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Introduction
Background of the Study
China is the worlds most populous country. The country is rated the second largest in the world by land area. The country also has the fastest growing economy in the world, having overtaken other major world economies except for the United States. The population growth of this country is high. From the figures that are available from the report given by Brown, Kroszner and Jenn (2002, p. 23), the population of this country is expected to hit a record 2 billion people by 2050. This means that the country must develop mechanisms that would enable it to sustain this huge number of citizens. In this regard, a number of projects must be set up to counter the negative influence of population growth.
There is an emerging trend in the country where most of the citizens of this country prefer staying in town as opposed to staying in urban centres. There is a massive migration of people from rural to urban centres. As at the moment, the population of Chinese in urban centres is well over 200 million people. This number is expected to shoot to about 350 million people by 2025, according to the report by McKinsey Global Institute (2009). This means that the country must be ready to sustain this population and even more by the above stated time to have self-sustaining cities.
In response to this need, the government, through various urgencies, has initiated a massive project that is expected to develop sustainable cities in various selected locations that would be able to sustain the expected population. China Sustainable Cities Program is one of the most ambitious projects ever to be designed on the face of the earth. The financial consequences, the expected time, and other costs that would be directed to this project are massive. If successfully implemented and completed as per the specification, the result would be a city that is self-sustaining, a city that the Chinese have always dreamt of for the last century.
Problem Statement and the Research Hypotheses
The future of our environment heavily depends on what we do today. Several environmental organizations, especially the Green Belt Movement, have categorically stated that China is the worlds leading country in pollution. This is understood because the country is currently home to various international manufacturing firms. The consequence of this is not only felt by China itself but also the rest of the world at large. However, the fact that the cities are fast-growing and the consequences that come with this will be felt by China as an individual country. Therefore, there was a need to develop a sustainable city program that would ensure that the rising urban population is put under check. As stated above, this project is very ambitious, and its successful completion would result in cities that are not only attractive to the Chinese but also foreign investors.
Though, one problem that the management committee of this project must put into serious consideration is the possible risk factors that may accrue in the process of implementing this project. Attractive it is, but if care were not taken to keenly identify the possible risks that may affect the project, then the whole program would be a white elephant, and the taxpayers money would be lost through failed projects.
Therefore, this study seeks to follow the path taken by May (2010, p. 77) on those lessons from Huangbaiyu. The researcher intends to analyze the possible risks that the project may face, and design risk management techniques that would help the implementing authorities of the project work with the least possible problems. The researcher seeks to identify these risks and develop means of averting them in the entire implementation process. In essence, the researcher seeks to reject the null hypotheses stated below (and accept the alternative hypotheses) through quantitative data analysis.
H1o. Perception of risk management is not related to perceptions of project maturity, corporate culture, and project sustainability.
H1a. Perception of risk management is related to perceptions of project maturity, corporate culture and project sustainability.
H2o. Identification, quantification, and mitigation are not the three main areas in the activities of China sustainable cities program, and response control is not the key accompanying tool for environmental issues.
H2a. Identification, quantification, and mitigation are still the three main areas in the activities of China sustainable cities program, and response control is the key accompanying tool for environmental issues.
H3o. Risk quantification technique is not an appropriate mathematical method in dealing with international project uncertainty.
H3a. Risk quantification technique is an appropriate mathematical method in dealing with international project uncertainty.
Justification of the Study
Bussey Bridge in Boston, the United States, was one of the most attractive projects that were expected to generate revenue that would exceed the cost of its construction in less than one year. However, because the implementing authorities failed to analyze the possible risk factors that could be associated with the project, the result of the entire program was the infamous Forest Hill Disaster where the iron railroad collapsed under a train, killing thirty people and injuring over forty on March 14, 1987, not to mention the wasted due to the fallen bridge. This is just but one incident. Other numerous ugly accidents have happened due to inappropriate measures taken to mitigate risks in massive projects. China Cities Sustainable program has been hailed as a massive project that stands to benefit many. Researchers have extensively reported on how the country stands to benefit from it. However, little research exists on risk factors that may come with the project and mitigation measures that come with it. It is upon this basis that the researcher decided to conduct this study.
Aims and objectives
Through this study, the researcher seeks to achieve the following objectives.
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To investigate the possible risk factors that may be associated with the China Sustainable Cities Program.
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To determine the mitigation measures that may help avert the identified risk factors in the project.
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To identify individuals and authorities that would be in the best positions to implement the above-identified mitigation procedures.
