In any investment project, there is a risk associated with such an investment. This is the probability that the forecasted results will be different from the actual results. This research paper intends to identify the risks associated with Gauchito project. This project involves the assembly of a rocket.
One of the risks faced by this project is that there is a possibility that some materials to be used in the assembly of the rocket may not be supplied in time. This may result to a situation whereby the assembly of the rocket will be delayed. Unavailability of some parts means that workers will be idle as they wait for the materials leading to wastage of resources in terms of time wasted. This increases the costs of the project and hence reduced revenue.
The other risk is the possibility that the ordered glue is expired. The probability of receiving expired glue is 50 percent. This risk can lead to additional costs of buying new glue which reduces the total revenue of the project. The glue should be inspected before accepting supply to ensure that there are no risks of having expired glue (Virine, 2007).
There is a probability that the parachutes in the rocket fail to open. The effects of this risk are that it can lead loss of the whole rocket. This means that the time and money used to develop the rocket would be no more. The probability of the parachute not opening is very small but the effects are adverse. Proper inspection of the parachutes before purchase can serve to reduce the risk of failure of the parachutes to open.
The other risk is the probability of damage of the parts of the rocket. There is 50 percent probability that the parts of the rocket will be damaged. This can lead to huge loss of the revenue invested in the project. This can lead to stoppage of the project. This risk can be mitigated by insurance (Wideman, 1992).
The other risk is that weather conditions will be unfavorable to test the rocket. There is 50 percent probability of bad weather. Therefore, this risk can cause damage of the whole rocket hence loss of revenues. This project can also stop due to bad weather (Virine, 2007).
There is also the risk that the key personnel in the project will not be available. As a result, the project can be delayed leading to increased cost of the project. Having alternative personnel can help to avoid this risk. The other risk is the possibility that the rocket will fail to function. The risk level is 50 percent. This can make the project worthless. There is also the risk that the cost of the project will be more than expected. The allowable increase in costs in this project is 10 percent. More than this percentage increase in the costs can paralyze the project bringing it to an end. Proper cot management should be put in place to reduce the risk (Wideman, 1996). There is a possibility that the quality of the rocket will be less than the planned. However, this probability is negligible and the occurrence of this risk has no much effect on the project.
Virine, L. and Trumper M.,(2007) Project Decisions: The Art and Science . Management Concepts. Vienna
Wideman, R.M.(1992) Project and Program Risk Management . Newtown Square, PA: Project Management Institute.