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Nadine APC > Risk Management NK > Flashcards

Risk Management NK Flashcards

1
Q

What is risk defined as?

A

An uncertain event that will have an effect on the outcome of the project, should it occur.

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2
Q

What are the different types of risk according NRM1?

A

Design Development
Construction
Employer Change
Employer Other

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3
Q

List examples of different risks within the NRM 1 category ?

A

Design Development - third party risk, delays in tendering, procurement method

Construction - ground conditions, access restrictions/limitation

Employer change - change in quality, time, scope of works

Employer other - early handover, acceleration, availability of funds

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4
Q

How do you manage risk?

A

Identify
Assess
Control/Monitor
Record
Review

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5
Q

Can you give me some examples of risk in a construction project?

A

External risks: Brexit, Covid
Financial risks: exchange rate, inflation
Client risks: lack of experience, likelihood of post-contract changes
Design risks: inappropriate consultant team, incomplete/poor design
Contractor selection: inadequate selection process.
Construction: weather, buildability, H&S, availability of resources, ground conditions

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6
Q

How do you identify a risk?

A

Work collaboratively with stakeholders to identify everything that could go wrong with a project.

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7
Q

Why is risk management important in construction?

A
  • Projects are typically complex, all have time, cost and quality targets which must be met.
  • 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.
  • Risk is present in all projects and surveyors are routinely involved in making decisions which have a major impact on risk.
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8
Q

What would you do before spending risk?

A

Mitigate the risk by checking the following;
Reduce, transfer, avoid, risk,

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9
Q

What is risk allowance?

A

A sum included to cover unknown expenses or unmitigated risks during the project.

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10
Q

How do you carry out risk analysis and risk management?

A

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.

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11
Q

What happens to risk allowances if the risk does not occur?

A

If it’s a central contingency pot, this should be reduced proportionally as the project progresses.

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12
Q

What is the difference between qualitative and quantitative risk management?

A

Quantitative quantifies risks numerically 1-5.
Qualitative categorises them in descriptive terms such as low to very high.

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13
Q

What is risk management?

A

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.
All time, cost and quality targets must be met.

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14
Q

Tell me about the importance of risk registers?

A

Help to identify, analyse, monitor, manage and respond to potential hazards and risks.

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15
Q

What are the various risk response strategies?

A

Retain
Reduce
Transfer
Avoid
Share

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16
Q

What current challenges is Covid and/or Brexit bringing to Risk Management?

A

How do you allow for price increases?
Fluctuations in contracts
Who takes risk of covid?
Material delays

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17
Q

What is the difference between a hazard and a risk?

A

A hazard is the potentially detrimental event that could occur.
A risk is the probability and impact of that hazard occurring.

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18
Q

Can you expand on the Identify, Assess, Respond approach?

A

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.
Response actions aim to reduce the probability of the risk arising or to mitigate its impact should the risk arise.

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19
Q

What is an uncertain or unforeseen event?

A

A random event that defies prediction.

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20
Q

What is Risk Allocation?

A

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.

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21
Q

Describe the format of the risk register?

A

A risk register format will typically include:-
A description of the risk.
The risk owner.
A probability of occurrence.
The impact of its occurrence (£/wks).
Risk factors (probability x impact).
Actions required.
Review date.
Status (open or closed).

22
Q

What role does the QS play in Risk Management?

A

Assist in setting & managing contingency funds appropriately.
Undertake risk analysis to ensure accuracy of funds available & manage their release when no longer required.

23
Q

Can risk be calculated?

A

Risk can be calculated to an extent, but 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.

24
Q

What is Expected Monetary Value (EMV)?

A

EMV is the probability of the risk occurring multiplied by its impact.
Can be used to establish the overall monetary value of risks
within the project.
The probability is usually expressed as a fraction or percentage while the impact is usually a positive or negative monetary value.

25
Q

What is monte carlo simulation?

A

Uses computer software to predict the risk.

26
Q

What is a risk register?

A

A document listing all the risks identified for the project, explaining the risk qualitatively and quantitatively.

27
Q

How do you create a risk register?

A

All members of the project team come together and brainstorm elements of project risk.
All risks will be collated by the PM.

