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APC > Risk management > Flashcards

Risk management Flashcards

1
Q

How do you define risk in the context of project management?

A

Risk involves uncertain circumstances that can impact project outcomes.

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2
Q

What construction project risks are you versed in?

A

Common construction project risks and their implications on program and cost.

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3
Q

Why do you value early issue resolution in projects?

A

Because proactive risk management is important for project success.

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4
Q

How is risk apportionment categorized according to resources like the RICS Guidance Note on Risk Management and NRM1?

A

Into categories such as design development, construction, employer change, and other areas.

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5
Q

What methods does NRM suggest for managing risks?

A

Methods like risk avoidance, reduction, transfer to the contractor, and shared risk.

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6
Q

How does varying risk levels across procurement routes influence route selection?

A

Different procurement routes have different levels of risk, influencing the selection of the most appropriate route for a project.

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7
Q

Why is risk allowance important in costing?

A

Risk allowance is important because it accounts for potential risks and uncertainties, ensuring that projects are adequately funded.

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8
Q

What are the four main categories of risk allowance?

A

The four main categories are known risks, known unknowns, unknown unknowns, and residual risks.

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9
Q

What is your role in the risk management process for the 1 Triton Square project?

A

Maintaining the project risk register to identify and address potential risks.

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10
Q

What are the three stages of the risk management process you progress through?

A

Pre-mitigation, mitigation, and post-mitigation.

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11
Q

How do you evaluate the cost implications of risks?

A

By assessing the potential cost impact of identified risks and incorporating an appropriate risk allowance into the cost plan.

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12
Q

How do you collaborate with relevant parties in project workshops regarding risk management?

A

By assigning ownership of specific risks to relevant parties, such as design teams and contractors.

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13
Q

How do you report risks during a project?

A

By consistently reporting both existing and emerging risks, and incorporating expected variations in the cost report.

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14
Q

How do you manage risk allowances as the project progresses?

A

By decreasing risk allowances as associated risks diminish.

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15
Q

Can you provide an example of a significant risk identified at Citi Bank and how you contributed to its resolution?

A

Yes, a significant risk involved the possible need for an additional fire exit integrated into the external structure due to potential changes in headcount. I contributed to pricing various design options and participated in a threat assessment conducted on the building.

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16
Q

How do you carry out risk analysis and risk management?

A

Use risk registers from previous schemes as a starting point if available.

Organize a risk management workshop with the design team to identify project-specific risks.

Update the risk register during the meeting to form the basis of risk management.

Continuously monitor identified risks as the project progresses.

Aim to remove risks or reduce their probability and put mitigation measures in place if they occur.

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17
Q

What is risk defined as?

A

An uncertain event that will affect the achievement of the project objectives if it occurs.

Risks are measured in terms of their likelihood (probability) and consequence (impact).

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18
Q

What is risk management?

A

A process for identifying, assessing, and responding to risks associated with the delivery of an objective, such as a construction project.

Establishes a set of procedures by which risks are managed.

Comprises an intuitive approach where project teams proactively manage risk.

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18
Q

What should be done with identified risks in risk management?

A

Identified risks should be continually monitored as the project progresses.

Risks can be removed, their probability reduced, or mitigation measures put in place if they occur.

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19
Q

What is a risk management workshop?

A

A meeting where all members of the design team come together to identify project-specific risk items.

The risk register is updated during the meeting and forms the basis of risk management for the project.

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20
Q

Why is risk management important in construction projects?

A

It helps to proactively identify and mitigate risks, ensuring the project objectives are met.

Establishes a structured approach to managing uncertainties that could impact project success.

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21
Q

How are risks measured in risk analysis?

A

Risks are measured in terms of their likelihood (probability) and consequence (impact).

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22
Q

What is a Risk Event?

A

An event that can be predicted to at least some degree, generally based on historical data or experience
and making a decision according to the probability of a particular event occurring.

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23
Q

What is an uncertain or unforeseen event?

A

A random event that defies prediction.

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24
Q

What are the stages of Risk Management?

