Risk Management to L2 - 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

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

Answer 12

• 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 13

What is the Monte Carlo method?

Answer 13

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 14

What is risk allocation?

Answer 14

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 15

What are the risk
management strategies?

Answer 15

• 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 16

What are the benefits of risk management?

Answer 16

• 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 17

Why is risk management needed in construction?

Answer 17

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 18

Can you name a risk that was present on the Charles Street risk register?

Answer 18

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 19

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

Answer 19

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 20

What surveys were completed to ascertain the extent of ground risk at PBSA project? 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 PBSA project. 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 other projects for a similar ground risk.

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.

Question 23

How were risks identified and priced on the PBSA project?

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 the PBSA project?

Answer 24

The risk that works would be required to the external area which sits within the redline boundary.

Question 25

How did you manage the level of contingency on the PBSA project once a risk had passed?

Answer 25

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

For example, there was a concern that additional external works would be required to the pavements due to planning.

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.