Project Risk Analysis: Jacobs Engineering Group Construction Report

This report provides a comprehensive analysis of project risk management within the construction industry, using Jacobs Engineering Group as a case study. It explores the importance of risk management, particularly within the context of the construction sector, and delves into the strategies employed by Jacobs to identify, assess, and mitigate risks. The report examines the company's approach to risk management, including the use of various tools and techniques, such as cost-effective plans, and the categorization of risks into asset, project and program, operations, and corporate risks. Furthermore, it discusses the role of procurement management, highlighting the importance of collaboration with suppliers and subcontractors, the use of different contract types, and the implementation of quality monitoring and control measures. The report also investigates the application of risk management theories and models, such as decision-making theory and contingency theory, to enhance the effectiveness of risk management strategies. Through this analysis, the report offers insights into how appropriate practices can assist in minimizing risk for construction projects and achieving sustainable development.

Running head: PROJECT MANAGEMENT
Risk management of construction industry (Jacobs)
Name of the student:
Name of the university:
Author note:

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DECLARATION OF ORIGINALITY
I hereby declare that the propositions made in the assignment are solely mine. The sources
used are duly acknowledged at the end of the assignment.
Student signature
-_____________________________

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Abstract
Project management is one of the efficient parameters in the current business context, which
is needed for enhancing the efficiency in the processes. Within this, mention can be made of
the risk management process, which is crucial for reducing the intensity. Calculation of the
impact on the overall productivity is assistance for the Jacob Engineering Group in terms of
mapping the areas in which modifications are needed. Risk management strategies are linked
with the corporate strategies for achieving growth and development. On the other hand,
procurement involves contracts, which expands the scope and arena of the supply chain
network. Theories like game theory, decision making theory is relevant in this context for
developing the fairness and transparency in the operations.

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Table of contents
Introduction................................................................................................................................4
Overview of the company..........................................................................................................4
Discussion..................................................................................................................................5
Risk management in Jacobs Engineering Group...................................................................5
Procure management of Jacob Engineering Group................................................................7
Procurement strategy............................................................................................................14
Risk management and procurement theories and models........................................................15
Five step risk management model........................................................................................15
Risk management and decision theory.................................................................................15
Contingency theory of risk management.............................................................................15
Game theory in procurement................................................................................................16
New procurement management thinking theory..................................................................16
Theory and practice of Procurement flexibility...................................................................16
Conclusion................................................................................................................................16
References................................................................................................................................18
Appendices...............................................................................................................................20
Appendix 1...........................................................................................................................20

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Introduction
Management is one of an important aspect for enhancing the efficiency in the
operations. These parameters of management extends to the scope and arena of human
resource, finance, marketing and sales and others. Within this, one of an important areas is
that of risk management and assessment, which is crucial in terms of ensuring the wellbeing
of the clients and the customers (Christopher, Mena & van Hoek, 2018). Risk management
and assessment is a difficult task, which needs rational planning and logical reasoning for
achieving positive outcomes. Diligence is needed for executing the responsibilities in an
efficient and effective manner. This assignment, with the example of Construction Industry
(Jacobs), attempts to shed light on the approaches towards risk management. Theoretical
considerations is used for excavating the means for achieving effective solutions for the
crucial issues.
Overview of the company
Jacob Engineering Group achieves accolades and glory by emerging as one of the
reputed American international technical professional services firms. It is a public sector
company, trading as NYSE: JEC. The firm operates under the construction industry, dealing
with architecture, engineering and construction planning. The operations of firm is globalized
all over the world, which reflects an expanded supply chain network. According to the annual
report of 2018, the total revenue was US$ 14.98 billion (Jacobs.com, 2019). The operating
income was calculated as US$648 million and the net income was US$163.4 million. The
total equity value was US$5854.3 million. The major drive behind this is the skilled efforts of
80000 employees according to the annual report of 2019. KeyW is considered to be a wholly
owned subsidiary of Jacobs. KeyW is an important agent for the firm in terms of receiving
innovative solutions, which enhances the cyber security. The firm aims to engage the clients