A
  • Identification.
  • Analysis.
  • Response.
  • Monitor and control.
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25
Q

Why is risk management needed in construction?

A
  • Projects are typically complex, all have time, cost and quality targets which must be met.
  • Risk is present in all projects and surveyors are routinely involved in making decisions which have a
    major impact on risk.
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26
Q

Can you give me an example of an external risk in a construction project ?

A

economic uncertainty, legislation changes and changes in
government policy.

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27
Q

Can you give me an example of an Financial risk in a construction project ?

A

exchange rate changes or the increased cost of borrowing.

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28
Q

Can you give me an example of an site risk in a construction project ?

A

restricted access, planning difficulties and environmental issues can also be considered
as further examples.

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29
Q

Can you give me an example of an client risk in a construction project ?

A

lack of experience, a multi-headed client and the likelihood of post contract
changes.

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30
Q

Can you give me an example of an design risk in a construction project ?

A

inappropriate consultant team, poor team ethos, an incomplete design or lack
of design co-ordination.

31
Q

What is Risk Allocation?

A

Risks should be allocated to those who are best able to manage it, in a manner likely to optimise project
performance.

32
Q

What are the four stages of risk management?

A

Identify
Analyse
Respond
Review

33
Q

Describe the Identify stage of Risk Management?

A

Identify and prioritize uncertainties that may adversely affect the project.
Achieved through workshops, experience, and risk registers.

34
Q

Describe the Respond stage of Risk Management?

A

Assess the impact of identified risks on time and cost.
Methods include judgement, probability matrix, Monte Carlo analysis, and decision trees.

34
Q

Describe the Analyse stage of Risk Management?

A

Implement strategies to mitigate each risk.
Strategies include acceptance, monitoring, reduction, transfer, and avoidance.
Allocate risks to the party best able to manage them.

35
Q

Describe the Respond stage of Risk Management?

A

Conduct regular reviews to identify new risks and monitor existing ones until project completion.

36
Q

What are some methods used in the analysis stage of Risk Management?

A

Judgment
Probability matrix
Monte Carlo analysis
Decision trees

37
Q

Why are regular reviews important in Risk Management?

A

To identify new risks and monitor existing risks up to project completion.

37
Q

Describe the format of the risk register?

A
  • A risk register format will typically include:-
    o 1) A description of the risk.
    o 2) The risk owner.
    o 3) A probability of occurrence.
    o 4) The impact of its occurrence (£/wks).
    o 5) Risk factors (probability x impact).
    o 6) Actions required.
    o 7) Review date.
    o 8) Status (open or closed).
37
Q

How does the QS assist in the decision-making process?

A

By providing estimates with a degree of certainty and carrying out simulations to determine the level of risk.

38
Q

What are some strategies used in the response stage of Risk Management?

A

Acceptance
Monitoring
Reduction
Transfer
Avoidance (via a change of design)

38
Q

What is the role of the QS in managing contingency funds?

A

The QS assists in setting and managing contingency funds appropriately.

39
Q

How does the QS ensure accuracy of available funds?

A

By undertaking risk analysis and managing the release of funds when no longer required

40
Q

What advice does the QS provide when bidding for work?

A

The QS provides advice on the level of risk and financial exposure to the company, understanding market conditions and their impact on the project and rates.

41
Q

What is the goal of risk analysis?

A

To achieve a better understanding of identified risks and quantify their effects in terms of probability and impact.

42
Q

What is subjective probability in risk analysis?

A

It assesses a person’s confidence in a specific risk by having several professionals evaluate it independently to avoid bias.

43
Q

What does decision analysis involve in risk management?

A

It involves assessing risk exposure and attitudes, considering alternative options and outcomes, often using decision trees.

44
Q

How does sensitivity analysis work in risk management?

A

It adjusts a single input variable to determine acceptable parameters and identify variables most sensitive to change.

45
Q

How are intuition and experience used in risk analysis?

A

Risks are identified and their impact on time and cost is assessed through professional judgment.