Scope of the Study
This research aims at assessing China Sustainable Cities Program and determining the risk factors that are associated with the project. Therefore, the study is limited to this specific project. The findings of this study, its conclusions and recommendations are specifically meant for this project. The scope of the study is also limited to China as a country. Although the study may be helpful in other countries and in other projects, it was specifically meant for the above-stated project.
Significance of the Study
This study aims at developing measures that would help avoid the risks that may be associated with this massive project. As such, the researcher hopes to eliminate such incident that may occur in the process, or after the completion of the project that may cost lives of people or damage of properties or the project itself. Because this is a scholarly research, the report would also be useful to future researchers in this and other related fields.
Literature Review
This chapter is a detailed analysis of the existing literature on China Sustainable Cities Program and other related literature about project management, especially the management of risk factors. In this literature, the researcher hopes to find supporting clues that would help in supporting the alternative hypotheses set in the research proposal by rejecting the null hypotheses. Below are the hypotheses that the literature review in this chapter is trying to respond.
H1o. Perception of risk management is not related to perceptions of project maturity, corporate culture, and project sustainability.
H1a. Perception of risk management is related to perceptions of project maturity, corporate culture, and project sustainability.
H2o. Identification, quantification, and mitigation are not the three main areas in the activities of China sustainable cities program, and response control is not the key accompanying tool for environmental issues.
H2a. Identification, quantification, and mitigation are still the three main areas in the activities of China sustainable cities program, and response control is the key accompanying tool for environmental issues.
H3o. Risk quantification technique is not an appropriate mathematical method in dealing with international project uncertainty.
H3a. Risk quantification technique is an appropriate mathematical method in dealing with international project uncertainty.
The Nature And Characteristics Of China Sustainable Program
China has the largest population in the world. Cadle and Yeates (2004, p. 45) state that China is home to about 1.3 billion people. Some of the provinces within this vast nation are partially autonomous, with their own governments and other relevant facilities. The cities within this country are expanding at an alarmingly high rate. Chandra (2009, p. 11) states that Shanghai alone has had about 56 per cent increase in population in the past twenty years. The rate of expansion of these cities is expected to increase, especially with the expansive economy of the country and the fact that the country is currently the leading manufacturer in the world. The cities would have to host not only the Chinese but also other nationals who would come to trade, as casual laborers, or expertise in various production facilities within the country. Having realized the looming crisis in the country following the expected growth of population in the cities, the concerned authorities have realized the importance of having the cities upgraded to reflect the current needs. According to the report by Dong and Yang (2008, p. 33), the authorities have come to terms with the reality on the ground, and have come to the realization that not much can be achieved out of the cities if programs to implement current changes are not implemented as soon as possible.
Engineers from China designed most of the cities, several years back. Though good enough to sustain the current population, the rate at which the cities population is growing is a clear pointer that the country stands to lose many revenues if immediate changes are not met. Therefore, many of the authorities have considered outsourcing the expertise of UK urban designers and planners. Dressel (2001, p. 87) argues that most of the cities in the United Kingdom are designed in such a way that they can sustain an unexpected upsurge of the population without causing an upset to the available facilities. This scholar notes that because of this, these United Kingdom cities have remained sustainable even with the increasing population. This is what the authorities seek to borrow from these cities in an attempt to ensure that these Chinese cities become sustainable with the expanding population. Changsha, Chongqing, Hangzhou, and Wuhan are some of the cities that have clearly come out to seek the expertise of the UK urban designers and planners. This research seeks to study the projects of two of the four cities: Hangzhou and Wuhan.
The Action Plan 2011-2012 for the UK-Hangzhou Sustainable City Partnership is a project that is expected to improve the Hangzhou by planning and designing it in a way that would be sustainable in the coming future. Within this city, there four sections that define the entire project. The first section is the delivery of the action plan, which involves defining the main players of the project. UKTI Shanghai will be the link to the UK planers and designers of urban centres. The Hangzhou Municipal Foreign Trade and Economic Cooperation Bureau will be the leading Chinese stakeholder in the project. The second section involves defining activities and projects of the action plan 2011-2012. Geschwind (2001, p. 32) says that a good project should have all the activities clearly defined and the tasks appropriately assigned. This argument is supported by Earl, who emphasizes on the need to define and assign activities of a project with the clear timeline clearly stated.
This scholar further explains that the individuals should then be grouped into units based on the closeness of their projects. This section has clearly stated the roles of different participants and the expectations after the completion of the project. The third section of this project is the scope of the plan. Horlick-Jones (1995) argues that every project must have a scope. The scope, according to this scholar, would help the planers know what to include in the project, and what to avoid. The participants in this project agreed that besides the activities stated in section two, both of them would give consideration for further cooperation if such a need would be. This is very important for the success of the project. Insag (1992, p. 65) notes that a projects success has its genesis from the trust between the two concerned parties.
