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Flashcards in Risk Management Deck (48)
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1

Define risk.

A risk can be defined as an uncertain event or
a circumstance that, if it occurs, will affect the outcome of a programme/project

2

Does risk only refer to threats?

No, risk is widely accepted to define risks and opportunities

3

What guidance note does the RICS produce on risk?

RICS professional guidance, UK - Management of risk,
1st edition

Effective 25 September 2015

4

What is an issue?

Issues are events that are happening now or imminently.

This differs from risks, which sit in the future.

5

What can lead to an issue?

Unmediated disputes, unaddressed concerns, unresolved decision making or risks that have evolved into issues

6

How should you manage risks and issues?

- Response plans

- Agreed action dates

Hold people accountable

7

What is a risk register?

A document that can be adopted during the early stages of the project, showing:

- Where the responsibility lies

- Likelihood of risk occuring

- Impact of risk should it occur

8

What are the different measures that can be taken to mitigate risks?

- Risk avoidance (serious, unacceptable, designed out)

- Risk reduction (unacceptable, reduce chance of risk or impact)

- Risk transfer to contractor (building programme risk better controlled by contractor, comes at risk premium)

- Risk sharing (often provisional quants employer risk and provisional rates contractor risk)

- Risk retained (risk allowance included in cost plan)

9

What are the general risk categories?

- Political and business risk

- Benefit risk

- Consequential risk

- Project risk

- Programme risk

10

What is political and business risk? Give an example.

A risk that has an adverse impact on the business as an ongoing concern.

This risk could come as a result of a benefit, consequential, programme or project risk.

For example, if there is a severe delay the share price for the business may fall due to lack of confidence in the organisation.

11

What is a benefit risk? Give an example.

The risk of failing to deliver the project to the performance required, undermining the long term business case (no benefit of the project).

For example, planning may limit size of scheme, reducing revenues through reduced net lettable space.

12

What is a consequential risk? Give an example.

Risk occurs as a result from another risk.

They may occur within the project, and can affect operations inside or outside of the project.

An example would be the disruption of activities due to the interruption of power supplies.

13

What is a project risk? Give an example.

A risk of something going wrong during the execution of the project. This may affect it's successful delivery.

Generally described in terms of quality/time/cost, an example is a provisional sum for unknown excavation works below the ground.

14

What is a programme risk? Give an example.

Risks that affect the programme as a whole, rather than individual projects. These risks concern decisions that transform strategy into action.

Examples include funding, organisational/cultural issues, quality, business continuity.

When project risks exceed set criteria and affect programme objectives, then they
would be escalated to the programme level

15

What NRM document defines risk categories?

NRM1

16

What are the risk categories as defined in NRM1?

- Design development risk

- Construction risks

- Employer change risks

- Employer other risks

A risk allowance for each forms part of a cost estimate (if required)

17

What are design development risks?

Risks associated with design development, changes in estimating data, third-party risks (e.g. planning, legal, environmental risks), statutory requirements, procurement methodology and delays in tendering

18

What are construction risks?

The risks associated with site conditions (e.g. access restrictions/limitations, existing buildings, boundaries,
and existing occupants and users), ground conditions, existing services, and delays by statutory undertakers.

19

What are employer change risks?

The risks of employer-driven changes (e.g. changes in scope of works or brief, changes in quality and changes in time).

20

What are employer other risks?

- Early handover
- Postponement
- Acceleration
- Availability of funds
- Liquidated damages or premiums on other contracts due to late provision of accommodation
- Unconventional tender action and special contract arrangements

21

What general risks can the project team control?

Project risks and consequential risks, however t it
should be ensured that the client is informed of other risks to enable development of their contingency plans

22

What is risk exposure?

The potential effect of a risk

23

What are the objectives of the risk monitoring and control process?

• review (monthly) the current risk profile and identify
changes in risk probabilities and impacts

• monitor (monthly) the implementation of risk responses
and implement any necessary changes

• update (quarterly) the risk register with any new risks
and associated responses based on changes in
project scope, project progress and changing risk
generators

• review (quarterly) the level of project risk management
maturity of each project in the programme.

24

Give an example of a major consequential event?

If there was a minor event that required the redecoration of a room, which had a knock-on effect of delaying PC and losing rental income for the client

25

What is a procurement strategy?

The procurement strategy identifies the most effective
approaches in successfully delivering a construction
project.

The strategy entails measuring the risks, benefits and cost, time and quality constraints to conclude and establish the most suitable procurement route and what contractual factors should be considered.

26

What is the difference between procurement strategy and procurement route?

The procurement strategy identifies what is required in terms of time/cost/quality/risk for a successful project delivery.

The procurement route will be chosen based on the procurement strategy.

27

List some factors that will affect a procurement strategy

• client type
• risk allocation
• time available
• cost certainty
• design development
• design responsibility
• specialist input
• BIM
• complexity of project
• change accommodation and
• contract administration.

28

Why might you want to quantify risk?

• to build a risk allowance that could be part of a
project contingency
• where clients need to report upwards in their organisation or to a third party
• where the project forms part of a larger programme of
projects
• to motivate people into following through management
actions
• where clients insist on it as part of their procedures or
have capped funds
• where it is desirable to link risk to contingency
• where it is required or provides comfort to funders or
other third parties

29

What is a probability tree?

A probability tree is a technique for determining the overall risk associated with a series of related risks.

30

What is the central limit theorum?

This is a mathematical technique used to provide a 90%
confidence level for a project contingency fund