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and customers into the mainstream business operations for achieving sustainable
development (Jacobs.com, 2019).
Discussion
Risk management in Jacobs Engineering Group
For Jacobs Group, risk management consists of the experimentation with the tools and
techniques for detecting the risks, which act as an obstacle in executing the business
activities. This experimentation helps in achieving a greater understanding of the measures to
mitigate the intensity of the risks through the means of calculating the utility value. In this
context, mention can be made of cost effective plans, which enhances the efficiency within
the processes of risk assessment and management (Jacobs.com, 2019).
In the past financial years, the firm has practiced objective risk management practices,
which has brought drastic change in the consumption of water resources. Tactical decision
making is used for filling the gaps in the usage of the resources and assets. As a matter of
specification, risk management is done by adhering to a number of steps. At the initial stage,
the risks are identified and scored. These scores are assistance in terms of gaining an insight
into its intensity on the overall productivity. Mostly, the estimation is done through the
consideration of the financial parameters. For example, risk scores of the assets like pumps
and meters, accuracy is developed in the utility value, maintenance of the resource allocation,
maintenance, capital investment and others. These data is further assistance for the firm in
terms of undertaking beneficial decisions (Jacobs.com, 2019). The risk assessment data
includes maintenance expenses, repair and replacement strategies, which are audited and
reviewed in the meetings. These meetings are presided by the board panel, which helps in
formulating essential strategies and action plans for improving the efficiency.
Risks are mainly categorized into four types:
 Asset risks- needs advanced repairing and maintenance strategies

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 Project and program risks- project management techniques are used for reducing the
intensity of these risk
 Operations risk- the scope of these risks extends to safety in the field work and other
risks, which are managed by the strategic management techniques applied by the line
managers.
 Corporate risks- The scope and arena of these risks extends to actions and events
planned by the executives. The management strategies are executed and formulated
by the executives (Jacobs.com, 2019).
Partnership with Portland Water Bureau is assistance in terms of constructing appropriate
risk management approaches. This activity aligns with the initiatives towards improvising on
the standards and quality of the risk management. In this process, Standard Operating
Principles are followed by the firm for averting the illegal instances and issues. Asset funding
decision making is practiced, which proves beneficial for effective management of the
corporate risks.
The staffs are provided with best learning practices, which develops their personal skills
towards management of the risks. Mention can be made of extensive staff engagement
process, which ensures broad risk identification process. In this case, Hong, Lee and Zhang,
(2018) highlights that capacity building is an essential issue. Social equity obligations are
adhered for executing the risk process in accordance to the plans and requirements. The
leading consultants are hired for delivering lectures on risk management. The employees are
encouraged to participate in these lectures, which is a planned and reasoned approach towards
effective human resource management. The components of the risk management programs in
the firm are:
 Asset management

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 Risk management
 Project and program management
 Corporate culture
 Leadership development
Strategic alliances are also formed with the Environmental Finance Advisory Board,
which helps in reducing the intensity of the risks in the field of finance, asset management
and utility management projects especially in the consumption of the water resources
(Jacobs.com, 2019).
Procure management of Jacob Engineering Group
Collaboration with the suppliers and subcontractors helps in adding innovation into
the solutions. This innovation is an agent in terms of delivering high quality solutions to the
clients and the customer across the world. At the initial stage, planning is conducted by the
board panel by involving the managers of the departmental units. In the next step, execution
of the plans takes place, followed by the implementation of the monitoring and control
measures. After the final evaluation, closure is achieved. The inputs in this case are project
management plan, documentation, risk register, resource requirements and project schedule
(Friday et al., 2018). The deliverables also includes activity cost estimates, stakeholder list
and others.
Legal contracts are an essential aspect of the procurement management. Mention can
be made of the fixed price contracts, which the firm adopts for assessing the risks associated
with the pricing of the products and services. Incentives like Fixed Price Incentive Fee
Contracts are adopted for scanning the risks associated with the sellers. Along with this, cost
reimbursable contracts are also adopted for legitimizing the costs related to the incurred risks.
This is accompanied with the fee representing the seller profit. Time and material Contracts

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are also applicable in the issues of the firm. This is used for assessing the staff augmentation,
acquisition of the experts or any other external support (Myerson, 2018).
The tools and techniques used for procure management are make or buy analysis,
expert judgment. Expert judgments involves market research, which enhances the awareness
about the capabilities of the industries and the shareholders. Meetings are conducted for
evaluating the effectiveness, feasibility and appropriateness of the plans, programs and
policies. The outputs include procure management plans, stating the types of contracts,
handling of the decisions, standard documents and procurement metrics. Statement of works
are produced for adding clarity into the specifications of the contracts, period of performance,
work location and other requirements.
Procurement documents considered by the firm are:
 Request for Information
 Request for proposal
 Invitation for bid
 Request for quotation
 Invitation for negotiation (Behzadi et al., 2018)
The criteria for selecting the sources includes:
 Expenses for the life cycle
 Capability value of the technologies
 Risks
 Warranty
 Past performance of the sellers
 Make or buy decisions
 Change requests

