The Risk Register is a tool to assist Project Managers in identifying likely sources of risk and the impact they may have on achieving Objective 2 target expenditure. It seeks to build upon more general risk assessment guidance that has been provided by other regeneration programmes. Even early guidance provided for the SRB Challenge Fund (Guidance Note No. 3 Project Appraisal and Approval Dec 1995) acknowledged the need to identify and consider each component of risk. Later guidance (New Deal for Communities and Single Regeneration Budget Approval and Appraisal Oct 2000) went on to identify two main levels of risk firstly, risks that might prevent an option delivering anticipated results or outputs on the ground and, secondly, risks that might prevent outputs and results from being translated into long-term outcomes. Risk management is now seen as an integral part of good project and programme management and a robust assessment of risk needs to be undertaken to ensure that target spend (or claim) is achieved together with successful project implementation. The following Guidance Notes set out a recommended approach to risk assessment and a guide to the completion of the Risk Register. It is appreciated that a number of APPs already have risk management procedures in place. This Guidance is designed primarily to help other APPs in establishing their own systems, but it should also be used to ensure that any existing system is sufficient to meet GONWs expectations. Effective risk management will be part of GOs audit remit when looking at project management, in EPS six monthly monitoring visits, for example. The Guidance is structured around completing a risk register, in accordance with the process set out in the slides which accompanied the APP workshops held on 24th/25th February. It assumes a project-by-project approach but APPs may wish to deal with similar projects in groups. A proforma risk register is included at Annex A.
Claim element
next 1/4
Stage
Dec-03 whole life
Acquisition
Risk Impact Assessment The impact of the risk, should it occur, needs to be considered in time, cost and quality terms, as follows: Time: the impact on project programme (and particularly the timing of a claim) think in days/weeks/months Cost: the impact on claim value think in s Quality: the impact on outcomes or outputs think in terms of m2 office space, no of jobs, etc.
For each impact type, rate and score the likely effect as being Very low Low Medium High Very high 1 2 3 4 5
You may wish to set some parameters to define what you mean by each of these terms if different workshop participants are likely to have differing views on impact severity. The parameters might % impact or absolute (eg 5-10% of total cost or 2,500-5,000). Generally, zero or insignificant impact will score 1, whilst project-critical impact (ie so severe that it threatens to stop the project) will score 5 across one or more dimensions. You can then get a total impact score by simply adding up the values in the time, cost and quality columns. The Impact score will be a value between 3 and 15.
PROJECT NAME ID Risk F3 Title concerns delay sale
Time (T)
1-5
Cost (C)
1-5
Risk Probability Assessment This considers the likelihood of the risk occurring and is rated in terms of percentage chance. Again, a five-point scoring system is used. Very low Low Medium High Very high 1 2 3 4 5
A score of 1 would imply that the risk is very unlikely to happen, a medium score might imply a 50/50 chance, and a score of 5 would apply to a risk which is very likely to be realised. Risk Severity and Ranking The combined effect of impact and probability needs to be assessed to rate the overall severity of each risk. This is done by simply multiplying the Impact and Probability scores. The higher the resulting figure, the more significant the risk, and so risks can be prioritised and ranked accordingly
PROJECT NAME ID Risk F3 Title concerns delay sale C1 Weather delays construction M4 Initial estimates too low
T
1-5
C
1-5
Ranking 2 1 3
4 3 1
1 2 3
1 1 4
6 7 8
3 4 2
18 28 16
Ranking Mitigation 1 2 3 Transfer weather risks to contractor Engage lawyer early Get QS to review estimates
Maintenance of the risk register should be the responsibility of the Project Manager. Regular reviews should ensure that any new risks are captured and that mitigating actions are undertaken to address risks which remain current. Consideration should be given to reassessing the impact and probability scores for risks as the project progresses and as mitigating actions are completed: they are likely to change over time and risks should be re-ranked accordingly. Management effort can then be redirected to always focus on the most important risks at any point in time.
ANNEX B
GENERIC RISKS (ALL PROJECTS) SUB-CATEGORY Number of match funding sources Type of match funding sources Extent of commitment Partner approval or support State Aid approval Statutory approval (such as planning and highways) Funding approval Management capability Staffing capacity Failure to submit or process claims Obtaining suitable accommodation or equipment Maintaining accommodation or equipment Poor initial cost estimates Inflationary cost increases Insufficient demand for product or service 3rd Party actions leading to delay Under-spend Under-claim No claim Weather delays Costs associated with transfer of control to the private sector
CATEGORY Funding
Political Risk/Approvals
APP or Project Management Capacity and Capability to Deliver Accommodation and Equipment Cost Escalation & Over-run Market Risk Other Risks (please specify)
ADDITIONAL RISKS TO PRIORITY 3 & PHYSICAL PROJECTS CATEGORY SUB_CATEGORY Land Acquisition - Delay in completion of acquisition - Failure to acquire - Cost increases Unanticipated Site Issues Legal Risk Poor ground conditions Contamination Pollution Poor title rd Wayleaves/3 party rights Liabilities (such as environmental) Failure of contractors Under-performance of contractors Transfer of control and risk to private sector
Contractual Risk