1. Why was a risk management plan considered unnecessary?

Altex corporations’ sponsor thought a risk management strategy unnecessary for a variety of
reasons, as follows:

Optimistic Assumptions and Over-optimism of Technical Capability:

The sponsor had high expectations for their engineers and scientists' capacity to create
technical breakthroughs. They decided to interpret this confidence as a "over-optimism of
technical capability" rather than dishonesty. In their opinion, admitting hazards and
implementing a risk management plan might dampen this optimism and lead to pessimism
among team members, impeding development.

Focus on short-term goals and profit maximization:

The sponsor's major goal was to get the first contract and later follow-on contracts, both of
which were viewed as significant profit potential. They noted the necessity of having a good
relationship with the Army in order to win these contracts. They believe that discussing risks
through a risk management strategy might jeopardize this connection by exposing prospective
project obstacles and uncertainties.

Avoidance of bad view and Accountability:

The sponsor voiced worry about the Army's possible bad view if risks were revealed. They
thought that the Army personnels were previously aware of these concerns but chose not to
disclose risks to their officers. By avoiding the creation and distribution of a risk management
strategy, the sponsor hoped to retain a favorable image while avoiding culpability for any
project delays or failure.

Strategic Timing and Cancellation Mitigation:

The sponsor proposed delaying the risk management strategy until later phases of the project,
when the Army had made a significant investment in the firm and project. They hoped that
publicizing the proposal at this time might convince the Army to stick with the program despite
any obstacles or uncertainty. They also hinted at implementing the risk management strategy as
a last option to avoid program termination if serious concerns arose.

The Dunning-Kruger effect: It is a cognitive bias in which people with limited knowledge or
competence overestimate their skills, causing them to make ignorant or overconfident choices.

Delaying risk management planning until after contract award may result in a manifestation of
the Dunning-Kruger effect. The organization may assume that it has a good awareness of the
project's risks and its capacity to handle them, causing them to underestimate the significance
of formal risk management planning. This overconfidence in their skills may originate from
their perceived competency in getting the contract and their conviction in their team's capacity
to deal with obstacles.
 Fig1

Overall, the sponsor's approach prioritized short-term goals, profit maximization, and strategic
relationship management with the Army over proactive risk management and transparency.
They saw risk management as possibly harmful to their strategic goals and opted to retain the
control over the project development.

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

Risk management planning should ideally be integrated into the proposal stage to ensure that
potential risks are identified and addressed from the outset. By proactively addressing risks
during the proposal stage, companies can present more realistic project plans and avoid
overpromising to clients. Additionally, incorporating risk management into the proposal
demonstrates a commitment to project success and fosters transparency with the client. If risk
management planning is delayed until after the contract award, companies may face challenges
in managing client expectations, mitigating unforeseen risks, and maintaining credibility in the
long term.

Murphy's Law: it states that "anything that can go wrong will go wrong," risk management
planning becomes even more critical, and it should ideally be completed at the proposal stage.
Murphy's Law states that unanticipated occurrences and problems are unavoidable in every
undertaking, and failure to anticipate and handle such risks can result in major setbacks and
failures. By including risk management planning early in the project lifecycle, businesses may
proactively identify, analyze, and mitigate possible hazards before they occur, reducing the
impact of Murphy's Law.
 Fig2

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?

In the provided scenario, the customer, in this case, the Army, does have a legitimate expectation
for the contractor to perform risk analysis and develop a risk management plan, even if it's not
explicitly outlined in the contractual statement of work. Here's what the Army could have done
in response to this situation:

Clarify Expectations: The Army could have initiated a discussion with the contractor during the
contract negotiation phase to clarify expectations regarding risk management. They could have
emphasized the importance of identifying and mitigating risks to ensure the success of the
project.

Request Documentation: Even if risk management planning was not initially included in the
contract, the Army could have requested the contractor to provide a risk management plan as
part of their project management documentation. This request could have been made based on
industry standards and best practices.

Contract Amendment: If the Army recognized the need for risk management planning after the
contract was awarded, they could have pursued a contract amendment to formalize this
requirement. This would involve negotiating with the contractor to incorporate risk management
activities into the project scope and deliverables.

Monitor Progress: Throughout the project lifecycle, the Army could have actively monitored the
contractor's progress and performance, including their approach to risk management. If
 deficiencies were identified or if risks were not adequately addressed, the Army could have
intervened and requested corrective actions.

