Risk Management Flashcards
(39 cards)
Define risk in construction
An uncertain event or set of circumstances that should it occur, will have a negative effect on the project objectives.
What are the five different strategies for risk mitigation listed in NRM 1?
Avoidance
Reduction
Transfer
Sharing
Retention
Which risk mitigation measures do you undertake to limit the possibility of a claim on your firm?
Transfer - Insurances
Reduce -Clear scopes of service, deliverables, exclusions, and assumptions.
Reduce - Undertaking Quality Assurance checks to ensuring we provide a good quality and diligent service
Avoid - Only take on work within McBain’s competence.
How do you Share Risk?
Risk is not entirely transferred to one party
An example would be the use of CDP.
How do you Transfer Risk and what is the consequence?
- Change contract strategy to transfer design to contractor, achieving a reduction in the design development risk
- Risk transfer doesn’t come without its own risks
- Premium paid
Can transfer risk of site conditions e.g. underground obstructions
How do you Avoid Risk?
Looking at whether the risk of an element or the project on a whole is worthwhile
If unacceptable project could be cancelled or another design solution without so much risk adopted.
Redesign to consider different design solutions.
How do you Reduce Risk?
Redesign
More detailed design
Further Site Investigations
Cost Estimating
Different materials or engineering solutions
Different methods of Construction
Change contract strategy
How do you Retain Risk?
Risks retained by the client that are not necessarily controllable. This remaining risk is called the residual risk exposure.
Provisional sums - Potential for cost savings if can get a low quote later.
How are traditional contracts used to manage cost, time and quality risks?
Cost - Reduced tender as less risk for contractor but increased chance of variation cost increases
Time - Longer to get to tender, time risk due to variations sits with the client.
Quality - Client maintains control of the design
How are D&B contracts used to manage cost, time and quality?
Cost - Increased tender returns as contractor prices risk, but design development cost risk sits with contractor
Time - Quicker to get to site, time risk due to design development sits with contractor
Quality - Contractor takes on design development
What is the difference between project and construction risks?
Construction risks occur during the construction phase and relate to the contractor’s works.
Project risks are over the from conception through to completion and relate to achieving client project goals within the defined resources boundaries, such as time and budget.
What is EMV?
EMV stands for Expected Monetary Value. It is used to quantify the potential impact of uncertain events on project objectives, particularly concerning project costs and revenues. EMV = Probability (%) x Impact (£)
How were the risks score for probability?
In Expected Monetary Value, the risks are scored as a percentage of probability that they would happen with 1 the least and 100 the most likely.
How was the contingency calculated
The price of each risk was multiplied by the probability score that the risk would happen. This produced a Estimated Monetary Value for each risk and the sum of these EMV’s was used to form the planning/project contingency.
What are the risks listed in NRM1
Employers Change Risk
Construction Risk
Design Development Risk
Employers Other Risk
What are the risks listed in NRM2?
NRM2 refers to the BoQ listing residual risks (unexpected expenditure arising from risks that materialise, such as disposal of contaminated ground material), which the client wishes to transfer to the contractor.
The contractor is required to provide a lump sum fixed price for taking on the risk.
What is a residual risk in NRM2?
Whilst producing BoQ or other quantified document, there will still be a number of risks to be managed by the client and their project team. This is called the client’s residual risk exposure (or residual risks).
These can be dealt with in the following way
risk transfer to the contractor
• risk sharing by both the client and contractor, or
• risk retention by the client.
What are the risks listed in NRM3?
Risk allowances are treated as four separate cost targets that are used
to ‘top up’ other overspending cost targets as the project progresses. As an element overruns its cost target, a transfer is made from the appropriate risk allowance to allow for the increase. Similarly, if a cost target is likely to underrun, the surplus is transferred into the appropriate risk allowance.
The recommended cost targets are:
• design development and associated installation risks
• maintenance risks (unplanned/unscheduled risks)
• client – change risks, and
• client – other risks.
What are the differences between Employers Change Risk, Construction Risk, Design Development Risk & Employers Other Risk?
Design development risk - used during design process for risks associated with design changes
Construction risk - for use during the construction process to provide for the risks associated with site conditions, ground conditions, existing services and delays by statutory undertakers.
Employer change risk - use during both the design process and the construction process to provide for the risks of client driven changes
Employer other risk - early handover, postponement, acceleration, availability of funds
What is a risk register?
A risk register is a management document used to accumulate and track potential risks associated with a project
Used to organise, categorise and assign each risk
Highgate West - What process did you undertake to produce the risk register?
I would undertake a risk workshop, in this workshop I would:
Identify risks
Categorise risks
prioritise
assign
Decide the approach to each risk (STARR)
Following the workshop, I would monitor the progress of the risks.
Elleray Hall - Would you only include design development risk in a Design and Build pre-tender estimate?
Design development would be included in both D&B and Traditional contract PTE’s.
D&B requires design dev risk before the contract
Traditional requires design dev risk throughout the project
In D&B it would mainly be included within the expected tender figure as a contractor risk whilst with traditional it would be included as a client risk.
What does ACM stand for?
Asbestos Containing Material
Name three types of Asbestos?
Chrysotile - White Asbestos (imagine a white Christmas tile)
Amosite - Brown Asbestos (imagine a brown site filled with ammo)
Crocidolite - Blue Asbestos (imagine a blue crocodile with a light)
