Level 1 Questions Flashcards Preview

Risk Management > Level 1 Questions > Flashcards

Flashcards in Level 1 Questions Deck (63)
Loading flashcards...

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?

Design development
Construction risk
Employer change
Employer other


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
- Postponement
- Acceleration
- 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
life cycle.
- 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)


What are the reasons for quantifying risk on a project?

- to build a risk allowance (project contingency)
- Where clients need to report upwards in their organisation or to a third party
- Where a project forms part of a larger programme of projects
- To motivate people with management actions
- Clients insist as part of their procedures / capped funds
- provide comfort to investors / third parties