This would eliminate any conspiracy that may arise where one participant wants to demonstrate that the other is ineffective in undertaking the assigned duties. Broadening a narrowly defined scope leaves the participants with a room to expand the current scope to include some factors that were not included in the initial plan. Section four of this project defines the commencement date, the duration that the project is expected to take, and a room for the termination of the project. This, according to Kunreuther (1997, p. 20), is a very important aspect of a project. This scholar holds that a good project should have the time constrain should be spelt out so that the supervision of the project is made easier. This argument is supported by May (2008, p. 17) who says that when specifying the time, it is important for the participant to specify the time that they will complete the projects so that their performance may be determined as at the stated time intervals. Wuhan Sustainable Cities Initiative project has the same procedure as that of the Hangzhou Project stated above.
China Sustainable Programs Drivers And Constraints
Register (1987, p. 42) defines project drivers as the items that have brought the initiative to put up the project. According to this scholar, project drivers are the opportunities that may be gained if the project is implemented or the possible threats that must be avoided for a successful operation of the firm. This project had a number of drivers that forced the two cities to implement the project. According to Steffen (2010, p. 38), Wuhan and Hangzhou are some of the fastest-growing cities in China. The current population of these two regions is already having a heavy impact on the two cities. There is every need to ensure that the cities develop proper structures that would help it sustain itself. The first driver of this project is the numerous benefits that this firm stands to gain by successfully implementing the project. By implementing the project, the cities would open up for foreign investment. This would increase the revenues collected by the two councils in tax and other charges. The region will also experience a general improvement of the living standards of the citizens of this country, as there will be increased job opportunities. There also some negative drivers that the cities are trying to avoid.
According to the report by Slovic, (1993, p. 67), most of the cities in China have an increased level of urban sprawl. This is partly due to poor urban planning, as Suzuki, Dastur, Moffatt and Yabuki (2009, p. 25) note. This has had a negative effect on these cities, especially the sanitation and traffic movement. With the increasing population, Wuhan and Hangzhou risk having their environs to become completely polluted due to the increased demand posed by the higher population. These are the main drivers that made the councils of the two cities settle on the decision to implement the sustainable cities program. Abdurrahman (2010, p. 39) observes in his report that there are situations where the forces become so strong that trying to resist them may prove foolhardy. In such situations, this scholar notes that it may force the concerned authorities to act in a way that would avert the forces of nature.
The project has some constrains that must be observed by both partners that are involved in the project. According to Abu and Faruq (2010, p. 78), the leading constrain in a project is always a time factor. This is also supported by Andrzej and Buchaman (2007, p. 42), who argue that a project must have a time constrain clearly spelt out, stage by stage for there to be a proper monitory mechanism. By spelling out time for the project, Earl says that it becomes very easy for all the involved participants to determine the success of the project stage by stage, from the onset of the project. Hangzhou had divided the project into four faces. The first face of the project was stipulated to begin in 2009 and run until 2010. The second face was set to begin in 2011 and run until 2015. The third face of the project would begin in 2016 and run until 2020.
The last face would run from 2020 to 2050. The participants must observe these time constrain there to be a successful implementation of the project. It would be possible now, to determine the success of the project by looking at the first face, which by now is expected to be complete. Barbara (2005, p 6) says that another important constrain that must be considered in project management is the available finances. Wuhan has various projects each estimated to cost differently based on their magnitude. The third project, which aims at eco-system protection, is estimated to cost the council RMB 15.875 -13824. Waste Water Treatment Project, which is the fifth project, is estimated to cost the council $ 11 million. The seventh project; the Caidian Wetland Ecological Park Scheme Project is estimated to cost the council 4.57 billion shillings.
The eighth project of building Tianxing Ecological scheme would cost about $ 2 billion, while the ninth project of building commercial and residential complex scheme would cost the council RMB 6 -13824. Barry (2005, p. 12) notes that defining the value of each project the way Wuhan Council has done is very important. It allows the implementers of the project to determine if the available resources would be enough to finance the intended projects. Barthe (2010, p. 22) on the other hand thinks that although the art of defining a large project in small subproject may help assign value to each project, the strategy is far more costly than when the project is defined in entirety. By defining the entire project, it becomes possible for the council to negotiate a lower price and award one firm the entire project. This scholar also notes that this would foster uniformity of the construction. Both partners must ensure that they work within the set constrains if the best result is expected.