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 Risk register
 Essential documentation
The stage of procurement comprises the act of collecting sellers’ feedback, selecting the
prospective seller and awarding a contract (Fleming, 2019). The essential tools and
techniques in this context are:
 Bidder conference
 Proposal evaluation techniques
 Independent estimates of the costs
 Expert judgment
 Advertising
 Analytical techniques
 Procurement negotiations
Procurement is managed by the firm through the implementation of quality monitoring
and control measures. Communication between the managers and the contractors enhances
the stability in the professional relationships. Evaluation of the performance helps in
detecting the necessary changes. Contract change control systems are used for catering to the
paperwork, tracking and dispute resolutions (Darr, 2019). Performance reviews and audits are
crucial for standardizing the operations. Reporting is assistance in terms of estimating the
progress towards reducing the intensity of the potential risks in the upcoming financial years.
Risk management strategy
Corporate strategies are applied by Jacobs Engineering Group in terms of achieving
effective mitigation measures for the potential risks. Long terms goals are developed for
calculating the impact on the overall productivity. In the assessment process, the considerable
factors are market forces, corporate governance and the stakeholder approaches. Decision

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making tree is used for assessing the effective and feasibility of the strategic plans in the
current workplace scenario. Assumptions are proposed, which are assessed through the
attachment of hypothetical approach. In the evaluation process, it is seen that incorrect
assumptions are obvious. Error of judgments also persist in the assessment of the external
environment. Even the plan does not fully cater to the identified and the specified objectives.
According to Qian et al., (2019), one of the crucial aspects is the speculation towards
resource inadequacies.
Application of the decision making tree, it can be inferred that the firm’s plan towards
managing the risk is correct but there is compromise with the internal changes. Structural
changes might have been an agent for inefficiencies. In this case, the assumptions also related
to the lack of introduction for the required changes in the internal processes. Even there are
gaps in the assessment of the planned changes. Excavation of the fact that originality in the
plan but compromise in the external change is also a risk (Suhonen et al., 2019). In this case,
the assumptions relate to:
 Significant changes in the external environment
 Emergence of the new competitors
 Release of the competing products
 Alterations in the statutory controls

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Fig: Transitions in the strategic risk management process of Jacob Engineerin Group
(Source: Jacobs.com, 2019)
It is a common tendency of the firms like Jacob Engineering Group to transcend from
the current position to the desired position through the development of strategies. Proper
identification of the risks between point A and B is difficult, which aggravates the
complexities in the process of achieving effective resolutions. The strategic risk manager is
entrusted with the responsibility for conducting forecasting and estimation procedures to
assume that there is plenty risks, affecting the efficiency in the operations. Risks adds
difficulty in the process of strategic implementation in the different parameters of the
business operations of the firm. In this context, Nguyen et al., (2018) is of the view that
assumptions also pertain to the consideration regarding the unforeseen events, which affects
the navigation between the positions A and B.
A B
Current position
Desired position

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Fig: Strategy displacement for the risks
(Source: Suhonen et al., 2019)
In the evaluation process, it is seen that some of the risks have greater impact as
compared to others. As a result of this, the common outcome is that of general divergence.
Consideration of the variations adds the concept of variance envelope into the strategic
approach of the firm towards managing the risks. In this case, the allowance has limitation to
the extent till the notification of warnings. In case of the variance envelope, contraction is
used for assessing the functions of time. As the firm progresses towards position B, the errors
of judgment diminish.
As a matter of specification, the risks management strategy of Jacob Engineering
Group is done through the adherence to integrated structure of identification, management
and evaluation (Jacobs.com, 2019).
A B
C
D
Current position

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Fig: Risk management process
(Source: Woods, 2009)
In case of the implementation of the strategies, mention can be made of the
transgression methods, where the risk management system needs to attain flexibility in the
detection of transitions and predict the consequences. This estimation is assistance in terms of
planning effective actions for standardizing the processes according to the Standard
Operating Principles.
Change management is one of the relevant parameters to which the risk management
strategy extends. This aspect is assessed by Jacob Engineering Firm by fragmenting the
operations in three levels- strategic, operational and project levels. In this context,
Christopher, Mena and van Hoek, (2018) argues that consideration of the variations in the
internal and external environments aligns with the strategic planning for accomplishing the
identified goals and objectives.
Identification
ManagementEvaluation

