Risk Management for "Dubai Eye" Project
Risk Identification
Risk identification is the second stage of risk management of any project that follows elaboration of risk management plan. The process of risk identification should be performed with a significant degree of efforts as unforeseen risks can put the well-planned project on the verge of the failure.
The following procedures are recommended to speed up the process: brainstorming, Delphi technique, interviewing, root cause analysis (Rose, 2013). The project team has performed few of these procedures, and the results of their efforts can be found in Table 1.
Table 1. Identified Risks and their Description
Risk
Risk Description
Technology Challenges
Dubai Eye is naturally an innovative construction that upon completion will be the highest observation wheel in the world. Typically, such endeavours raise a multitude of technological challenges to be solved. Thus, the technologies involved both in its construction and future usage are central for the successful project completion. Provided the solution is not found or prove to be inappropriate the project completion is under threat.
Foreign Exchange
Since not all companies involved in the construction of Dubai Eye are from the UAE, the problem of exchange rate fluctuation can increase the project cost.
Schedule Change
The risk of delays of different kinds present in projects of a different kind. Since Dubai Eye requires the cooperation of many contractors, the delay of one procedure can cause cascade delays of the dependent ones thus increasing project costs and postponing completion date.
Increase in Costs
The increase in costs is a potential problem for any innovative construction as to solve the unsolved challenges the project team should invest more resources that usual.
Environment Damage
Since the project scale is quite significant and potentially harmful for environment materials are used, it is primary to ensure that the handling of them as well as the performing of the hazardous operations is done properly or minimized.
Funding Problems
Dubai Eye is a breakthrough construction that requires massive investments. The fluctuation of the costs may need additional financing.
Wrong Estimation
The project team estimate of costs, reliability of contractors and suppliers, completion date, may vary significantly from actual ones.
Contractors and Suppliers
Contractors and Suppliers may be unwilling or unable to perform the procedures under the contract. Though the forfeit will be paid, there will be none to finish the project
Identified Risks Categorized by WBS
The generic project stages include planning, realization, and closing phases. These stages are high-level units in work-based structure, and Table 2 shows to which of them each risk belong.
Table 2. Identified Risks Categorized by WBS
Risk
Planning
Realization
Closing
Technology Challenges
Foreign Exchange
Schedule Change
Increase in Costs
Environment Damage
Funding Problems
Wrong Estimation
Contractors and Suppliers
Risk Consequences
To prioritize risks, the project manager should assess two parameters: its probability and the impact it might have on the project(Rose, 2013).
Table 3. The Probabilities of Identified Risks and their Rationale
Risk
Rationale
Probability
Technology Challenges
This …