Invoke Penalties: In extreme cases where the contractor consistently failed to address risks or
fulfill contractual obligations, the Army could have invoked penalties or contract termination
clauses as a means of enforcing compliance and protecting their interests.

Overall, while risk management may not have been explicitly stipulated in the initial contract, the
Army could have taken proactive measures to ensure that the contractor prioritized risk analysis
and mitigation efforts to minimize project uncertainties and maximize the likelihood of success.

4. Would Altex have been more interested in developing a risk management plan if the project
were funded entirely from within?
If Altex Corpooration were funding the project entirely from within, their interest in developing a
risk management plan would likely be significantly higher. Internal funding implies that Altex
bears the full financial responsibility for the project's success or failure, fostering a heightened
sense of ownership and accountability. With resources directly allocated to the project, there's a
vested interest in ensuring their efficient and effective utilization. A comprehensive risk
management plan becomes imperative to identify and mitigate potential threats to resource
allocation, safeguarding investments and maximizing returns. Moreover, projects funded
internally often align closely with the organization's strategic objectives and long-term
sustainability goals. Developing a risk management plan not only protects these investments but
also ensures that the project contributes positively to Altex's growth and stability over time.
Engaging in risk management activities fosters a culture of organizational learning and continuous
improvement. By systematically identifying, assessing, and mitigating risks, Altex can gain
valuable insights that inform future projects, enhancing overall project management capabilities
and reducing the likelihood of costly mistakes. Therefore, if Altex Corporation were solely
funding the project, the imperative for a robust risk management plan would be paramount to
ensure project success and organizational resilience.

Fig3
In this case behavior of altex corporation can be examined via the lens of cognitive biases,
particularly the "agency problem" or "principal-agent problem." In business, this refers to
 circumstances in which the principal's (the customer or external entity) interests differ with those
of the agent. When a company works for a customer, there may be an inclination to minimize or
ignore hazards in order to obtain the contract or maintain a favorable relationship, which is
motivated by incentives such as financial gain or the fear of losing business. However, when a
company invests its own resources in a project, it is more aware of and accountable for possible
risks since they have a direct impact on the company. This phenomenon can also be attributed to
“self-serving bias”, where individuals or organizations tend to attribute success to their own
abilities and efforts while attributing failure to external factors or circumstances.

5. How effective will the risk management plan be if developed by the project manager in
seclusion?

Effectiveness of Risk Management Plan Developed by the Project Manager Alone:

Limited Perspective: The plan may lack diverse viewpoints and insights from team members,
leading to oversight of potential risks.
Lack of Ownership: Team members may not feel ownership or commitment to a plan they did
not contribute to, reducing their motivation to execute it effectively.
Missed Opportunities: Without input from various stakeholders, critical risks may be
overlooked, leading to inadequate mitigation strategies.
Reduced Collaboration: Development in isolation hampers collaboration and open
communication, essential for effective risk management.
Decreased Buy-in: Team members may be less likely to support and adhere to a plan they were
not involvd in creating, diminishing its effectiveness.
Limited Innovation: The absence of brainstorming and idea sharing from team members may
limit innovative approaches to risk mitigation.
Inadequate Risk Identification: Without input from subject matter experts, certain risks may go
unnoticed, impacting the plan's comprehensiveness.
Lack of Adaptability: A plan developed solely by the project manager may lack flexibility to
adapt to changing circumstances and emerging risk.
Potential Resistance: Team members may resist a plan imposed upon them, leading to reluctance
in executing risk management activities.
Decreased Effectiveness: Overall, a risk management plan developed by the project manager
alone is likely to be less effective in identifying, assessing, and mitigating project risks compared
to a collaborative approach involving the entire team.

6. Should the customer be allowed to participate in or assist the contractor in developing a risk
management plan?

Overall, while involving the Army in risk management planning offers significant benefits in
terms of operational insights, shared responsibility, regulatory compliance, and stakeholder buy-
in, it requires careful consideration of potential challenges related to bureaucratic processes,
confidentiality concerns, complexity, and risk exposure. Collaborative decision-making and clear
 communication channels are essential for maximizing the benefits of Army participation while
mitigating potential drawbacks.

