Risk Management Flashcards
What is RISK
The likelihood of an event or failure occuring and its consequences or impact
What is difference between a hazard and a risk
Hazard: something that could potentially cause harm.
Risk: the degree of likelihood that harm will be caused
How would you price a risk register?
Pre-Mitigation
Risk Cause and Consequence
Assign number to probability and consequence (multiplied for RAG rating)
Assign cost if this happened
Post-Mitigation
Details what has been done to mitigate
Assign new number to probability and consequence (multiplied for new RAG rating)
New cost impact is existing cost multiplied by new RAG over old RAG
Impact of procurement routes on financial risk
Traditional - Risk with client
D&B - Risk with Contractor
Mangament - Shared
What are RARTS
Retain,
Avoid,
Reduce,
Transfer and
Share
Types of risks (Management of Risk)
- Avoidance - Risks with such serious consequences they should be avoided all together (redesign)
- Reduction - Level of risk unacceptable, actions taken to reduce (more site investigations / use of different materials)
- Transfer to contractor - Risks that may impact programme transferred to another party that may be better at managing it
- Sharing risk - When risk not wholly transferred e.g. provisional quants, pricing risk to contractor, quantification risk to client
- Retention - Risks retained by employer, appropriate risk allowance made in cost plan
Risk allowance in NRM1
**Design development risks **
- Allowed for during the design period
- To provide for design development, changes in estimating data, third party risks (eg planning requirements), statutory requirements, procurement methodology and delays in tendering
**Construction risks **
- Allowed for during the construction period
- To provide for risks associated with site conditions, ground conditions, existing services and delays by statutory undertakers
**Employer change risks **
- Allowed for during design and construction
- To cover the risk of Client changes (eg changes to scope, programme, quality)
**Employer other risks **
- Allowance for other employer risks (early handover, acceleration availability of funds/postponement)
Risk Managament Process
Risk Identification
Risk Analysis
Risk Response
Risk Manage
Risk Managament Under JCT and NEC
JCT Risk - Relevent Event, Prov Sums
NEC Risk - Compensation Event, Early Warning
How can a client minimise design risk
Use trusted experienced design team
Transfer the risk (D&B and CDP)
How would you cost risk
Percentages at initial stages, after a risk workshop it cost plan stages.
What is a risk assesment
Assesment of risk to understand liklehood and impact of them occuring.
What is the purpose of risk management?
To identify and manage the works.
What recourse is there in the contract to reduce client risk?
Collateral Warranty
Bonds
LAD’s
Third party rights
Dispute guidelines
Are you familiar with a risk register? Whats in it?
Risk
Liklehood
Impact
Cost Impact
Mittigation
Owner
How do you start a risk register on a project?
Organise a risk workshop to identify the risks
Under a NEC form of contract what is the relevant of a risk register?
It is a contract document along with the programe.
How would you allocate a risk owner for a risk item on a risk register?
By whome is best to manage it.
Types of risks
Economically, Political, Social and Enviornmental
Monte Carlo
Software to deudce likely outcome of a risk occuring.
How should risk be allocated
The person or party best placed to manage
How is risk dealt with NRM2
There is no exact way of dealing with it.
How is risk dealt with NRM1
Risk allowanced (4 catagories), not defined, no contingency.
How often do you update risk assesment
Every time you go to site
What is a nominated subcontractor (how does risk work)
Nominated is selected by the client, they are part of contract docs and client has risk as they have insisted.
What is a named subcontractor (how does risk work)
Named or preferred by client but MC has risk.
What is the difference between a contingency and a risk allowance? And which one would you recommend?
Risk allowances are the “known” unknowns, such as underground utility conflicts,
Contingencies are for the “unknown” unknowns, such as changes in a project’s scope.
