Chapter 8 - Construction risk managment

Question 1

What are the three main areas in risk managment?

Answer 1

1) Risk identification
2) Risk Analysis - Quantitive & Qualitative
3) Risk Response Planning - Risk Monitoring

Question 2

What are the steps to analyze failure mode and effect analysis (FMEA)

Answer 2

Steps
1. List ways in which a project might potentially fail
2. List the consequences of each failure
▪ Severity (S) on a scale of 1 -10
3. List the causes of each failure
▪ Their likelihood of occurrence (O) on a scale of 1 -10
4. The ability to detect each of the identified failures
▪ Detectability (D) on a scale of 1 -10
5. Calculate the Risk Priority Number (RPN) by multiplying S, L, D
6. Score the list of potential failures by their RPN and identify actions to reduce the
risk associated with failures with a higher RPN

Question 3

What is Quantitative risk analysis?

Answer 3

1) Objective is to illustrate the distribution or risk profile of outcomes

Question 4

What is the importance of estimates?

Answer 4

Identifying the probability of certain possible risky outcomes (Not their range)

Question 5

What are the advantages of running simulations? (Monte Carlo)

Answer 5

1) Low-cost way to experiment
2) Easy to repeat and modify
3) Studying systems that are too complex to solve analytically
4) Examine hidden quantities and patterns

Question 6

What are the disadvantages of running simulations? (Monte Carlo)

Answer 6

1) Time-consuming
2) Doesn’t give an exact solutions
3) Is the model correct? (garbage in - garbage out)