Risk

Question 1

How do you quantify risk?

Answer 1

Early on in the project risk will generally be quantified on a high level basis by adding a percentage onto the contract sum, it can also be identified using a Monte Carlo scenario. As the project progresses and more information is readily available the disk team will hold risk works and update a risk register with BRAG sheet scoring to identify the likelihood of a risk occurring and the impact it may have on the project.

Question 2

What’s on a risk register?

Answer 2

• Each project related risk identified risk workshop (each risk will generally have its own reference)
• Clear description of the risk also identifying the cause and the effect it will have on the project
• Assessment of risk (Likelihood of occurrence multiplied by Impact if the risk occurs)
• Mitigation strategy to prevent
• Action owner and due date for actions
• Re-assessment of risk (Likelihood of occurrence multiplied by Impact if the risk occurs)
• Risk owner
• Risk cost

Question 3

What are the five different ways to deal with risk on a project?

Answer 3

• Avoid
• Transfer
• Reduce
• Share
• Retain

Question 4

What is EMV?

Answer 4

Expected Monitory value, calculation of probability times impact on a risk occurring on a project

Question 5

Are you familiar with the Monte Carlo Simulation?

Answer 5

Monte Carlo simulation, or probability simulation, is a technique used to understand the impact of risk and uncertainty

In a Monte Carlo simulation, a random value is selected for each of the tasks, based on the range of estimates. The model is calculated based on this random value. The result of the model is recorded, and the process is repeated. A typical Monte Carlo simulation calculates the model hundreds or thousands of times, each time using different randomly-selected values.

When the simulation is complete, we have a large number of results from the model, each based on random input values. These results are used to describe the likelihood, or probability, of reaching various results in the model.

Question 6

How could you capture the cost for unknown risk?

Answer 6

Through allowing a suitable percentage of the project cost in the early stages of the project.

Question 7

If you feel that the project is high risk and required a large percentage is required for unknowns, but the client states they have limited funding what would you advise them?

Answer 7

I would give them my professional opinion and explain the logic behind my decision, if they wish to carry out the project on a limited budget I would suggest implementing a robust change control procedure to ensure that the project budget was under firm scrutiny.

Question 8

How do you use the risk register to set your contingency budget?

Answer 8

We use a rag sheet system to identify the likelihood of a risk occurring and the impact it will have on a project. If medium or high the team will propose a mitigation strategy to reduce the overall impact it will have on the project and evaluate by focusing on the effect it will have on programme, i.e. additional preliminaries, any changes to work methodology or materials that will effect costs and any out of hours work that will be charged at an additional premium.