Risk Management Flashcards
What is a ‘Risk’?
An uncertain event that, if it occurs, will affect the outcome of a project
Risk can refer to both positive and negative uncertainties
What is ‘Consequential Risk’?
A risk that may occur as a result of another risk occurring
What is an ‘Issue’?
Events that are happening now or will almost certainly happen in the future
What is ‘Risk Appetite’?
The willingness of a person or an organisation to accept risk
What is a risk register?
The willingness of a person or an organisation to accept risk
The purpose is to continuously monitor risks throughout the project period to minimize or mitigate the consequences
What are the NRM1 risk categories?
Design development risks
Construction risks
Employer change risk
Employer other risks (e.g. early handover, postponement, availability of funds etc.)
What is risk management?
Client’s risk appetite
Who is responsible for risk management
How risks will be identified, analysed, managed and reviewed
Frequency of risk review meetings
Software tools and techniques that will be used
Reporting forms and structures
Explain a typical risk management process? (5 main steps)
Identification – workshops, checklists, interviews, design review etc.
Analysis (qualitative and quantitative)
Management (risk response and management actions)
Review(s)
o Risk probability and impacts (monthly)
o Implementation of risk responses (monthly)
o Update risk register (quarterly)
o Risk management maturity (quarterly)
Reporting
What is a risk maturity model?
maturity.
What risk response and mitigation strategies are available?
Risk avoidance (where the impact is unacceptable) Risk reduction (where the level of risk is unacceptable) Risk transfer (pass responsibility to another party better able to control the risk) Risk sharing (where the risk is not entirely transferred and the employer retains some element of risk) Risk retention (employer retains risks that are not necessarily controllable – reduces as the project progresses)
Explain quantitative risk analysis (QRA)?
Calculation of cost or time effects of risk.
What is ‘expected monetary value?’
Multiplying the likelihood of the risk occurring by the size of the outcome (as monetised)
What are probability trees?
Technique for determining the overall risk associated with a series of related risks. Used to calculate ‘expected monetary value’ in more complex situations.
What is fault tree analysis?
Involves working back from a negative outcome to identify cause(s)
What is event tree analysis?
Find possible outcomes from an initial event - opposite of fault tree analysis
What is percentage addition?
Risk allowance is based on a percentage of the cost – should only be used for initial order cost estimates.
What is the simple method of assessment?
Likely cost is assigned to all risks in the risk register along with a probability. The cost is multiplied by the probability to give an expected value.
What is the probabilistic method?
More in-depth version of the simple method (sometimes called 3-point estimating) – best, likely and worst cases for each risk are prepared. The probabilities for all 3 should total 100%. An expected value per assumption is generated (probability x impact) which is totalled to apply an expected value to each risk.
What are the different type of risk?
Site (Ground conditions, asbestos, contamination) Design Construction Programme Client Stats Tender S106
What are the types of risk allowance?
Design development
Construction
Employer change
Employer other
What is design development risk allowance?
Allowance for use during design process to provide for risk associated with design development.
Planning requirements, legal agreements, covenants, environmental issues, stats, procurement process and tender delays
What is construction risk allowance?
An allowance during the construction process for the risks associated with site conditions, ground conditions, existing services and delays by stats.
What is Employer change allowance?
Allowance for both design and construction phases for changes made by the client
What is employer other risk allowance?
An allowance for other risks
Early handover, postponement, acceleration, availability of funds, LDs
How can a client minimize his design risk?
The client is able to minimize the design risk mostly through procurement by utilising a D&B contract.
Or through Contractors Design Portion
What does a risk register look like?
Description, priority, probability, value, owner, mitigation strategy
How do you identify risks?
A risk workshop where all parties can have an input
How to calculate a risk?
To provide an informed risk budget I would gather as much information as possible (workshop- Delphi)
Benchmarking
How to calculate the likelihood of a risk occuring?
Workshops, Monte Carlo, Central Limit Thereom
Who owns a risk?
Can be dependent on:
risk itself
procurement route
How are risks captured?
Risk register
Approaches to identifying risks?
Lists, brainstorming, delphi technique
What is risk allocation
To allocate to the party who can manage risk best
Benefits of Risk Management?
Increased confidence in achieving project objectives
Reduces surprises and cost/time overruns
Enable greater decision making
Encourages communication and collab
How to price risk at NRM1?
Risk allowances will typically be excluded from my cost plans and priced separately within the Risk Register
How are risks identified?
Risk workshops
Previous experiencdes
What are the techniques of valuing risks?
Expected monetary value Probabilistic method Central Limit Thereom Monte Carllo Route Means Square
Why are risks tracked?
Within progress meetings to potentially alleviate risks and to value risks throughout
Why is a QS so important to Risk Management?
Monitoring of the clients budget and costs
Risk protection included in the Contract?
Contract Type/Procurement Route Bonds Retention Materials on/off site Schedule of amendments
