Introduction to Mastering Risk and Procurement in Project Management: A Guide to Planning, Controlling, and Resolving Unexpected Problems
Manufacturing, distribution, sales, and service organizations have one thing in common: the requirement of resources. An organization’s success, in many cases, is a direct function of how it obtains and manages resources to carry out its strategic business objectives. The organization’s first and most important task is to obtain management personnel who are skilled and experienced in acquiring and managing resources, which may include:
- Human resources
- Materials and supplies
- Equipment and facilities
- Intellectual property
In the process of obtaining resources within all organizations, either for daily operations or for special projects, there are two givens: Resources must be obtained, and they have the potential to be problematic. The challenge, then, is how to obtain the correct resources at the right time and for a cost equitable for the organization, as well as how to manage any potential problems that may occur with a given resource. Mastering Risk and Procurement in Project Management has been designed not only to explain basic concepts in risk and procurement management, but also to offer tools and techniques that can be used by a project manager, project staff, and supporting departments that would be associated with risk or procurement.
Problems Are Inevitable
As organizations utilize resources in daily operations and within projects, it becomes quickly evident that a variety of problems and issues can be associated with resources. Human resources are often the primary resources used across organizations. Given the potential of variability in skills, individualism, reliability, and work ethic, they can bring to the table an array of challenges and problems. An interesting component of human resources is that although people are often the source of a variety of problems, they also have the ability to solve them, which is typically not the case for other types of resources.
Problems can also be associated with other resources, such as materials and supplies. They can be incorrect, get damaged, or fail as a result of poor quality. Equipment and facilities can develop problems that can render them less effective or inoperable altogether. Some organizations can have financial challenges that make it difficult to fund projects, constraining project managers in their need to obtain and schedule resources for work activities.
Regardless of what type of resource is used, problems are inevitable, and the project manager must develop a system to deal with problems throughout the project lifecycle. As problems are not designed to happen on projects, they are typically characterized as having a potential to occur, which we commonly refer to as risk.
The second component of projects that inevitably develops problems is associated with purchasing items required for project work activities and acquiring subcontractors. The purchasing aspect of a project can itself introduce several types of problems and is in many cases connected to risk management. The area of purchasing and acquiring items for the project is commonly referred to as conducting procurement.