Polytechnic University of the Philippines

Open University System

Master of Science in Construction Management

CM 659
Construction Risk Management

Planning Project Risk

Management

Danilo N. Pilar, Ph.D.

Subject Specialist
 PROJECT RISK
MANAGEMENT PLAN
➢ The Risk Management Plan (RMP) defines the
level at which risk management will be performed
for the project and the frequency of risk
management meetings and risk register updates.
➢ It lists the members of the Project Risk
Management Team (PRMT) by the various
disciplines involved in the project and sets a
budget for the risk management activities.
➢ The Risk Management Plan (RMP) should be
completed early in project planning, since it is
crucial to successfully performing the other
processes described herein.
➢ This step will ensure that the level, type,
and visibility of risk management are
commensurate with both the risk and
importance of the project to the
organization, provide sufficient
resources and time, and establish an
agreed‐upon basis for evaluating risks.
Basic Steps of Project Risk Management Plan

❖ Determine the scalability level for the project.

❖ Download the risk register for the scalability level if there
is already
❖ Determine the frequency of risk meetings for the project
and the applicable communication and accountability
checkpoints.
❖ Decide who will be on the Project Risk Management
Team.
❖ If significant effort or outside consultants will be involved,
include estimates for project risk management activities in
work plans.
❖ If applicable, obtain the necessary approvals for the
written RMP.
 The Project Risk Management Team

The Project Risk Management Team (PRMT) is the core

group performing, updating, and reviewing risk
management activities under the direction of the project
risk manager. The PRMT will include members of the
Project Development Team (PDT), but not necessarily all
members.

The Project Development Team (PDT) may not continue

regular meetings after RTL. Emphasize that the PRMT is
expected to stay together to manage risks until project
completion.
 INTEGRATING RISK MANAGEMENT
INTO THE PROJECT SCHEDULE

The project schedule (work plan) should

incorporate the following:
➢ Dates for project risk management meetings.
➢ Time to allow team members to prepare for
review of the risk register and risk responses.
➢ Milestones for communication and
accountability checkpoints.
 Project Risk Management Meeting
The first time that the Project Risk Management Team
(PRMT) meets, the project manager should brief the team
about the following:
❖ The importance and objectives of the project risk
management process.
❖ The process itself .
❖ The roles and responsibilities.
❖ The risk register.
❖ The communication and accountability check points.
❖ Risk management activities in the project schedule.
❖ Time charge codes for risk management activities.
❖ The expectation that risk will be managed,
documented, and reported.
At this first meeting, elicit risks from the team members.
If working to Level 2 scalability, determine the impact
and probability definitions so that the team has the
same understanding of the meaning of the word
descriptions.
The Project Development Team (PDT) may include
external stakeholders and agencies in addition to
organization personnel. At Project Development Team
(PDT) meetings, after regular Project Development
Team (PDT) business is concluded, the Project Risk
Management Team (PRMT) members from the PDT can
remain to conduct a project risk management meeting.
Examples of the Content of Risk Project Plan
1. Purpose. Includes methodology, roles and
responsibilities, budgeting, timing, risk categories,
definitions of risk probability and impact, probability
and impact matrix, stakeholders tolerances, reporting
formats, and tracking.
2. Risk Management Approval. Usually Project
Manager and the Project Sponsor .
3. Version History. Provide information on how the
development and distribution of the risk management
plan up to the final point of approval was controlled and
tracked.
4. Methodology. This section defines how risk
management will be performed for this particular
project. This risk management plan does not contain
any identified risk or their related risk response
strategies. It simply describes how to approach plan,
and execute all activities related to managing risks for
a particular project.
5. Roles and Responsibilities. This section describes
the roles and responsibilities of the project team
regarding the risk , risk identification, analysis,
response planning, and monitoring and control.
6. Budget. This section outlines the budget allocated to
performing risk management by the entire project
team.
7. Risk Management Schedule. This section contains
meetings for the purpose of discussing and making
decision on Project risk will be held. The risk
management identification, analysis and response
planning shall occur throughout the entire lifecycle of the
project; from Project Initiation Document (PID) through
Construction, including close-out.
8. Definition and Probability of Impact. The table shown
in this section can vary from project to project. See Risk
Management Handbook .
9. Stakeholder Tolerances for Risk. This section
describes the tolerance level of the project
sponsor/s in terms of risk to show those
stakeholders based on their level of influence on
the program in generating and responding to
program risk. It also considers the organization’s
culture regarding risk management.
10. Risk Reporting and Formats. This section
describes the risk related reports, and their format,
that will be used to communicate the project risks to
the interested project sponsors as well as
stakeholders. Typically a copy of Risk Register
Template can be attached to this Risk Management
Plan. The timing of disseminations of such reports
should also be contained in this section.
11. Risk Tracking. This section describes the process to
follow to track identified risks and to recognize any new
risks that may affect the program. It also describes how
the program’s risk management process will be
audited and the frequency of the audits, as well as the
process to document lessons learned based on the
program’s risk management activities.
12. Appendix. References
References:
Jutte, Bart, Risk Management Handbook
Jorion, Philippe, Value at Risk, 3rd Edition. New York:
McGraw-Hill, 2006. ISBN-10: 0071464956. ISBN-13:
978-0071464956.
Rejda, George E., Principles of Risk Management and
Insurance (11th Ed.), Addison Wesley publishers,
Boston, Mass.
Thank you
very much!