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RICS APC JC > Risk Management > Flashcards

Risk Management Flashcards

1
Q

In you initial cost estimate how much contingency did you hold? (Imperial Street)

A

This was at 10% and was advised based on a risk register which was compiled by myself following a risk workshop with the design team. We looked at the risk list of NRM1 and explored which risks were relevant to the project. The risks amounted to 5% of the contract value.

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2
Q

What is a risk?

A

Risk is an uncertain future event which would have an effect on the achievement of one or more project objectives.

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3
Q

What is risk management?

A
  • Proactive exercise designed to enable the identification, analysis and effective on-going management responding to risks.
  • A process of identifying, assessing and responding to risks associated with the delivery of an objective such as a construction project.
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4
Q

What are the key stages of Risk Management?

A

1) Identify
2) Assess/Analyse
3 )Respond
4) Monitor and control

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5
Q

Talk me through how you manage risk on your projects.

A

Risk management workshops where I fill in risk registers and these are monitored and updated at monthly intervals in order to mitigate the risks.

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6
Q

Did you have a risk register on your project? How was it formulated?

A

This was a document formed following a risk workshop with the project team. Each risks nature was explained qualitatively and quantitatively. This included the probability, impact, mitigation and risk owner of each risl.

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7
Q

How would you go about pricing a risk register?

A

Firstly I would identify the risks. I would then

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8
Q

What types of risks would you find under employers risks?

A
  • Funds
  • Planning refusal
  • Force majeure
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9
Q

What type of risks would you find under employer’s change?

A
  • Specific changes in requirements (i.e. in scope of works or project brief during design, pre-construction and construction stages).
  • Changes in quality (i.e. specification of materials and workmanship).
  • Changes in time.
  • employer driven changes/variations introduced during the construction stage.
  • Effect on construction duration (i.e. impact on date for completion).
  • Cumulative effect of numerous changes.
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10
Q

What type of risks would you find under construction risks?

A
  • Contaminated ground.
  • Adjacent structures (i.e. requiring special precautions). Invasive plant growth.
  • Tree preservation orders.
  • Ecological issues (e.g. presence of endangered species).
  • Environmental impact.
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11
Q

What type of risks would you find under design development?

A
  • Inadequate or unclear project brief.
  • Unclear design team responsibilities.
  • Unrealistic design programme.
  • Appropriateness of design (constructionability).
  • Ineffective design co-ordination.
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12
Q

What is a risk Mangement strategy?

A

STARR
S - Share usually through construction contract, exceptional adverse weather, EOT, not loss and expense
T - Transfer - through insurance
A - Avoid - action to ensure risk does not occur. Remove or alternative design/ method
R - Reduce - if a risk does occur the impact will be reduced as much as possible
R - Retain - nothing and keep the risk under control

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13
Q

How do you carry out risk analysis and risk management?

A

Produce a risk register

  • All members of the design team come together and brainstorm as many elements of project risk as possible
  • These risks are continually monitored throughout the project progress
  • Identified risks can be used to flag, prepare for and reduce the possibilities of their occurrence
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14
Q

What is a risk register?

A

A tool used in risk management to identify potential risks in a project

The register includes all information about each identified risk, such as nature of the risk, level of the risk, who owns it and what are the mitigation measures in place to respond to it

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15
Q

What approaches can you use to identify risks?

A

1) Research - similar projects / neighbouring sites
2) Structured interviews / questionnaires - with the project team
3) Checklists / Prompt lists
4) Brainstorming in a workshop environment
5) Risk Register
6) Database of historic risk

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16
Q

What is the aim of risk analysis?

A

It is concerned with trying to achieve a better understanding of the nature of the identified risks.

Risks have two dimensions that need to be analysed:

  • Probability - likelihood of the risk occurring
  • Impact - if the risk did occur, what effect could it have on the project objectives?

This allows you to determine which of the identified risks require detailed consideration (high probability with high impact) verses which only need a cursory glance.

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17
Q

What are the benefits of risk management?

A

1) Increased confidence in achieving project objectives
2) Reduced cost / time overruns
3) Enable decision making based on known variables
4) Risk Management Workshop facilitates team development and encourages communication

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18
Q

What is the use of probabilistic risk analysis?

A

It is a method of further evaluating a deterministic model using sets of random variables.

An example of probabilistic analysis includes the Monte Carlo Simulation

19
Q

What is Monte Carlo Simulation?

A 
A quantitative (probabilistic) risk analysis method.
It is used to model the probability of different outcomes in a process that cannot be easily predicted due to the intervention of random variables.

It is a technique used to understand the impact of risk and uncertainty in prediction and forecasting models.

It helps to visualise most or all of the potential outcomes to have a better idea regarding the risk of a decision.

It can be best understood by thinking about a person rolling dice. A novice playing craps for the first time will not have a clue what the odds are to roll a six in any combination (e.g. 2+4, 5+1, 3+3). Throwing the dice many times, ideally several million times, would provide a representative distribution of results which will tell us how likely a roll of six will be. Ideally we should run these tests efficiently and quickly, which is what Monte Carlo simulation does.

20
Q

What is the process of using Monte Carlo Simulation?

A

The first step in identifying any risk is to make assumptions on the probability and impact of the risk which will be based on either historical data, expert knowledge or past experience. Sometimes it will be based on guesswork.

Monte Carlo simulation takes the guess work out of predicting the probability and impact by randomly selecting a value within a range of uncertainty and calculating the likelihood of this value being the correct result. It does this by repeating the calculation many times (hundreds, thousands, millions of times) using other randomly selected values within the uncertainty range and comparing the results.