45
Q

What is Monte Carlo simulation used for in risk analysis?

A

It changes variables simultaneously using triangular distribution and repeats the analysis 1,000 times to eliminate bias and generate an appropriate contingency fund.

46
Q

What is risk avoidance?

A

Changing the approach to avoid the risk completely, such as plotting an alternative excavation route to avoid underground cabling.

47
Q

How can risk reduction be achieved?

A

By reducing the probability or impact of the risk, which can include staff training, employing security, placing early material orders, and scheduling an earlier start on site.

48
Q

What does risk retention involve?

A

Considering and retaining the risk by the party best placed to manage it, such as the employer managing internal risks with sufficient contingency.

49
Q

How is risk transfer implemented?

A

Transferring the risk from one party to another who is better positioned to manage it, through contracts and insurances, and considering the cost of risk premiums against the potential financial impact.

50
Q

Can risk be calculated exactly?

A

No, risk cannot be calculated exactly; it can only be estimated to an extent, otherwise it wouldn’t be classified as a risk.

51
Q

What does risk calculation involve?

A

It involves assessing the probability of an event occurring and its potential impact if it does occur.

51
Q

What is Monte Carlo Simulation used for in risk management?

A

It is used for probabilistic risk analysis, assessing the probability of achieving certain targets by analyzing variables that change simultaneously.

52
Q

What methods can be used to assess risk?

A

Risk can be assessed using risk registers, workshops, and the team’s intuition and professional judgement to identify and evaluate risks in terms of cost and programme impact.

53
Q

How does Monte Carlo Simulation differ from other RM techniques?

A

Unlike techniques like Sensitivity Analysis that work based on one variable at a time, Monte Carlo Simulation uses random sampling to assess multiple variables changing simultaneously.

54
Q

What input does Monte Carlo Simulation require from the project team?

A

The project team provides a triangular distribution for each risk (optimistic, likely, pessimistic), which is then used in the simulation.

55
Q

What does the Monte Carlo Simulation process involve?

A

It involves multiplying the arithmetical mean by the probability, feeding it into software like ‘@ Risk’, and running the simulation 1,000 times to avoid bias.

56
Q

What distribution does Monte Carlo Simulation work on?

A

It works on a triangular distribution of minimum, maximum, and mean probabilities, requiring some professional judgement.

57
Q

What does EMV stand for in risk management?

A

Expected Monetary Value.

58
Q

How is EMV calculated?

A

EMV is calculated by multiplying the probability of the risk occurring by its impact.

59
Q

What does EMV help to establish in a project?

A

It helps to establish the overall monetary value of risks within the project.

60
Q

How is probability usually expressed in EMV calculations?

A

The probability is usually expressed as a fraction or percentage.

61
Q

How is impact usually expressed in EMV calculations?

A

The impact is usually a positive or negative monetary value.

62
Q

What is the initial step in organizing a risk workshop?

A

Forming a project team and appointing a facilitator.

63
Q

What does the workshop facilitator do before the workshop?

A

Briefs the team by issuing appropriate information about the scheme and the workshop’s purpose and objectives.

64
Q

What is one key operation performed during a risk workshop?

A

Identification of risks and generation of the risk register.

65
Q

What is involved in the identification of risk probability?

A

Assessing how likely it is that each identified risk will occur.

66
Q

What is involved in the identification of risk impact?

A

Determining the effect each identified risk would have if it occurs.

67
Q

What does allocation of risk items to the owner mean?

A

Assigning responsibility for each risk to a specific team member.

68
Q

What is agreed upon regarding upcoming actions in a risk workshop?

A

Upcoming actions, which are usually design-led, are agreed upon.

69
Q

What are review dates for each risk item used for?

A

Review dates are set for monitoring each risk item in following workshops.

70
Q

Are there any risks for client working on overseas projects?

A
  • Conditions of contract could be unfamiliar.
  • Legislation may be different from the UK.
  • Exchange rates may fluctuate causing price uncertainty.
  • Cultural ways of the workforce may be different resulting in different working hours.

APC (20 decks)

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