An Analysis Of Risk Management Planning Construction Essay

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This document describes how Risk Management will be structured and performed on this project. The risk management plan includes the methodology, constraints, roles and responsibilities, categorization of risk, probability impact matrix and identifying risks involved in the main functions associated with the project.


The objective of the Risk Management Plan is to define the strategy to manage project-related risks such that there is acceptable minimal impact on cost and schedule, as well as operational performance. The purpose of the Risk Management Plan is to establish an approach to monitoring, evaluating, and managing risks throughout the life of the project. The lifecycle of the project is as follows:

→Site Evaluation →Preliminary design →Design approval by client and final design

→Construction →Handover →Remedying faults

The activities involved in the project lifecycle will be briefly explained as separate to the risk management process. The constraints accruing to the project are also outlined and state the relative limitations which may lead to inefficiencies in cost and scheduling.

The categorization of the risks and its respective probabilities will also be determined and a risk matrix will indicate the levels of risks that can be accrued.

Four important aspects in the business process are taken into consideration, namely cost, safety, schedule and performance. Various risks associated with these business functions are categorized. These specific business functions are highlighted because they define the whole process and are the basic aspects looked upon during risk assessment

The Risk management process will be explained by the following flow chart-


The table below gives an overview to the probable constraints facing the project.

Limited access

The site is bounded by housing on three sides and a railway track on the other side.

There is only one access which is over the railway.

Limited capacity of the bridge and transfer of various structures which are constructed off-site which need to be transported to the site.


Lack of time

Assembling can only take place in summers

Risk of Schedule failure.

Third-party involvement

Lack of communication may cause hazardous consequences

Performance of the contractor maybe below par and in some cases bankruptcy may also be a major concern.

Penalties/ social constraints

Expensive penalties on the disturbance to the rail services.

Difficult to maintain a streamlined construction process without having to cause the railway service to be postponed or rescheduled

Minimized disturbance to surrounding area, construction process needs to be extra cautious


Steel used for the construction is non-interchangeable and non-standard

Any differences which are in the planned design and the end product cannot be mended

New technology

Skilled professionals need to be employed

Complexity problem

Technology not proven

Unreliable performance record of vendors

Inexperience with the technologies to be used

Vendor infrastructure is not sound

Project Lifecycle

Site evaluation

Evaluation of the site, arranging utilities and organizing the site layout so as to provide a storage area and office space in order to work efficiently.

Efficient record-keeping process established

Suitability to various assessments regarding previous hazard assessments, determining whether additional works are required to render the site viable for development or whether land use should be restricted to reduce vulnerability to natural hazards.

Consideration of re-siting to a location of reduced risk is an option: Topographical features and landscape can be used to reduce the impact of potential natural hazards (e.g., to minimise flood risk or modify wind-speed and wind direction).

Preliminary Design

Satisfying the hazard safety objectives.

To consider limitations of finance, construction skills and the availability of material

To ensure that the environmental and social aspects of the proposed solution is acceptable, develop a procurement strategy that provides overall value for money and resources during the entire life of the service

Assessing the competency of the contractor, consideration of the level of necessary site supervision and building aids and guidelines, accounting for local hazard conditions, building material characteristics, constructions skills and quality and using results from previous assessments

Design approval by client and final design

Development into definitive plans and elevations by the design team.

The colours, patterns, materials, lighting fixtures, and special equipment and building elements are selected and reviewed with the building committee.

Detailed floor plans, sections, elevations and an outline specification defining materials, finishes and systems, as well as an updated construction cost estimate, are submitted for review and approval by the building committee and appropriate college representatives.


Marks the transition from project delivery to occupation and operations.

Strategic objectives of the handover stage ensured so as to confirm the building is free from identified defects, it is fully functional and operational and also to prevent disruption to operations during the handover transition.

A handover strategy is transferred from the design and construction team to the operational and maintenance staff improving the latter's ability to manage short and long term performance of the building.


Mobilization to construct the project.

Clear contractor procedures and rules should be issued and each individual worker should be trained.

Frequent construction meetings for updates and issue resolution take place.

A construction phase plan constructed so as to comply with the law and avoid prosecution and effectively plan and manage health and safety to prevent accidents during larger construction projects.

