Risk Management (Level 2) Flashcards
How do you carry out risk analysis and risk management?
- If the project is being undertaken within a wider programme of similar projects, experienced clients may have access to risk registers from previous schemes that can be used as a starting point.
- A risk management workshop can also be organised with all members of the design team coming together to identity project specific risk items.
- The risk register can be updated during the meeting and will form the basis of risk management for the project.
- These risks will be continually monitored as the project progresses.
- Identified risks can either be removed or we can aim to reduce their probably of occurring and put in mitigation measures if they do occur.
What is risk defined as?
- An uncertain event that will have an effect on the achievement of the project objectives should it occur.
- Risks are measured in terms of their likelihood (probability) and consequence (impact).
What is risk management?
- A process for identifying, assessing and responding to risks associated with the delivery of an objective such as a construction project.
- Risk management establishes a set of procedures by which risks are managed.
- It comprises an intuitive approach where project teams look to manage risk in a more proactive manner.
Can you expand on the Identify, Assess, Respond approach?
- Identification takes place after the project and its objectives have been well defined.
- A risk cannot be effectively managed before it has been identified.
- Risk identification should be carried out as early as possible.
- Assessment can be carried out to determine the probability and impact of each risk item and its effect on cost, time and performance of the project. A qualitative approach can also be undertaken to describe the risk and effect on project performance.
- Response actions aim to reduce the probability of the risk arising or to mitigate its impact should the risk 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 or 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 are the stages of Risk Management?
- Identification.
- Analysis.
- Response.
- Monitor and control.
Can you give me some examples of risk in a construction project?
- External risks - for example include economic uncertainty, legislation changes and changes in government policy.
- Financial risks - for example include exchange rate changes or the increased cost of borrowing.
- Site risks - such as restricted access, planning difficulties and environmental issues can also be considered as further examples.
- Client risks - may include a lack of experience, a multi-headed client and the likelihood of post contract changes.
- Design risks - including an inappropriate consultant team, poor team ethos, an incomplete design or lack of design co-ordination.
- Construction and delivery risks - may include adverse weather, H&S and availability of resources.
What is Risk Allocation?
- Risks should be allocated to those who are best able to manage it, in a manner likely to optimise project performance.
- Financial allocation of risk should be achieved through the contract documents.
What are the benefits of risk management?
- Increased confidence in achieving project objectives and success.
- Reduced likelihood of cost and time overruns.
- The team understands and recognises the use and composition of contingencies.
- It enables decision making to be made on an assessment of known variables that are available.
- Risk management workshops can facilitate team development and encourage communication.
Describe the format of the risk register?
1) A description of the risk.
2) The risk owner.
3) A probability of occurrence.
4) The impact of its occurrence (£/wks).
5) Risk factors (probability x impact).
6) Actions required.
7) Review date.
8) Status (open or closed).
What role does the QS play in Risk Management?
Part of the whole Cost Management Process is to:
1) Assist in setting & managing contingency funds appropriately.
2) Undertake risk analysis to ensure accuracy of funds available & manage their release when no longer required.
3) Assist in the decision making process by providing estimates with a degree of certainty & carry out simulations to determine the level of risk.
4) Provide advice when bidding for work on the level of risk & financial exposure to the company with understanding of market conditions & impact on the project & rates.
What forms of risk response are available?
- Avoidance
- Reduction
- Retention
- Transfer
Can risk be calculated?
- Risk can be calculated to an extent with suitable provision being made for the risk however it cannot be calculated exactly otherwise it would not be classified as a risk.
- Risk involves the probability of something occurring & its potential impact in the event that it does occur.
- Risk can be assessed via a number of methods, the method I have most experience with is through using risk registers and workshop using the team’s intuition and professional judgement to identify risk & assess their impact in terms of cost & programme.
