Identification of Risks
The report consists of the risk management plan of a large construction project which would be utilized in order to make the planning, identifying, assessing, categorizing, quantifying, handling and lastly tracking or reporting the various risks associated with the project. This would be helping in the process of achieving the requirements and goals that the project is having (Kasapo?lu 2018). The project upon which the risk management plan is to be included is for the “Research Support Building and Infrastructure Modernization (RSB) Project” that is going to be established at the SLAC National Accelerator Laboratory. The risk management plan of RSB is consistent with the DOE 413.3A, Project Management for the Acquisition of Capital Assets”, and besides this it also strives to incorporate all the “best practices” all around the DOE complex (Burtonshaw-Gunn 2017).
It is believed by the RSB management team that risk would be inherited in each and every activity of the project and in order to achieve success there is a need of risk assessment plan. This plan would be helping in the evaluation of the risks along with managing them so as to minimize the effects of the risks.
This is a method bounded by various processes and is associated with ensuring the fact that there exists a list of risks which has been identified and besides this it is also seen that they are comprehensive in nature. The risk project managers, integrated project team, safety subject matter experts and control account managers are responsible for the identification of the risks in various areas of the project (Iqbal et al. 2015). This identification process is associated with using a graded approach. This approach begins with the evaluation of the potential risks by the team. This teams are generally regarding the technical items and the subsystems that exceed the amount of $100K, or when it is on the critical path of near to it, or the one that is having the possibility of facing certain technical challenges. Development of common risk areas are done as a tool which would be assisting the entire team to identify the area that are likely to face the potential risks (Musa et al. 2016). Besides this the Project Risk managers are also having the capability of identifying the project risks which might not have been identified earlier in the subproject risk analysis. In the table provided below shows the major risks that are likely to occur:
|
Project risk area |
Significant risks |
|
Facilities and equipment’s |
· Development of major equipment’s · Planning which are inadequate in order to maintain the items that are going to be used for a longer time and for maintain the support of the vendors (Walker 2015). |
|
Design |
· The design is dependent upon the technologies which are immature or the exotic materials so as to achieve the objectives of performance · Designs are not cost effective |
|
Requirements |
· Non-establishment of the operational requirements in a proper way or are stated vaguely · Unstable requirements. |
|
Testing/evaluation/simulation |
· Testing plan is not includes at the initiation phase. · Testing are not associated with addressing the ultimate operational environment. · All the important specifications are not addressed by the test procedures. · Absence of the facilities that are needed in order to sspecify the tests mainly the system-level tests · Absence of sufficient time so as to conduct the test thoroughly (Hwang, Zhao and Toh 2014). · Lack of proper tools in the project along with the absence of proper modelling and simulation capabilities so as to assess the other alternatives. |
|
Scheduling |
· Instability of the funding profile from one budget cycle to another. · Non-reflection of the acquisition planning by the schedule. · Not realistic and attainable characteristics of the scheduling objectives · Unavailability of resources so as to meet the schedule |
|
Supplier capabilities |
· Restriction of the available number of vendors. |
|
Cost |
· Non establishment of the realistic cost objective at the early stage · Non-matching of the fundamental profile with the actuation strategy (Raj and Wadsamudrakar 2018). · Price fluctuation of the raw materials |
|
Technology |
· Non-demonstration of the technology in the required operating environment · Dependency of the technology upon the complex technical equipment’s that includes the hardware, software or the integration design (Glendon, Clarke and McKenna 2016). |
|
Management |
· Adequate considerations are not provided by the acquisition regarding the various essential elements · Undeveloped subordinate strategies and plans timely or are dependent upon the acquisition strategy. · Ineffective risk assessment or non-understanding of the results (Qazi et al., 2016). |
Major Risks Associated with the Project
Fig 1: Previous Structure of the Building
Source: (slac.stanford.edu, 2018)
Fig 2: New Design of the Project
Source: (slac.stanford.edu, 2018)
