"List of FiguresFigure: 2.1.1 Set and Update Risk Environment…....…………………………………………… 7Figure 2.2.1: COSO ERM Framework……………………………………………………......... 12 Figure: 2.3.1: Main Areas for Risk Identification………………………………….………….....13Figure 3.4.1: Comparisons between Critical Success Factors Proposed by DifferentAuthors………………………………………………………..…………...……………………. 20Figure: 4.1.1: Procurement Planning Process…………………………………………..………. 21 Figure: 4.1.2: Procurement Planning Map……………………………………………………… 22Figure 4.2.1: Steps Involved in Procurement Strategies…….………………………….………. 24List of TablesTable 1.1.1: Project Scope Planning…………………………………………….……………….. 5Table 2.1.1: Factors Attributed to Risk Environment…………………………………………..... 9Table 2.2.1: Risk Reponses Planning and Approach by Klemetti (2006)……………...…..…...11Table 2.3.1: Risk Identification Matrix…………………………………………………….…… 14Table 2.3.1: Risk Matrix for Shane Co. Risk Identification…………………………...……….. 15Table 3.1.1: Risk Analysis based on Different Elements…………………………...………….. 17Table 3.2.1: Risk Evaluation for Shane Co..……………………………………………………. 17Table 3.3.1: Different Approaches of Risk Treatment…………………………...…………….. 19Table 4.2.1: Different Actions Involved in the Procurement Strategies……………….……….. 26Table 5.1.1: Elements Used in the Solicitation Process……………………………….….…….. 27Table 6.1: Tools and Techniques for Shane Co. Procurement Control……………………….... 301. IntroductionThis report is based on based on the critical analysis of risk management strategies used in theproject planning and implementation. The report is based on the implementation of SystemAnalysis and Program Development (SAP) Software in the retail jewellery chain - Shane Co.based in Colorado. The failure in the implementation of SAP has led many companies to facefatal situations. Thus, this report would provide a critical review and analysis of several keyareas including project risk management and project procurement management in order todetermine how Shane Co. has coped up with different risks during its implementation and howSAP contributed to different procurement strategies.1.1. BackgroundShane Co. began its contract with SAP AG in 2005 for implementing a "highly sophisticatedpoint-of-sale and inventory management system” The overall cost of the project was estimatedaround $8 million to $10 million. However, the actual cost skyrocketed to $36 million and theimplementation which was supposed to be completed in a year has now taken up to 32 months(Kanaracus, 2009). Thus, the risk of cost burden along with some other risks would be evaluatedthroughout the report through using different methodologies and principles of projectmanagement. What most of the organisations fail to understand as claimed by Grabski, Leechand Ku (2001) is that there are certain risks such as application complexity, lack oforganisational experience and cost burden that are associated with SAP implementation.Therefore it is important to elaborate the complete background in order to refine the projectprocess through inputs, tools and techniques which lead to outputs as illustrated below (PMP,2013): Table 1.1.1: Project Scope PlanningInputs Tools and Techniques OutputsProject Description Project Analysis Scope StatementProject Charter Benefit/Cost Analysis Supporting Detail Constraints Alternatives identification Scope management planAssumptions Expert judgements Source: (PMP, 2013)2. Risk Planning and Identification2.1. Risk EnvironmentRisk environment is an essential and strategic part of the project risk management wheredifferent activities and steps are undertaken to ensure the proper understanding of thecomponents of risk environment as outlined below in the figure: Figure: 2.1.1 Set and Update Risk EnvironmentSource: (Dickstein and Flast, 2009)Shane?s management contained the goal of optimising of inventory levels, reducing out-of-stocksand enabling improved customer service through implementing SAP. Gattiker and Goodhue(2000) identified four benefits of the Enterprise Resource Planning ERP or SAP implementation:(1) improved coordination, standardisation, communication and information flow between "