Risk Management

Question 1

962 What is risk in the context of a construction project?

Answer 1

A risk is an uncertain event or set of circumstances that, should it occur, will have a negative effect on the projects` objectives.

Question 2

963 What is a risk assessment?

Answer 2

An assessment of the risk and the likelihood or severity of the hazard being realised.

Question 3

964 What is the difference between and quantified and qualitative risk assessment?

Answer 3

A quantitative risk assessment focuses on the cost and time impacts of the risks. Whereas a qualitative risk assessment focuses on the relative impact/likelihood of an event.

Question 4

965 What is the Monte Carlo simulation?

Answer 4

This is a computer software to predict risk. The ones I have use repetitive simulations whereby the scenarios are run 10,000 times and the software spits out a range of different results giving a likely hood across a number of scenarios.

Question 5

966 How do you go about creating a risk register for a new project? (395)

Answer 5

• Sit down with the project team and list all potential risks to the project:
• Financial
• Health and safety
• Programme
• Quality
• Outside project risks like changes to the law or planning permission
• Try to assess the risk, put in place a mitigation strategy, and monitor before and after intervention. Try and work out the time/cost impact should the risk occur
• Assign a risk owner for the risk. The person who is best placed to manage the risk should be the owner
• Usually, the PM collates and add to the risk register. But I have done this on my projects

Question 6

968 How do you use the risk register?

Answer 6

The risk register should be reviewed and update regularly as you move through the project. New risks should be added as the surface, existing risks updated if the situation has changed and expired risks closed out.

Question 7

969 What is risk allocation?

Answer 7

This is assigning a risk to a specific person or group. Usually those best placed to manage or mitigate that risk. This should be clearly identified.

Question 8

970 What are risk management strategies?

Answer 8

• Avoid – Intervention to stop the risk from occurring
• Reduce – Intervention to lessen the risk impact
• Retain – noting and keeping the risk and controlling it. Must ensure that the proper level of control is put in place
• Transfer – Move the risk from one part to another or insurance
• Share – Where the risk and are rewards is shared by the parties

Question 9

971 What are the benefits of risk management?

Answer 9

• Increase confidence in achieving the project objectives
• Reduced cost and time overruns
• Team understands and recognises the use and composition of contingencies
• Enables decision making to be made on an assessment of know variables

Question 10

972 Why is risk management needed in construction?

Answer 10

• Projects tend to be complex and usually all have time costs and quality targets to be met
• Risk is present in all projects and surveyors are often routinely involved in making decisions which have a major impact on risk
• Risk management cannot eliminate risk, but techniques can be used to reduce the impact of events which may cause failure of reaching a goal.

Question 11

973 What is the purpose of risk management? (401)

Answer 11

• Risks can be managed, uncertain events cannot. A fundamental rule of risk is to reduce uncertainties to a minimum
• Events have a likelihood of occurring (probability) and a consequence (impact)
• It is impossible to manage uncertainties. The way they are usually managed are through programme float and cash contingencies

Question 12

974 How do you report and monitor risk?

Answer 12

Reported using the cost/ progress reports, holding regular risk meetings and keeping the risk register up to date.

Question 13

975 What is a risk allowance?

Answer 13

A sum included in the estimate to cover unknown expenses or unmitigated risks during the project.
An estimate of the cost of dealing with an individual risk should it materialise.

Question 14

976 What are the four main risk categories?

Answer 14

• Design risk
• Construction risk
• Client change risk
• And Client other risk

Question 15

977 How can the project team reduce design risk?

Answer 15

• Through early engagement with the contractor to iron out buildability risks
• Transfer the risk in procurement (contractor design portion and D & B)
• Effective management of the risk register
• Use an experienced design team

Question 16

978 Who owns specific risks?

Answer 16

This should be the party that is best placed to manage them. Also, this should be recorded in the risk register so that parties are aware of their responsibilities.

Question 17

979 How would you calculate your risk allowances?
.

Answer 17

At the order of cost estimate stage these would be a %. In cost plans risk allowances would be applied after compiling the risk register. Risk analysis should be used to determine the value of them should they occur rather than just basing it on a %

Question 18

980 What are the problems to the QS regarding cost control with piling? Who owns this risk?

Answer 18

One of the risks with piling is the depth of the pile which can often be uncertain. Who holds the risk for this depends on the procurement route and or who has accepted the risk as part of the contract negotiations.