Risk Assessment in Construction Projects PDF

RISK
ASSESSMENT

EXECUTIVE SUMMARY
The report is discussing level of risk or uncertainities at time of undertaking a
construction project by ABC construction company which is a SME. The procedure which
covers the life cycle of whole project from its initiation to closure will be called to as risk
management plan. Under this, risk register is considered as an important part which is providing
gist of whole project with relevance to risk. This following project is providing evaluation on
risk at the time of project, ways to lower down these risks as well as mentioning the people
involved with their roles and responsibilities. There will also be reporting of these risks, changes
of risk status undertaken by project and Steering committee with complete risk register including
all identified uncertainties and mitigation strategies to reduce likelihood as well.
INTRODUCTION
Risk is a chance of some wrong happening that is generally not expected and thus, it will
be affecting business in negative manner (Pinto, 2014). There is no such activity of business
which is not having some of the elements of risks linked with. It is the duty of business
management that they are identifying all risks and uncertainties that are associated with activities
and tasks of company. So, if company is able to identify the risks, they will be able to avoid them
especially in construction industry like that of lower bidding for any higher level of construction
project and this could lead to bankruptcy of firms as well. This current project concerns about
what are all risk, uncertainties or potential threats that are associated with execution and closure
of construction project which is managed in proper way.
RISK ASSESSMENT
3.1 Identification
Risk identification is the process of finding out all risk that are associated at time of
undertaking construction of building and those which are impacting business or project as well.
These different types of risks will lead to reduce or delay in project outputs and sometimes, they
will be having catastrophic effects on company as well. So, under this process, recording and
identifying potential risks to projects will be impacting delivery of project (Taroun, 2014). But
within this type of project, one of the most difficult things will be identification of all major risks
associated with project. So, management needs to identify relevant risks to be identified by
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causal categories. It includes risk of business, corporate, infrastructure and project that could be
broken down in economic, human, political and environment.
So, in this current project which is of WSI Blue Mountains TAFE there are variety of
commercial and residential construction with annual turnover of $25 million. There are some of
the risks that are identified in this context which are related to completion of building project like
that of:
 Contractual
 Technical which are faults in design
 Logistical
 Construction
 Financial
3.2 Analysis and evaluation
At the time when risk is identified, it will be required that management is analysing and
evaluating these risks so that they will be able to mitigate them all in given time frame. In
general way, the impact of these risks will be there on quality of project. When outcome will be
delayed, cost is increased and timeframe are extended (Taylan, Abdulaal and Kabli, 2014). So, in
order to analysis risk, management needs to include two main factors namely likelihood of its
happening which means that what has chance of occurrence for any event. The consequence will
be possible outcome of related risk which is calculated using following formula:
(Level of risk = consequence x likelihood)
This likelihood could be measured as L= Low, M=Medium, H=High while consequence
will be measured according to impact of risk in negative or positive manner that is also ranked as
L= Low, M=Medium, H=High and S= Sever.
So, in this project, there are certain risks associated at the time of construction like that of
incomplete design and inadequate site investigation which are considered to be technical risk,
availability of resources and sufficient transportation facilities are determined as logistical risk.
Further, these are uncertain of productive resources and that of weather or seasonal implication is
construction risk and delay in payment and local taxes are termed to be financial risk (Pinto,
2014).
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Likelihood
Consequence
Low (1) Medium (2) High (3) Extreme (4)
Low (1) incomplete
design
inadequate site
investigation
Customs and
import
restrictions and
procedures
Inflation
Medium (2) Repatriation of
funds.
sufficient
transportation
facilities
Uncertainty
over the source
and availability
of materials
availability of
resources
High (3)
weather or
seasonal
implication
uncertainty of
productive of
resources
local taxes delay in
payment
Low (1) Medium (2) High (3) Extreme (4)
RISK MITIGATION
This will involve identification of all actions which are taken to reduce likelihood or
occurrence of risk so that their impacts will also be mitigated or lower down (Risk Mitigation
Planning, Implementation, and Progress Monitoring, 2018). Mitigation of risk strategies will be
helping management of company to reduce risks such as uncertainty of productive resources,
delayed payments, inadequate site investigations, availability of resources and many more. So, in
this strategy, grades will be given according to their handling procedures like assume, avoid,
control, transfer and monitor (As in appendix 2 of Risk Mitigation)
RISK MONITORING
This is the complete management of all sorts of risks identified so that they cause any
hindrance in progress of project. If there is any risk which is not identified or not treated properly
then it will be significant to be corrected with priority (Kraus, 2018). Under this monitoring,
there are certain sections to be included like frequency of review of risk register, monitoring of
risk in order to ensure that monitoring of risks are undertaken in a proper way. There must also
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be roles and responsibilities included of personal who are in charge of risk identification and
mitigating policies as well.
ROLES AND RESPONSIBILITIES
6.1 Steering committee
In order to ensure proper and timely management of risk, its identification and
monitoring will be of project manager, team and Steering committee. They are responsible for
identification, analysis and evaluation of risk process for filling hazard register and completing
risk management plan. In this project which is dealing with tender of WSI Blue Mountains
TAFE project by ABC construction company, Steering committee will be responsible to review
Grade A and B of the risk mitigation strategy (Wang, Dai and Ning, 2015). After that, they will
review risk register in order to consider all requirements and threats are identified or their impact
is analysed properly.
