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My Class - CCM > Risk Management (11) > Flashcards

Risk Management (11) Flashcards

1
Q

When performing a Monte Carlo simulation, a mutually ________ risk event is an event that can only occur if another risk event occurs first.

A

inclusive

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2
Q

A quantitative risk analysis method that relies on repeated random sampling to obtain a range of possible outcomes is called what type of simulation?

A

Monte Carlo Analysis

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3
Q

Under which of the following project delivery methods would the contractor’s degree of risk be the least?

A

Multiple prime

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4
Q

Risk management is a ________ activity commensurate with the scope, size, complexity, and risk profile of the project.

A

scalable

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5
Q

Under which of the following contracting methods does the CM assume the most risk?

A

Design-build

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6
Q

The most important part of the comprehensive risk management process is:

A

mitigation

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7
Q

When should risk management be applied to a project?

A

Throughout the life of the project

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8
Q

An advanced risk register usually contains additional fields with specific quantitative definitions and a formula for scoring the overall risk. Which of the following would most likely be included in this advanced risk register?

A

Probability score

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9
Q

Which of the following provisions would be considered a common risk allocation method?

A
  • Retainage
  • Insurance
  • Differing site conditions
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10
Q

During a qualitative analysis, each risk’s potential severity is assessed. Which of following categories would represent the most likely highest impact for a major project in most category descriptions?

A

Serious, major, critical
(SMC)

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11
Q

In developing a project risk management plan, the initial major step is to:

A

Identify the risks

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12
Q

During the conception phase of a project, which of the following is the only form of assessment able to be performed?

A

Qualitative Analysis

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13
Q

The risk management plan should include:

Statement of _______
Terminology _______
Identification of _______
Mitigation ________
Performance _______

A
  • Statement of purpose and objective
  • Terminology definitions
  • Identification of risk and mitigation methods
  • Performance objectives
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14
Q

The two distinct types of risk analysis are:

A

Qualitative and quantitative

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15
Q

The CM should regularly hold risk management meetings to review the _______, a risk tracking database.

A

Risk register

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16
Q

The risk identification process should include team members with the:

A

most product knowledge

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17
Q

A thorough risk management plan helps to reduce _______ losses, lessen the frequency of ______ losses, and maximize the potential of _______.

A
  • Reduce large losses
  • Lessen the frequency of small losses
  • Maximize the potential of opportunities
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18
Q

Purchasing insurance is one way of _________ risk.

A

Transferring

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19
Q

According to the International Partnering Institute (IPI), partnering helps to:

Reduce _____
Produce cost ______
Reduce project _______
Enhance project _______
Promote greater _________ for the entire team

A

Reduce claims
Produce cost savings
Reduce project delivery time
Enhance project safety
Promote greater job satisfaction for the entire project team

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20
Q

Partnering does not establish legal relationships, nor does it change any contractual obligations.

A
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21
Q

An integrated risk management process is a tool that CM can use to enhance project ______

A

Project delivery and performance

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22
Q

Alternative Dispute Resolution (ADR) are used in an attempt to settle claims in a timely, cost effective, and controlled method, rather than bringing a lawsuit to trial. ADRs can include:

A

Mediation
Arbitration
Dispute review board (DRB)

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23
Q

The use of alternative dispute resolution (ADR) methods help to avoid litigation. The CM can recommend ADR to the Owner as an option that results in cost benefits to the:

A

Owner

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24
Q

The most common risk allocation provisions are:

A
  • Differing site conditions and pre-construction site conditions
  • Indemnification and negligence
  • Insurance and waiver of subrogation
  • Contract time, including LDs, early completion incentives
  • Ambiguity or conflict in contract documents
  • Changes and claims
  • Notice requirements
  • Weather and force majeure
  • Responsibility for safety
  • Payment terms, retainage, pay when paid, or pay-if-paid clauses
  • Suspension and termination
  • Submittals and approvals
  • Errors and Omissions Insurance
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25
Q

Design-Build (DB)
Control is the key risk factor.