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Project risks are strategized through the development of the relevant action plans for
embracing the required change. Involving in various projects and their evaluation is
assistance for the firm in terms of conducting the capability analysis. Negative results in this
case like damages and late submissions are payable. In case of the operational risks, strategies
include the consideration of value chain analysis for excavating the ways and means in which
the risks can be mitigated for enhancing the productivity. One of the measures in this case is
that of using Risk Assessment Matrix, which enhances the awareness of the Jacob
construction industry staffs about the potential risks (refer to appendix 1). One of the
samples can be as follows:
Risks Frequency
of
Occurrenc
e
Persons/resources
responsible
Impact Level of
impact
Evaluation
Accidents High Wet floors, loose
wires
Severe
injury, death
High Careless
approach of
the staffs
towards
proper
maintenance
of the wires
and floors is
a threat to
the security
of the

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workers
Illegal
contracts
Medium Third party
interference
Financial
scandals
Medium Illegal
contracts
degrade the
stability in
the relation
between the
industry
staffs,
contractors
and agents
Labour
shortage
High Improper
recruitment
strategies
Delay in
completing
the tasks
High Labour
shortages
result in
delays for
completing
the projects
Unexpected
increase in
the costs of
the
materials
High Inaccurate budget Straining the
budgets
High Unexpected
rise in the
cost of the
materials
aggravate
the
complexities
in

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completing
the project
orders
Thefts High Lack of security
measures in the
storage of the
materials
Complexitie
s in
completing
the projects
High Thefts result
in shortage
of the
materials,
putting the
security
issues at
stake
Table: Risk assessment for Construction Industry (Jacob)
(Source: Created by the author)
Procurement strategy
Purchasing documents attain an important position in the procurement strategy of the
Jacob Engineering Group. The typical components of the purchasing documents are header
data, item overview and item details. These documents are segmented into internal and
external. Determination of the requirements initiates the process. After this, the source is
identified, followed by the vendor selection and PO processing. In the next step, order
monitoring is practiced by the firm, which is assistance for establishing the receipt and
invoice verification.
Strategic partnerships are conducted for improvise on the market share through time
to time evaluation of the performance. Within this, Hong et al., (2018) mentions about the
evaluation of reducing exposure towards disruption risks. The typical components of the
strategy are transform, develop and align, which is carried out through the means of systems

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integration. This step helps the firm in value creation, adding to the market share. Creation of
the supplier pool is assistance in terms of generating best practices in the procurement.
Within this, bid specifications are crucial for identifying the prospective suppliers. Fairness in
the bidding process is fruitful in terms of achieving trust, loyalty and dependence from the
clients and the customers.
Evolution strategies are relevant in this context, which helps in generating the
techniques through which the potential risks can be minimized. In this context, Friday et al.,
(2018) highlights that the Darwinian concept can be relevant, which sheds light on expanding
the scope and arena of the responsibilities for adding value to the operations and the
mechanisms.
Risk management and procurement theories and
models
Five step risk management model
Like all other firms, Jacob’s Engineering Group uses the five step risk management
model, which comprises of the aspects of risk identification, quantitative risk analysis,
qualitative risk analysis, risk response planning and risk monitoring and control. These
aspects are conducted in a cyclical manner, enabling the staffs in achieving positive outcomes
in achieving effective resolutions (Myerson, 2018).
Risk management and decision theory
In this theory, essential linkages are established between the concepts of risk
management and decision theory. Risk management is conducted by the firm for gaining
clarity about the uncertainties, which persist in the process of decision making for
undertaking decisions for resolving the risks. Decision theory is applied to risk management
for calculating the expected value of a risk. This is the only applicability of the decision
making theory into the risk management (Behzadi et al., 2018).

