Process Management -

VENUGOPAL
DILEMMA

BID
INVITATION
PREPARATION

TENDER (IT PLANNING

COMPETITORS
PROJECT) &COSTING

DESIGN OF RISK REGISTER:

Risk IDENTIFICATION form
Activity/Event BID preparation for IT solutions within an estimated budget
Process/Product
/Service
Risk Ref No Risk-1.1

Critical Success Optimum utilisation of funds for effective bidding of the IT solution for growth and
Factors enhancing the profits of the company

(What needs to
go right?)
Risk The Technical risk to be avoided for efficient bidding of the right IT solutions. The
(What can go budgeted risk and the schedule risk should be mitigated to avoid additional cost to
wrong?) the company. Qualitative risk to be reduced by using Monte Carlo Simulation in case
of default probability
Causes High cost and not following the budget estimation while bidding. Wrong system
(What could design. Installation defaults. Improper resources allocation and inefficient risk
cause that to management
happen?)

Controls Probability of default – Monte Carlo Simulation

(Existing
preventative or
mitigative Preventive additional cost – Segregation fixed and variable – Using activity based
measures.) costing approach

Risk Management Matrix – to check severity, likelihood and consequences to take

necessary precautions

Consequence if (Maximum Probable Loss – to avoid keep reserves and contingency plans). When
risk occurs analysing the consequences of a risk event, an authority incharge needs to consider
(consider the the level of impact (1 to 5) in relation to each of the consequence categories defined
worst/largest $ in the Public Authority’s in this case Venugopal’s own consequence rating table.
impact)
 1. RISK IDENTIFICATION

 Bidding Risk - They have to bid for the IT package which would cost
Rs.300000 per day which requires 100 workers (labour cost)
 Legal and compliance risk involved with software design and bidding.
 Scheduling risk – specified Time period - 8 weeks.
 Other risks - Document review, interviews with key project players, , wrong
risk brainstorms to secure team buy-in, unaware of specific requirements or
even can be people are unknown about software application
 Wrong estimated Budgeting and over incurrence of costs
 Preparation of Bid (12 million could go up to 24 million)-
 External risk- from competitors –
 Business risk – business process failure , people, lack of information, reports
could be biased, input issues
 Environmental and contingency risk
 Quantitative risk - degree of confidence for preparing the bid within the
estimated budget

2. RISK ASSESSMENT

 Monte Carlo technique - Applying a Monte Carlo approach which integrates risks and
uncertainties provides a clear view of their impact on timelines and costs. This defines
the extremes of the range, as well as the probability of a particular outcomes.
 Prioritize risks by their impact on the project – how much time, money, and effort does
each risk require
 It is critical to carefully think through each risk, so that they can be managed (step three)
strategically, rather than just haphazardly dealing with the first risk on the list.

Three Factors to focus on for Risk Assessment:

Risk Rating, Likelihood and Severity
 LOW MEDIUM HIGH EXTREME
RISK RATING 0 – ACCEPTABLE 1 – ALARP (as low as 2 – GENERALLY 3 – INTOLERABLE
reasonably practicable) UNACCEPTABLE
KEY
–––––––––––––––––– –––––––––––––––––– –––––––––––––––––– ––––––––––––––––––
OK TO PROCEED TAKE MITIGATION SEEK SUPPORT PLACE EVENT
EFFORTS ON HOLD

SEVERITY

ACCEPTABLE TOLERABLE UNDESIRABLE INTOLERABLE

LITTLE TO NO EFFECT ON EFFECTS ARE FELT, BUT SERIOUS IMPACT TO THE COULD RESULT IN
EVENT NOT CRITICAL TO COURSE OF ACTION DISASTER
OUTCOME AND OUTCOME

LIKELIHOOD

IMPROBABLE LOW MEDIUM MEDIUM HIGH

RISK IS UNLIKELY TO –1– –4– –6– – 10 –

OCCUR

POSSIBLE LOW MEDIUM HIGH EXTREME

RISK WILL LIKELY –2– –5– –8– – 11 –

OCCUR

PROBABLE MEDIUM HIGH HIGH EXTREME

RISK WILL OCCUR –3– –7– –9– – 12 –

Risk Assessment for Venu Gopal for bidding preparation:

