Organic Lotions and Soap Manufacturing Project
A project is proposed for the production of organic soaps and lotions. The project intends to use organic oils such as avocado, jojoba, and coconut oils for soap and lotion production. The key risks associated with the project include technical, cost, schedule, and safety risks among others. In each of these risk categories, various measures can be taken for risk mitigation including reduction, avoidance and sharing.
Table of Contents
Project Description. 3
Risk Management Analysis. 4
Risk Identification. 4
Risk Evaluation. 5
Risk Mitigation. 6
Works Cited. 9
Project management and project risk management operate concurrently. In every project, risks are inevitable and the risk management process has to be intentionally directed towards risk reduction or mitigation to ensure sustainability is achieved. In a manufacturing project, for instance, the risks vary thus resulting in the need for effective planning and preparation for risk management. While some risks are discernible, others are more hidden and managing them can be a challenge. The project risk management process entails different activities and can be dynamic from one industry to the other. In the organic soap manufacturing process, for instance, the risk management process has to take into consideration aspects such as safety, which are eminent in a manufacturing environment.
The project under consideration is a cosmetic soap and lotion-manufacturing plant to be based in the U.S. It is set to begin in January and entails the production of soap and lotions from a variety of organic oils. At the beginning, the organic oils will be based on extracts from avocado, coconut oil, jojoba, and sesame seeds. The activities in the project will include sourcing or procurement of raw materials; production of the soaps and lotion; packaging of the manufactured products; quality control activities in the production department and maintaining safety in the production area; and sales and marketing of the product. The scope of the project covers organic lotion, bar and liquid soap manufacture, and sales and packaging across four different categories of base soaps, that is, avocado, coconut oil, jojoba oil, and sesame seed oil. Based on the project characteristics, its objectives can be described as:
- To provide cheap and high-quality liquid and bar soaps and lotions from purely natural products.
A project risk is defined as any unpredictable event that is likely to cause a negative outcome on the project objectives. There are many categories of risks, each with a different probability and different potential impacts. While planning for a risk-management approach in any given project, the process takes into consideration the project objectives and the sections of the project. Toth and Sebestyen assert that project risks can best be articulated based on the project goals and objectives (510). The project goals are defined based on the minimum viable product requirements associated with the project. This implies that when working on the project risk management process, the project goals shift from attaining financial viability to achieving minimum viability in the project. For the soap and lotion project, minimum viable requirements would include: safe soaps and lotion; minimized production costs and subsequently prices; and achieved project goals in terms of production volumes. The project also has to involve many people working in different capacities from product formulation through to testing and actual production. These means that each of the persons involved in the project is exposed to different degrees of risk and may need to be catered for when planning for risk mitigation and reduction.
The first step in risk management for any project is that of risk identification. Risks can be consequence-based or actual risk-based in a project. The identification and categorization of risks in such a case depends on the probability and potential impacts of the mentioned risks. Rodrigues- da- Silva describes project risks in terms of the time, costs, and the quality of project work (943). In the soap and lotion production project, the risks that may potentially arise can be categorized into technical risks, safety risks, schedule risks, costs, and environmental risks. The technical risks entail aspects such as use of wrong formulations which can result in harm to the soap or lotion users, as well as to the producers and lack of expertise among the operators of the process. The safety risks include chemical burns and occupational accidents. Rodrigues – da – Silva opines that high-risk potential operational plans require more stringent risk-management planning and implementation strategies (946). The project cannot be considered a high-risk environment in terms of safety. Similarly, the costs cannot be considered a potentially high-risk area for the project. On the other hand, schedules can be a bit of a risk when the demand for the product cannot be met with the limited human resources at the start of the project.
