Risk Management Flashcards
(28 cards)
What is RISK
Uncertain event that if happens will affect the outcome of the project
What is difference between a hazard and a risk
Hazard: something that could potentially cause harm.
Risk: the degree of likelihood that harm will be caused
Types of risks (Management of Risk)
- Avoidance - Risks with such serious consequences they should be avoided all together (redesign)
- Reduction - Level of risk unacceptable, actions taken to reduce (more site investigations / use of different materials)
- Transfer to contractor - Risks that may impact programme transferred to another party that may be better at managing it (pay premium)
- Sharing risk - When risk not wholly transferred e.g. provisional quants, pricing risk to contractor, quantification risk to client
- Retention - Risks retained by employer, appropriate risk allowance made in cost plan
Risk categories in NRM1
**Design development risks **
- Allowed for during the design period
- To provide for design development, changes in estimating data, third party risks (eg planning requirements), statutory requirements, procurement methodology and delays in tendering
**Construction risks **
- Allowed for during the construction period
- To provide for risks associated with site conditions, ground conditions, existing services and delays by statutory undertakers
**Employer change risks **
- Allowed for during design and construction
- To cover the risk of Client changes (eg changes to scope, programme, quality)
**Employer other risks **
- Allowance for other employer risks (early handover, acceleration availability of funds/postponement)
Risk Managament Process
Risk Identification
Risk Analysis
Risk Response
Risk Manage
Risk Managament Under JCT and NEC
JCT Risk - Risk allocation, Insurance requirements, Design responsibility, Provisional sums
NEC Risk - Risk register, Early warning, CEs, Collab approach
How can a client minimise design risk
- Use trusted experienced design team
- Transfer the risk (D&B and CDP)
- Effective management of risk register
- Early contractor involvement
What is a risk assesment
Assesment of risk to understand liklehood and impact of them occuring.
What recourse is there in the contract to reduce client risk?
Collateral Warranty
Bonds
LAD’s
Third party rights
Dispute guidelines
Are you familiar with a risk register? Whats in it?
Risk
Liklehood
Impact
Cost Impact
Mittigation
Owner
How do you start a risk register on a project?
Organise a risk workshop to identify the risks
Under a NEC form of contract what is the relevant of a risk register?
It is a contract document along with the programe.
How would you allocate a risk owner for a risk item on a risk register?
By whome is best to manage it.
How should risk be allocated
The person or party best placed to manage
How often do you update risk assesment
Every time you go to site
What is a nominated subcontractor (how does risk work)
Nominated is selected by the client, they are part of contract docs and client has risk as they have insisted.
What is a named subcontractor (how does risk work)
Named or preferred by client but MC has risk.
What is the difference between a contingency and a risk allowance? And which one would you recommend?
Risk allowances are the “known” unknowns, such as underground utility conflicts,
Contingencies are for the “unknown” unknowns, such as changes in a project’s scope.
Why are early warnings important on NEC
Address potential risk before escalation - could affect TCQ
Key benefits of effective risk management
- Increased confidence acheiving objectives
- Reduce cost time overruns
- Workshops can encourage communication
How can project team reduce design risk for client
- Use trusted experienced team
- Trasfer design risk in procurement e.g. CDP or D&B
- Effective and regular management of risk register
- Early contractor involvement
General risk categories
- Political and business risks (client share price down due to delay)
- Benefit risks (Compliance with planning may limit size of scheme)
- Consequential risks (risk that occurs due to other risks, no power)
- Project risks (affect delivery of project, TCQ)
- Programme risks (affect job as whole funding)
Why quantify a risk
- Build risk allowance
- Client may need to report upwards
- Project forms part of larger programme of works
- Provide comfort to funders / third partys
A typical risk management strategy would cover
- Whos responsible
- How risks will be identified
- Frequency of meetings
- Reporting forms
- Software tools and techniques used
