Risk Management Level 1

Question 1

What is risk?

Answer 1

A risk is an uncertain event or set of circumstances that, should it occur, will have a negative effect on the project’s objectives.

Question 2

Provide an example of risk?

Answer 2

An example of risk is the potential presence of asbestos in a building.

Question 3

How is procurement risk dealt with through the contracting process?

Answer 3

Through:
- risk assessments
- selecting the right procurement method
- prequalification of suppliers & contractors
- incorporating risk mitigation clauses such as liquidated damages and early warnings
- through regular monitoring and communication
- financial monitoring of a contractor

Question 4

How would a pre-contract risk register compare to a post-contract version?

Answer 4

Pre-contract:
1. identify and assess potential risks
2. Potential risks & mitigation strategies
3. Contract negotiation & project feasibility
4. Informs decision-making and negotiations
5. Engages stakeholders for input on potential risks

Post-contract:
1. Monitor & manage actual risks
2. Actual risks, ongoing assessments & updates
3. Project execution & risk management
4. Serves as a living document for active management
5. Use by project teams for ongoing monitoring

Question 5

How is risk categorised under NRM?

Answer 5

Design Development Risk
Construction Risk
Employer’s Change Risk
Employer’s Other Risk

Question 6

Why would using a % not be a good idea for calculating risk?

Answer 6

Risk allowances should be properly considered and assessed through quantification, a standard percentage doesn’t provide for this - in that it has no real basis, could be far too high or far too low.

%’s lack the depth and context necessary for effective risk management.

Question 7

How does risk management differ through RIBA Stages 0-7?

Answer 7

Through the RIBA stages, risk management evolves from high-level assessments in the early stages to detailed, proactive management during construction and post-occupancy evaluations. Each stage builds upon the previous one, refining the understanding of risks and developing strategies to mitigate them effectively. This approach ensures that risks are identified, assessed and managed throughout the entire lifecycle of a project.

Question 8

How can you mitigate the risk of inflation in a contract?

Answer 8

1. Fixed price contracts with adjustment clauses - allowing for adjustments based on inflation indices
2. Contingency allowances
3. Regular price reviews
4. Use of indexed pricing

Question 9

What are the ‘4 T’s’ of risk mitigation methods?

Answer 9

Tolerate
Terminate
Treat
Transfer