Project Management – Risk Management Plan

Company Introduction — Scenario
As the president of Silver Fiddle Construction Company and the project manager of this building project, you are responsible for managing the

project, which includes identifying potential risks and taking appropriate actions to eliminate or reduce risks.
Silver Fiddle Construction Company specializes in building high-quality, customized homes in Grand Junction, Colorado. New customers, the

Czopeks, have hired you to build their dream home. An overview of the project specifics are:
• Time: The project is estimated to take approximately five months after groundbreaking. The Czopeks are willing to have the project

delayed in order to save costs.
• Cost: The anticipated range is $290,000 to $320,000.
• Commitment:The housing construction business in Grand Junction is booming, and at this time, Silver Fiddle is already under obligation

to build 11 other houses in the same area.
• Resources: Silver Fiddle’s only employees are you and a part-time bookkeeper. You use subcontractors to work on the houses you have been

hired to build.
Launch the video, provided in the Resources under the Capella Multimedia heading, to meet your customers, Bolo and Izabella Czopek, and learn

more about the dream home project they are entrusting to your company.
Reference
Gray, C. F., & Larson, E. W. (2006). Project management: The managerial process. New York, NY: McGraw-Hill.

Scope Statement
Project Objective
To construct a high-quality, custom home within five months at a cost not to exceed $320,000.
Deliverables
• A 2,500-square-foot, two-and-one-half bath, three-bedroom, finished home.
• A finished garage, insulated and sheet-rocked.
• Kitchen appliances to include a range, an oven, a microwave, and a dishwasher.
• A high-efficiency gas furnace with a programmable thermostat.
Milestones
1. Permits approved by July 5.
2. Foundation poured by July 12.
3. “Dry-in” framing, sheathing, plumbing, electrical, and mechanical inspections passed by September 25.
4. Final inspection by November 7.
Technical Requirements
1. The home must meet local building codes.
2. All windows and doors must pass NFRC class-40 energy ratings.
3. The exterior wall insulation must meet an “R” factor of 21.
4. The ceiling insulation must meet an “R” factor of 38.
5. The floor insulation must meet an “R” factor of 25.
6. The garage will accommodate two cars and one 28-foot-long Winnebago.
7. The structure must pass seismic stability codes.
Limits and Exclusions
1. The home must be built to the specifications and design of the original blueprints provided by the customer.
2. The owner is responsible for landscaping.
3. A refrigerator is not included among the kitchen appliances.
4. Air conditioning is not included, but the house is pre-wired for it.
5. Silver Fiddle Construction Company reserves the right to contract out services.
Customer Review
Bolo and Izabella Czopek, new to this part of the country, are currently living in temporary housing while awaiting the building of their new

home.
Reference
Gray, C. F., & Larson, E. W. (2006). Project management: The managerial process. New York, NY: McGraw-Hill.

Project Risk Initiation (Assessment 1)
1.Project Description
[GUIDANCE: Please provide a brief description of the project this risk management plan is integrated with. Provide a brief description of the

problem or problems; budget, timeline and scope, stakeholders, et cetera.]

2.Project Objectives
[GUIDANCE: Examples include: costs within budget threshold; time within schedule threshold; quality of projects with threshold. These objectives

will be used in association with the identification of risks.]

3.Risk Thresholds and Tolerances Definitions
[GUIDANCE: Describe how much risk is acceptable by each key stakeholder for each project objective.]

