Risk Management Flashcards
How do you carry out risk analysis and risk management?
- Produce a risk register.
- All members of the design team come together and brainstorm as many elements of project risk as possible.
- These risks will be continually monitored throughout project progress.
- Identified risks can be used to flag, prepare for and reduce the possibilities of their occurrence.
What is a risk register?
Is a risk management tool acting as a store for all risks identified and includes additional information about each risk
How do you use the risk register?
- Continually monitor risk items identified in initial risk register and make it a working document to identify project risks for the remainder of the project.
- Assign levels of likelihood to each risk identified in an attempt to iron out the possibility.
What is Monte Carlo simulation?
A study on risks based on random sampling.
What is risk defined as?
- An uncertain event should it occur will have an effect on the achievement of the project objectives measured in terms of likelihood (probability) and consequence (impact)
What is risk management?
- A process for identifying, assessing and responding to risks associated with delivery of an objective such as a construction project.
- Establishes a set of procedures by which risks are managed.
- Formulates an intuitive approach to risk which project teams often undertake to manage risk in a more proactive manner.
Can you expand on the Identify, Assess, Respond in terms of risk management?
- IDENTIFICATION: Takes place after the project and its objectives have been well defined. A risk cannot be effectively managed before it has been identified! Should be done as early as possible.
- ANALYSE: Assessment of an individual and combined effect of identified risks on the successful delivery of the objective. Analysis = likelihood (probability) and consequence (impact) Qualitative: Describes risk and effect on project performance, Quantitative: Sensitivity and probability analysis: mathematical probability and numerical consequence (time, cost and performance).
- RESPONSE: Actions to reduce the probability of the risk arising or the significance of its detrimental impact should it arise.
What is a “Risk Event”?
- 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.
What is an uncertain/ unforeseen event?
A random event that defies prediction.
Why is risk management needed in construction?
- 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.
- Risk management cannot eliminate risk, but techniques can be used to reduce the impact of events that may cause failure to reach the desired targets.
What is the purpose of risk management?
- Risk events can be managed, uncertain events cannot. Fundamental rule of risk is to reduce uncertainties to a minimum.
- Events have a likelihood of occurring (probability) and a consequence (impact)
- Impossible to manage uncertainties, usual way to manage them is to include programme float and/ or contingency.
What are the stages of Risk Management?
- IDENTIFY
- ANALYSE/ ASSESS
- RESPOND
- MONITOR AND CONTROL
What approaches can you use to identify risks?
- Assumption analysis: previous experience categorised as:
- High prob/ high impact, high prob/ low impact, low prob/ high impact, low prob/ low impact.
- Lists, brainstorming, Delphi techniques (Design team, client, contractor individually identify risks prob/ impact in questionnaires, info collected and reported against)
Can you give me some examples of risk in a construction project?
a. External risks: economic, legal, political
b. Financial risks: exchange rate, funding
c. Site risks: Restricted, occupied site, planning difficulties, access, environmental
d. Client risks: lack of experience, multi-headed client, likelihood of post contract changes.
e. Design risks: inappropriate consultant team, poor brief, incomplete design, co-ordination.
f. Selection of appropriate contractor: inadequate selection process
g. Construction and delivery risks: weather, constructability, H&S, availability of resources.
What is a risk management strategy?
a. Avoidance: action needs to be taken to ensure risk does not occur. E.g. remove or alternative solution considered- different design, method
b. Reduction: If such a risk does occur the impact will be reduced as much as possible. Alternative solutions: need to ensure adequate man power and budget are dedicated to mitigating the risk.
c. Transfer: transfer the risk through sub-letting or insurance
d. Share: Usually achieved through the construction contract: exceptionally adverse weather EOT but not direct loss and/ or expense.
e. Retention: Noting and keeping the risk and controlling it. Must ensure dedicated man power and budget are dedicated to monitor and control it.
