BUS 697 WEEK 4 ASSIGNMENT BUS 697 WEEK 4 ASSIGNMENT

Title: ALTEX CORPORATION: SUMMARY OF CASE AND RISK MANAGEMENT PLANNING

Student Name:

Course Name and Number: Business 697- Project Management Strategy

Introduction

Motivation to Create an Industry

The United States government entered a cold war with the Union of Soviet Socialist Republics (USSR) in the years following the Second World War. This war required the United States to develop and produce sophisticated weapons systems. These systems were required to be proven effectively and immediately deployable with enough potential destructive power as to bring entire elimination of any threat to United States’ national security (Kerzner, 2005).

This need for security created government spending in the amount of hundreds of millions of dollars. The funding was directed in effort of development of a retaliatory missile program required to be consistently more advanced in evolution of technology sufficient to absolutely defray anySoviet missile attack threat posed by them in their missile program (Kerzner, 2005).

The Game Begins

Military Officials were delegated responsibility of procurement of weapons systems from manufacturers. This was done by product and service contract specifications, timetables, and requests for cost and price proposals (RFP’s). Speed and technological capability were deemed more important to successful project completion than was cost (Kerzner, 2005). However, with the motivation of increasing competition with a hoped-for and resultant reduction in cost to government and an increased number of contractors, contracts were awarded to second-and-third-most qualified bidders (Kerzner, 2005).

The power lies within in the customer (government procurement) to award contracts to whomsoever the entity wishes; without rules. The motivation of business is to generate profit. In the industrial and federal government climate generated; conflict is created; which inadvertently causes a conundrum in moral and ethical dilemmas. Both sides of the business of supplying and procurement of weaponry quickly and with the latest technology are then placed in danger of failure of completion in terms of satisfaction of goods and services to the government. Both sides must participate with fairness for projects’ excellence in completion to become reality. While government pays money for goods manufactured to specification, businesses’ project manager responsibility is to provide realistic timetables and quality tolerance in specifications with honest risk-of-failure assessment and reporting of especially these two parameters in performance to customers (government) (Kerzner, 2011). Determination in finding truth in project risk before start of work brings effectiveness to decisions in which projects to pursue and with what fervor; and whether to abort potentially resource-robbing boondoggles (Esposito, 2015).

Adversary’s Political Machine

In the USSR, profit motive is absent. Government owns everything, including the clothing worn by every breathing human; even those under the authority of the Gulag Archipelago. Government builds the factories and runs everything. No capitalistic energy is allowed. The lesson learned from the Soviet approach to industry and the arms race, as experienced by the collapse of the Soviet Union as an entity, is: entrepreneurial spirit adds to the essence of productivity.

Body

Assessment of Risk in Risk Management Plan Presentation to Procurement

Altex Corporation was awarded Research and Development phase of the Advanced Tactical Missile Program (ATMP). A contract provision required a formal project management plan be submitted to contracting Officers within 60 days of the award. The project manager wanted to include a risk management plan with the project plan (Kerzner, 2005).

The project sponsor urged a risk plan prepared but not presented with the project plan. The sponsor’s argument was: introduction of project failure risk probability in a management plan presented to military officers in charge of procuring deliverables will scare them from continuing professional relationship to production phase with Altex only (Kerzner, 2005).

This perceived risk on the part of procurement officials, the sponsor contends, will then become an inadvertently-introduced threat to the event of being awarded the production phase of the project. According to the project sponsor, company strategy is to get the procurement office so dependent on and invested in Altex during the Research and Development phase of the project that the government agents will be bonded to the point of no return to Altex only in the mass manufacturing of production phase of the project (Kerzner, 2005).

The sponsor maintains patented designs and satisfaction with prototypes on the part of procurers will bring bargaining power to Altex in the lucrative production process contract award. The project manager contends a risk management plan including accurate calculations of foreseen and unforeseen technology changes positively or negatively affecting deliverable timeliness risk; will bring trustworthiness to the process (Kerzner, 2005). Contrarily, failure to supply an accurate risk assessment to procurement agents will misrepresent capabilities of Altex to serve and supply the awarded contract (Kerzner, 2005).

Responsibility lies with Altex in risk assessment to deliverables of any contract it performs. However, procurement must also bear responsibility in its decisions in contract awards. A failure in responsibility lies with procurement if it fails to demand or conduct its own risk assessment before awarding work (Esposito, 2015).

Since power of attorney is invariably held by procuring agencies, the risk assessment process is usually immaterial to contract awards. Provisions punishing non-performance by payment of monetary damages to procurers are enforceable in protection of contracting agencies. However, a time element exists. Lost time is never regained. In the case of building a nuclear war machine nullifying Soviet military threat, every second counts. For this reason, government should demand or prepare its own risk management plan. This plan must be prepared; at request of procurement; during the bidding process; and before contracts are awarded (Esposito, 2015).

