Agricultural Greenhouses: Risk Assessment and Management

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Table of Contents

Introduction
Financial Risks
Technical Risks
Commercial Risks
Execution Risks
Legal Risks
List of References

Introduction

Projects face risks that have detrimental impacts (Chapman & Ward 2003, 31). These include risks associated with financial, technical, commercial, execution and legal aspects. It is vital to define each of these risks, identify their scope and propose effective mitigation measures.

This paper discusses the potential risks associated with the establishment and operation of the green houses. Moreover, it proposes various precautionary and preventive measures aimed at minimizing the risks.

Financial Risks

These risks might emerge due to lack of adequate monetary resources. For instance, the green house managers might lack the required money to cater for water supply. Adequate finances are required for the planning, establishment, operation and maintenance of a green house (Delmon 2005, p. 19).

The deficiency might negatively influence the capacity of the company to establish new green houses. Evidently, operational costs must be availed to enhance the efficiency of present green houses. A proper system of accessing credit and fundraising will be necessary for operation and establishment of green houses.

Technical Risks

These refer to risks associated with lack of proper and skilled labour to offer technical support. This support is appropriate for both the already operational green houses and the ones to be built. It is evident that transformative technology and skills are necessary for the maintenance and establishment of the projects (Henschel 2008, p. 34). Technical risks require a distinct management approach.

The project must establish strategic alliances with human resource organizations. Apart from this, it shall be mandatory to create effective linkages with other institutions involved in training of technical personalities. Internship programs will help the project to access readily available and affordable human resource.

Active job advertisement and creation of awareness to the public is another critical step aimed at reducing the impacts of technical risks (Sonneveld & Voogt 2009, p. 23). It will also be necessary for the team to procure and use standardized equipment and processes. Notably, these indications are applicable both for the new and operational green house. These crucial steps will enable the project to overcome the technical challenges likely to be faced.

Commercial Risks

Commercial risks may emerge due to the failure in marketing of the green house products. Moreover, the delays in procurement systems might also contribute to the rise of commercial risks (Liebig, Franzluebbers & Follett 2012, p. 17). Lack of adequate availability of market area might pose a great commercial challenge. Consequently, the project might incur significant loses.

Generally, there must be a transparent and proper system for solving or managing the risk. Foremost, an effective advertising and product promotion initiative must be developed. However, before this is done, there is need for full mapping of all the products likely to be gotten from the project.

Brand promotion is also an important undertaking. This is because it makes specific customers to identify with the products from the green houses. Procurement procedures must be hastened in order to ease the smooth movement of ordered material or services. This crucial consideration helps to minimize commercial inconveniences and risks (Song, Maroto-valer & Soong 2002, p. 37).

The project must also collaborate with strategic organizations and commercial support structures. The collaborative approach helps to enhance business dealings. Moreover, the general procurement system becomes more flexible. These are appropriate for the operation and development of any green house within the project.

Execution Risks

Execution risks might arise from object failure of the project staff to carry out basic processes that enhance the operation of a green house. Several conditions might lead to the emergence of this risk (Vlek & Wassmann 2004, p. 55). However, the project needs to focus on the fundamental control measures. Particularly, this is crucial in order to attain efficiency and high level of performance.

The first basic step to undertake is the development of proper procedures for execution of project activities. The design, proposal, funding and construction of all green houses must be according to these procedures. Ideally, this helps to limit or alienate wastage of time and resources. Routine operation measures should also be based on a fixed schedule of events (Iglesias, Cancelliere, Garrote, Cubillo & Wilhite 2009, p. 20).

Active reporting, communication and sharing of experiences amongst the concerned parties remain critical. Generally, the project must consider strategic management practices in executing its routine activities. Indicatively, all these processes apply for the new and active green house projects.

Legal Risks

Many regulatory measures control the establishment and operation of green houses. Lack of adherence to these frameworks might compromise the legality of the project. Specifically, the new green houses to be erected might incur this potential challenge. Due to environmental factors and other operation by-products, the operational greenhouses might face legal constraints (Hardaker 2004, p. 67).

