Disaster Plan Analysis Report
Engineering Risk Management (MGMT6019)
Executive SummaryRisk management refers to the capacity of involved personnel to recognise risks and for accurate evaluation and addressing. This report aims to identify various risks and measure performance in compliance with them. Major risks in an engineering project pertain to the areas of costs and attainment of required funds. Furthermore, legal issues also impose significant risks in engineering activities. Due to these complications, the quality of the deliverables starts to degrade. Safety risks threaten employees, customers as well as the management body. Risk identification is made by database maintenance, brainstorming, Delphi strategy, cause appraisal, SWOT and checklist appraisal. Risk management is done through risk audits, appraisal of trends and variance, and reserve analysis. Risk analysis helps to create foundations for decisions in an organisation. Prominent applicability of this approach is that it does not replace nor compels the decision maker into taking risks. Lack of information is a limitation of this approach. It is recommended that risk perception and communication plans should be used to mitigate the observed issues. Based on the given information, it can be stated that the systematic exchange of information can implement risk management in engineering activities.
Table of Contents
TOC o “1-3” h z u Executive Summary PAGEREF _Toc518937097 h 11.Introduction PAGEREF _Toc518937098 h 32.Findings PAGEREF _Toc518937099 h 32.1.Primary Issues in Engineering Activities PAGEREF _Toc518937100 h 32.1.1.Financial Risks PAGEREF _Toc518937101 h 42.1.2.Legal and Government-Related Risks PAGEREF _Toc518937102 h 42.1.3.Quality Risks PAGEREF _Toc518937103 h 52.1.4.Safety Risks PAGEREF _Toc518937104 h 53.Analysis PAGEREF _Toc518937105 h 53.1.Risk Management Methods PAGEREF _Toc518937106 h 53.2.Advantages and Disadvantages of Risk Assessment PAGEREF _Toc518937107 h 73.2.1.Benefits PAGEREF _Toc518937108 h 73.2.2.Applicability PAGEREF _Toc518937109 h 73.2.3.Limitations PAGEREF _Toc518937110 h 84.Recommendations PAGEREF _Toc518937111 h 84.1.Risk Perception and Communication PAGEREF _Toc518937112 h 84.2.Risk Communication Skills and Plans PAGEREF _Toc518937113 h 95.Conclusion PAGEREF _Toc518937114 h 9References PAGEREF _Toc518937115 h 11Appendices PAGEREF _Toc518937116 h 12Appendix A: Risk Register PAGEREF _Toc518937117 h 12
IntroductionRisk management attributes to the capacity of involved personnel to recognise risks and for accurate evaluation and addressing. The issue that is discussed in this report involves a couple of blasts in Tianjin, China that killed approximately 50 people. This mishap has occurred shortly after officials have decided to focus on safety in the area. The report aims to identify various risks and measure performance in compliance with them. In addition to this, the report also reviews the efficacy of risk appraisal as decision-making equipment.
FindingsPrimary Issues in Engineering ActivitiesThe present segment of the report documents the risks associated with engineering activities. The risks are enumerated in close association with the blast that occurred in Tianjin (ABC News, 2015). A risk register is attached along with to enumerate the level of threat imposed by the risks that are given below. Refer to Appendix A
Serial Number Risks Cause Effect Impact Probability Risk level
1. Financial risks Inflation Use of cheap raw materials Significant High
2. Legal and government-related risks Approvals
Inappropriate plans Liabilities Moderate Low
3. Quality risks Low budget and legal complications Failure to retain customer Significant Low
4. Safety risks Poor quality maintenance Workplace hazards
Table 1: Risk Matrix
(Source: Given by Researcher)
Financial RisksMajor risks in an engineering project pertain to the areas of costs and attainment of required funds. It is often seen, that a tight budget hinders quality that is initially planned to be achieved by the project schedule. Cost curtail can result in a conflict between resource allocation and profitability (Aven, 2016). Implementation of costly resources decreases the scope of profit gathering by the company. On the contrary, application of cheap building materials can hinder the quality of the finished product. This, in turn, can result in the collapse of buildings, under environmental or physical distress.