Internal Decision Hierarchy

The sponsor and project manager relation must be addressed here. The sponsor is usually in charge of procuring funding for projects. However, the responsibility of producing a successful project rests solely with the project manager. The conflict of whether to produce a risk management plan to clients; if unresolvable between sponsor and project manager; will be referred upward in the organizational hierarchy for executive steering committee decision (Kerzner, 2011).

Responsibility to Cancel or Continue

An astute steering committee will understand the need for ethical practice with procurement agencies. An honest assessment of risk associated with potential for company failure to produce acceptable deliverables is essential to start on a right foot in a large project lasting two years (Esposito, 2015).

If precious company resources are potentially squanderable on a project possibly becoming mired in a quagmire of unforeseen difficulties resulting from overly-optimistic promises of potentially non-deliverable deliverables, the company must cancel the project before commitments block prevention of resource waste (Esposito, 2015). Also, a risk management plan; properly prepared by incorporating foreseen and unforeseen exigencies and contingencies (including technological advances during the project life cycle), may well reveal a project with potential to exceed specifications and timeliness requirements (Kerzner, 2016). In which case, the natural course of events is to continue with the project unabated.

Internal versus External Funding and Motivation for Risk Assessment

An ethical company will consider externally-provided capital resources as precious as internally-funded projects. The thought of “This is government money so we can waste it” is immature (Jedd, 2015). The thought, if allowed to invade company philosophy, will threaten the firm’s viability by failure to meet budget. Failing to meet budget leads to loss of future business (Jedd, 2015).A project manager will want to provide the same unbiased risk management plan to internal senior managers as external funding sources. Potential for success and failure of projects by assessment of risk is a powerful tool to assure company’s or clients’ resources are effectively put to use in viable projects; internally or externally funded (Kerzner, 2005).

Army Response to Risk Management Plan Presented Early in R & D.

Army response to a risk management plan will receive more favorable response the sooner is its presentation. By the time the R & D process is engaged, risk assessment has no value because as the project continues, probability of project cancellation diminishes geometrically. This is the reason so many failed projects continue wasting resources well after risk is discovered (Kerzner, 2005).

Army response will be most favorable when risk assessment plans get presented well before work proceeds. If risk of failure is honestly assessed as low, both sides of agreements experience a growth in confidence in project success. If risk is assessed as medium -to-high, both parties to the project may want to problem-solve weaknesses and threats with solutions increasing probability of mutual success in project procurement and supply (Kerzner, 2011).

Conclusion

A good faith purchaser of nuclear missiles, while desiring industry competition-creation; and a plethora of suppliers; must face realities of economies of scale and project failure possibilities. This is the reason a risk management plan must be included with any project proposal. If the supplier cannot provide accuracy in appraisal of risk, the bidder must be disallowed opportunity to be considered among prospective suppliers (Jedd, 2015).

Altex owes itself a well-prepared risk management plan submitted or not submitted to procurement. This plan will bring valuable information to the company as in: if the particular R & D missile project is worth the investment or to be scuttled before a waste of precious resources creates a quicksand impossible to escape. Effective risk management planning makes decisions about whether to engage, continue, or stop projects in their tracks with immediacy; easy (Kerzner, 2005). Even a handwritten risk management plan on the back of an envelope for work conducted on a small business purchase order brings confidence to a project’s success probability.

References

Esposito, Emily, (October, 2015). Demystifying the 5 Phases of Project Management. Smartsheet Blog.

Smartsheet®. Retrieved from April 6, 2016) URL: https://www.smartsheet.com/blog

/demystifying- 5-phases-project-management

Jedd, Marcia (June, 2015). Growing Up. Project Management Institute, Inc. Retrieved from (March

23, 2016) URL: http://www.pmi.org/learning/growing-up-maturity-assessments-4709

Kerzner, Harold, (2010). Project management: a systems approach to planning, scheduling, and

controlling. Tenth edition. John Wiley & Sons, Inc.Retrieved from(April 11, 2016) URL:

https://www.coursehero.com/file/13703794/project-management-harold-kerzner1pdf/

Kerzner, H. (2005). Using the Project Management Maturity Model: Strategic planning for project

management (2nd ed.). Hoboken, NJ: John Wiley and Sons, Inc. ISBN: 9780471691617.

Altex Corporation

Read Case 3: Altex Corporation in the case study section of your text. Write a summary of the case and answer the following questions from the end of the case.

Why was a risk management plan considered unnecessary?

Should risk management planning be performed in the proposal stage or after contract award, assuming that it must be done?

Does the customer have the right to expect the contractor to perform risk analysis and develop a risk management plan if it is not called out as part of the contractual statement of work?

Would Altex have been more interested in developing a risk management plan if the project were funded entirely from within?

How might the Army have responded if they were presented with a risk management plan early during the R&D activities?

Can risk management planning be justified on almost all programs and projects?

Your paper must be 2-4 pages in length (not including title and reference pages), doubled spaced, and formatted according to APA style as outlined in the approved style guide. A minimum of two sources, including the text, must be used to complete this assignment.

Carefully review the Grading Rubric for the criteria that will be used to evaluate your assignment.