28
Q

How do you use the risk register?

A

Continually monitor risk items and assign likelihood and impact scores to each risk. Will give it an overall risk score.

29
Q

L1 - What methods are there to assess the value of a risk?

A

Probability trees and monte carlo simulation.

30
Q

L1 - How do you decide if a risk has passed?

A

It would be discussed within a risk workshop between the project team. For example, if asbestos had been identified on the risk register it would be removed following investigation and confirmation that there was none present.

31
Q

L1 - Have you participated in a risk workshop?

A

No, I have not participated in a risk workshop. I have been involved in progress meetings where the contractor has highlighted certain risks.

32
Q

L1 - How do you mitigate a risk?

A

You put appropriate actions in place to reduce the likelihood of the risk occurring.

33
Q

L1 - How would you score or weight a risk?

A

You apply a percentage to the risk, this is dependent on the likelihood of it occurring.

34
Q

L1 - What are the NRM1 measurement rules for risk and risk allowance?

A

Under NRM1 a risk allowance is calculated by estimating the risk allowance for:
design development risks
construction risks
employer change risks
employer other risks
These are calculated by multiplying the base cost estimate by a % probability.

35
Q

L1 - What current challenges is Covid and/or Brexit bringing to Risk Management?

A

How do you allow for price increases?
Fluctuations in contracts
Who takes risk of covid?
Material delays

36
Q

L1 - What is a Monte Carlo simulation?

A

A computer based software used for predicting risk.

37
Q

L2 - Project Zeta - How were the risks evaluated?

A

The project team assessed the risks and applied a probability percentage to them. This was multiplied by a rate to give a total risk allowance.

38
Q

What contractual mechanisms protect the client or contractor?

A

Performance Bond/PCG
Variations
LD’s

39
Q

How do probability trees work?

A

Tree diagrams are a way of showing combinations of two or more events. Each branch is labelled at the end with its outcome and the probability is written alongside the line.

40
Q

How does the monte carlo method work?

A

A random-number generator is used to run enough simulations to produce different outcomes that mimic real-life results.

41
Q

Can you provide some examples that relate to the NRM1 risk categories?

A

Design development risk - use during the design process to provide for the risks associated with design development i.e. planning requirements, environmental issues, tender delays etc.
Construction risk - allowance for use during the construction process to provide for the risks associated with site conditions i.e. ground conditions, existing services etc.
Employer change risk - allowance for use during both the design process and the construction process to provide for the risks of employer driven changes i.e. changes to scope of works, change in quality etc.
Employer other risk - an allowance for other employer risks i.e. acceleration, funding issues etc.

42
Q

What did you highlight in terms of risk for Argyll St.James? How did these risk influence how it would be priced?

A

In terms of how risk would be priced in each procurement
D&B - Risk on design and construction would be priced in their CSA
Traditional - construction is priced in this.

42
Q

What tools do you use to assess risk?

A

Monte Carlo - commuter generated simulation used to model outcomes.

42
Q

How did you assess risk in your project?

A

Impact vs probability

42
Q

Why is it important to track risk?

A

So you know the types of risks that affect the final outcomes and which strategies best to respond or mitigate them

43
Q

How do you calculate your contingency?

A

You can work out the level of contingency by pricing your risks and applying that to the contract sum
Risks / contract sum £1,000,000/ £50,000,000 = 2%

44
Q

What was the risk if proceeding with the works that is not instructed? What type of risk was that?

A

Proceeding with work that is not instructed can be a financial risk, and it can also lead to disputes between the client and contractor:

45
Q

Under the JCT when do you agree cost? What if the cost is critical?

A
46
Q

Why is it important to capture risk as early as possible? How do you do this?

A

A risk management workshop organised with all members of the design team coming
together to identity project specific risk items, risk register

47
Q

How do you know how to price risk?

A

workout the impact x probability x rate = Expected Monetary Value

48
Q

What risk do you allow for in your estimate?

A

Design development risk
Construction risk
Employer change risk
Employer other risk

49
Q

When would you use employer other risk?

A

-Early handover
-Acceleration
- Availability of funds
-LAD due to late provision of accommodations

Nadine APC (21 decks)

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