the review of commercial terms, pricing, technical skills, available resources, service supplier qualifications, scope definition, safety issues, and deliverables. The following are five important areas to assess during initial project definition:
Technical risk
- poorly defined project scope
- undefined or poor acceptance test criteria
- undertaking technical challenges beyond current skill sets
- selection of unqualified or inexperienced service suppliers or subcontractors
- unreasonable constraints, including schedule expectations and resource availability
- undefined or poorly defined project deliverables: these risks are particularly important for projects governed by a regulatory body
Financial risk
- failure to estimate appropriately causing a project overrun
- failure to use good change management causing an overrun
- poor project management resulting in poor cash flow
- undertaking work for clients with a poor credit rating and an inability to pay
Insurance and indemnification risk
- providing a proposal with inadequate terms and conditions
- accepting contracts with one-sided or unfair terms and conditions
Commercial contractual risk
- failure to appropriately handle confidential client information or intellectual property, opening up the possibility of financial loss claims by the client
- failure to formally hand ownership of project deliverables to the client
- failure of project team to understand contractual commitments
Safety risk
- failure to come to an agreement on a health, safety, and environmental plan for project
- failure to meet OSHA 29 CFR 1910.119 process safety management requirements, if required
- failure to meet other regulatory agency safety standards that apply, including Department of Defense, Department of Energy, FDA, and the Bureau of Alcohol, Tobacco and Firearms
