Flashcards in Level 1 Questions Deck (63)
What is a risk?
an uncertain event or circumstance that, if it occurs, will affect the outcome of a programme/project
What is Risk Management?
a structured process integrated in to construction projects to manage risk throughout the project lifecycle
What is an issue?
events that are happening now or will almost certainly happen in the future, and therefore require more immediate action than risks.
Give some examples of issues.
Examples of issues include unmediated disputes, unaddressed concerns, unresolved decision-making or risks that have occurred which therefore become an issue.
How does NRM1 categorize risk?
What are some examples of design development risk?
- Design development
- changes in estimating data
- Third party risks (planning requirements, environmental issues, legal agreements)
- Statutory requirements
- Procurement methodology
- Tendering delays
What are some examples of construction risk?
- site conditions (e.g. access, existing buildings)
- ground conditions
- existing services
- delays by statutory undertakers.
What is employer change risk and give some examples?
- Employer driven changes
- Used during design and construction phases
- Examples include changes in scope / specification, changes in quality, changes in time
What are some examples of employer other risk?
- Early handover
- Availability of funds
What are the ways to deal with risk as outlined in NRM?
- Risk avoidance
- Risk reduction
- Risk transfer
- Risk sharing
- Risk retention
Explain risk avoidance.
Where risks have serious consequences and are unacceptable, RA techniques may include re-design, review of employer’s brief, or project cancellation.
Explain risk reduction.
level of risk is unacceptable and steps taken to reduce this; further site investigation to improve information, using different materials/suppliers to avoid long lead times or using different construction methods.
Explain risk transfer.
Risk is transferred so it is dealt with more effectively. Accepting the risk would not provide the client with value for money. Premium to be paid (includes transferring to contractor or taking out insurance)
Explain risk sharing.
the risk is not wholly transferred to one party and some elements of the risk are retained by the employer; usually dealt with by provisional quantities (employer retains quantity risk, contractor takes on cost risk).
Explain risk retention.
the appropriate risk allowance identified in the cost plan will be reserved and managed by the employer.
Explain the General Risk Categories outlined in NRM.
- Political and Business Risk
- Benefit Risk
- Consequential Risk
- Project Risk
- Programme Risk
Explain political and business risk.
The occurrence of one of the project, programme, consequential or benefit risks that breaks out into the public domain and has an adverse effect on the business as an ongoing concern e.g. drop in share price
Explain benefit risk.
The failure of the project to deliver the performance expected, leading to an undermining of the long-term business case
Explain consequential risk.
Risks that may occur as a result of other risk (knock-on effect) e.g. interruption of power supplies = delay to activities.
Explain project risk.
Risks that could affect the successful delivery of the project (considered in terms of time, cost & quality)
Explain programme risk.
Risks that impact on the programme as a whole, rather than individual projects e.g. funding
What risks a project team manage?
Normally the project team can only manage the project risks and some of the consequential risks directly, but it should be ensured that the client is informed of other risks to enable development of their contingency plans. The client is most concerned with business and benefit risks.
Why is it important to continually manage risk throughout the project lifecycle?
Risk exposure (i.e. the potential effect of risk) changes as the building project progresses: continually managing the risks is therefore essential. As the design evolves, more of the project requirements are defined, and a risk response can be decided.
What is the residual risk exposure?
The remaining risk retained by the employer
Explain the importance of understanding the interrelationships of risks on a project.
The risk manager should be able to communicate and liaise across the boundaries of risk interrelationships. Identifying, assessing and tracking down interrelationships of risks are essential parts of the risk management process.
Key items to consider when recommending a procurement route?
- Funding (cost): the total costs for the delivery of
the construction project and the client’s availability
and accessibility of finance throughout the project
- Time: certainty of completion date and any flexibility
in delivery date.
- Performance (quality): the desired performance
functionality and standards of quality.
Determining a suitable construction procurement strategy will depend on a number of factors, such as:
• client type (private / public, experience)
• risk allocation
• time available
• cost certainty
• design development
• design responsibility
• specialist input
• complexity of project
• change accommodation and
• contract administration
Name some risk quantification techniques.
• Simple method of assessment (Expected monetary value)
• Simple method of assessment
• Probabilistic method
• Monte Carlo Simulation
• Percentage addition
• Risk probability trees
• Fault Tree Analysis
• Event Tree Analysis
• Sensitivity Analysis
• Central Limit Theorem
How do you quantify risk on your projects?
Multiplying the likelihood of the risk occurring by the size of the outcome (as monetised)