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Contingency theory of risk management
Contingency theory caters to the approaches towards management of the risks,
highlighting the behavioural aspects. Considering the responses of the stakeholders and
shareholders helps in developing new insights for inferring new concepts related to the risk
management. These responses are an agent in terms of developing the frameworks for risk
management, which have never been considered (Woods, 2009).
Game theory in procurement
Decline in the standards of the inhouse production aggravates the complexities in the
mechanisms of the supply chain network. Reliance on the suppliers is increasing, which
reflects the need for innovation. Game theory is considered to be an agent for the firm in
terms of management of the complexities through strategic management. In this context,
mention can be made of the decision making theory, which sheds light on mapping the
outcomes in the aspects of offshore management, annual price negotiations, make or buy
decisions and outsourcing of the projects (Fleming, 2019).
New procurement management thinking theory
Design thinking is applied into the procurement management processes of the firm for
adding innovation into the management techniques. In this context, proactive data attains a
primary position in terms of undertaking effective decisions for minimizing the intensity of
the risks. Reflection through observation can be beneficial for the firm in terms of mapping
the arenas of thinking, which can be applied towards regulating the procurement activities
(Darr, 2019).
Theory and practice of Procurement flexibility
The essence of this theory lies in flexibility within the procurement methods, which
helps the manufacturers and suppliers to establish crucial relationship with the firm.
Classification of the flexibilities results in detection of the commonalities adopted by the
practitioners to execute the allocated roles and responsibilities (Qian et al., 2019).

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Conclusion
Jacob Engineering Group is a leader in the American market in terms of conducting
the risk assessment and procurement. Strategic approach in this context is beneficial in terms
of achieving positive outcomes for minimizing the risks. Using risk assessment matrix is
fruitful in terms of enhancing the awareness about the impact on the overall productivity.
Scoring the risks is assistance in terms of calculating the utility value and the approaches of
the stakeholders towards the potential risks. Consideration of the market dynamics is
assistance in terms of developing such action plans, which prove beneficial for enhancing the
supply chain network. Contracts with the suppliers is assistance in terms of enhancing the
stability in the professional relationships and customer relationship management.
Technology is one of the sources, which helps in revolutionizing the activities for
expanding the scope and arena of the supply chain network. Offshore management is
executed for transferring data and information to the external environment.

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References
Behzadi, G., O’Sullivan, M. J., Olsen, T. L., & Zhang, A. (2018). Agribusiness supply chain
risk management: A review of quantitative decision models. Omega, 79, 21-42.
Christopher, M., Mena, C., & van Hoek, R. (2018). Leading procurement strategy: driving
value through the supply chain. Kogan Page Publishers.
Darr, W. (2019). Advanced Issues of Procurement Management. tredition.
Fleming, Q. W. (2019, January). Project procurement management: contracting,
subcontracting, teaming. Project Management Institute.
Friday, D., Ryan, S., Sridharan, R., & Collins, D. (2018). Collaborative risk management: a
systematic literature review. International Journal of Physical Distribution & Logistics
Management, 48(3), 231-253.
Hong, Z., Lee, C. K. M., & Zhang, L. (2018). Procurement risk management under
uncertainty: a review. Industrial Management & Data Systems, 118(7), 1547-1574.
Jacobs.com (2019). About us. Retrieved 30th September 2019 from http://www.jacobs.com/
Jacobs.com (2019). Using Risk Management Processes and Tools for Strategic Planning.
Retrieved 30th September 2019 from http://www.jacobs.com/newsroom/news/using-
risk-management-processes-and-tools-strategic-planning
Myerson, P. (2018). Lean Demand-driven Procurement: How to Apply Lean Thinking to
Your Supply Management Processes. Productivity Press.
Nguyen, T., Li, Z. H. O. U., Spiegler, V., Ieromonachou, P., & Lin, Y. (2018). Big data
analytics in supply chain management: A state-of-the-art literature review. Computers
& Operations Research, 98, 254-264.

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Qian, X., Huang, M., Ching, W. K., Lee, L. H., & Wang, X. (2019). Mechanism design in
project procurement auctions with cost uncertainty and failure risk. Journal of
Industrial & Management Optimization, 15(1), 131-157.
Suhonen, N., Tammi, T., Saastamoinen, J., Pesu, J., Turtiainen, M., & Okkonen, L. (2019).
Incentives and risk-sharing in public procurement of innovations: Towards
contracting strategy framework. Journal of Public Procurement, 19(2), 129-145.
Woods, M. (2009). A contingency theory perspective on the risk management control system
within Birmingham City Council. Management Accounting Research, 20(1), 69–81.
doi:10.1016/j.mar.2008.10.003

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Appendices
Appendix 1
Fig: Risk management matrix
(Source: Hong, Lee & Zhang, 2018)