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RICS APS QS - Optional Competencies > 2. Risk Management > Flashcards

2. Risk Management Flashcards

1
Q

What is Risk?

A

An uncertain event, which should it occur will have an effect on the achievement of the project objectives.

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2
Q

What are the Different NRM1 Risk categories?

A
  • Design Development Risk - allowance for design development, risks, stats, procurement etc.
  • Construction Risk – risks during construction projects i.e. site conditions, stats, delays etc.
  • Employer Change Risk – employer scope changes during design and construction process.
  • Employer Other Risk – example: acceleration, LDs, postponement, availability of funds.
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3
Q

Where can a QS find guidance on Risk Management?

A

RICS Guidance Note Management of Risk – 1st Edition.

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4
Q

How do you manage risks on your projects?

A

At BTP management of risk ongoing, allocated risk allowance – risks are identified, assessed and controlled as they become apparent.
At previous practices – risk management workshops, risk registers and project reports.

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5
Q

What is Risk Management?

A

The process of identifying, analysing and responding to risks associated with construction projects

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6
Q

What is the purpose of Risk Management?

A

Recognising potential problems as early as possible so that the opportunity for taking effective action is maximised.

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7
Q

What is the process of Risk Management?

A
  1. Identify Risk
  2. Assess or Analyse – cost and programme implications
  3. Respond - action controls
  4. Monitor and control – update regularly
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8
Q

What are the benefits of Risk Management?

A
  • Reduced cost / time overruns - risk cost and programme implications
  • Enable decision making on identified and analysed risks
  • Risk Management workout – team development and encourages communication
  • Increased confidence in mitigating risk and achieving project objectives
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9
Q

What are the different Risk Management tools you are aware of?

A
  • Risk Register
  • Risk Management Workshops
  • Risk Quantification Tools
  • Contingency
  • Research - Benchmarking risks associated with similar projects
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10
Q

How can risk be apportioned/administered?

A
  • Risk Avoidance – risk completely unacceptable = re-evaluate brief or project, potentially require alternate design or cancellation of project.
  • Risk Reduction – risk unacceptable = actions to reduce likelihood and impact i.e. site investigation, different materials/suppliers for lead times and construction methods.
  • Risk Transfer – risks that impact programme = where transferred to a party who can handle more effectively (contractor) – includes premium i.e. Design and Build – design risk.
  • Risk Sharing – risk not wholly transferred to one party = some elements of risk retained by the employer i.e. PPCH noisy working hours.
  • Risk Retention – risk is retained and managed by employer i.e. planning conditions.
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11
Q

What is a Risk Register?

A

Tool used in risk management for the identification, assessment and management of risks associated with in a construction project.

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12
Q

What is the process for assembling a Risk Register?

A

Risk Management Workshop with project team, involving the following process;
• Risk Identification – Number, Cause, Description, Impact on Cost and Programme.
• Assessment of Risk – Likelihood, Risk Severity (traffic light system).
• Risk Management – Action required, action owner and date to be completed by.

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13
Q

What is included within a Risk Register?

A
  • Risk Identification – Number, Cause, Description, Impact on Cost and Programme.
  • Assessment of Risk – Likelihood, Risk Severity (traffic light system).
  • Risk Management – Action required, action owner and date to be completed by.
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14
Q

What are some typical items you would see in a risk register?

A
  • COVID-19 and Brexit
  • Planning Approval
  • Party Wall Issues / Rights of Light
  • Contamination
  • Ground conditions
  • Weather
  • Ecology
  • Archaeological issues
  • Client Design Development
  • Un Exploded Ordinance Issues
  • Statutory services – provision of incoming services to a site before construction.
  • Ecology
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15
Q

How would you update a Risk Register?

A

Typically reviewed at each Progress Meeting with the project team, process for updating;

  1. Delete Closed Risks
  2. New risks – identification, assessment and assignment of new actions.
  3. Review Existing Risks – review progress on management actions and any further steps.
  4. Risk Allowances – review and recalculate risk allowances where necessary
  5. Updated Risk Register – update and circulate to project team updated register.
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16
Q

How can risk registers be used to determine risk allocation between client and contractor?

A

Risk registers carried out it initial project stages.
Risk register used in contract process - showing allocation of risk between contractor and client.
Contractor to review and agree.

17
Q

Are risk registers typically part of your quantity surveying scope of services?