China sustainable programs global network and collaborations
China Sustainable Program is designed in a way that it incorporates various stakeholders. The two councils conducted a research, and it came to their realization that the cities in the United Kingdom were designed in a way that they reflect the current needs of highly-populated urban centres. The cities have been designed to sustain population influx, although the growth rate of the country does not indicate the possibility of having this influx in the near future. Therefore, the councils have decided to collaborate with firms from the United Kingdom in developing sustainable cities that would help it come up with the desired cities designed to meet the increasing population of China. The Hangzhou Municipal Government has signed a contract with a leading UK trade and investment authority, known as UKTI (United Kingdom Trade and Investment). The two have agreed to work in collaboration to ensure that the entire project is successful in its implementation. This firm would be the global link of Hangzhou in the international forum. It would be responsible for outsourcing the best expertise from the United Kingdom and other world regions. This is in line with the explanation given by Belanger (2011, p 21) on projects global networks and collaboration.
Wuhan Municipal Government has also outsourced the services of UKTI in implementing the various projects that it has set in a bid to ensure that its city is planned and designed to reflect the current and expected future demand. UKTI has entered into a collaboration with this government to ensure that the projects get the right personnel that would be in a position to ensure that Wuhan is transformed into one of the ultra-modern cities not only in China but also the entire world. This reflects Bells (2001, p 38) advice on project networking.
China Sustainable Programs Organization And Corporate Governance
Biswas (2011, p. 55), observes that it is very important to realize that a project, just like any corporate task, must have a clearly defined organizational structure in order to achieve the desired result. This scholar further notes that corporate governance is very important in project management, especially if the magnitude (in terms of the financial need and the impact it has on the society in general) is huge. In both municipalities, the magnitude of the projects is huge. As Bowe, Briguglio and Dean (1998, p. 61) state, the concerned authorities have clearly defined the organizational structures of the projects and corporate governance that would ensure the success of the projects. Wuhan has ten projects that should be completed within a varying period.
Having realized their capacities and the deficits they have in expertise and facilities, Wuhan Municipal Government has developed a management pattern that has seen it assign UKTI some tasks. The council is not without expertise. Therefore, this council has entered a partnership with UKTI to handle some tasks in the project that would help ensure that the projects are completed at the least cost possible. Clement and Henry (2010) say that this is important because it helps strengthen the bond between the outsourced firm and the client. Clement and Rodney (2004, p. 15) further observe that this would enable the participants to work as a team. Both sides will benefit from the experience of the other. Most of the projects activities would be carried out within Wuhan, while others would be done in the UK and Beijing.
The same strategy is applied by Hangzhou in managing its projects. In both cases, the management is reduced to the individual level and is assigned to the participant. Each participant would be responsible for the management as regards to the assigned task and ensuring his or her success, as suggested by Clinton (2011, p. 63).
Project Management Maturity Model And Capability In China Sustainable Program
Project Management Maturity Model is a tool that is used in measuring project management maturity. It provides a roadmap with the necessary steps that should be taken towards the project management performance improvement and maturity advancement. Drake, Wong, and Salter 2007) state that this model provides a logical path towards progressive development and strategic plan for the advancement of a project. The levels given in the figure below (levels 1 to five) shows projects advancement towards maturity and the activities that should be carried out towards the same, from the initial stage to the optimizing stage. In the rows are the tasks to be taken out at these stages. This model shows that the China Sustainable cities program has a clear-cut strategy that would help it in achieving the desired objectives. Also important to note is the fact that the stakeholders have factored in risk management policies, as shown in the model below. This would help in ensuring that the project management team is in a position to identify the risks and act upon them as soon as would be possible. This would help in ensuring that the risks are identified at an earlier stage so that the consequences of late identification are eliminated.
The Nature Risk And Risk Management In China Sustainable Programs
Ewens (1972, p. 76) notes that it is very important to come up with a workable definition of projects risks in order to be able to identify them in the course of the project and work upon them as soon as possible in order to eliminate their consequences. This idea is supported by Falah (2005, p. 111). According to this scholar, risks refer to exposure to uncertainties, which may potentially have negative consequences, and therefore affect the project negatively. French, McNayr and Escher (2010, p. 112), on the other hand, define risks as unforeseen consequences that may result in loss of money, labour or time of a project. In every project, there is always the need to ensure that all the risks are well calculated, and their consequences factored in. As Hirschey, Kose and Makhija (2004, p. 20) say, there is no project that comes without risks. Every project has its own risks. The most important thing should be ensuring that these risks are well-identified and appropriate measures taken to manage their consequences. China Cities Sustainable Programs is a massive project that would have a huge impact on the cities. However, it would be very important to appreciate the fact that this would come with some risks that must be factored in for it to be possible to be successful.
