Project Risk Management
DR S R Akoh
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Today’s code
XXXX
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Today’s session
• Sign in detail 44251
• Introduction
• Learning Outcomes
• Recap of week 2
• Introduction project risk
• Risks and the client
• Ranking of project risk
• Evaluating project risks
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Learning Outcomes
• Critically evaluate risks and uncertainties associated
with the appraisal of construction and property
developments
• Understand how risk to the clients business from a
project can be assessed
• Understand how the approaches to establishing a
project’s objectives contribute to the amount of risk in
achieving them
• Become familiar with the technical, commercial and
managerial risk factors of a project
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Recap from week 3
• Concept of project
communication
• The impact of poor project
communication
• Challenges of effective project
team communication
• Communication plan
• Communication channel
• Element of communication
• Communication approaches
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Introduction to risk management
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An introduction to Risk
Management – A discussion of
Risk & uncertainty
“it's better to be safe than sorry“
better the devil you know…”
nothing ventured, nothing gained“
“look before you leap“
You have to be in it to win
it!”
“got to speculate to accumulate”
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Risk - takes many forms
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Risk –Takes many forms
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Value & Risk Management - 2
sides of the same coin?
“These processes [VM and RM] are
fundamental to the successful delivery of
projects and should be used throughout the
life of the project”
OGC Procurement Guide 04: Risk and Value Management (2003)
[Link]/documents/[Link]
“unless value is clearly articulated at the outset and, later
delivered in the finished product, it will not be maximised
unless risk is identified and its consequences controlled, value
will be destroyed”
Michael F Dallas, Value & Risk Management (2006)
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Concept of value
Did you make a business or
personal decision this week
which involved risk?
Describe the situation in terms
of the risk involved.
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Concept of value
• Should a business
related to the built
environment (e.g.
contractor, client,
architectural practice,
QS firm etc,) attempt to
avoid risk - why?
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Risk and construction Project
“No project is risk free. Risk can be managed,
minimised, shared, transferred or accepted.
It can not be ignored”
Sir Michael Latham 1994
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Value & Risk - Scottish Parliament
building project
Holyrood Inquiry conclusions report
• 4 references to Value
Design competition, VFM and quality
Value
VE exercise “failed
miserably”!
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Value & Risk - Scottish Parliament
building project
36 references to Risk in the Holyrood Inquiry
conclusions
Client type
RISK Procurement
Risk Management
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Value & Risk - Scottish Parliament
building project
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Value & Risk - Scottish Parliament
building project
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Value & Risk - Scottish Parliament
building project
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Risk & Uncertainty
Work in groups 4 - 5
• Consider and- in your own
words…
- define risk and uncertainty as
succinctly as possible
- discuss whether there is a
difference between risk and
uncertainty
- define Risk Management as
succinctly as possible
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Risk, uncertainty and the Project
timeline
Risk is about information
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Typical broad risks on construction
projects
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Risk Management
…why limited? Only considers downside
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Consider any risk situation…
A risk event/situation involves risk exposure
Risk
Risk
Exposure
Response
-extent of loss/gain
- rational
assessment
- objective
properties
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Not just a rational logical process
…
Risk Risk
Exposure Response
Perception Attitude
- Subjective
- intuition, judgement, personal - Neutral
experience - Risk
- Often irrational/inconsistent -averse
Risk
- Influenced by.. seeking
…conditioning
…culture
…psychological make-
up 24
…professional training
Not just a rational logical process
…
Risk and its management is not necessarily a
rational, logical process!
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Construction Team & Risk
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Projects Risk Ranking
3 phase approach from Client perspective
• Method of establishing T, C, Q objectives for a
project
– How realistic are the expectations?
• Consequence for the business of failure to
meet targets
– How critical is the project to the client org?
• Risk features of the project itself (the
deliverable)
– How risky is the technical design and delivery of the project?
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Relationship of business to core
business objectives
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Evaluating Project Risk – 3 Phases
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Evaluating Project Risk – 3 Phases
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Evaluating Project Risk – 3
Phases
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Risk and the Client
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Risk and the Client
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Risk and the Client
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Any questions?
Thank you
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Tutorial Tasks
Discussion points
Work in Peers
• Review the assessment brief
with a peer to identify all the
risks associated with the
project described in the min
case study. With the help of a
risk register assess their
impact on the delivery of the
project and explain how each
of them can be effectively
managed.
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