The risk evaluation process in any project takes into consideration the different characteristics of the identified risks. Aven avers that risk evaluation must also take into consideration the values of the project management team to ensure that any ideas put forth to help in risk management are acceptable within the constraints of the project values (1-3). Moreover, there has to be a consideration of key principles and values of project risk management practices. Such values include stewardship, teamwork, efficiency, and accountability. Project risk management is collaborative and thus needs high levels of teamwork. The risk evaluation in the present project can be presented both qualitatively and quantitatively (Pieplow 2). The project risks include wrong formulations, lack of expertise, chemical burns, and schedules. The following risk matrix shows the different risk categories and their areas of existence. The matrix has been developed based on the project characteristics.
Fig 1: Risk Matrix
From the risk matrix, the areas shaded blue are high probability low-impact areas, while those marked yellow are low probability high-impact areas. In the project under consideration, wrong formulation is a medium probability and high impact event. On the other hand, lack of expertise, chemical burns, and schedule violations are all low probability and potentially high-impact events.
Aven describes various methods of risk mitigation based on the type and intensity of the risks identified (4-6). The high impact and high probability events are given the first priority while the low probability and low impact events are given the least priority in mitigation. Stanleigh describes various approaches that can be used for risk mitigation in any project setting (par. 2- 6). These methods include risk avoidance, risk sharing, risk reduction, and risk transfer (Berg 79). In the soap and lotion project, the most applicable practices for risk mitigation would be avoidance and sharing. Risk avoidance would entail seeking alternative project strategies. In this case, risks such as wrong formulations can be mitigated through avoidance practices which would mean using proven formulations for both soap and lotions. For the schedule risks, avoidance would imply planning the productions ahead and scheduling product deliveries based on the production schedules. In this way, customer expectations are not raised unnecessarily. Risk sharing in such a project could help to mitigate cost risks through partnerships, while safety and expertise risks would be mitigated through reductionist approaches whereby experts in the manufacturing sector are hired. Wrong formulation probabilities could also be reduced through hiring experts in the area.
Apart from these measures, there have to be preparations for risk management in the project. A risk assessment entails a description of the risk, the functional area it directly affects, and the potential impacts of the risk if it occurs. The mitigation measures could also be stated as in a risk register such as that shown in Table 1. This is the first step towards mitigating risks.
Table 1: Risk Register for the Soap and Lotion Project
|High product prices
|Sales and marketing
|· Loss of credibility among customers.
· Escalation of production pressure which can result in poor quality.
|Non- adherence to quality standards.
Production of harmful products.
|Non- compliance to standards.
Loss of credibility as a manufacturer.
|Production unit/ personnel
|High costs for treatment.
Social impacts on the workers’ families.
Loss of productivity.
|High treatment costs.
Loss of productivity.
Project risk management requires intensive attention to the goings-on in the project from the inception to implementation stage. Through various practices, it is possible to identify, evaluate, and mitigate the potential risks in a project through a variety of practices. The soap and lotion manufacturing project can be a source of many risks ranging from the technical aspects through to the human resources and personnel features. These risks can be mitigated through either reduction or avoidance measures.
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Berg, Heinz – Peter. Risk management: procedures, methods and experiences. RT & A 1, 2(17) (2010): 79 – 95. Retrieved from ww.gnedenko-forum.org/Journal/2010/022010/RTA_2_2010-09.pdf
Pieplow, Bob. Project risk management handbook: a scalable approach. Caltrans, 2012. Retrieved from www.dot.ca.gov/hq/projmgmt/documents/prmhb/PRM_Handbook.pdf
Rodrigues – da – Silva, Luiz andCrispim, Jose Antonio. The project risk management process, a preliminary study. Procedia Technology 16, (2014):943 -949. Retrieved from www.sciencedirect.com/science/article/pii/S2212017314002746
Stanleigh, Michael. Risk management… the what, why and how. Business Improvement Architects. Retrieved from bia.ca/risk-management-the-what-why-and-how/
Toth, Tamas and Sebestyen, Zoltan. Integrated risk management process for building projects. Procedia Engineering 85, (2014): 510 – 519. Retrieved from www.sciencedirect.com/science/article/pii/S1877705814019444