4.Probability/Impact Scale Definitions Table
[GUIDANCE: This is an example: “Opportunities represent positive impacts to both project exposure and objectives; threats represent negative

impacts to both project exposure and objectives.” Below are example tables. You can replace with your own definitions table. Add a legend to

explain definitions]

SCALE PROBABILITY
(%) +/- IMPACT ON PROJECT OBJECTIVES
TIME* COST* QUALITY*
Very High > 95%
High > 80% < 94 %
Medium > 65% < 79%
Low > 35% < 64%
Very Low < 34%

Legend of Impacts to Project Objectives:
Scale Time Cost Quality
Very High Project Schedule will be pushed out more than 20 days Costs will exceed the approved budget by $100k or 25% Number of

defects will significant impacts to customer acceptance
High
Medium
Low
Very Low

5.Risk Breakdown Structure (RBS)
[GUIDANCE: Define the potential sources of risk of your project. Your first level should be RBS Level 0 (Left-hand side – All Risks); next, your

RBS Level 1 will be your categories of risks (such as technical risk, financial risk, regulatory risks, et cetera); RBS Level 2 will be your

risks used in your risk identification/assessment and project review sections. Can be completed in Excel or Visio; copy and paste in section and

add an introduction]

Video Script
Characters: Bolo Czopek and his wife, Izabella Czopek
Setting: Bolo is sitting at a table (in an apartment or rental home) with pencil, papers, blueprints, and calculator, intently working. There

are also gardening magazines and dishes sitting on the table. He may be talking to himself as he does his calculating.

Izabella Oh, its so exciting to finally be here in Colorado —a lifelong dream—to be back to nature! But it’s going to take me and my ol’

bike a while to get used to these hills!
Bolo Uh huh.
Izabella So, how’s it going?
Bolo It’s going well. It’s coming along.
We’d like to have the house completed by October, just to give the new landscaping a few months to settling in before winter. But that gives

Silver Fiddle Construction Company only five months to complete the whole thing.
Izabella This is so exciting!—but five months? That’s not very long. Do you think they can do it?
Bolo Well, the president of Silver Fiddle’s coming over in about an hour to discuss a few last-minute details and plans, so we’ll find out

then.
Izabella But, didn’t they mention that they might be able to give us a price break if we could be flexible on the finish date?
Bolo They did, and I guess it would be worth it to cut costs a bit.
Izabella I agree. Then we could use some of the saved money for wallpapering or new furniture. By the way, did Silver Fiddle tell you how

much the house is going to cost?
Bolo Well, it’s a custom home, and with all the special requests we asked for, they’re estimating somewhere between $290,000 and $320,000.
Izabella That sounds like a lot…
Bolo But it’s really not bad for a 2,500-square-foot home with 2-1/2 baths, and 2 bedrooms, and a 3-car finished garage-Boy! Won’t it be

great to put our canoes, and our kayaks and 4-wheelers in there? Who knows, maybe we’ll even have room for the cars!
Izabella I can’t wait to have a new, custom kitchen with a center island and windows that overlook the valley view! Oh, and there are

several appliances— the microwave, the oven, the dishwasher, and the trash compactor.
Bolo Oh, that reminds me, we need to tell Silver Fiddle that the house should come with a high-efficiency gas furnace with programmable

thermostat.
Izabella …and we told them about the landscaping plans at the last meeting…
Bolo That was one of the first things we discussed, even though we’re planning on handling the landscaping ourselves. Here’s the latest

version—complete with wildflower garden, perennial garden, a stone wall, and a fountain! So, what do you think?
Izabella I can already picture it! And I’ve already selected about 40 different kinds of plants, flowers and trees. But, I’m going to

have to pare down the list a little, or we may have to buy another 5 acres!
Bolo Maybe not. First things first. Let’s get the house built.
Izabella I’m so glad that the Martins told us about Silver Fiddle. They’ve been really happy with the work on their house.
Bolo Still, we have to expect a few bumps in the road. You know how the weather and supply availability can affect a building project.
Izabella Well, maybe the president of Silver Fiddle’s can tell us about the associated risks with our project.
Bolo Yes, after our meeting, they’ll be laying out any potential risk and laying out a game plan for us.
Izabella Oh! It’s almost 7 o’clock and they’re gonna be here in an hour so, we better start getting picked up get this place picked up,

and um…
Bolo I’ll start the coffee.

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