Running head: PROJECT SELECTION 1 Project Selection Daniel R. PJM480- Capstone- Project Management Colorado State University - Global Campus Dr. XXXX XXXXXXX 1 May 2016 PROJECT SELECTION 2 Introduction Module3 CapstoneAssignment:ProjectRiskFactor(100Points) Project risk is defined simply as any possible event that may negatively affect the viability of a project and it is computed using the simplerelation: ProjectRisk=ProbabilityofEvent*ConsequencesofEvent Zungoo Electronics, the second largest manufacturer of flat screen displays in the United States,expanded its business into South America three years ago. Having experienced a roller coaster ride of large ups and down in its business, the company would like to investigate the quantitative risk for its South America operations using details in the table below: ProbabilityofFailureC ategory ProcessMaturity TechnicalComplexity VendorDependency WorkforceAvailability Probabilityof Failure 30% 30% 25% 25% ConsequencesofFailureC ategory Performance=45% Schedule=55% Cost=20 Reliability=20% Use the table above to answer the following questions: 1. Please calculate the total risk factor for this project. Would you assess this level of risk as low,moderate(medium),or high?Why? (Hint:TotalRiskFactor =P*C-(P+C),whereP=AverageProbabilityofFailureand C =Average Consequences of Failure. A common rule of thumb assignsany project with a Risk Factor below 0.30 as lowrisk, between 0.30 and 0.70 as medium risk,and over 0.7 as high risk.) PROJECT SELECTION 2. What are all the risk mitigation strategies available to Zungoo? What specific mitigation options would you recommend to the corporation? First we will discuss about the types of risks mitigation strategies available for the project: Risk Acceptance: Risk acceptance does not reduce any effects however it is still considered a strategy. This strategy is a common option when the cost of other risk management options such as avoidance or limitation may outweigh the cost of the risk itself. A company that doesn't want to spend a lot of money on avoiding risks that do not have a high possibility of occurring will use the risk acceptance strategy. Risk Avoidance: Risk avoidance is the opposite of risk acceptance. It is the action that avoids any exposure to the risk whatsoever. Risk avoidance is usually the most expensive of all risk mitigation options. Risk Limitation: Risk limitation is the most common risk management strategy used by businesses. This strategy limits a company's exposure by taking some action. It is a strategy employing a bit of risk acceptance along with a bit of risk avoidance or an average of both. An example of risk limitation would be a company accepting that a disk drive may fail and avoiding a long period of failure by having backups. Risk Transference: Risk transference is the involvement of handing risk off to a willing third party. For example, numerous companies outsource certain operations such as customer service, payroll services, etc. This can be beneficial for a company if a transferred risk is not a core competency of that company. 3 PROJECT SELECTION 4 Considering the current scenario I will suggest to go with the risk limitation strategy because it is the most common risk management strategies which are currently used by any business organization. Also, it is a mix of both risk acceptance and risk avoidance and we can also say that it is an average of both. It will be a cost-effective solution for the problem which may not lead to a high budget or high cost solution for any kind of problem. 3. In order to reduce the total risk factor by one level(e.g.,high to medium or medium to low)what would be your focus among the four probabilities of failure and four consequences of failure listed? 4. If you were to prioritize yourefforts,which risk factors would you addressfirst? Why? 5. Explain the meaning of the following sentence:Reduction of risk factors is not cheap. Your responses should be integrated in a well-written paper that meets the following requirements: Be 2 to3 pages in length plus graphical elements. Be formatted according to theCSU-GlobalGuide to Writing and APA Requirements. Include and reference two credible sources; theCSU-Global Library is a good place to find the resources. References Chapman, R. J. (2014). The Rules of Project Risk Management : Implementation Guidelines for Major Projects. Farnham, Surrey: Gower Publishing Limited. Goetsch, D., & Davis, S. (2014). Quality management for organizational excellence: Introduction to total quality (7th ed. ; Pearson new international ed.). Harlow, Essex: Pearson. PROJECT SELECTION 5 Kerzner, H. (2013).Project management: A systems approach to planning, scheduling and controlling(11th ed.). New York, NY: Wiley. Lussier, R. N., &Achua, C. F. (2013). Leadership: Theory, application, & skill development (5th ed.). Mason, OH: Cengage/Thomson South-Western. 1. Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK Guide), Fourth Edition, ANSI/PMI 99-001-2008, pp. 273-312. 2. The MITRE Institute, September 1, 2007, MITRE Systems Engineering (SE) Competency Model, Version 1, pp. 10, 40-41. 3. Garvey, P.R., 2008, Analytical Methods for Risk Management: A Systems Engineering Perspective, Chapman-Hall/CRC-Press, Taylor & Francis Group (UK), Boca Raton, London, New York, ISBN: 1584886374. 4. Kossiakoff, A. and W.N. Sweet, 2003, Systems Engineering Principles and Practice, John Wiley and Sons, Inc., pp. 98-106