Risk Management

Question 1

What is the simple method of risk assessment?

Answer 1

Estimate of the risk is combined with a likelihood of occurrence to give an expected monetary value for that risk to go into the risk register.

Question 2

What is the probabilistic method?

Answer 2

Three point estimating where an estimate is produced for best case, worst case and most likely case (impact). A percentage likelihood is applied to each case with the percentages totaling 100%. The EMV for each case is combined to give a total EMV for the risk to be carried forwards.

Question 3

What is the Monte Carlo Simulation?

Answer 3

Three point estimate input into computer software with likelihood of occurrence.
The computer software then applies a multitude of variables and likelihoods in order to produce data for probabilities of project completion at various costs for example 90% certainty of completion for less than £XX

Question 4

What provisions does the NEC4 contract have for managing risk?

Answer 4

• EWN process
• X7 Delay Damages
• X16 Retention
• X13 Performance Bond
• X17 Low Performance Damages

Question 5

Who takes the risk in a traditional procurement route?

Answer 5

Client owns the risk in terms of time, cost and information as they retain the design. Contractor owns the risk for construction programme, performance of subbies and quality of works.

Question 6

Who owns the risk in design and build procurement route (single and two stage tender)?

Answer 6

In single stage the contractor owns the risk for design and construction. In two stage then there is a stage where design risk is shared as the design team is novated before becoming the contractors. At this point risks become contractors as per single stage.

Question 7

What actions can be taken to deal with risk on a project?

Answer 7

• Risk Avoidance
• Risk Reduction
• Risk Transfer
• Risk Sharing
• Risk Retention

Question 8

How would you carry out a qualitative risk analysis?

Answer 8

Using the RICS guidance note on managing risk i would allocate a description from Very low to very high after consulting with the project team or any necessary stakeholders. The qualitative category would allow a guide probability which can feed into quantitative analysis also.

Question 9

What benefits are there to holding a risk workshop?

Answer 9

Gathers multiple stakeholders and disciplines together to identify potential risks in a structured way. Means things are less likely to be missed. An approach to mitigation or management can then be put in place by agreement. These become EWN meetings post contract.

Question 10

What have you included on risk registers you have compiled?

Answer 10

Category of the risk, status, type, description, cause, consequence, owner and actions and then the qualitative ratings and quantification to give an expected monetary value against each risk and a total project risk forecast.

Question 11

What are the NRM risk categories?

Answer 11

• Design Development Risks
• Construction Risks
• Employer Change Risks
• Employer Other Risks

Question 12

What are the steps of risk management?

Answer 12

• Identify
• Assess
• Respond
• Monitor