Assess Organizational Readiness

November 25, 2022| admin

Assess Organizational Readiness

 

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Assess Organizational Readiness

 

 

 

For any corporate risk management program, there are a number of factors whose absence signals an increased likelihood of failure for the risk management program and whose presence greatly increases the chance for success of the program (Hillson and Simon, 2012). These factors, called Critical Success Factors (CSF), include the following:

 

 

 

An organization supportive of the process;

A skilled and competent staff;

The presence of the necessary support infrastructure; and

A simple, scalable, and documented procedure (Hillson and Simon, 2012).

In the Environmental Quality International (EQI) in Siwa case study, some important details are missing, but with the information that is available, it is possible to draw conclusions about EQI’s risk management system and how the company reached the CSFs.

 

 

 

EQI’s Critical Success Factors InSiwa

CSF     Examples

Supportive Organization         ·         Company President’s personal project

  • Fit company mandate to promote sustainable development

 

  • Secured loans and other financing for project

 

Skilled & Competent Staff     ·         Neamatalla and his sister Laila were instrumental in success of phases of the project

  • Use of local staff for reduces costs

 

Necessary Support Infrastructure       ·         Loan money for project finance

  • Evidence of willingness to address problems as they developed (mites in lumber, wages for women workers)

 

Simple, Scalable, & Documented Procedure  ·         No documented evidence of this CSF

(Hillson and Simon, 2012)

 

There were many benefits and beneficiaries of the Siwa project. Before the Siwa development project, EQI had only worked as a consulting firm, taking on is project was its first foray into project execution (Story, 2009). This expansion in business opportunities was in itself a significant benefit of the project. Another significant benefit for EQI in undertaking this project was that it was an “ideal fit with EQI’s mandate to promote sustainable development projects” (Story, 2009). This likely made it easier to sell the project to investors and other stakeholders. Other benefits were the eventual economic and social development that would accompany EQI’s work in the Siwa region. EQI’s interest in sustainable development, while small in scale, has the cultural interests and ultimately the well-being of the locals in mind. Since this project represented a change in the business practices for EQI, from consulting to execution, it would certainly have been necessary to gauge the organizational readiness of the firm to undertake such a shift, and to implement the necessary risk management programs that such a change would mandate. From the limited information available in the case study, it appears as though EQI might not have been adequately prepared for the the project. For instance, Story (2009) notes that the company’s president, Neamatalla, had visited the region in 1995 and that by 1996 the firm had begun development projects. For a company that had only focused on consulting until this project, that may not have been a sufficiently long enough time to prepare the organization for such a shift in mission. It may be that EQI considered time to be a factor, and perhaps rushed through the preparatory work. That however, makes it likely that inadequate risk management preparations were made by the firm. Hillson and Simon (2012) point out that “risk arises from uncertainty,” and that “lack of effectiveness comes from not knowing “how-to.”’ For a company making a serious shift in mission, this could have been a critical oversight. Because of EQI’s willingness to assume the risk of undertaking a project such as the development of Siwa, as well as shifting from a consulting to an execution role, labeling the company “risk averse” can be ruled out. Because the firm’s willingness to accept that a certain level of “uncertainty is inevitable” and because the company is willing to “reap the rewards associated with effective risk management,” the best label for EQI’s risk management culture is “risk-mature” (Hillson and Simon, 2012).

 

Based on analyzing EQI’s Critical Success Factors and the benefits, organizational readiness, and the risk culture, there are a number of steps that the firm should consider implementing in order to improve its risk management processes. Knowing that project “risk management means applying skills, knowledge, and risk management tools and techniques to your projects to reduce threats to an acceptable level while maximizing opportunities,” (Heldman, 2005) it is vital to have a documented risk management plan in place. This critical success factor seems to have been missing from EQI’s project planning. To improve the likelihood of success for the Siwa project, mitigate risk and uncertainty, EQI should always include a simple, scalable, and documented risk management plan in place before executing any project (Hillson and Simon, 2012).

 

Another important element of the risk management process the EQI should undertake before embarking on any projects in the future is to commit a sufficient amount of pre-project execution time for the initial stages of project risk management. If EQI adopted the Active Threat and Opportunity Management (ATOM) risk process for future projects, they would be a in a much better position to deal with the uncertainties that are bound to develop (Hillson and Simon, 2012). The ATOM process begins with defining objectives, which EQI did successfully. However, the next phases of ATOM, identifying relevant uncertainties, prioritizing uncertainties, and developing responses to the uncertainties seem to have been overlooked by the company and the project manager (Hillson and Simon, 2012). This was evident when construction of the hotel constructed by traditional means had to be halted due to mite infestation and solved with the help of local elders. While this particular problem, the mites, could probably not have been foreseen, a construction stoppage due to traditional building issues should have been anticipated, with mitigating measures ready to enact (Story, 2009). In the future, EQI should follow ATOM.

 

EQI was fortunate in that it was able to build a skilled and competent staff with a strong interest in the success of the project. However, because of some of the environmental factors, including a remote location, harsh geography and climate, scant resources, a fragile local natural environment, and even some political sensitivities it seems that it would have been difficult for EQI to establish a necessary support infrastructure (Story, 2009). For future projects in remote or otherwise difficult locations, it is critically important for EQI to ensure that it has an adequately robust support infrastructure in place to ensure the success of the project. For a project like Siwa, this might involve a greater involvement with local leaders, investment in clean local transport options, building a cadre of local traditional craftsmen and women to serve as technical leaders and instructors, and other possibly costly considerations. However, in light of EQI’s mandate of promoting sustainable development projects, it is a worthy investment towards that goal.

 

 

 

 

 

Risk Break Down Structure – Siwa Development Project

 

RBS LEVEL 0           RBS LEVEL 1           RBS LEVEL 2           Affect Project?

 

 

 

 

 

0.Project Risk

 

  1. Technical Risk 1.1 Scope Change

(scope creep, incremental changes to project)

 

Yes

1.2 Requirements Change (requirements set internally)         No

1.3 Security (extremists in area)          Yes

1.4 Design

(traditional design)

 

Yes

1.5 Estimates, assumptions, and constraints   Yes

  1. Management Risk 2.1 Project Management

(inexperience with executing operations)

 

Yes

2.2 Field Operations Management

(working with local workers, cultural differences)

 

Yes

2.3 Communication

(remote working area, lack of communications infrastructure)

 

Yes

  1. External Risk 3.1 Sub-contractors

(local contractors, reliability issues)

 

Yes

3.2 Local Regulations

(cultural, tax, resource limitations)

 

Yes

3.3 Customers

(availability, transportation, global economic factors)

 

Yes

3.4 Weather

(construction delays, damage)

 

Yes

(Hillson and Simon, 2012; PMBOK guide, 2013)

 

 

 

 

 

References

A guide to the Project Management Body of Knowledge (PMBOK guide), fifth edition (5th ed.). (2013). Newtown Square, Pa.: Project Management Institute.

 

Heldman, K. (2005). Project manager’s spotlight on risk management. San Francisco: Harbor Light Press.

 

Hillson, D., & Simon, P. (2012).Practical project risk management the ATOM methodology. Tysons Corner, Va.: Management Concepts.

 

Story, J. (2009). Environmental quality international in Siwa. Fontainebleau, Fr.: INSEAD.

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