Owners often feel they give up control to the DB firm through the design process, because they are not present during every decision.

A

Contractor has some High risk

Owner has some Low risk

CM would have Highest risk because managing the design and construction.

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26
Q

Design-Bid-Build (DBB)

The key risks is the design phase duration and total project cost.

Design changes/design delays/revisions will delay contractor bid/selection.

Owner and Contractor risk is even.

A

Contractor has medium Risk
Owner medium Risk

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27
Q

CM at-Risk (CMAR)

The key risk is the relationship between the CM and the architect and/or contractor.

The point during a project’s lifecycle at which CM is brought on board is of great importance.

CMs should be involved at the beginning of a project, in order for the CM to influence the design, by ensuring the design considers the Owners budget and schedule constraints.

A

Contractor has some Low Risk

Owner has some High Risk

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28
Q

Integrated Project Delivery (IPD)

The biggest risk associated with IPD is its newness to the industry. Since it is so new, its failures are not supported by case law that helps shape the behaviors of involved parties.

Like CM at-Risk, another risk of IPD is the souring of relationships between parties.

Unlike CM at-Risk, IPD intentionally selects parties based on each party’s ability and willingness to work harmoniously with one another to achieve a common goal.

A
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29
Q

A guiding principal for risk management is to allocate risk to the party that is ____

A

best capable of managing it

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30
Q

Public Private Partnership

A

Contractor has Highest Risk
Owner has Lowest Risk

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31
Q

Multiple Prime

A

Contractor has Lowest Risk

Owner has Highest Risk

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32
Q

When dealing with residual risk, use bid ______ , maintain risk ______ and assign risk _______ appropriately.

A
  • Bid allowances in bid
  • Maintaining risk visibility
  • Assign risk responsibility appropriately
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33
Q

Risk management process includes monitoring, ____, and ____

A

Monitoring
Reporting
Adjusting

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34
Q

A continuous, integrated risk management process will help reduce unidentified _____, improve _______ between parties and maintain focus on risk objectives.

A
  • Reduce unidentified risks;
  • Improve communication
  • Maintain risk objectives
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35
Q

Risk management is a continuous process and needs to continue throughout the _______ of a project.

A

lifecycle

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36
Q

New risks and opportunities should be _______ and other risks will be retired/______.

A

Identified
Retired/Resolved

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37
Q

A comprehensive ___________ can improve or detract from a risk management process

A

Risk register

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38
Q

A highly-detailed risk register should be housed in a ___________ in order to make make maintenance and reporting more manageable.

A

database system

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39
Q

A pre-_______ meeting allows the project team to more easily plan risks/mitigation

A

Pre-Mitigation

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40
Q

The person responsible for managing a risk and carrying out the risk mitigation measures for that risk is called the:

A

Risk Owner

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41
Q

The action item includes the targeted ____ by which the risk mitigation action should be completed.

A

Due Date

42
Q

A post-_________ meeting allows the project team to more easily discuss risk/mitigation results

A

Post-Mitigation

43
Q

“Risk should be owned by the party best able to manage it.”

A
44
Q

The most important part of the risk management process

A

Mitigation

45
Q

Risk Responses categories are: Avoid, _____, _____, and ______.

(AMTA)

A

Avoid
Mitigate
Transfer
Accept

(AMTA)

46
Q

Opportunity Responses categories are: Exploit, _____, _____, and ______.

(ESEA)

A

Exploit
Share
Enhance
Accept

(ESEA)

47
Q

Monte Carlo Method: A software based methodology that relies on repeated random sampling to obtain a range of possible outcomes and the probabilities that they will occur for any choice of action.

It is used to:

A

Understand potential risks to cost and schedule

48
Q

Example of Quantitative Analysis (during which figures are estimated for severity and percentages are estimated for likelihood to better define potential risk impacts and probability)

A

Monte Carlo Analysis

49
Q

Severity
How great an impact will the event have on the project if it does happen?