Remedying faults

Prediction of the effectiveness of any action to correct defects.

Necessitates to take account of the intended use of the building and to obtain a comprehensive understanding of the causes of the defects and of the resultant damage.

If faults exist, the wisdom of intervention will depend on various factors, such as the balance between the detrimental side-effects of remedial work and the consequences of delaying or avoiding repair.

Questions based on the integrity of the design and the structures are answered.



At this initial phase plans, specifications and project budget will be thoroughly looked through. Owner's needs and expectations are clarified, specifically focusing on what tasks need to be done and who is responsible for the various assessments of risks. The risks that lie within this stage are whether the views of the different stakeholders vary and may not have mutually acceptable objectives. There is not much support at this stage and ideas are relatively vague. The roots of the uncertainty are evaluated by incorporating the 'Who' entity which is answered in this phase. The responsibilities to the personnel involved in the risk management process are stated below.



Individual Members

Identify new risks

Estimate probability of risk, impact, and time frame

Classify risk

Recommend action

Assist in prioritizing risk

Project Manager

Collect all risk information from individuals

Ensure accuracy of probability, impact and time frame

Build the Risk Register

Collect and report risk measures and metrics

Report risk to senior management

Prioritize Risk

Executive Oversight Committee

Authorize expenditures of resources for mitigation

Authorize additional cost or time to mitigate risk.


The reliability of the design will be questioned at this stage. At this stage various aspects of the design such as the costs, benefits and the effect of changes to a design are evaluated. Main risks during this phase include:

May not consider the limitation of financial, construction skills and availability of materials

The design documents maybe incomplete, ambiguous and incorrect leading to further time lags

Design maybe incomplete

Unexpected geotechnical or groundwater issues

Inaccurate assumptions on technical issues in planning stage

Surveys incomplete

Changes to materials/geotechnical/foundation

Unforeseen design exceptions required

New or revised design standard

Construction staging more complex than anticipated


A base plan will be constructed in this phase, development targets and milestones are chalked out and the development of the plan is carried out. Assessing the risks which may associate with this phase include:

Targets set maybe unrealistic and may not be met

Overestimation in the assessment of costs can lead to a budgeting failure

Functional units not available, overloaded

Lack of understanding of complex internal funding procedures

Priorities change on existing program

Inconsistent cost, time, scope and quality objectives

Overlapping of one or more project limits, scope of work or schedule

Funding changes for fiscal year

Lack of specialized staff (biology, anthropology, geotechnical, archaeology, etc.)

Capital funding unavailable for right of way or construction

Internal "red tape" causes delay getting approvals, decisions


At this stage of the process the contractual terms and conditions, implications of the contract conditions are both assessed as well determining the target costs and bid prices for the contracts. The profits will also be estimated at this stage. Main aspects we need to consider is that of the contractors adopting risk that they do not understand and lose money, perhaps becoming bankrupt, thus reducing the global pool of contractors capable of doing work. The contractual agreement should adhere to various risks associated with contract risk which have been stated in the table below



Operator group and contractor group property and personnel

Risk of costs associated of loss of or damage to the parties' respective groups' property and personnel of whatsoever nature, irrespective of cause (including negligence)

Project works

Risk of loss of or damage to the project works if such loss or damage is caused by an act or omission on the part of the contractor group whilst the project works are in the care, custody and control of the contractor group


Risk of pollution and contamination of whatever kind emanating from the contractor groups' spread and onshore facilities, operator's facilities, the work and the facilities of others (third parties).

Unlimited liability/damages at large

Risk of delay, damage, rework, re-performance and/or replacement and default


Risk of inability to track or enforce contract compliance (performance or pricing)


Risk of failure to leverage volume rebates or negotiated terms, increasing total cost of ownership