Determining of the probability of occurrence along with the cost and schedule consequences of each risk the risk level assessment is conducted. This type of consequences must be associated with considering the foreseeable cumulative impact upon the scope of the project, cost of the project and schedule of the project (Desai and Kashiyani 2015). There exists three assessment levels in each risk category and they are listed below:
In case of occurrence of the risks:
Level0: The risk is negligible or would not be having any type of impact upon the fulfilment of the needed mission
Level1: impact is low upon the fulfilment of the needed mission
Level2: The impact is moderate upon the fulfilment of the needed mission
Level3: There is a considerable impact upon the fulfilment of the needed mission
In case of occurrence of the risks:
Level0: Potential Delay in the milestone up to one month
Level1: Potential Delay in the milestone up to two month
Level2: Potential Delay in the milestone up to three month
Level3: Potential Delay in the milestone up to three months and more
In case of occurrence of the risks
Level0: the estimated cost of the impact consequence is less than $10K
Level1: the estimated cost of the impact consequence is less than $109K
Level2: the estimated cost of the impact consequence is less than $500K
Level3: the estimated cost of the impact consequence is more than $500K
|
Overall Level |
Level 0 (Negligible) |
Level 1 (Low) |
Level 2 (Moderate) |
Level 3 (High) |
|
Risk Area |
||||
|
Technical |
The risk is negligible or would not be having any type of impact upon the fulfilment of the needed mission |
impact is low upon the fulfilment of the needed mission |
The impact is moderate upon the fulfilment of the needed mission |
There is a considerable impact upon the fulfilment of the needed mission |
|
Schedule |
Potential Delay in the milestone up to one month |
Potential Delay in the milestone up to two month |
Potential Delay in the milestone up to three month |
Potential Delay in the milestone up to three months and more |
|
Cost |
<=$10k |
<=100K |
<=$500K |
>$500K |
Risk management is generally considered to be a process that is used for the purpose of identifying the risks and also for the purpose of implementing the actions that are required in order reduce the likelihood of risk materialization or for reducing or eliminate the potential consequences that the identified risks would be having. The strategies related to risk mitigation can be categorised into four different type which includes the 1. Avoidance of risks, 2. Transfer of risks, 3. Reduction of risks and 4. Acceptance of risks. The strategy related to the management of the risks are identified and selected (Hughes, Champion and Murdoch 2015). After which the control actions are specified for each of the risks that has been identified and this specifying is generally dependent upon the selected management strategy. Assigning of the date for completing each of the control actions is also to be specified. In addition to this the POC or the probability and consequence of the risk is also be assignied. The estimation regarding the cost of implementation the control actions is also to be done along with estimating the control actions as well as the indications so as to determine if the risk is closed or not.
|
Elimination or avoidance of the risk is done by changing the project parameters |
|
|
The risks are viable but are shifted to some another project or organization which is often termed as risk allocation |
|
|
Reduction of the likelihood or consequence of the risk by a series of control actions |
|
|
Recognizing the risks that are simply taken on by the project. |
Risk Assessment Levels and Strategies
Determining the impact that the risk would be having is generally considered to be a process associated with the evaluation and quantification of the effects that the risk is having upon the project. The impact of the project can be differentiated into two categories which includes the following:
Handling strategy implementation: In case if handling of the risk is done by making use of the risk reduction or the mitigation strategy then there might exists an impact upon the cost or schedule which is associated with the implementation of this particular strategy (Carvalho and Rabechini Junior 2015). Besides this the implementation of the cost and the scheduling impacts related to the handling strategy which is to be included in baseline cost and schedule of the project.
Residual risk: once the process of implementing the risk-handling strategies is completed, there still exists some risks. So it is necessary to add an extra cost and schedule for the residual risks in the contingency calculations. This is to be done by determination of the effects that the cost and schedule probability distribution would be having upon the residual risks. These distribution of the probabilities are to be combined statistically by making use of the Monte Carlo process so as to produce the estimate of contingency (Violante, Dominguez and Paiva 2018). It is also to be made sure that during every instant the statistical calculations remains less than the available cost of the project and the cost contingency for each of the risk related to the cost.
