risk management yulvi. introduction time quality cost project constraints success introduction
TRANSCRIPT
RISK MANAGEMENTYULVI
Introduction
TimeQuality
Cost
ProjectConstraints
SuccessIntroduction
DelaysPoor
Quality
Costoverrun
ProjectConstraintsRisks
Risk
Unknown
Unexpected
Undesirable
Unpredictable
endeavor
action
What is the risk
Risks in Construction
Contractor Supplier
ProjectManager
Engineer
Architect
Client
QuantitySurvey
Inspector`
Soci
al Fa
ctors
Political Factors
Economic Factors
Envir
onm
enta
l Fa
ctors
Physical
Risks
Financial
Economic
&Actsof
God
Political
Environ.&
Design
Const.Related
Types of Risks in Construction
Types of Risks in Construction
Physical
Risks
Financial
Economic
&Actsof
God
Political
Environ.&
Design
Const.Related
Acts of God
Flood
Earthquake
Landslide
Fire
Wind damage
Types of Risks in Construction
Physical
Risks
Financial
Economic
&Actsof
God
Political
Environ.&
Design
Const.Related
Physical
Damage to structure
Damage to equipment
Labor injuries
Fire
Theft
Types of Risks in Construction
Physical
Risks
Financial
Economic
&Actsof
God
Political
Environ.&
Design
Const.Related
Financial & Economic
Inflation
Availability of funds
Exchange rate fluctuations
Financial default
Types of Risks in Construction
Physical
Risks
Financial
Economic
&Actsof
God
Political
Environ.&
Design
Const.Related
Political & Environmental
Changes in laws and regulations
Requirement for permits
Law & order
Pollution and safety rules
Types of Risks in Construction
Physical
Risks
Financial
Economic
&Actsof
God
Political
Environ.&
Design
Const.Related
Design
Incomplete design scope
Defective design
Errors & omissions
Inadequate specifications
Types of Risks in Construction
Physical
Risks
Financial
Economic
&Actsof
God
Political
Environ.&
Design
Const.Related
Construction Related
Labor disputes
Labor productivity
Different site conditions
Design changes
Equipment failure
Risk Management
A systematic approach to control the level of risk to mitigate its effects.
Risk IdentificationRisk Identification
Risk EstimationRisk Estimation
Risk EvaluationRisk EvaluationRisk ResponseRisk Response
Risk MonitoringRisk Monitoring
ControlledRisk
Environment
Risk IdentificationRisk Identification
Risk EstimationRisk Estimation
Risk EvaluationRisk EvaluationRisk ResponseRisk Response
Risk MonitoringRisk Monitoring
ControlledRisk
Environment
RiskAnalysis
Risk Management Life Cycle
Risk AnalysisEstimating the potential impacts of risk to decide what risks to retain and
what risks to transfer to other parties
Ranking options
Comparing options
Descriptive analysis
Qualitative
Risk AnalysisTechniques
Probability analysis
Sensitivity analysis
Simulation techniques
Quantitative
Risk Response
Risk Response Methods
Elimination Transfer ReductionRetention
Risk Response
Risk Response Methods
Elimination Transfer ReductionRetention
Risk Elimination Practices
Tendering a very high bid
Placing conditions on the bid
Pre-contract negotiations as to which party takes certain risks
Not biding on the high risk portion of the contract
Risk Response
Risk Response Methods
Elimination Transfer ReductionRetention
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.
Risk Response
Risk Response Methods
Elimination Transfer ReductionRetention
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.
Risk Response
Risk Response Methods
Elimination Transfer ReductionRetention
Risk Reduction Continuous effort.
Related with improvements of a company’s physical, procedural, educational, and training devices.
Improving housekeeping, maintenance, first aid procedures and security.
Education and training within every department .
Risk Monitoring and Control◦Risks can be monitored on a continuous basis to check if any change is
made. New risks can be identified through the constant monitoring and assessing mechanisms.
Risk Management Process
◦Each person involved in the process of planning needs to identify and understand the risks pertaining to the project.
◦Once the team members have given their list of risks, the risks should be consolidated to a single list in order to remove the duplications.
◦Assessing the probability and impact of the risks involved with a help of a matrix.
In deciding how serious a risk is we tend to look at two parameters:
◦ Probability – the likelihood of the risk occurring
◦ Impact – the consequences if the risk does occur.
Impact can be assessed in terms of its effect on:
◦ Time
◦ Cost
◦Quality.
There is also a third parameter that needs to be considered:
◦ Risk proximity – when will the risk occur?
Scale Probability Impact
Very low Unlikely to occur Negligible impact
Low May occur occasionally
Minor impact on time, cost, or quality
Medium Is as likely as not to occur
Substantial impact on time, cost or quality
High Is likely to occurSubstantial impact on time, cost or quality
Very high Is almost certain to occur
Threatens the success of the project
The analysis is based on the risk level of investment risk factor equation where the magnitudes of the risk factors are overview of the level of investment risk that happening.
RF = L + I – (L x I) (1)
Where: RF = Risk Factor (scale 0 – 1)
L = Risk Probability (scale 0 – 100%)
I = Risk Impact
RISK ANALYSIS
Risk Category & Quadrant Risk MappingRF Value Category Step Handling
>0.7 High Risk Should be done a decreased risk of lower level
0.4 – 0.7 Moderate
Risk
Required corrective measures within a specified period
< 0.4 Low Risk Corrective measures if needed
Risk category based on Quadrants Risk Mapping, they are:
◦ Low risk, where the risk is usually overlooked because of the relatively low probability of occurrence, and if it happens, then the impact is relatively small.
◦Moderate Risk, where one of the probability and the impact is relatively low, so it is necessary for action to manage it.
◦High Risk, where the probability of occurrence and impact is relatively high, so it needs to be made and a decreased risk management plans that may occur
continue
◦Split the team into subgroups where each group will identify the triggers that lead to project risks.
◦The teams need to come up with a contingency plan whereby to strategically eliminate the risks involved or identified.
◦Plan the risk management process. Each person involved in the project is assigned a risk in which he/she looks out for any triggers and then finds a suitable solution for it.
conclusion◦ An organization will not be able to fully eliminate or eradicate risks. Every project
engagement will have its own set of risks to be dealt with. A certain degree of risk will be involved when undertaking a project.
◦ The risk management process should not be compromised at any point, if ignored can lead to detrimental effects. The entire management team of the organization should be aware of the project risk management methodologies and techniques.
◦ Enhanced education and frequent risk assessments are the best way to minimize the damage from risks.
Assessment 1
1. Chose 1 project
2. Identification the risks
3. Identification potentials impact
4. Risk response
5. Risk Monitoring and Control