Risk of non-compliance with laws and regulations


Risk of inconsistent process, leading to excessive cycle times, inefficiencies and bottlenecks


financial risks : financial loss due to inaccurate accounting and asset management reporting unnecessary financial exposure due to underutilised warranties and defect liability periods unnecessary financial exposure due to a lack of supporting documentation, should legal proceedings related to the building be brought against the crown

operational risks: deficient asset management due to inadequate building knowledge caused by a lack of documentation (manuals, specifications, certificates, as-built drawings etc) potential disruptions and inefficiencies in building operations/maintenance due to a lack of building services information non-compliance with statutory and/or government policy requirements, including those of the Maintenance Management Framework

design risks in future refurbishments/improvements due to lack of accessible and accurate

building information

health and safety risks to maintenance personnel due to inadequate training and

knowledge of building systems, plant and equipment

: Contract reviews and insurance facilitation are critical components on an effective risk mitigation and management program. Insurance facilitation assumes the probability that accidents will occur and seeks an efficient way of distributing and/or transferring the risk.

In many instances the ultimate loss is transferred to the insurer, using conventional insurance as the risk transfer method. In other instances, the use of contractual risk transfer methods, utilizing indemnification provisions, are used. However, in most cases, the combination of insurance, risk financing, and contract indemnification provisions are used.


The following illustrates the Probability impact diagram. The 'red' area contributes to the risks which are deemed as "High", the 'yellow' as "Moderate" and the 'green' as "Low". Items classified as green are acceptable without further mitigation and will be routinely tracked. Items classified as yellow may require mitigation. For these items, alternative dispositions will be identified and trade-offs conducted to determine the mitigation required. Items classified as red are considered primary risk drivers. For these items, mitigation options will be developed. Red risks will be assessed for impact to budget reserves and will be tracked to closure







1 2 3 4 5


The risks associated that will be assessed will be from the various organization levels which include - Cost, Safety, Schedule and Performance

Probability rating

Ordinal Value


Very Low


Qualitative:Very unlikely to occur, management not required in most cases. Strong Controls in Place

Quantitative:1 %<P<= 20% (for risks with primary impact on Cost, Schedule, or Performance)



Qualitative: Not likely to occur, management not required in all cases. Controls have minor limitations/uncertainties.

Quantitative:20%<P<= 40% (for risks with primary impact on Cost, Schedule, or Performance)



Qualitative:May occur, management required in some cases. Controls exist with some uncertainties.

Quantitative:40%<P<= 60% (for risks with primary impact on Cost, Schedule, or Performance)



Qualitative:Highly likely to occur, most cases require management attention. Controls have significant uncertainties.

Quantitative:60%<P<= 80% (for risks with primary impact on Cost, Schedule, or Performance)

Very High


Qualitative:Nearly certain to occur, requires immediate management attention. Controls have little or no effect.

Quantitative:P>80% (for risks with primary impact on Cost, Schedule, or Performance)



Very Low








Very High


≤ 10%

Over budget

>30 %

Over Budget

>30% but ≤50% over budget

>50% but ≤80% over budget

>80% over budget



Minor injury


first aid


Moderate injury,

illness or


Severe injury,

illness or



disabling injury



Equipment or other assets


damage to



facilities or systems

Major damage to


ground facilities or


Minor damage to

Flight assets or

Critical ground

facilities or systems. Loss of


ground facilities or


Major damage to

Flight assets or

Critical ground

facilities or systems

Loss of

Flight assets

(vehicle) or



facilities or



Negligible violation, non-reportable

Minor Reportable violation

Moderate violation

Major violation causing temporary stoppage

Serious or repeat of violations which may cause termination of program


<1 month

delay to

time scheduled

1-3 month delay

time scheduled

>3-6 month delay

To time scheduled

6-9 month delay to

time scheduled

>9 month

delay to

time scheduled or cannot meet the time scheduled



Negligible Impacts to requirements/design margins

Small Impact to



Moderate Impact to requirement/ design margins

Major impact to requirement/ design margins

Technical goals not achievable with existing engineering capabilities


Negligible impact to mission objectives/operations

Minor impact to

operations -

workarounds available

Moderate impact to

operations -



Major impact to

operations -

workaround not available

Unable to







usage loss or

capability to

maintain a

non-flight critical asset

Permanent usage

loss or capability to

maintain a non-flight critical asset

Temporary usage

loss or capability to

maintain major

element(s) of flight

vehicle or ground facility

Permanent usage

loss or capability to

maintain major

element(s) of flight

vehicle or ground facility

Inability to



flight operations