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BUS 377 Managing Risk – The Human Factor

BUS 377 Managing Risk – The Human Factor

Starting a new project poses uncertainty and unforeseeable and also some inherent risk, however, the management should understand their role in assessing the capital risks in the scope of every new project they undertake. In 2008, a structural steel fabricating firm (Steel LLC) that is located in Atlanta expanded its operations to serve its customers in the northeast and also some western part of the United States. Senior management in the project played a very critical role in assessing the amount of capital that would be spent on the expansion of the project. Despite the fact that risk taking was a very integral part of the organization’s business activities, they had never tried to take on such substantial financial risks. However, the senior management staff were advised and encouraged to embrace the entrepreneurial risks thus they decided to take the risk bearing strategic opportunity (Loch, C., DeMeyer, A. & Pich, 2006). The plan of project expansion was an organizational strategy to grow and develop its business and also increase the bottom line, the project expansion vision, and its reward outweighed the associated risks in the project.

This project was faced with two significant risks. The first risk that emerged in the project was a substantial investment with the associated capital risks. The senior management had to review their business plan very carefully while assessing their capital risks and this could not be that conservative in their efforts. They decided to invest $5 million dollars hoping that they will raise their share rapidly and continue making the profit in the steel market as a major steel fabricator in the southeast of the United States. The senior management realized that after expanding their project, they would be faced with some minor problems.

However, they were very optimistic that with a good and a proper planning and with oversight in the project they could succeed. The senior management and also the project's staff played a very critical role in risk monitoring in the project.

The second risk that affected the project is that the economy was in crisis and very few companies that were able to expand their operations in their projects. Due to this (economy crisis), it was a risk since the companies did not know whether they will be hit by problems such as a decrease in the price of goods and services and whether the product demand would drop. The commercial construction in the government sectors was growing highly, but there was no any idea as for whether the company would sustain any setbacks that would mostly affect its operation or even the future existence of the company (Patsalos-Fox, M. & Pergler, 2010). The senior management staff on the project realized that this substantial problem could be very destructive in the financial sector.

Despite the fact that there were complexity and uncertainty for the projects, other qualified and experienced personnel were hired for procurement efforts to obtain materials to supply attained due to the project expansion. Both financial and human resources were required for the implementation of the project expansion plan. An inventory of about 30% was increased, and also new sales and project staff were hired so that they can meet the deliverables of the project. The organization goal while searching for additional staff was to hire the most qualified and experienced personnel with technical savvy and capabilities to deal with junk punks when they emerge. It was not an easy task while venturing out some other areas of the United States targeting contracts. Lobbying and politics played a very major part in these efforts (Patsalos-Fox, M. & Pergler, 2010). In both the government and also the private general contractors, developing savvy sales with capabilities took some precedence over technical capabilities to do the job. It was also a challenging to maintain a good and a better working relationship with the sub-contractors so as they can help in fulfilling the contract deliverables in some geographic locations. Project staff was supposed to be mindful and well groomed in all the projects they oversee while using the appropriate PRM technique. This included being diligent in their efforts to foresee any emerging issue and also being flexible. Duetero learning played a very critical role in the project staff where they used it to detect errors and also to take actions. This learning helped them to move from contingency planning to project learning since they changed the way they used to do things and started them differently thus making changes. Both trust and relationship building were very critical in the expansion of the project. Even though proper planning and forecasting were done to plan the type of contracts the company would target, choosing experienced sub contracts, having a flexible contract was very important in case punk punks emerge. The work structure was defined when the expansion of the project started and also the roles and duties of employees were communicated effectively to all employees. Key sales staff pursued contracts on several projects in both government and private sectors (Loch, C., DeMeyer, A. & Pich, 2006). The routine and novel risk projects were contained in the organization’s portfolio. Senior managements played a very crucial role in monitoring the progress of the project and also assessing the risks involved in all new projects.

The way they organized the project with some management layers with the aim of assisting in new projects, some transparency and buy-in occurred to all involved. In every week, project staff met to discuss all the new projects due to the expansion of the project and communicate the progress of all the projects. Qualified and experienced personnel were given the responsibility to handle all activities in sub projects which created the capabilities to deal with any emerging punk punks.

There was risk related business processes in every project. During this process, collaboration and communication were made to ensure that all the stakeholders involved in the expansion of the project were aware of its progress and also how the progress is affecting the company’s bottom line and goals. The organization soon realized that dealing with government contracts earned them a lot of capital and this made them concentrate their efforts to achieve it successfully. Senior management created an organizational mindset that impacted in the success of the expansion of the project. Some of their responsibilities were hiring, building good project infrastructure, assigning people to their duties and also implementing project governance. The sponsors of these projects fell on the project staff and senior management, and the projects were directed and supported through very difficult time. Effective collaboration and communication were to ensure that senior management was informed and that was flexible enough to advise and encourage the team through any emerging punk punks. They embraced a lot of entrepreneurial efforts with the aim of increasing their profit at over 400% within six years.

Despite the fact that bids were won for these projects with unusual uncertainty and complexity the expansion was very successful since the setbacks that faced them were very few. Project staffs were given a good environment of dealing with unk punks when they emerge that was created by the senior management. The infrastructure of any planned project plays a very crucial role towards the success of any project expansion.

Some lessons were learned during the expansion of the organization’s project. Our management and project sales learned that by maintaining a good relationship with the vendors and contractors in different geographical locations plays a major role in the success of the project. This also included developing a report with sub-contracts ensuring that the progress of the deliverables in their subcontracts is communicated effectively. They also learned that employing qualified and experienced contractors with a right insurance, better construction capabilities and also bonding are pertinent. The procurement staff also realized that coordinating the delivery of commodities with no down time to the project plays a key role in the success and development of the project.

In conclusion, we learn that managing risks to the minimum is very essential to the longevity of any organization (Loch, C., DeMeyer, A. & Pich, 2006). The scope also should be evaluated well anytime a new project is undertaking to ensure that it aligns with the organization’s goals and also ensuring that all the major risks in the projects are assessed by qualified and experienced personnel to make sure that complexity and uncertainty of any project are handled and managed successfully. A good communication flow is very essential with the stakeholders as well as project staff. With all the benefits of lessons learned, they will be prepared better for expansion of any project in future.


Arnold, J.H. (1986, September)Assessing Capital Risk: You Can’t Be too Conservative. Retrieved from

Brodeur, A., Buehler, K., Patsalos-Fox, M. & Pergler, M. (2010, February) A Board Perspective on Risk Management. Retrieved from McKinsey & Company: management

Loch, C., DeMeyer, A. & Pich, M.(2006) Managing the Unknown: a new approach to managing high uncertainty and risk in projects. John Wiley and Sons

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