Cost and Risk Management

Question 1

What does cost management involve?

Answer 1

Cost management involves planning, estimating, budgeting, financing, funding and controlling costs to complete the project within the approved budget.

Question 2

Why are early accurate cost predictions challenging but important?

Answer 2

Early accurate cost predictions are challenging due to limited information but important for determining the economic viability of the project.

Question 3

How do cost planning techniques progress as the design develops?

Answer 3

Cost planning starts with cost per unit benchmarks, then progresses to detailed elemental cost plans and bills of quantities as the design develops.

Question 4

What other key considerations are there in cost management?

Answer 4

Other key considerations include life-cycle costing, value engineering, and value management.

Question 5

How can cost be used to measure project progress?

Answer 5

Cost can be used to measure project progress through tools like S-curves and costed bar charts.

Question 6

What should detailed cost appraisals include?

Answer 6

Detailed cost appraisals should include land costs, fees, site investigations, building and infrastructure costs, marketing, planning, insurance, funding costs, operational costs, etc.

Question 7

What is risk in the context of project management?

Answer 7

Risk is the uncertainty of outcomes, which can be positive or negative. Risk management includes identifying, assessing and responding to risks.

Question 8

Why do construction projects face many risks?

Answer 8

Construction projects face many risks due to their unique, complex, outdoor nature.

Question 9

What are some common risks in construction projects?

Answer 9

Common risks relate to ground conditions, permissions, interdependencies, safety, quality, resources and weather.

Question 10

What are the steps in the risk management procedure?

Answer 10

The risk management procedure involves: 1. Identify and classify risks, 2. Analyse likelihood and impact, 3. Respond using the 4 Ts (Tolerate, Treat, Transfer, Terminate), 4. Monitor risks and appoint a risk owner.

Question 11

How can non-financial risks be assessed?

Answer 11

Non-financial risks can be assessed using a probability-impact matrix.

Question 12

What is a risk register used for?

Answer 12

A risk register is used to track and update risks throughout the project lifecycle.

Question 13

Who are project stakeholders?

Answer 13

Project stakeholders are actors who incur a direct benefit or loss from the project.

Question 14

What is the difference between internal and external stakeholders?

Answer 14

Internal stakeholders have a legal contract with the client, while external stakeholders have a direct interest without a contract.

Question 15

What are some examples of internal stakeholders?

Answer 15

Examples of internal stakeholders include the project owner, project professionals, suppliers, and customers.

Question 16

What are some examples of external stakeholders?

Answer 16

Examples of external stakeholders include public parties like authorities and the public, and private parties like interest groups, media, trade and industry.

Question 17

How do client types vary and what are their characteristics?

Answer 17

Client types vary, e.g. public vs private, experienced vs inexperienced, with different characteristics that affect the project.

Question 18

How should stakeholders be mapped and prioritised?

Answer 18

Stakeholders should be mapped and prioritised based on their power, legitimacy, urgency, and potential to cooperate or threaten the project.

Question 19

How can stakeholder relationships be managed?

Answer 19

Stakeholder relationships can be managed through effective formal and informal communication.

Question 20

What should you be aware of in terms of potential conflicts and emotional responses?

Answer 20

Be aware of potential conflicts and emotional responses to change, and have strategies to resolve issues.

Question 21

What are the key risks and benefits of stakeholder management?

Answer 21

Key risks of poor stakeholder management include uncertainty, reactive planning, behavioural issues. Benefits include trust, pace, risk management, awareness, innovation.

Question 22

How does project governance relate to organisational governance?

Answer 22

Project governance aligns with organisational governance and covers the full project lifecycle.

Question 23

What does project governance set out?

Answer 23

Project governance sets out responsibilities, enables stakeholders to manage interests, supports the project team, enables decisions, provides expertise and information.

Question 24

What are the key elements of project governance?

Answer 24

Key elements of project governance include project ownership, sponsorship, guidance, change management, risk management, quality management, contracting approach.

Question 25

What is the role of the Project Board?

Answer 25

The Project Board represents key stakeholders and is the ultimate decision-making body.