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Risk Management Plan: Construction of Lellow’s Toys Last Revised: 08/05/2015
Prepared by Group 4
Evan Rapp, Sira Ong, Elyse Powell, Carson O’Rourke, William Rees
Project Management MAN4583
DUE: 09.06.15
DESCRIPTION
Lellow’s Toys, a popular specialty toystore, is opening there second location in Athens, GA. Opening this new retail location will allow the company to expand sales and business into a new area of town. The company will sell educational toys and games to people of all ages and genders, disabilities, and conditions. It will allow children and people to grow and develop better skill.
ROLES AND RESPONSIBILITIES FOR MITIGATING RISK
Owner: Hires management team, payroll and costs, creates contingency plan for management reserves, transfers risk to contractors, decides who is best suited for controlling activities, providing liability insurance, and approving project charter.
Project Manager: Plans and executes project, oversees the project, reconstruction on rental, holds meetings for the project, budget reserves such as allocating resources to project activities, ensures that the project is approved, processes and completes project in an orderly fashion, developing methods to assess and resolve technical uncertainties, and hiring the coordinators and contractors to assist with store grand opening.
Project Assistant Manager: Assists project manager with responsibilities, delegating tasks and responsibilities to contractors and coordinators, and acts as project manager when project manager is unavailable.
Contractors: Taking ownership by absorbing risks, identifying and documenting responsibility, does the actual work, coordinates their contributions with the project team, providing support to project scope, and completing segments by deadline.
Store Manager: Supports project manager, orders inventory and expenses, trains employees, delegating tasks to employees, following through with employees to ensure tasks are completed, communicates with store owner, ensuring customer satisfaction, and loss prevention.
Employees: Stocking shelves, merchandizes displays to planogram, hanging signage, cashiering, verifying correct prices, gift wrapping and personalizing toys, providing excellent customer service and experience.
Sales Marketer: Provides marketing tools, advertising, providing signage, creates planograms for merchandising, and ensures store managers are merchandising displays to planogram.
Finance Team: Processes, underwrites, and approves project plan, and finances project.
BUDGET
Total budget break down is listed below, followed by its risk analysis on page 7.
Total Budget $250,000
Lellow’s Toys: Risk Management Plan Group 4-1
Lellow’s Toys: Risk Management Plan Group 4 – 7
Revision 20150805
Risk/Association: Timing and Delivery
Risk Owner: William Rees
Description of Risk: Supply chain failure for on-time delivery of product inventory for Grand Opening Day
Score: 4
Likelihood: 1
Impact: 4
Rank:
Current Internal Controls and Their Effectiveness:
· Ordering product in advance |
· Communicate and outline necessities to vendors |
|
Proposed Actions to Reduce Likelihood of the Risk |
Target Completion Date |
Status and Impact of Actions |
|
|
1 |
Order product in advance, to ensure delivery |
03/31/2016 |
Ordering in advance allows for the option of receiving product earlier, rather than later. |
|
2 |
Develop relationships with other vendor/ suppliers |
01/01/2016 |
Developing relationships with other vendors and suppliers allows for other opportunities when selling product, and ensures that there will be product in the store if number 1 vendors cannot supply. |
|
3 |
Offer Incentives to ensure on-time delivery |
01/01/2016 |
This may cost a bit more financially, but will ensure that no matter what the product is delivered when asked. |
|
Proposed Actions to Reduce Impact of the Risk |
Target Completion Date |
Status and Impact of Actions |
|
|
1 |
Having other back up options in place for Product, in case it is B.O. or not delivered. |
03/01/2016 |
Having other options in place of product that may not be delivered, allows for better options and the option to continue to sell product. |
|
2 |
Offer Incentives to ensure on time delivery |
01/01/2016 |
This will help to reduce the effect of no inventory |
Risk/Association: General Risk Associations
Risk Owner: Carson O’Rourke
Description of Risk: The store and all items inside (shelving, plastic toys, plush toys, employees, restroom, power outlets, displays, etc.) must be safe for children of all ages. This is a high risk category, any safety issues could lead to down fall of the store. All shelves and displays need to be secured as to not fall and injure children or parents also employees must be screened well to avoid any compromising situations where the store could be liable.
Score: 15
Likelihood: 3
Impact: 5
Rank:
Current Internal Controls and Their Effectiveness:
· All racks are ordered from the companies that sell the product |
· Protocol for the store, restrooms and backrooms are up to OSHA standard |
· Application for employees has strategic questions |
·
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Proposed Actions to Reduce Likelihood of the Risk |
Target Completion Date |
Status and Impact of Actions |
|
|
1 |
Secure racks to floor and walls to prevent falling |
03/31/2015 |
Prevents racks from falling on top of children |
|
2 |
Hang certificates of OSHA compliance |
Immediately |
Certificate should be received and showing as soon as the store can have contractors, workers, or anyone. This will cover legal liability. |
|
3 |
Perform background check on employees |
N/A After interview process |
Allows for safe environment, and help to assist with liability concerns |
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Proposed Actions to Reduce Impact of the Risk |
Target Completion Date |
Status and Impact of Actions |
|
|
1 |
Similar to likelihood risks |
|
If completed, the impact of liability can be reduced significantly. |
Risk/Association: General Risks
Risk Owner: Carson O’Rourke
Score: 16
Likelihood: 4
Impact: 4
Rank:
Description of Risk: Product shrinkage can happen either through theft or from accident destruction by children, this must be monitored as any shrinkage results in an immediate loss to the store. Also shrinkage is something that can be controlled with the proper measures which can be determined after opening but measures before opening can be implemented like security cameras and security tags on higher priced items to avoid theft.