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

Presenting a risk management plan early during the R&D activities of the Advanced Tactical
Missile Program (ATMP) could have evoked several responses from the Army. Initially, the Army
might have welcomed Altex Corporation's proactive stance in identifying and addressing potential
risks upfront, viewing it as a demonstration of responsible project management. This proactive
engagement aligns with the Army's own risk mitigation strategies for complex defense projects.
Upon review, the Army would likely assess the plan's comprehensiveness, seeking thorough risk
identification, analysis, and mitigation strategies. Feedback from military stakeholders could
further enhance the plan's quality, ensuring alignment with the Army's expectations and risk
tolerance levels.
Encountering a well-developed risk management plan could instill confidence in the project's
success among Army stakeholders. Assurance that potential risks are actively managed reduces
concerns about project viability, delays, or cost overruns. This confidence may garner stronger
support for the project from military leadership, fostering a positive relationship between Altex
Corporation and the Army.
Moreover, early presentation of the risk management plan could facilitate collaborative risk
mitigation efforts. The Army might collaborate closely with Altex Corporation to address high-
priority risks or develop contingency plans for critical project components. This collaborative
approach fosters a sense of shared responsibility for project outcomes and promotes transparency
and accountability.
Overall, presenting the risk management plan early in the ATMP's R&D activities could enhance
transparency, communication, and collaboration between Altex Corporation and the Army. It
could lead to more effective risk mitigation strategies, contributing to the successful execution of
the program.

8. How effective is a risk management plan if cost overruns and schedule slippages are always
allowed?

A risk management plan's effectiveness is inherently compromised when cost overruns and
schedule slippages are consistently permitted. Here's why:

Risk Identification and Analysis: If there are no consequences for cost overruns or schedule
slippages, there might be less incentive to thoroughly identify and analyze risks. Project managers
may not feel compelled to delve deeply into potential pitfalls if there are no repercussions for
failing to mitigate them.
Risk Mitigation: Without the pressure to adhere to budgets and timelines, there may be less
motivation to implement effective risk mitigation strategies. Project teams might opt for reactive
approaches rather than proactive ones, addressing issues as they arise rather than anticipating and
preventing them.
Accountability and Responsibility: Allowing cost overruns and schedule slippages can create a
culture of lax accountability, where project managers and teams are not held responsible for their
performance. This lack of accountability diminishes the urgency of adhering to risk management
plans and undermines the discipline required for successful project execution.
 Stakeholder Confidence: Continuous cost overruns and schedule slippages erode stakeholder
confidence in the project's management and feasibility. Investors, clients, and other stakeholders
may lose trust in the project's ability to deliver on its objectives, leading to disengagement or
withdrawal of support.
Long-Term Viability: Persistently allowing cost overruns and schedule slippages can jeopardize
the long-term viability of the project and the organization as a whole. Chronic mismanagement of
resources and timelines can lead to financial strain, reputational damage, and missed opportunities
for future projects.
In summary, while a risk management plan is a valuable tool for identifying, analyzing, and
mitigating project risks, its effectiveness is severely compromised in an environment where cost
overruns and schedule slippages are consistently tolerated. To maximize the effectiveness of risk
management efforts, it is essential to establish clear expectations, enforce accountability, and
prioritize proactive risk mitigation strategies.

9. How can severe optimism or severe pessimism influence the development of a risk
management plan?

Aspect Severe Optimism Severe Pessimism

Risk Identification Tends to overlook or Overemphasizes and

downplay risks magnifies potential risks
Risk Analysis Assumes that everything will Expects the worst-case
go smoothly scenario for every aspect

Risk Mitigation May neglect to develop Focuses excessively on risk

robust mitigation strategies avoidance or mitigation

Decision Making Might make decisions based May hesitate or avoid

on overly optimistic views decisions due to fear of failure

Team Dynamics Encourages positive morale Can foster a culture of fear,

but may lead to complacency low morale, and resistance
Stakeholder Confidence Initial enthusiasm may boost Heightened concerns may
stakeholder confidence undermine stakeholder trust

Project Outcomes May lead to unrealistic Tendency to anticipate failure

expectations and can become self-fulfilling
disappointment

10. How does one develop a risk management plan predicated upon needed advances in the state
of the art?

Developing a risk management plan predicated upon needed advances in the state of the art
involves several key steps:

Risk Identification: Identify potential risks associated with the specific technological
advancements required for the project. This includes considering uncertainties related to
technology development, resource availability, and external factors.
Risk Assessment: Assess the likelihood and potential impact of each identified risk on project
objectives. Evaluate the consequences of technological failures or delays in achieving the required
advancements.
Risk Mitigation: Develop strategies to mitigate or minimize the impact of identified risks. This
may involve investing in research and development, securing backup plans or alternative
technologies, or collaborating with experts in the field to address technological challenges.
Contingency Planning: Establish contingency plans to address unforeseen obstacles or failures
in achieving technological advancements. This may include allocating additional resources,
adjusting project timelines, or reevaluating project scope and objectives.
Monitoring and Review: Continuously monitor technological progress and reassess risks
throughout the project lifecycle. Regularly review the risk management plan and make
adjustments as necessary based on emerging developments or changing circumstances.

