What is a risk ?
Risk is an uncertain event
that may have a positive
or negative impact on the
project.
Risk management is
the process of identifying
and migrating the risks
What is a Risk?
Unknown
endeavor
Risk
Unexpected
action
Undesirable
Unpredictable
Success
Cost
Project
Constraints
Quality
Time
Cost
overrun
Risks
Poor
Quality
Project
Constraints
Delays
Why is it important?
Risk affects all aspects
of your project your budget,
your schedule, your scope,
the agreed level of quality
and so on
Increase probability of
positive event
Reduce the occurrence of
negative event
Risks in Construction
Economic Factors
Client
Social Factors
Quantity
Survey
Architect
Project
Manager
Engineer
Environmental Factors
Supplier
Contractor
Inspector`
Political Factors
Acts
of
God
Risks
Political
&
Environ.
Const.
Related
Design
Acts
of
God
Acts of God
Flood
Earthquake
Risks
Landslide
Fire
Wind damage
Political
&
Environ.
Const.
Related
Design
Acts
of
God
Physical
Damage to structure
Damage to
equipment
Risks
Labor injuries
Fire
Political
&
Environ.
Const.
Related
Theft
Design
10
Acts
of
God
Inflation
Availability of funds
Risks
Political
&
Environ.
Exchange rate
fluctuations
Const.
Related
Financial default
Design
11
Acts
of
God
Changes in laws
and regulations
Risks
Requirement for
permits
Law & order
Political
&
Environ.
Const.
Related
Design
12
Acts
of
God
Design
Incomplete design
scope
Defective design
Risks
Political
&
Environ.
Const.
Related
Inadequate
specifications
Design
13
Acts
of
God
Construction Related
Labor disputes
Labor productivity
Risks
Different site
conditions
Design changes
Political
&
Environ.
Const.
Related
Equipment failure
Design
14
Risk Management
A systematic approach to
control the level of risk to
mitigate its effects.
The objectives of project
risk management are to
increase the likelihood and
impact of positive events,
and decrease the likelihood
and impact of negative
events in the project.
15
17
18
19
20
Identify risks
Identify Risks is the process of
determining which risks may affect
the project and documenting their
characteristics. The key benefit of
this process is the documentation
of existing risks and the knowledge
and ability it provides to the project
team to anticipate events.
22
23
Risk Analysis
Estimating the potential impacts of risk to decide what risks to retain and what risks
to transfer to other parties
Risk Analysis
Techniques
Quantitative
Qualitative
Probability analysis
Ranking options
Sensitivity analysis
Comparing options
Simulation techniques
Descriptive analysis
24
Risk Response
Risk Response Methods
Elimination
Transfer
Retention
Reduction
27
Risk Response
Risk Response Methods
Elimination
Transfer
Retention
Reduction
28
Risk Response
Risk Response Methods
Elimination
Transfer
Retention
Reduction
Risk Transfer
Two basic forms.
(a) The activity responsible for the risk may be transferred, i.e.
hire a subcontractor to work on a hazardous process
(b) The activity may be retained, but the financial risk
transferred, i.e. methods such as insurance.
29
Risk Response
Risk Response Methods
Elimination
Transfer
Retention
Reduction
Risk Retention
Handling risks by the company who is undertaking the project.
Two retention methods, active and passive.
Active retention is a deliberate management strategy after a
conscious evaluation of the possible losses and costs of
alternative ways of handling risks.
Passive retention occurs through negligence, ignorance or
absence of decision.
30
Risk Response
Risk Response Methods
Elimination
Transfer
Retention
Reduction
Risk Reduction
Continuous effort.
Related with improvements of a companys physical, procedural,
educational, and training devices.
Improving housekeeping, maintenance, first aid procedures and
security.
Education and training within every department .
31
32
33
34