SEVERITY LIKELIHOOD IMPACT

Acceptable Not likely Low
Tolerable Possible Medium
Generally
unacceptable Probable High

RISK MANAGEMENT MATRIX TEMPLATE ( ASSESSMENT - SEVERITY,LIKELIHOOD,RATING)

RISK ASSESSMENT FOR EFFECTIVE BIDDING PREPARATION
NAME VENUGOPAL OBJECTIVE
BY VENUGOPAL
3. RISK MITIGATION

We can proactively manage risks in several ways, including avoidance, elimination,

reduction, or acceptance.
An example of avoiding a risk would be moving a client’s network to a separate server
if their server has issues – by switching servers, that risk is avoided. Elimination of a
risk is ideal for preventing a blow-up of that risk later. For example, if the bidder knows
a retailer will need an additional supply of denim in the near future, purchasing an
additional order immediately will eliminate this risk later. Teams can also reduce the
probability of a risk from occurring. Risk acceptance is usually reserved for risks that
have a low to medium probability of occurring, and have a low impact on work if they
do occur

POST MIGITATION PHASE

Access information from historical reports about the following;
 Which risks actually happened?
 What was their impact?
 How effective were the risk mitigation actions?
 Are there any risks specific to this project?
 Review bid documents: contracts, estimates, plans, scope, etc, looking for: caveats,
gaps, omissions, assumptions, errors,
 Interview key project players to explore issues in-depth and get team members to open
up in a way that they might not in front of their peers.
PRE&POST MIGITATION – RISK ASSESSMENT

REF/ID PRE-MITIGATION

RISK RISK
RISK RISK LEVEL
SEVERITY LIKELIHOOD

1 Technical & IT Risks UNDESIRABLE POSSIBLE MEDIUM

2 Legal Risks TOLERABLE POSSIBLE HIGH

3 Budgeted Risks UNDESIRABLE POSSIBLE EXTREME

4 Environmental Risks ACCEPTABLE POSSIBLE LOW

5 Business Risk INTOLERABLE PROBABLE MEDIUM

Funding or Cash
6 ACCEPTABLE POSSIBLE EXTREME
management risk

7 Sceduling risk UNDESIRABLE POSSIBLE HIGH

 MITIGATIONS /
WARNINGS / POST-MITIGATION
REMEDIES
RISK ACCEPTABLE
RISK SEVERITY RISK LEVEL
LIKELIHOOD TO PROCEED?

Software and
Hardware installation UNDESIRABLE PROBABLE LOW YES
checks

Abide by
compliance related
bidding
TOLERABLE POSSIBLE MEDIUM NO
requirements. Pay
bidding legal
charges

Follow budget
estimation plan,
schedule and keep TOLERABLE IMPROBABLE MEDIUM YES
backup costing
remedies

Reserves and
Contingency plans
INTOLERABLE POSSIBLE LOW NO
for controllable part
of this risk

Internal awareness
and use of
techniques like
ACCEPTABLE PROBABLE LOW NO
probability of default
and loss given
default

Estimate costs, fund

raising and using ABC
TOLERABLE POSSIBLE MEDIUM YES
approach to prioritize
activities
 Timeline based
follow up and
monitor the progress
TOLERABLE IMPROBABLE HIGH YES
by having buffer to
eliminate time based
cost incurrence.
RISK CONTROL PLAN

 By submitting a bid price that realistically reflects the level of uncertainty and risk
 Taking a strategic decision to proceed with the bid knowing the risk exposure, and
where the company ensures that is has the contingency funds to support it.
 The company officials can decide to “No-bid” in the case of high risk projects that
without a change to the scope have a low probability of making a profit – with the
result that you can focus on winning good, profitable business
 Once Venu Gopal and team wins the bid the project has a starting point in terms
of risks and the above matrix shows the levels and means to mitigate.