Fig4

Communication and Collaboration: Foster open communication and collaboration among

project stakeholders, including technical experts, project managers, and decision-makers. Ensure
that all parties are aware of potential risks and actively involved in risk management efforts.
 Documentation and Reporting: Maintain thorough documentation of risk management
activities, including risk assessments, mitigation strategies, and contingency plans. Provide
regular updates and reports to stakeholders to keep them informed of risk status and mitigation
efforts.

By following these steps, project teams can develop a comprehensive risk management plan that
addresses the specific challenges and uncertainties associated with advancing the state of the art in
technology

11. Can the sudden disclosure of a risk management plan be used as a stopgap measure to
prevent the termination of a potentially failing project?
Certainly, the sudden disclosure of a risk management plan can serve as a temporary measure to
prevent the termination of a struggling project. By presenting a comprehensive risk management
plan, project stakeholders gain insights into the potential challenges, uncertainties, and mitigation
strategies, fostering transparency and accountability within the project team. This transparency
can reassure stakeholders that proactive steps are being taken to address issues and improve
project outcomes.

Moreover, the disclosure provides an opportunity for stakeholders to reevaluate the project's
viability and consider alternative strategies for risk mitigation. It may also encourage continued
support and investment in the project, especially if stakeholders believe that identified risks can
be effectively managed.

However, the effectiveness of this strategy depends on the severity of the risks, stakeholder
receptiveness, and the project's strategic importance. It's crucial to view the disclosure of a risk
management plan as a proactive measure to address project challenges rather than a reactive
attempt to salvage a failing project. Ongoing risk management throughout the project lifecycle
remains essential for long-term success.

12. Can risk management planning be justified on almost all programs and projects ?
Yes, risk management planning can be justified on almost all programs and projects. Let us
discuss few components which makes risk management planning necessary.

Uncertainty is Inherent: All projects and programs operate within an environment of uncertainty,
whether it's related to technology, market conditions, regulatory changes, or resource availability.
Risk management helps identify, assess, and address these uncertainties.

Proactive Approach: Risk management allows project teams to take a proactive approach to
anticipate potential problems and opportunities before they occur. By identifying risks early,
 teams can develop strategies to mitigate threats and capitalize on opportunities, ultimately
enhancing project success.

Resource Optimization: Effective risk management helps allocate resources more efficiently by
focusing efforts on areas with the highest potential impact. By prioritizing risks, teams can
allocate resources where they are most needed, reducing the likelihood of cost overruns and
schedule delays.

Stakeholder Confidence: Stakeholders, including clients, investors, and regulatory bodies, often
expect to see evidence of robust risk management practices. Demonstrating a structured approach
to risk management can enhance stakeholder confidence in the project's ability to achieve its
objectives.

Legal and Regulatory Requirements: In some industries, risk management is a legal or

regulatory requirement. Compliance with industry standards and regulations necessitates the
development and implementation of risk management plans.

Continuous Improvement: Risk management is not a one-time activity but a continuous process
throughout the project lifecycle. By regularly monitoring and updating the risk management plan,
teams can adapt to changing circumstances and improve project outcomes over time.

Overall, risk management planning is a valuable practice that can contribute to the success of
almost any program or project by enhancing decision-making, reducing uncertainty, and
increasing stakeholder confidence.

References
Fig1 : Cuofano, W. I. G. (2023, October 23). Qual é o efeito Dunning-Kruger nos negócios. FourWeekMBA.

https://fourweekmba.com/pt/efeito-kruger-de-cobran%C3%A7a/

Fig2 : Kearney, J. (2013, December 29). Murphy’s Laws of Moving my WordPress Site. My Local Business

Online. https://www.mylocalbusinessonline.co.uk/murphys-laws-moving-wordpress/

Fig3 : What is Self Serving Bias? How Can it Damage Your Career, Creativity, Potentials? (n.d.). unb.com.bd.

https://unb.com.bd/category/lifestyle/what-is-self-serving-bias-how-can-it-damage-your-career-

creativity-potentials/88249

Fig4 :Hoban, S. M. (2023, December 4). How To Create A Risk Management Plan + Template & Examples.

The Digital Project Manager. https://thedigitalprojectmanager.com/risk-management-plan/