(MMSMC)

A

NOTE: If the risk has effect in multiple categories, use the highest ranking consequence.

  • Minor: Minor severity, unlikely to occur.
  • Moderate: Moderate through major severity, possible to likely chance of occurrence.
  • Serious: High severity or likelihood of occurrence, lower likelihood or severity, resulting in a risk that the project team needs to consider as serious.
  • Major: A risk with a combination of high levels of both severity and likelihood.
  • Critical: A risk with a combination of the highest levels of severity and likelihood.
50
Q

Likelihood
How likely is it that the event will happen?

(MUPLA)

A
  • Minor: Very small chance the risk will occur.
  • Unlikely: Small chance the risk will occur.
  • Possible: This category is used when a risk has an equal chance of occurrence or nonoccurence.
  • Likely: Large chance the risk will occur.
  • Almost Certain: Very large chance the risk will occur.
51
Q

Qualitative Analysis
The objective of qualitative risk analysis is to evaluate the probability and impact of each risk in the risk register to determine the top risks to the project.
* Subjective: No figures are estimated
*The matrix of likelihood and severity results help the project team to identify where to devote their mitigation efforts

A

Step 1: Likelihood
Step 2: Severity
Step 3: Combined Likelihood & Severity

52
Q

Establish A________
Prioritize E________
Adjust Project B________ and S_____
Update the R_____R_____

A

Accountability,
Efforts,
Budget & Schedule
Risk Register

53
Q

Benefits of a Risk Management Plan include increased confidence in project objectives (budget, schedule, quality, and scope) by creating a systematic framework that:

Minimize ___ and ___maximize
Improves decision making by _____ responsibilities
Provides information to _______
Enhances project delivery
Allocates resources

A
  • Minimize losses and maximize gains
  • Improves decision making by clarifying responsibilities
  • Provides information to stakeholders
  • Enhances project delivery;
  • Resource allocation
54
Q

For large projects, the risk manager will likely be __________, an individual with specific training and expertise in decision making and risk mitigation.

A

the risk specialist

55
Q

For medium and small projects, with owner concurrence, the _______ may act as the risk manager.

A

CM

56
Q

Risk Score is absent of any control measures.

The value of a risk has a formula:

Value of Risk =

A

Value of Risk = (Risk Event Probability) x (Risk Event Value)

Example. Risk value is $250,000 and probability is 25% = (250k x 25%)= $62,500 Value of Risk

57
Q

Cost, Schedule, Quality, Safety, Public Relation, Legal/Regulatory are examples of:

A

Consequence categories

58
Q

Very Likely, High, Medium, Low, Very Low, are examples of:

A

Severity categories

59
Q

Consequence categories and severity categories are determined based on project _______

A

Project Specific data

60
Q

The 2 elements of Qualitative Risk Analysis:

A

Likelihood
Consequences

61
Q

Probable, Likely, Possible, Unlikely, Improbable

A

Likelihood categories

62
Q

Risk identification is a team effort that starts ______ in the project lifecycle.

A

Early in the project lifecycle

63
Q

Describe the risk management process:

A

Risk Planning,

Risk Identification

Risk Analysis Qualitative (Likelihood & Consequence) and Quantitative (Monte Carlo)

Risk Reponses and Mitigation Actions (Avoid, Mitigate, Transfer, Accept)

Cost of Risk

Risk Monitoring and Control (Monitor& Evaluate, Revise/Re-baseline & Update, Report & Communicating)

64
Q

Risk Monitoring and Control can include:

A
  • Monitor & Evaluate
  • Revise/Re-baseline & Update
  • Report & Communicate
65
Q

Which Risk Analysis is based on relative frequency, degree-of-belief and subjective confidence:

A

Qualitative (Likelihood & Consequence)

66
Q

When more information becomes available the CM moves the team from Q__________ stage (no figures are estimated) to Q_______ stage (figures are estimated).