Current Internal Controls and Their Effectiveness:
· Have an employee by front door at all times, one at the register, and one watching around the store to ensure visual security of product coming in and out. |
|
Proposed Actions to Reduce Likelihood of the Risk |
Target Completion Date |
Status and Impact of Actions |
|
|
1 |
Security Cameras |
02/01/2015 |
Security Cameras will allow review and understanding of where lost product has gone, and also how employees react. |
|
2 |
Security Tags |
After inventory received |
Will alert store employees when expensive product has walked out of store. |
|
Proposed Actions to Reduce Impact of the Risk |
Target Completion Date |
Status and Impact of Actions |
|
|
1 |
Make sure small product is by register |
04/30/2016 |
Tiny product pieces near register are less likely to walk than those that are not. This can assist with loss prevention. |
|
2 |
Ensure that employees are trained on theft Awareness |
04/30/2016 |
This will assist employees with understanding what to be aware of, how to be safe, but also prevent theft from happening frequently in the store. |
Risk/Association: Finances
Risk Owner: Elyse Powell
Score: 6
Likelihood: 3
Impact: 2
Rank:
Description of Risk: Original cost of budget was $200,000 for even number purposes. After looking up cost commercial costs of improvements, equipment, and inventory cost was increased by $43,000 over the original number. These numbers include the cost of labor as well as Georgia averages for the salary ranges. However, there is always room to cut cost depending on the location that is chosen for the store and how much restoration and improvements that to be done. The budget was then raised to $250,000. The idea of this continuing to happen, and handling increase in inventory cost or construction costs are risky.
Current Internal Controls and Their Effectiveness:
· Have a strict budget with researched set costs |
|
Proposed Actions to Reduce Likelihood of the Risk |
Target Completion Date |
Status and Impact of Actions |
|
|
1 |
Ask for proposals from various contractors, don’t settle with the first team that is met with. |
11/01/2015 |
Want to find a team that is cost effective, but will also ensure that our project is completed in a timely and efficient manner. |
|
2 |
Make sure inventory is good quality inventory, but check with all vendors to ensure that we are getting the best bang for our buck. Maybe talk about free racks with purchases as well. |
01/31/2016 |
Want to make sure we speak with all vendors about their pricing and deals, this will allow us to save money by purchasing a variety of products, and getting a discount on what we purchase. |
|
3 |
|
|
|
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Proposed Actions to Reduce Impact of the Risk |
Target Completion Date |
Status and Impact of Actions |
|
|
1 |
Ensure that credit is in a good place for additional loans if needed |
11/01/2015 |
Want to ensure that all credit and financials are at a stable point to pull out more loans, and cover any other financials so the financial hardship is not difficult if this does in deed happen. |
|
2 |
Make sure that the budget has a cushion of at least $10,000 |
11/01/2015 |
Want to make sure additional funds are in the budget to cover for the Costs of unplanned emergencies and issues that will happen. |
Current Internal Controls and Their Effectiveness:
· Currently looking to sell educational toys, books and games |
· Location within short distance of Toys R Us, Walmart, and Target |
· Wooden and American Made toys are our specialty |
Description of Risk: Specialty Toy Store may not obtain as much business because of higher priced and more unique options to select from.
Rank:
Impact: 5
Likelihood: 2
Score: 10
Risk Owner: Evan Rapp
Risk/Association: Methodology
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Proposed Actions to Reduce Likelihood of the Risk |
Target Completion Date |
Status and Impact of Actions |
|
|
1 |
Offer free gift wrapping and personalization with any purchase |
03/31/2016 |
Free gift wrapping and personalization will make customers more prone to purchasing product, knowing that their getting more ‘bang for their buck.’ |
|
2 |
Educate employees on the specialty of the Product and how beneficial each piece is |
03/31/2016 |
Training employees on each product piece and explaining how they can benefit various types of children and people allows the consumer to have a better understanding of the products and want to purchase more product from our store. |
|
Proposed Actions to Reduce Impact of the Risk |
Target Completion Date |
Status and Impact of Actions |
|
|
1 |
If this happens, go to cheaper yet efficient product |
06/01/2016 |
We will already have other vendor options, but if we are not receiving customers because of pricing and other concerns, we will need to lower the cost effectiveness of our product. |
Improvements
Paint137.00$
Furniture700.00$
Lights500.00$
Locks100.00$
Flooring2,000.00$
Equipment
Cashier stations [2]1,000.00$
Shelving units1,400.00$
Registers500.00$
Price Guns120.00$
POS system1,500.00$
Computers [4]3,200.00$
Signage430.00$
Salary
Managers [2]80,000.00$
Employees [4]72,000.00$
Inventory
Toys80,000.00$
Total:243,587.00$
Sheet1
| Improvements | |
| Paint | $ 137.00 |
| Furniture | $ 700.00 |
| Lights | $ 500.00 |
| Locks | $ 100.00 |
| Flooring | $ 2,000.00 |
| Equipment | |
| Cashier stations [2] | $ 1,000.00 |
| Shelving units | $ 1,400.00 |
| Registers | $ 500.00 |
| Price Guns | $ 120.00 |
| POS system | $ 1,500.00 |
| Computers [4] | $ 3,200.00 |
| Signage | $ 430.00 |
| Salary | |
| Managers [2] | $ 80,000.00 |
| Employees [4] | $ 72,000.00 |
| Inventory | |
| Toys | $ 80,000.00 |
| Total: | $ 243,587.00 |
