Risk Management SoE Q's

Question 1

What is the definition of risk in NRM 1?

Answer 1

The likelihood of an event or failure occurring and its consequences or impact.

Question 2

What are the risk categories in NRM 1?

Answer 2

• Design development risk
• Construction risk
• Employer change risk
• Employer other risk

Question 3

What is a risk assessment?

Answer 3

An assessment of the risk to identify the likelihood and severity of the hazard occurring

Question 4

How do you create a risk register for a new project?

Answer 4

Project team engages in workshop and brainstorms as many elements of project risk as possible
Project Manager usually collates this and issues to the project team

Question 5

How do you use the risk register?

Answer 5

Continually monitor risk items identified in the initial risk register and make it a working document to identify project risks for the remainder of the project.

Assign ‘likelihood’ and ‘impact’ scores to each risk to give an overall risk score.

Question 6

What is simple method of risk assessment?

Answer 6

Most basic quantitative method for calculating a risk allowance on a project.

A likely cost is assigned to all risks in the register along with a, usually subjective, probability or occurrence.

The cost is then multiplied by the probability to give an expected value. The expected value for each risk is then totalled for an overall risk allowance.

Question 7

What is included within the guidance note on Management of Risk?

Answer 7

This details the types of risk under NRM1, and the ways in which risk can be apportioned/response/mitigation measures.

It further looks at procurement strategy and the cost, time and quality risks associated with the differing routes.

It also looks at risk quantification, including probability trees and the monte carlo method.

It further looks at qualitative and quantitative assessment, with examples shown on draft risk registers.

Question 8

How would you identify risks on a project?

Answer 8

I would identify risks on a project by participating in a risk workshop with other member of design team.

We would discuss potential risks on a project and include them within the risk register.

I would look at the probability of these risks occurring and price them accordingly to get the expected monetary value (EMV)

Question 9

Can you elaborate on how risk allocation differs between different procurement routes?

Answer 9

With design and build, the client relinquishes all design and construction risk, and this is absorbed by the contractor for a premium.

With traditional, the client takes the design risk, whilst the contractor takes the pricing risk and construction quality risk. If using a BoQ, the client takes the measurement risk.

With construction management, the client takes the risk in terms of management of trade agreements, the construction manager, as well as the pricing and design risk.

With management contracting, the management contractor takes the risk associated with trade contracts, programme and quality. The client takes the pricing and design risk, as well as risk associated with the management contractor.

Question 10

Can you name the NRM risk categories for me and provide an example of one?

Answer 10

• Design development risk (planning requirements, environmental issues)
• Construction risk (ground obstructions, adverse weather, existing services)
• Employer change risk (change in scope of works, change in quality/time)
• Employer other risk (acceleration costs, funding)

Question 11

What is a probability Tree?

Answer 11

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.

A technique for determining the overall risk associated with a series of related risks.

Question 12

What is the Monte Carlo method?

Answer 12

A computer generated simulation used to model outcomes.

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

Question 13

What is risk allocation?

Answer 13

Risks should be allocated to those best able to manage it, therefore risks are allocated to an ‘owner’ and recorded on the risk register.

Question 14

What are the risk management strategies?

Answer 14

• Avoidance (action to ensure risk does not occur)
• Reduction (if it does occur, impact reduced as much as possible)
• Transfer (risk transferred to another party)
• Share (shared between parties)
• Retention (kept by client)

Question 15

What are the benefits of risk management?

Answer 15

• Reduced cost / time overruns
• Increased confidence in achieving project objectives and success
• Risk workshops encourage communication between the team
• Enable informed decision making on assessment of known variables

Question 16

Why is risk management needed in construction?

Answer 16

Projects are typically complex and have time, cost and quality targets that must be met

Risk is present in all projects and surveyors are routinely involved in making decisions which have a major impact on risk

Used to reduce the impact of events that may cause failure to reach desired targets

Question 17

Can you name a risk that was present on the Project Zeta risk register?

Answer 17

A risk that was present was in relation to the LUX levels of the external lighting.

The architect was unsure whether the proposed levels would be satisfactory for planning approval and therefore an allowance was made within the register to account for any potential uplifts.

Question 18

How is risk captured within the various stages of cost planning?

Answer 18

Risk is captured during the various stages of cost planning as a % of the works. This % will be predicted using past project data as a reference point.

The risk % will be reduced as the works progress to account for a more detailed design and cost plan.

Question 19

How did you assess the time and cost impact for the ground risk on St Wilfrids? Could anything be done to reduce the risk?

Answer 19

The time and cost impact of the ground risk was determined by reviewing the allowances that were made during the prior development. The prior development had encountered ground issues and it was therefore thought that this project would be a good reference point. Appropriate uplifts were applied in respect of time and inflation.

In order to reduce the risk, I could have looked at instructing further surveys to firm up the nature of the ground conditions and in turn firm up the cost.

In addition, I could have estimated the price of the ground risk by looking at the contractors labour, material, plant and any associated profit they would apply.

Question 20

What surveys were completed to ascertain the extent of ground risk at St Wilfrids? How did you establish the extent of risk and how did you determine the value of the P.Sum?

Answer 20

A soil investigation was completed on St Wilfrids. This provided us with a breakdown of the varying ground strata.

The extent of the risk was established through discussions with the design team. A probability % was applied to the risk.

The value of the provisional sum was established by looking at the allowances that were made during the prior project for a similar ground risk. This was uplifted for time and inflation as this project was completed a few years prior.

Question 21

What are the main categories on a risk register?

Answer 21

• Description of risk
• Category of risk
• Risk owner
• Risk probability
• Risk impact
• Expected Monetary Value of Risk
• Mitigation measures
• Review date
• Status

Question 22

On a construction project, asbestos is identified which wasn’t identified pre contract? Who owns this risk?

Answer 22

The person that owns the risk will be the person that is best placed to deal with the risk.

This being the contractor in most instances.

For example, on one of my Toby Carvery projects, we encountered asbestos following the work starting. As the contractor was on site completing the works, they dealt with the encapsulation, management and removal of the asbestos.

Question 23

How were risks identified and priced on Project Zeta?

Answer 23

Risks were identified by setting up a risk workshop with members of the design team.

Potential risks on the project were identified and included within the risk register.

The risks were assigned a probability and priced to give an expected monetary value (EMV)

Question 24

What risks were identified on Project Zeta?

Answer 24

As mentioned within key issue 2 of my case study, the cost of the welfare unit was raised as a risk. The price of materials had increased, and the contractor had provided critical dates for ordering of materials to ensure there were no further increases or delay to programme.

Question 25

How did you manage the level of contingency on Project Zeta once a risk had passed?

Answer 25

Once a risk had passed, this was drawn down proportionally.

For example, there was a concern that the current lux levels of the proposed external lighting may not have been appropriate for local authority requirements.

I made an allowance for increasing these, but it was confirmed that the lux levels were appropriate and therefore the cost was drawn down appropriately.

Question 26

How much of the contingency was used to deal with risks that were detailed within the risk register?

Answer 26

In the end, none of the client’s contingency was required to be used and the project was delivered under budget.