How does sensitivity analysis relate to contingency planning? What are several risk mitigation strategies that you could implement to desensitize these variables?
Management experts have examined the sensitivity analysis of a project with respect to the intensity of activity that is associated with a particular project. Accordingly, a planning is divided into four distinct phases as under:
(i) Feasibility
(ii) Design
(iii) Production, and
(iv) Termination
(I) Feasibility
This phase of a project is an essential component of the project which begins with the identification of some unfulfilled need in the economy or the market. This need is at the root of a concept/idea where an entrepreneur or an enterprise gets an idea to design and establish a project that will fulfill this need.
(ii) Design
Once the investment decision is taken, the design or the planning stage of the project starts. In the design phase the original project idea is amplified as much as possible so that a complete ‘blue-print’ of the project is available for the next stage. The feasibility and the design stages are similar in their contents but differ in the depth and details. At the end of the design phase one is ready with a blue print for the execution of the project.
(iii) Production
After the design phase is over, a project moves into the production phase where the emphasis is on giving a physical shape to the ideas that were elaborated in the project.. Usually, this demands actions to procure the materials, machineries and equipment required for the project and construction of facilities like buildings, equipment foundations, infrastructure etc. at the project site, to receive these equipment. After the plant and equipments are manufactured and delivered and civil and structural work is completed to receive these equipments, they are erected and tested
(iv) Termination
Finally, the construction of the project reaches its end and the last phase of termination starts. During this phase the newly constructed facilities arc tried out one by one in an integrated fashion and finally teething problems that might come up are resolved
Risk Mitigation Strategies – Implemented To Desensitize the Variables
A plan is typically an assignment that has identifiable start and finish and consists of a series of discrete, finite tasks. The sponsor desires that the project should complete successfully because ultimately it is the sponsor who is going to be most benefited.
A person possessing organizational authority will be able to function well so that he will make changes in the project if need be without affecting the overall strategy. The sponsor sees that the benefits of the project are delivered. He examines that the objectives of the project are clear and the amount invested in the project are cost effective as regards the result and only the sponsor can do these result oriented functioning.
Plan stakeholders
There must be deep understanding of cost estimating of projects at preliminary feasibility, techno economic feasibility and detailed project report stakes for seeking and obtaining financial sanctions within the company and also negotiating for securing project finances with appropriate financial institutions. Funding the project by financial institutions or sponsoring in any capacity like technical or material by different bodies are termed as project stakeholders. Further any organizations that have an interest or as a profit target once the project is completed are taken as part of stakeholders.
Skills Needed
To ensure that the plans are implemented within schedules and budgets and ensuring achievement of project performance parameters without any major conflicts, he is to ensure that the project personnel are fine—tuned to work as a team. The characteristics should have the following skills to carry forward the project in a smooth way.
1) Directing individuals and teams. 2) Reinforcing commitment and excitement
3) Informing everyone on the general position of the project. 4) Vitalizing teamwork
5) Empowering at all levels. 6) Risk taking and creativity