Legal and Government-Related RisksEconomic drivers of a project are closely influenced by government activities in the region, like inflation. The protocols of the project may require approvals from some administrative and local departments. This, in turn, extends the duration of the project. A majority of the initiation is phase is invested in acquiring approvals from the relevant legislative bodies, to prevent litigation charges in the later stages of the project (Epstein, 2018). Legal issues resulting from inappropriate construction plans and bureaucracy also impose significant risks in engineering activities.
Quality RisksThis issue is closely related to the risks mentioned above. Due to complications faced by an engineering corporation in legal and financial spheres, the quality of the deliverables starts to degrade. Risks associated with the quality of the finished goods are mostly linked to insufficient planning before the start of the project (Qian & Lin, 2016). Furthermore, the employment of cheap, unskilled labour can also hinder the quality of work achieved as a result. Unpredictable changes in plans, protocols and designs can create a communication gap among the departments working collaboratively in an engineering project.
Safety RisksAs mentioned above, the quality of a deliverable plays a critical role in the determination of safety. In case of low quality produces, it is anticipated that the structure of the building is not safe enough to endure stress. Safety risks threaten a plethora of stakeholders, for instance, employees, customers as well as the management body (Chemweno et al., 2015). Lack of workplace safety can result in a more significant number of accidents happening in construction sites. This, in turn, can threaten the reputation of the company and reduce its chances of sustainable progress.
AnalysisRisk Management MethodsThe risks discussed in the previous sections of the report are used as a framework for risk identification and mitigation strategies. As stated above, financial and legal implications are the most common causes of risks in engineering activities. The management of risk is segregated in two steps to mitigate the risks appropriately (Leveson, 2015). The initial step involves identification of the factors that can pose a risk in the engineering project. The risk estimation and mitigation stages follow this. In this stage, the risk factors are influenced in a manner where they cease to impose threats on the project.
Figure 1: Stages of Risk Management
(Source: Leveson, 2015)
Risk identification and estimation should be implemented in the initial stages of project development, to maximise the impact of the risk management strategies. Some of the popular risk identification equipment are a database, brainstorming, Delphi strategy, root cause appraisal, SWOT and checklist appraisal (Wetzel & Thabet, 2015). Appropriate identification of risks gives rise to the need for mitigation of the observed risks in the engineering activities. The following list enumerates some risk management tools and techniques that can be employed in the present scenario.
Risk Audit: Risk audit is one of the popular tools to formulate strategies based on risk responses obtained from the identification stage.
Appraisal of Trends and Variance: Management bodies must determine variances between project schedule and price baseline. High variance increases the chance of risks and uncertainties in an activity (Epstein, 2018).
Reserve Analysis: Management reserves and contingency forms a part of the budget. Risks and reserves are inversely proportional.
Advantages and Disadvantages of Risk AssessmentThis section demonstrates the feasibility of a risk assessment protocol to aid in decision-making in the context of engineering activities. In addition to benefits and applicability, this segment also enumerates the limitations of risk assessment.
BenefitsRisk analysis includes all the phases of a project lifecycle. This aids in decision-making to provide a foundation for making organisational decisions. With the help of risk identification and estimation, project managers can highlight the areas that need additional care. A decision based on risk assessment adds value to a number of the situation for a company (Haz?r, 2015). Also, to attain feasible results, catastrophic outcomes can also be avoided. A risk-driven decision-making process involves systematic documentation and analysis of available information to devise the strategic decision.
ApplicabilityThe purpose of a risk-driven decision is to offer ample data to aid in the formulation of an informed decision. This process applies to organise data in a comprehensible manner. Prominent applicability of this approach is that it does not replace nor compels the decision maker into taking risks. This strategy can be implemented before the implementation stage and is usually followed by the risk appraisal techniques (Renn, 2017). The general applicability of the strategies can promote a guiding framework for decision-making strategies and risk assessment.
