ALTEX CORPORATION

Risk Management Case Study

1. Why was a risk management plan considered
unnecessary?

The risk management plan was not required as a condition in the contract, there is
also a possibility that if a multitude of risks will be exposed, the Army might cancel
the project. Furthermore, they thought when they develop risk management plan
they may become pessimistic.
According to the contract at that time did not require that a risk management plan be
developed while according to the sponsor the risk management plan was not
necessary becausemost of the new weapon systems requirements are established by
military personnel who have no sense of reality about what it takes to develop a
weapon system based on technology which does not even exist yet. According to
Kerzner, in the earlier days of the project management on many commercial
programs, the majority of project decision favored cost and schedule. This was
because we knew more about cost and scheduling than we did in technical risk. But on
the other hand, it is essential that programs define and implement appropriate risk
management and contingency plans enhance project management effectiveness and
provide program managers a key tool to reduce lifecycle cost. (Kerzner, 2009).
2. Should risk management planning be performed in the proposal
stage or after the contract award assuming that it must be done?

Risk management plan is not a separate function but part of the

over all process of planning and management. It starts with the
time of planning to define scope and processes to identify, assess
and manage risks that could impact the project, it should be
developed early in the program from the very beginning and it
should continually be addressed through the program. As I see,
there are much more in depth risk plan to be developed after the
contract has been awarded to specific company (Kerzner, 2009).
3. 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?

• Yes, the customer have the right to expect the contractor to

perform risk analysis and develop a risk management plan as part
of the project planning. in addition, the customer cannot force
the contractor to implement if it is not written in the contract.
the customer expect the contractor is expert who knows what
needs to be done in any project which is a reason for hiring him to
do the required job. According to Kerzner, risk management
require early and continual involvement of all of the program
team as well as outside helps as appropriate.
4. Would Altex have been more interested in developing a risk
management plan if the project were funded entirely from within?

Altex would prefer to perform risk management plan if it were

funded from within. This will let to work with a fixed amount of
resources which would not include a massive budget and the
expectation to meet specification will be higher than 60-70%.
The PM should have educated beforehand the sponsor on the
benefits and purpose of a risk management plan because it would
be almost impossible for him to create an effective plan on his own
without any input from the rest of the team.(Burke, 2015)
5. How effective will the risk management plan be
if developed by the project manager in seclusion?

The risk management plan cannot be done in seclusion because it is

part of the project planning . It identifies how to approach and plan
the risk management activities of the project. It needs to be
established from the beginning in the project and continually
developed through project life cycle.
The process will include identifying the project charter, current
policies, current roles and responsibilities, and the project
manangement plan and RMP strategy needs to be established early
in the project and will need to be continually developed throughout
the project cycle.(Kerzner, 2009)
6. Should the customer be allowed to participate in or
assist the contractor in developing a risk management
plan?

Risk management requires regular participation from all

stakeholders of the project. The risks mostly identified by the
customer using questionnaire and surveys.
Customer needs to be involve since in any case there is a risk then
its the risk management program that will support setting reality
cost, schedule and performance objectives and identifies areas that
require special attention. In addition to that, the customer would
loose trust on the company and at the same time, work will be
delivered low quality. (Kerzner, 2009)
7. How might the army have responded if it were presented with a
risk management plan early during the R&D activities?

Army could find more suitable contractor if they were presented

with a risk management plan earlier before signing contracts.
Further to be more safety, they can write penalties in the contract
award if specification not met. Knowing and understanding the risks
prior to a contract award and even after changes the entire
approach to a statement of work.
8. How effective is a risk management plan if cost
overruns and schedule slip-pages are always allowed?

• No need for risk management plan when cost overruns and

schedule slip pages are always allowed. The majority of project
decisions strongly related to cost and schedule.
• Any program element associated with cost, schedule and
performance has a direct interface with a risk management
process. The army will not penalize the company for failing to
met cost or for allowing the schedule to slip.
9. How can severe optimism or severe pessimism influence
the development of a risk management plan?

• These two let engineers and scientist to become reactive rather

than proactive thinkers. So, without proactive thinkers, it will end
up with no risk management plan. This will force to accept crisis
management as a way of life and will increase the cost.
10. How does one develop a risk management plan
predicated upon needed advances in the state of the art?

He can develop risk management plan without being optimistic to

not become reactive rather than proactive thinker. Project using
state of art tends to have more uncertainty since the plans are
based on anticipated situations in the future. They should research
more and find alternative tactics or solutions to have a
breakthrough of the project.
11. Can the sudden disclosure of a risk management plan be used as
a stopgap measure to prevent termination of a potentially failing
project?

Yes, the sudden disclosure of a risk management plan can be used as

a stopgap measure to prevent termination of a potentially failing
project. The project will be deemed as a failure, if risks are found
before even starting it. By presenting it as a stopgap on a
potentially failing project will give a margin of success by
presenting solutions and situations, and creating a risk management
plan.
12. Can risk management planning be
justified on almost all programs and projects?

Yes, the risk management plan is important to all programs and

projects. The risks may cost a company more money if they are not
identified, eliminated from the beginning or even reduce their
impact. If they weren’t determined from the beginning, these risks
will be harmful, and will reduce the value of success of the project.
By providing a risk management plan, not only will it help, but also
improve the success rate of the project by implementing tactics and
solutions that were made beforehand.
References

"Altex Corporation Case Study." StudyMode.com. StudyMode.com, 10

2012. Web. 11. 2. 2015.
<http://www.studymode.com/casestudies/Altex-Corporation-Case-
Study-1126763.html>.
Altex Corporation Case Study. (2017, Feb08). Retrieved from
http://studymoose.com/altex-corporation-case-study-essay
Jamie Burke. Paper #6 (April 23, 2015)
http://www.jamieross.com/uploads/ogl_240_paper6-2.pdf