Risk Management Case 6

When Outrigger Hotels and Resorts started its operations as a mid-sized lodging firm in the 1960’s it was
focused on leisure travel to the Hawaiian Islands and the South Pacific. Outrigger’s original mission was
to bring the opportunity for a vacation in Paradise within the reach of middle-class families. As the firm
grew it began to diversify its portfolio and the profile of its customers. In more recent times the typical
guests staying at Outrigger often had an annual income exceeding $275,000 and were almost exclusively
leisure travelers. With the global economic crisis the high end tourism industry has been hit hard.
Outrigger has seen it overall occupancy around 90% to less than 45% in less than 3 years.
The company uses Information
Technology (IT) in numerous aspects
of its operations and sees its
salvations in changing its website and
its marketing and customer
relationship management computer
systems to maximize the use of its
customer database.
Your company XYZ Limited has been
providing Information Technology solutions and Project Management services to the Travel Industry in
British Columbia and the Northern Territories for several years. The company does not have much
experience with website development however. They are interested in contracting XZY as project
consultants for the upgrade of the computer systems. They estimate that this project will take 1 year and
cost them about $ 5 million inclusive of project consulting fees.
After receiving the responses to their RFP Outrigger decided to award a contract to XYZ Limited to initiate,
plan, and execute their IT project. XYZ subsequently partnered with an Australian tourism and hospitality
company, Perth Resort System (PRT) to work with them as their counterparts on this project. PRT is a
medium sized company with a good reputation for on-time and within budget service delivery in Australia
and the Pacific. PRT combines the necessary experience and competence with a significant cost advantage
over other regional competing vendors.

As time passes and as deadlines get tighter, a number of issues surface. One issue is the discovery that
some project’s deadlines have not been met. Another is that because of the global economic crisis PRT
has had to lay off some of its key staff and this has made it difficult to build and maintain the required
know-how, a third is that there have been frequent misunderstandings between the XYZ project team and
the PRT project team. Making matters worse, your management, upon learning that the project has
encountered a delay of several weeks, temporarily reassigned key people on your team to work on other
tasks leaving the clients unattended for days. There also seems to be some confusion between the
Risk Management Case 6
Canadian project manager and his PRT counterpart as to the importance of the project. The first phase of
the Outrigger project is now several weeks late and failing several critical tests.

As XYZ’s PM for this project you have discovered that the global economic crisis has hit PRT hard and they
have had to lay off some of their key staff and this has made it difficult to build and maintain their tourism
and hospitality expertise. There also seems to be some confusion and conflict between some members of
XYZ’s project team and their PRT’s counterparts on key aspects of the project.

You have gotten to the stage in your project planning where you are dealing with risks.

Do the following:

1. Develop a list of 15 possible risk events using meta language, consistent with the risk categories
2. Analysis of the Probability (P) of occurrence of the risks identified and their Impact (I) on the
project objectives (Scope S, Cost C, Schedule T, and Quality Q) using those probability and impact
scale, including explanations for those assessments.
3. A map of the results on a Probability - Impact Matrix.
4. Ranking of the risks accordingly into four categories: Red, Orange, Yellow & Green
5. Risk Response Strategy for all 15 Risk Events
6. Include all of the above in a risk register.