6.2 Project manager
Manager of project is the head of whole team who is responsible to carry out risk
identification process and there are also other roles which they need to perform like that of:
 Implementation of risk management plan
 Risk management sessions to be conducted so that it could be reviewed
 Identification of risk to develop strategies to manage risk
 Ensuring monitoring of all risks closely
 Then providing regular status report to committee so that none of the risks are left
unidentified
6.3 Project team
In way of assisting the project manager, it is the duty of whole team to follow instructions
given by him to follow risk management plan as well as help manager in mitigating issues and
monitoring progress of plan throughout its life cycle.
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REFERENCES
Books and Journals
Kraus, M., 2018. Risk assessments of contemporary accidents in construction industry.
In MATEC Web of Conferences (Vol. 146, p. 03004). EDP Sciences.
Pinto, A., 2014. QRAM a qualitative occupational safety risk assessment model for the
construction industry that incorporate uncertainties by the use of fuzzy sets. Safety
Science. 63. pp.57-76.
Taroun, A., 2014. Towards a better modelling and assessment of construction risk: Insights from
a literature review. International journal of Project management. 32(1). pp.101-115.
Taylan, O., Abdulaal, R.M. and Kabli, M.R., 2014. Construction projects selection and risk
assessment by fuzzy AHP and fuzzy TOPSIS methodologies. Applied Soft
Computing. 17. pp.105-116.
Wang, D., Dai, F. and Ning, X., 2015. Risk assessment of work-related musculoskeletal
disorders in construction: State-of-the-art review. Journal of Construction Engineering
and management. 141(6). p.04015008.
Online
Risk Mitigation Planning, Implementation, and Progress Monitoring. 2018. [Online]. Accessed
through: <https://www.mitre.org/publications/systems-engineering-guide/acquisition-
systems-engineering/risk-management/risk-mitigation-planning-implementation-and-
progress-monitoring>.
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APPENDIX
1) Analysis and evaluation
Likelihood
Consequence
Low (1) Medium (2) High (3) Extreme (4)
Low (1) incomplete design inadequate site
investigation
Customs and import
restrictions and
procedures
Inflation
Medium (2) Repatriation of funds.
sufficient
transportation
facilities
Uncertainty over the
source and
availability of
materials
availability of
resources
High (3) weather or seasonal
implication
uncertainty of
productive of
resources
local taxes delay in payment
Low (1) Medium (2) High (3) Extreme (4)
2) Risk Mitigation
Grade Possible Action
A Mitigation actions related to delay in payments, will be taken place by reducing likelihood and consequence will be
very much important to identify it and implement as soon as possible before initiation of project is priority.
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B Mitigation actions related to inadequate site investigation risk, is taken place by reducing both consequence and
likelihood. Then it is required to be identified at correct time with implementing it at time of project execution
C Mitigation actions that are related to availability of resources must be done to reduce probability of happening of
the event or its consequence. So it will be important to identify risk and cost that will be required to permit funds.
D In mitigating risk of uncertainty of productive resources no action would be required till this risk is increasing.
N If Weather or seasonal implications are the risk then they would not be required to improved or taken under
consideration till risk is increasing.
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3) Risk Register
Risk
description
Impact on
Project of risk
L1 S2 G3 Change Date of
Review
Mitigation
Actions
Individual/
Group
responsible
for
mitigation
action(s)
Cost Timeline
for
mitigation
action(s)
WBS4
Delayed
payment
If payments
made by clients
and debtors are
delayed then it
will be having
impact on all
decisions taken
like purchase of
materials and
timely payment
of salaries.
E E A NEW 16/07/18 Review of
agreements made
with clients and
debtors
Demand proof of
the financing
Maintaining
debtor turnover
period
Project
Manager
NA 17/08/18 Y
Inadequate
site
investigation
risk
Decision will be
not taken on
timely bases
H H B NEW 14/05/18 Investigating
risk at priority
bases
Project
Manager
NA 16/07/18 Y
1 Assessment of Likelihood.
2 Assessment of Seriousness.
3 Grade (combined effect of Likelihood/Seriousness).
4 Work Breakdown Structure – specify if the mitigation action has been included in the WBS or work plan.
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Availability
of resources
Reduce output
quality,
extended
timeframes,
results will be
delayed
H H C No
change
20/06/18 Identification of
risk
Communication
Considering
opportunities on
time
Project
Manager
TBC 12/08/18 N
Uncertainty
of productive
of resources
It will not be
clear where
wastage is
taking place
Quality will be
deteriorated
M M D NEW 1/07/18 Leverage change
control board
Motivating
employees
Training and
development
program
Monitoring of
project resources
Sponsor
Project
Manager
Project
Manager
Project
Manager
NA
NA
$3,000
$1000
21/07/18
21/07/18
22/07/18
10/08/18
Y
Y
Y
Y
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