Risk Management

Question 1

What is a ‘Risk’?

Answer 1

An uncertain event that, if it occurs, will affect the outcome of a project
Risk can refer to both positive and negative uncertainties

Question 2

What is ‘Consequential Risk’?

Answer 2

A risk that may occur as a result of another risk occurring

Question 3

What is an ‘Issue’?

Answer 3

Events that are happening now or will almost certainly happen in the future

Question 4

What is ‘Risk Appetite’?

Answer 4

The willingness of a person or an organisation to accept risk

Question 5

What is a risk register?

Answer 5

The willingness of a person or an organisation to accept risk
The purpose is to continuously monitor risks throughout the project period to minimize or mitigate the consequences

Question 6

What are the NRM1 risk categories?

Answer 6

Design development risks
Construction risks
Employer change risk
Employer other risks (e.g. early handover, postponement, availability of funds etc.)

Question 7

What is risk management?

Answer 7

 Client’s risk appetite
 Who is responsible for risk management
 How risks will be identified, analysed, managed and reviewed
 Frequency of risk review meetings
 Software tools and techniques that will be used
 Reporting forms and structures

Question 8

Explain a typical risk management process? (5 main steps)

Answer 8

 Identification – workshops, checklists, interviews, design review etc.
 Analysis (qualitative and quantitative)
 Management (risk response and management actions)
 Review(s)
o Risk probability and impacts (monthly)
o Implementation of risk responses (monthly)
o Update risk register (quarterly)
o Risk management maturity (quarterly)
 Reporting

Question 9

What is a risk maturity model?

Answer 9

maturity.

Question 10

What risk response and mitigation strategies are available?

Answer 10

Risk avoidance (where the impact is unacceptable)
Risk reduction (where the level of risk is unacceptable)
Risk transfer (pass responsibility to another party better able to control the risk)
Risk sharing (where the risk is not entirely transferred and the employer retains some element of risk)
Risk retention (employer retains risks that are not necessarily controllable – reduces as the project progresses)

Question 11

Explain quantitative risk analysis (QRA)?

Answer 11

Calculation of cost or time effects of risk.

Question 12

What is ‘expected monetary value?’

Answer 12

Multiplying the likelihood of the risk occurring by the size of the outcome (as monetised)

Question 13

What are probability trees?

Answer 13

 Technique for determining the overall risk associated with a series of related risks. Used to calculate ‘expected monetary value’ in more complex situations.

Question 14

What is fault tree analysis?

Answer 14

Involves working back from a negative outcome to identify cause(s)

Question 15

What is event tree analysis?

Answer 15

Find possible outcomes from an initial event - opposite of fault tree analysis

Question 16

What is percentage addition?

Answer 16

Risk allowance is based on a percentage of the cost – should only be used for initial order cost estimates.

Question 17

What is the simple method of assessment?

Answer 17

Likely cost is assigned to all risks in the risk register along with a probability. The cost is multiplied by the probability to give an expected value.

Question 18

What is the probabilistic method?

Answer 18

More in-depth version of the simple method (sometimes called 3-point estimating) – best, likely and worst cases for each risk are prepared. The probabilities for all 3 should total 100%. An expected value per assumption is generated (probability x impact) which is totalled to apply an expected value to each risk.

Question 19

What are the different type of risk?

Answer 19

Site (Ground conditions, asbestos, contamination)
Design
Construction
Programme
Client 
Stats
Tender
S106

Question 20

What are the types of risk allowance?

Answer 20

Design development
Construction
Employer change
Employer other

Question 21

What is design development risk allowance?

Answer 21

Allowance for use during design process to provide for risk associated with design development.

Planning requirements, legal agreements, covenants, environmental issues, stats, procurement process and tender delays

Question 22

What is construction risk allowance?

Answer 22

An allowance during the construction process for the risks associated with site conditions, ground conditions, existing services and delays by stats.

Question 23

What is Employer change allowance?

Answer 23

Allowance for both design and construction phases for changes made by the client

Question 24

What is employer other risk allowance?

Answer 24

An allowance for other risks

Early handover, postponement, acceleration, availability of funds, LDs

Question 25

How can a client minimize his design risk?

Answer 25

The client is able to minimize the design risk mostly through procurement by utilising a D&B contract. Or through Contractors Design Portion

Question 26

What does a risk register look like?

Answer 26

Description, priority, probability, value, owner, mitigation strategy

Question 27

How do you identify risks?

Answer 27

A risk workshop where all parties can have an input

Question 28

How to calculate a risk?

Answer 28

To provide an informed risk budget I would gather as much information as possible (workshop- Delphi) Benchmarking

Question 29

How to calculate the likelihood of a risk occuring?

Answer 29

Workshops, Monte Carlo, Central Limit Thereom

Question 30

Who owns a risk?

Answer 30

Can be dependent on: risk itself procurement route

Question 31

How are risks captured?

Answer 31

Risk register

Question 32

Approaches to identifying risks?

Answer 32

Lists, brainstorming, delphi technique

Question 33

What is risk allocation

Answer 33

To allocate to the party who can manage risk best

Question 34

Benefits of Risk Management?

Answer 34

Increased confidence in achieving project objectives Reduces surprises and cost/time overruns Enable greater decision making Encourages communication and collab

Question 35

How to price risk at NRM1?

Answer 35

Risk allowances will typically be excluded from my cost plans and priced separately within the Risk Register

Question 36

How are risks identified?

Answer 36

Risk workshops | Previous experiencdes

Question 37

What are the techniques of valuing risks?

Answer 37

``` Expected monetary value Probabilistic method Central Limit Thereom Monte Carllo Route Means Square ```

Question 38

Why are risks tracked?

Answer 38

Within progress meetings to potentially alleviate risks and to value risks throughout

Question 39

Why is a QS so important to Risk Management?

Answer 39

Monitoring of the clients budget and costs

Question 40

Risk protection included in the Contract?

Answer 40

``` Contract Type/Procurement Route Bonds Retention Materials on/off site Schedule of amendments ```