The best mitigation step is to recognize and comply with all regulatory frameworks. Proper legal research must be conducted. This ensures that all relevant laws are identified and complied with by the project. The operational green houses must control their effluvia to avoid legal challenges involving environmental protection. The table below indicates the risk matrix for the project.

Risk	Impact on Project	Probability of Occurrence	Probability of Detection	Significance
Financial	High	4	5	These risks might involve lack of adequate resources to execute major project duties, purchase equipment or even hire technical staff. This risk might cause failure of the project. Various measures should aim at fundraising and resource pulling to integrate additional finances into the project (Besley & Brigham 2008, p. 22)
Technical	Medium	2	3	Technological deficiencies might lead to the failure of the green house project. Ideally, the technical risks might also emanate from the lack of adequately trained professionals (Crundwell 2008, p. 67). Competitive recruitment and remuneration of qualified staff is a critical step towards the solution of this challenge.
Commercial	High	3	3	The major commercial risks relate to procurement and financial delays. Systems must be upgraded to ensure smooth flow of material and equipment to be used in the project (Coleman 2009, p. 22). Adequate quotation and transparent systems of accounting must be integrated during the beginning of the project.
Execution	Medium	2	2	Execution risks bear minimal impacts and are less likely to occur (Watson 2000, p. 42). They arise from failure of other project initiatives and can be easily avoided.
Legal	Medium	2	5	All legal measures are crucial for the success of the green house project (Royer 2001, p. 44). Environmental, labour, business, taxation, investment and agricultural laws among others might be appropriate for the green house project.
Environmental	High	4	5	Environmental issues might include pollution, soil degradation, effluvia, obstruction, disasters and others (Babcock 2003, p. 11). These are mostly experienced during the construction and operation phases.

List of References

Babcock, A 2003, Risk management and the environment: agriculture in perspective, Kluwer Acad. Publ., Dordrecht.

Besley, S & Brigham, F 2008, Principles of finance, South-Western, Mason, Ohio.

Chapman, B & Ward, S 2003, Project risk management: processes, techniques and insights, John Wiley, Chichester, West Sussex, England.

Coleman, E 2009, The winter harvest handbook: year-round vegetable production using deep-organic techniques and unheated greenhouses, Chelsea Green Pub, White River Junction, Vt.

Crundwell, K 2008, Finance for engineers evaluation and funding of capital projects, Springer, London.

Delmon, J 2005, Project finance, BOT projects and risk, Kluwer Law Internat, The Hague.

Hardaker, B 2004, Coping with risk in agriculture, CABI, Wallingford.

Henschel, T 2008, Risk management practices of SMEs: evaluating and implementing effective risk management systems, Erich Schmidt, Berlin.

Iglesias, A, Cancelliere, A, Garrote, L, Cubillo F & Wilhite, A 2009, Coping with Drought Risk in Agriculture and Water Supply Systems Drought Management and Policy Development in the Mediterranean, Springer Netherlands, Dordrecht.

Liebig, M, Franzluebbers, J & Follett, F 2012, Managing agricultural greenhouse gases coordinated agricultural research through GRACEnet to address our changing climate, Academic Press, S.l.

Royer, S 2001, Project risk management: a proactive approach, Management Concepts, Vienna, Virg.

Song, C, Maroto-valer, M & Soong, Y 2002, Environmental challenges and greenhouse gas control for fossil fuel utilization in the 21st century, Kluwer Academic, New York, N.Y.

Sonneveld, C & Voogt, W 2009, Plant nutrition of greenhouse crops, Springer, Dordrecht.

Vlek, G & Wassmann, R 2004, Tropical agriculture in transition: opportunities for mitigating greenhouse gas emissions? Kluwer, Dordrecht.

Watson, R 2000, Land use, land-use change, and forestry, Cambridge University Press, Cambridge [England].

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