According to the reports by the UN-Habitat, there is a huge movement of people from the rural set-ups to urban centres in the world over in this twenty-first century. China is one such country that is experiencing this influx in its cities. This program is designed to help ease the congestion in these cities. However, obvious risks lurk in the implementation of these cities. Kalmbach and Carr (2010, p. 19) note that there are some factors that are known to cause risks to the project implementation process. Volatility is one such factor. According to Kent and Thompson, when the nature of change and its dynamics is volatile, a project risks various challenges.
This is especially so when the project is to take a long period because what is considered relevant today may be irrelevant after a short while. Uncertainties, as Kent and Thompson (2005, p. 30) explain, is another risk factor. This scholar explains that when the project implementers cannot predict the future, it becomes impossible to design the project in a way that it would satisfy the future needs for which it is intended to. The management may end up designing a project that may not satisfy future needs. Complexity is another problem that a project may face. When the project has hidden cause-effect inter-connectivity, it may be challenging to come up with a clear means of approaching issues that may cause a threat because it is difficult to single them out. In other cases, this is rare, though, the project implementation team may be vague in defining the project.
Kline (2010, p. 34) observes that there are a host of project risks that an organization may face. One such risk is inadequate sponsorship. When the project lacks a proper sponsor, it may fail, however ambitious it could be. A slow or poor decision-making process is another risk that a project may face Krathwohl (2004, p. 50). When a project lacks a clear decision-making organ that is efficient and effective, there is a huge risk that the project may fail to pick up at the expected pace. Kurtz and Boone (2010, p. 100) note that a project without a clearly defined scope is another risk that should be taken care of. When the scope is not defined, the project may risk being considered vague. Change management is another factor to be considered. Lacity, Willcocks and Feeny (2004, p. 127) argue that change is the most permanent factor in every aspect of a project. It is therefore very important to ensure that the implementing parties take either into consideration future changes that may affect the project before it is completed or after its completion. The resources, as Lall and Narula (2004, p. 467) note, must also be available. When the resources are available, it becomes easier to implement the project within the shortest time possible.
Qualitative And Quantitative Approaches In Risk Management
As Majer (2011, p. 62) observes, risk analysis is always performed in two ways, either quantitatively or qualitatively. It is very important that when assessing the two types of risks, the two approaches are clearly understood. Manaschi (1998, p. 87) states that risk analysis is very important. Through this, the supervisory task players would recognize the possible and existing vulnerabilities, fears and other dangers that can potentially derail the overall performance of the program. Therefore, care should be taken at this stage. When conducting a risk analysis, it is important that the approach chosen is compatible with the project itself. Michael, Lino and James (1998, p. 16) say that when conducting a risk analysis for a project, it is important the scope and approach should be harmonized with the project size, time availability and the expenditure.
Minja (2009, p. 14) supports this by noting that it is illogical for an individual to conduct a massive risk analysis that consumes a lot of time and money on a small and inconsequential project. Similarly, it would be suicidal to conduct a mini risk analysis on a huge project that has taken a lot of time and resources to complete. As Moran (2011, p. 80) simply puts it, risk analysis should be proportional to the project itself. A huge project like China Sustainable Cities Program should have an equally detailed risk analysis because it has a huge financial consequence.
The risk analysis team chooses to use quantitative, qualitative or both approaches in conducting risk analysis. This would be based on the requirements of the project and the available resources. The main difference between qualitative and quantitative risk analysis approaches is based on the objective. The objective of performing qualitative risk analysis to a project is to acquire security against identified risks and heighten the alertness of team members, the management and all other concerned people who may be vulnerable to the risks Panagariya (2008, p. 46). According to Proulx (2011, p. 69), this approach is important in the identification of impediments of project management that have the potential of becoming risk factors. Alternatively, a quantitative investigation is apprehensive of the execution process that is, the essential safety procedures that have already been recognized in order to put off all the dangers that have been described. When this approach is employed, Ruddar and Sundharam (2009, p. 141) note that the management would be in a position to conduct a conscious analytical interpretation which would help in the development of measures of risks resolution. Given the magnitude of China Sustainable Cities Program, there is a need to conduct both quantitative and qualitative risk analysis approaches.
Opportunity Management
According to Safizadeh, Field and Ritzman (2003, p. 557), effective risk management involves learning how best the team can recognize and subsequently capitalize on the available opportunities, besides recognizing failure points. This fact is emphasized by Shachaf (2008, p. 131), who notes that risk management should not be narrowly defined as identification of risks and how best these risks should be countered. This scholar notes that the team should not just concentrate on being on the defensive. It should also focus on being on the offensive by going for the existing opportunities and making the
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