A

Qualitative: no figures are estimated
Quantitative: figures are estimated

67
Q

The first step in risk management strategy is acknowledging that the potential for risk consequences can be mitigated but not:

A

not eliminated.

68
Q

Risk management strategy and objectives:
(Identify, Analyze, Mitigate, Monitor)

A
  • Identify and assess risk
  • Analyze Adequacy of Budget/Schedule
  • Manage Project/Mitigate Risk
  • Monitor/Review Performance
69
Q

These Risks are examples of:
* Project personnel safety
* Public safety
* Landmark buildings/historical/cultural sites
* Endangered species/work restrictions for migration seasons
* Wetland permit

A

Environmental Risks & Safety Risks

70
Q

Environmental Risks

A
  • Landmark buildings/historical/cultural sites
  • Endangered species/work restrictions for migration seasons
  • Wetland permit
71
Q

Safety Risks

A
  • Project personnel safety
  • Public safety
72
Q

These Risks are examples of:
* Weather conditions
* Logistics and staging
* Testing and commissioning
* Contractor resources
* Unforeseen site conditions
* Scope changes during construction
* Labor disputes

A

Construction Risk

73
Q

Design Risks

A
  • Design, estimating, and scheduling uncertainty
  • Incomplete or preliminary design development
  • Scope changes
74
Q

Technical Risks

A
  • Unproven technologies that could fail
75
Q

These Risks are examples of:
* Lack of adequate resources / qualified personnel to manage the project
* Regulatory changes
* Funding delays
* Poorly defined project purpose and objective
* Approvals not made in a timely manner

A

Organizational Risk & Political Risk

76
Q

Political Risks

A
  • Regulatory changes
77
Q

Organizational Risk

A
  • Lack of adequate resources or qualified personnel
  • Funding delays
  • Poorly defined project purpose and objective
  • Approvals not made in a timely manner
78
Q

In order to help track project risks, they should be organized using a Risk Breakdown Structure (RBS).

RBS provides a way to:

A

Categorize risks and improves the team’s ability to understand and effectively manage those risks

79
Q

Risk is known to be inherent to major capital construction projects:

  • adverse weather
  • differing site conditions
  • required or desired scope changes
  • resource unavailability
  • unanticipated environmental factors
  • community pressures

How should risks be grouped:

A

Risks should be organized using a Risk Breakdown Structure (RBS) such as:

Organizational risks
Design risks
Environmental risks
Construction risks
Safety risks
Technological risks
Political risks

80
Q

Risk is defined as an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives. Such as:

Negative, Opportunity & Uncertainty

A
81
Q

A _________ risk is an unforeseen occurrence which has the potential to negatively impact a project’s baseline cost, schedule, quality, or safety performance.

A

Negative risk

82
Q

Negative risks impact a project’s:

A
  • cost
  • schedule
  • quality
  • safety
83
Q

The opposite of a risk is an __________

A

Opportunity

84
Q

An Opportunity if acted upon has the potential to positively impact a project by:

A
  • Reducing overall costs
  • Reducing overall schedule
  • Improving quality
85
Q

Uncertainties are known items in the project baseline that have uncertain but quantifiable impacts to the project’s:

A

final cost or duration

86
Q

The risk identification process should include an estimate of the:

A

potential impact of identified risks

87
Q

The risk identification process should include the development of a:

A

Tracking report (risk register)

88
Q

A key to successful project and risk management is a well-drafted __________ with clearly defined _________ and properly allocated risks and _______.

A
  • Well-drafted contract
  • Clearly defined expectations
  • Properly allocated risks and responsibilities
89
Q
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90
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91
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92
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93
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94
Q
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95
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96
Q
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97
Q
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98
Q
A
99
Q
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100
Q
A
101
Q

Categorize a risk item that is unlikely but would be critical impact to project if it occurred:

Likelihood: Unlikely
Severity: Critical

A

My Class - CCM (13 decks)

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