Risk Management

Question 1

How is risk dealt with under JCT?

Answer 1

Risks are generally balanced between parties. There is no specific risk management process to allocate risks like NEC.
Under NEC, there is an early warning register that is managed by the PM, with risks allocated to specific parties.

In my projects, I manage the risk register, but this is not a contractual document. Under JCT, the contractor is required to use best endeavors to mitigate the risks associated with the works.

Question 2

Give an example of how you manage risks on one of your projects.

Answer 2

On my Credit Suisse project, noise disturbance had a commercial and operational risk. It had an operational risk through disturbing the business and in particular trading floors (acoustic hoarding, revised methodology, designated noisy working hours). From a commercial perspective, 7 working standdown days were agreed within the contract (c.£60k). There was a commercial risk of using excessive standdown days. If these were unused at the end of the projects, they would be instructed out of the contract as a saving.

Question 3

What is the RICS guidance for risk management?

Answer 3

Management of Risk Guidance Note - 1st Edition 2015.

Question 4

What are the strategies for risk management with the RICS Management of Risk Guidance note 2015?

Answer 4

• Avoid
• Reduce
• Transfer
• Share
• Retain

Question 5

What risk quantification techniques are you aware of?

Answer 5

• The simple method (cost x probability)
• Monte Carlo - computer generated
• Probability trees.

I personally use qualitative analysis (probability x impact), then apply a cost where possible. Give examples.

Question 6

What is the difference between a risk and an issue?

Answer 6

A risk is an uncertain event, that if occurs, could have a negative impact on a project. An issue is a negative occurrence that has actually occurred.

Question 7

Example of a risk management level 3?

Answer 7

On my projects, I advise my clients to use Smartsheet for risk management. This allows individuals to be assigned to a risk (ownership), and the automation will send emails when a risk is overdue or requires an update. Not only does this help with keeping risks up to date, but provides an audit trial of the risk history, on a centralised live platform that anyone on the project can access at any one time.

Question 8

When does the process of risk management start?

Answer 8

At the beginning of a project, and continues throughout all stages of the project lifecycle.