Risk Management Flashcards
What is risk and how do you manage it on a project?
“RICS Guidance Note – Management of Risk
Risk workshops held at the start of the project to develop client and design and construction risks into a risk register, risks reviewed monthly at progress meetings and dedicated workshops.
Probability
Severity of impact
Impact on cost
Impact on programme
Risk owners
Mitigation actions
This allows risk to be calculated and costed and the total cost impact compared to the contingencies levels in the budget to see if there is sufficient cover for the client if all risks were realised in a worst case scenario.”
How can you transfer risk?
“Procurement route and contract selection
contract terms:
Design risk to contractor in Design & Build route.
Risk of ground conditions with contractor in JCT (not NEC).
Contract amendment or schedule of responsibilities in relation to discharge of planning conditions.”
What is Monte Carlo Analysis?
“Monte Carlo Analysis is a type of probability simulation used to understand
the impact of risk and uncertainty.
This can be applied to the best and worst case scenarios in relation to costed risks and through a computer programme simulate thousands of different situations to give a probability of the most likely outcome.”
What is risk?
“An uncertain event or circumstance that if
it occurs will affect the outcome of a programme or project”
What is an issue?
“Issues are classified as events that are happening now or will almost certainly happen in the future”
How is risk related to contingency?
“Contingency is the total sum of identified risk where a cost has been
assigned to each risk”
What are the stages of risk management?
“Identify
Analyse
Respond
Monitor”
What are the risk responses?
“Risk Avoidance – where the consequences are serious and the risk unacceptable
Alternate design or cancellation
Risk Reduction – the level of risk is unacceptable, risk needs to be reduced
Redesign, further investigation required, alternative construction method
Risk Transfer – transferring the risk to someone better suited to control it
Insurance or transfer to contractor etc
Risk Sharing – not entirely transferred and employers maintains aspects
Risk Retention – Risk retained by the employer that are not controllable.
Remaining risk is the Residual Risk Exposure”
How does risk vary within the RIBA stages?
“Gradually decline as the design progresses
RIBA Stage 0 – risk may be a significant % of project cost
RIBA Stage 4 – risk should be assigned to specific items and mitigated where possible”
What are some general risks in construction?
“External – economic, legal, political
Financial – exchange rate, funding
Site Risks – restricted site, occupied site
Client risks – inexperienced client, multi-headed client, post-contract changes
Design Risks – inexperienced design team, poor brief, poor coordination, incomplete design
Contractor Selection – inadequate selection process
Construction – weather, buildability, H&S”
What is the difference between quantitative and qualitative risk management?
“Quantitative quantifies numerically – 1 to 5
Qualitative categorises in descriptive terms – low to high”
How are risk registers used?
To Identify, Analyse, Respond and Monitor risks
How does procurement route affect risk?
“Some routes transfer risk from the client to the contractor however this risk is reflected in the tender price
D&B vs Traditional”
What is included in a risk register?
“Description of the risk
Owner
Risk grouping
Risk premium – estimated cost
Probability of occurrence - %
Impact on occurrence - £/weeks
Risk factor – probability x impact
Action required
Review date
Status – open / closed”
How does risk work in D&B procurement?
Depends on single or two stage