Monte carlo simulations can be used in situations where experience or expert knowledge is lacking to provide a statistically based value on the probability of a certain event occurring, or the probability of the outcome of that event

21
Q

What are the outputs of the Monte Carlo Simulation?

A

Monte Carlo simulation can be used to predict the most likely event and provide you with levels of confidence.

22
Q

What are the advantages of Monte Carlo Simulation?

A

1) Very flexible - virtually no limit to the analysis
2) Can generally be easily extended and developed as required
3) Outputs easily understood by non-mathematicians

23
Q

What are the disadvantages of Monte Carlo Simulation?

A

1) Usually requires a computer
2) Accuracy of the result depends largely on the accuracy of the input data
3) Complicated to produce

24
Q

What is residual risk?

A

A residual risk is one which is unforeseen, One which is not included within any risk register or pricing schedule.

25
Q

What is the 6 step risk management process?

A

1) Initiate (defining the project and context, critical success factors, parties to it and resources available)
2) Identify (find out what the risks are)
3) Analyse (analyse the risks in terms of likelihood (probability) and impact)
4) Evaluate (prioritize the risks determining their significance)
5) Respond to risks ( by implementing STIRR)
6) Monitor (checking, supervising and recording progress and change).

26
Q

What is a risk register for?

A

Risk assessment and risk monitoring. They supplement and analyse the information contained on the register, probability and impact matrices are commonly used to determine the significance of individual risks.

27
Q

What are procurement route factors?

A
  • Client type
  • Risk allocation
  • Time available
  • Cost certainty
  • Design development
  • Design responsibility
  • Specialist input
  • Complexity of project
28
Q

How can risks be quantified?

A
  • Probability tree
  • Central limit theorem (mathematical technique used to provide a 90% confidence level for a project contingency fund).
  • percentage addition
  • Monte carlo
29
Q

What is central limit theorem?

A 
For quantifying cost only risks, a simple mathematical formula is applied, which is derived from the central limit theorem.
Risk allowance for 90% confidence =
?Pi x Ei +1.3 x v? (Ei2 x Pi) x (1 - Pi)
Ei= estimate for risk
Pi - the probability of the risk
30
Q

What is the order for a risk response?

A 
Avoid
Reduce
Transfer
Share
Retain
31
Q

List 5 risks which were on the Imperial Street risk register.

A
  • Contamination in the ground
  • Planning issues
  • Rights of light
  • Agreeing GMP with contractor
  • Underground sewer
  • Works to river wall
  • Diversion of services
  • Party wall
32
Q

What are the 3 types of contamination?

A
  • Inert
  • Contaminated
  • Non-contaminated
33
Q

Are risk registers typically part of your quantity surveying scope of services?

A

x

34
Q

What is qualitative in terms of risk?

A

This is when risk is identified in terms of the likelihood and magnitude.

35
Q

Was there a risk management plan on Imperial Street?

A

This was to regularly review the risk register at monthly intervals to decide on the impact, likelihood, mitigation strategies, cost and status of risks. Risks were to be decided on their management strategy which include avoid, reduce, transfer, share retain.

36
Q

What should be captured in a risk register?

A
  • Risk title
  • Likelihood/ probability
  • Risk category
  • Consequence
  • Date register was last modified
  • Action completion dates
  • Risk number
  • Description
  • Action owner
  • Risk status
  • Impact
  • Response category
  • Risk owner
  • Response actions
37
Q

How are risks measured quantitatively?

A

Where risks can be quantified in terms of cost and time.

38
Q

What happens in risk workshop meetings?

A
  1. Delete all closed or passed risks
  2. Add and assess new risks, assigning new actions as necessary
  3. Review progress of management actions and revisit them as appropriate
  4. Update assessments for all identified risks and assign new actions as necessary
  5. Recalculate the risk allowances if risks are quantified
  6. Update and reissue the risk register after each review
  7. Report back on the effectiveness of risk management
  8. Repeat the process regularly
39
Q

What are specified perils?

A

This insurance may cover all risks, or may be restricted to certain ‘specified perils.’ such as Fire, lightning, explosion, storm, escape of water, earthquake - contractor entitled to EOT and covered by contractors all risk insurance.

40
Q

What is force majeure?

A

Contractor entitled to EOT.

41
Q

What is a net contribution clause?

A

The amount that can be recovered from one party can be limited by a net contribution clause. This restricts liability to the amount for which the party being pursued is responsible. Other amounts must be recovered from the other parties. Net contribution clauses assume that parties responsible for the same loss or damage are all contractually liable to the other party to the contract, and that they have paid the share that they would have been apportioned under common law.

42
Q

What is the delphi technique?

A

The Delphi method is a forecasting process framework based on the results of multiple rounds of questionnaires sent to a panel of experts. Several rounds of questionnaires are sent out to the group of experts, and the anonymous responses are aggregated and shared with the group after each round. The experts are allowed to adjust their answers in subsequent rounds, based on how they interpret the “group response” that has been provided to them. Since multiple rounds of questions are asked and the panel is told what the group thinks as a whole, the Delphi method seeks to reach the correct response through consensus.

43
Q

What is a risk allowance and why is it important?

A

A risk allowance is an estimate of what the risk could cost if it occurs. It is important because this allows the client to better forecast the out-turn cost of their project.

RICS APC JC (20 decks)

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