LimitationsRisk assessments usually occur in an ambience where project methodology is rarely validated owing to the negligible occurrence of disasters. This gives rise to a sense of false security in the minds of the project managers. This, in turn, is responsible for mishaps like the Tianjin incident. In addition to this, high and low-frequency cases that operate outside the capacity of risk assessment can potentially threaten both the organisation as well as the society (Qian & Lin, 2016). Lack of information can hinder the potential for negative occurrences that in turn create conflict in the outcome anticipation.
RecommendationsRisk Perception and CommunicationRisk perception provides a subjective decision for factors that can impart to the severity and occurrence of risks. In this case, risk perception can be referred to as the hazards caused to the health and property owing to the physical distress (blast). On the contrary, risk communication offers a connection those results in the interaction including real-time data and opinions. This is usually similar to brainstorming, where stakeholders threatened by the same factors discussed to formulate strategies to improve their health, social or economic well-being. The aim of communication during risk invites people in risk to take decisions that can protect the well-being of the community.
Figure 2: Recommendations
(Source: Given by Researcher)
Risk Communication Skills and PlansRisk communication skills involve the capacity to recognise variation values and recognition of people’s perception. This perception gives rise to the response rates to specific risks. The risk communicators must be capable of applying risk communication and social science principles during their confrontation with challenging situations. An effective plan to increase the scope of risk communication is to induce confidence in the risk responses. This can help to develop strategies for risk communication that can incorporate proven and relevant theoretical paradigms in practical events.
ConclusionBased on the given information, it can be stated that the systematic exchange of information can implement risk management in engineering activities. The report has portrayed the issues highlighted in the Tianjin incidence that has given rise to multiple conflicts in the areas of ethics and quality. The report has also recommended plausible interventions to prevent the occurrence of these events. A drawback of the study has been its time and budget bound nature. Thus, the report has successfully implemented risk identification, estimation and management procedures. The measurement plan has aided to monitor performances of the factors in engineering activities.
References BIBLIOGRAPHY ABC News. (2015). Tianjin explosions: Officials met just one week ago to discuss safety at Chinese port; death toll rises to 50. Retrieved March 12, 2018, from ABC News: http://www.abc.net.au/news/2015-08-13/tianjin-explosion-44-killed-safety-officials-met-week-earlier/6696260
Aven, T. (2016). Risk assessment and risk management: Review of recent advances on their foundation. Retrieved March 12, 2018, from Sciencedirect.com: https://www.sciencedirect.com/science/article/pii/S0377221715011479
Chemweno, P., Pintelon, P., Van Horenbeek, A., ; Muchiri, P. (2015). Development of a risk assessment selection methodology for asset maintenance decision making: An analytic network process (ANP) approach. International Journal of Production Economics, 170, 663-676.
Epstein, M. J. (2018). Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts. Abingdon: Routledge.
Haz?r, Ö. (2015). A review of analytical models, approaches and decision support tools in project monitoring and control. International Journal of Project Management, 33(4), 808-815.
Leveson, N. (2015). A systems approach to risk management through leading safety indicators. Reliability Engineering ; System Safety, 136, 17-34.
Qian, Q., ; Lin, P. (2016). Safety risk management of underground engineering: Progress, challenges and strategies. Retrieved March 12, 2018, from Sciencedirect.com: https://www.sciencedirect.com/science/article/pii/S1674775516300178
Renn, O. (2017). Risk governance: coping with uncertainty in a complex world. Abingdon: Routledge.
Wetzel, E. M., ; Thabet, W. Y. (2015). The use of a BIM-based framework to support safe facility management processes. Automation in Construction, 60, 12-24.
AppendicesAppendix A: Risk Register