A

Not included in BTP Scope of Services – risk of liability associated with this.
RISC QS Scope of Services – QS to facilitate risk assessment meeting (supplementary services).
RICS PM Scope of Services – Responsible for risk management strategy, risk register and inc. summary within project report.

18
Q

How is risk apportioned under Traditional Procurement?

A
  • Design Quality – Client.
  • Cost Certainty – Shared = Fixed Lump Sum unless variations.
  • Design Programme – Client.
  • Construction Programme & Quality – Contractor.
19
Q

How is risk apportioned under Design and Build Procurement?

A
  • Design Quality – Shared.
  • Cost Certainty – Fixed Lump Sum (Contractor).
  • Design and Construction Programme – Contractor.
  • Construction Quality – Contractor.
20
Q

How is risk apportioned under Management Construction Procurement?

A
  • Design Quality – Client.
  • Cost Certainty – Client.
  • Design and Construction Programme – Management Contractor.
  • Performance of trade contractors – Management Contractor.
  • Construction Quality – MC and Works Contractor.
21
Q

How is risk apportioned under Construction Management?

A
  • Design Quality – Client.
  • Cost Certainty – Client.
  • Design and Construction Programme – Client
  • Performance of trade contractors – Client
  • Construction Quality – Works Contractor
22
Q

What is quantification of risk?

A

Process of quantifying identified risks in terms of cost and/or time.

23
Q

Why is the quantification of risk important?

A
  • Risk Management – identification, assessment and management of risks.
  • Risk Allowances – used to determine contingency through quantifying risks.
  • Funders or 3rd Party – requirement to provide comforts.
  • Capped Funds – means to monitor risks and ensure funds not exceeded.
  • Larger Programme – project fees into larger overall programme.
  • Motivate Team – risk management actions can motivate project team
24
Q

What are the different risk quantification techniques you are aware of?

A
  • Percentage Addition (%)
  • Simple Method of Assessment (SMA)
  • Central Limit Theorem (CLT)
  • Monte Carlo (MC)
  • Probabilistic Method
  • Sensitivity Analysis
  • Probability Trees
  • Fault Tree Analysis
  • Event Tree Analysis
25
Q

Explain Risk Quantification Method - Percentage Addition (%)?

A
  • % based on cost plan – total project cost.

* Should only be used when preparing initial Order or Cost Estimates.

26
Q

Explain Risk Quantification Method – Simple Method of Assessment (SMA)?

A
  • Likely Cost Assigned to Items in Risk Register
  • Probability X Cost Assigned = Expected Value of Item
  • Cumulative Expected Values of Items = Overall Risk Allowance
27
Q

Explain Risk Quantification Method – Central Limit Theorem (CLT)?

A
  • Mathematical technique to quantify risk.

* Provide 90% confidence for a project contingency fund.

28
Q

Explain Risk Quantification Method – Monte Carlo (MC)?

A

• Computer generated simulation modelling outcomes.

29
Q

Explain Risk Quantification Method – Probabilistic Method?

A
  • 3-point estimating.
  • Probability risk to each item – best, likely and worst case = totalled 100% for item
  • Cumulative Expected Value per assumption totalled = Overall Risk Allowance
30
Q

Explain Risk Quantification Method – Sensitivity Analysis?

A
  • ‘What-if-analysis – risk method.

* Practical method of investigating risk = varying values of key factors and measuring outcome

31
Q

Explain Risk Quantification Method – Probability Trees?

A
  • Where risks are inter-connected.
  • Certain risks may occur through actions of managing a risk.
  • Determine Overall Risk.
32
Q

Explain Risk Quantification Method – Fault Tree Analysis?

A
  • Deductive approach.
  • Determined cause contributing to negative outcome.
  • Begins with undesired event – branching back until top event defined by basic event.
33
Q

Explain Risk Quantification Method – Event Tree Analysis?

A
  • Find possible outcomes from initial event.

* Opposite to Fault Tree Analysis.

34
Q

How would you calculate contingency?

A

BTP Directors instruct staff to use Percentage Addition % Method for calculating risk allowance from overall project value, this is because;
• Large range of projects to benchmark against – most typically correct.
• BTP’s clients typically laymen – only want high level summary for risk allowance, therefore % addition sufficient.

35
Q

What if a client wants further breakdown to contingency?

A

Explain how calculated, should they want further breakdown can use Simple Method of Assessment.

RICS APS QS - Optional Competencies (2 decks)

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