People tend to think about risk management as the use of statistical data and probability; well not always! Risk management is a process that we use in every day of our lives and sometimes without even knowing. For example, before we go to bed, we adjust our alarm to ring at 6:00 a.m. Now, the question, why we did not set it to ring at 7:00 a.m.? The obvious answer is that we will be late for school or work! The word ‘”risk” may be defined as the likelihood a loss will occur. Risk management is the preventive measures that we take against such losses.
In the aviation industry, an Aircraft Lease Return Project involves very high risks. The project is about the redelivery of an aircraft back to the lessor (owner) in accordance with the terms and conditions specified in the lease contract. In order to succeed, the risk management plan must be well defined in term of its objective and importance. The preparation of a risk management process is usually started at least six months before the kick start of a project. The reasons are: these projects may involve substantial an aircraft maintenance check; sending the aircraft engines and some other aircraft components to the overhaul facility; additional aircraft spares may require to be purchased. Such spares may have long lead time. To prepare a risk management plan for the project, first we need to start with reviewing the lease contract to identify the significant risks. For example, what are the consequences if we don’t meet the return conditions on the redelivery date? Or what are the penalties on late redelivery of aircraft? Next is to do the risk assessment by making different scenarios. For example, what if the engines get delayed in the overhaul facility? This could impact the entire timeline of the project severely. After identifying and assessing all risks, the risk responses have to come into the picture. Do we mitigate, transfer, avoid, or retain? Aircraft lease return can have lots of surprises, such as failure of components before the redelivery date, project scope change, change of the project team members or even the project manager, etc. Therefore, a contingency plan should be ready to execute at anytime.
Risk control plays an important part in the project plan. Risk control is a method by which project team members evaluate potential losses and take action to reduce or eliminate such threats. Risk control is a significant action taken by project team members that is intended to identify proactively, manage, and reduce or eliminate risk. All projects should have a well-prepared risk management plan. An aircraft lease return project can be very costly and stressful if the risks are not identified and assessed at the early stage.
If you are assigned to be the project manager of an aircraft leased return project, what could be your action if the aircraft engines are not arriving on time from the overhaul facility as planned?