The risk managers of the project are associated with the development of the suitable risk abatement strategies in order to accept or to mitigate the risks faced by the project. At the time of risk elicitation the risk managers would be associated with the determination of abatement strategies for the risks that have been identified. The abatement strategy is considered to be the simplified approach that are adopted by the project managers in accordance to the risks. Abetment actions are generally developed for the risks that are having deemed mitigation (Osipova 2014). This actions can also be stated as the specific activities which are generally executed in order to reduce the impact that the risks would be having. The actions are to be accomplished in time, which would be acting a very effective aspect in the process of reducing the various risks. A clear and concise specifications and construction drawings are to be done along with the determination of the responsibilities that the sub-contractors would be having in a judicious way and proposal of lower tier sub-contractors would help a lot in minimization of the risks (Glendon, Clarke and McKenna 2016). Risk abetment strategies along with the risk areas have been provided in the table below:
|
Category of the project risk |
|||
|
Project Impact |
High |
Moderate |
Low |
|
Cost |
· Monitoring of the cost closely · Estimating of numerous bottom-up independent cost · Performing of Value Management Vendor visits. |
· Monitoring of the cost closely · Estimating of at least two bottom-up independent cost |
· Monitoring of the cost along with the schedule and spending done |
|
Schedule |
· Increasing the lead time in a substantial way by initiation of the procurements 6-8 weeks early · Visit of the vendors and oversight of this |
Increase in the lead time by initiation of the procurements at least 2-4 weeks earlier Visit of the vendors and oversight of this |
Monitoring of the cost along with the schedule and spending done |
|
Performance |
Performing the important redesigning Evaluation of the alternate technologies Question answers or acceptance training |
Redesigning at a moderate rate as required Question answers or acceptance training |
Question answers or acceptance training |
Risk Mitigation Control Actions
For doing the model probability simulation the software that is to be used is the “Crystal Ball”. This would be initially helping in the determination of the most likely expenditure and the delays in the schedule (Reddy 2015). Besides this the model would also be associated with the simulation rages that are generally taken from the “Optimistic”, “Pessimistic”, and “Most Likely” risk estimates by making use of the triangular linear model (Raj and Wadsamudrakar 2018).
In this about 80% of the Monte Carlo Simulated Risk Cost would be used for the purpose of validating the analysis conducted by the expert regarding the cost of the project and the projected level of project contingency.
Conclusion:
The risk management process would be including the creation of the risk register which would be helping in the tracking and monitoring of the status of the all the risks related to the project along with all the details that are included in the risk control actions. The risk manager would be associated with the identification and assessing of all the risks and the main responsibilities includes the re-evaluation and updating of the risk entries at regular intervals by making use of the risk register. Besides whenever an imminent or new risk is identified they are included in the risk register. The risk are closed when it is seen that they are no longer credible or whenever there is no residual risk remaining. In addition to the above stated facts the items that are having risk severity of level 2 or more are to be included in the contingency analysis which is considered to be a product of the risk and the probability. By this a rough quantitative assessment of the risks are identified. All the risks must be documented along with their consequences and their probability of occurrence are also to eb discussed so as to provide support the different level of assessment.
References:
Burtonshaw-Gunn, S.A., 2017. Risk and financial management in construction. Routledge.
Carvalho, M.M.D. and Rabechini Junior, R., 2015. Impact of risk management on project performance: the importance of soft skills. International Journal of Production Research, 53(2), pp.321-340.
Desai, A. and Kashiyani, B., 2015. Role of Insurance as a Risk Management Tool in Construction Projects. International journal of advanced research in engineering, science and management.
Glendon, A.I., Clarke, S. and McKenna, E., 2016. Human safety and risk management. Crc Press.
Hughes, W., Champion, R. and Murdoch, J., 2015. Construction contracts: law and management. Routledge.
Hwang, B.G., Zhao, X. and Toh, L.P., 2014. Risk management in small construction projects in Singapore: Status, barriers and impact. International Journal of Project Management, 32(1), pp.116-124.
Iqbal, S., Choudhry, R.M., Holschemacher, K., Ali, A. and Tamošaitien?, J., 2015. Risk management in construction projects. Technological and Economic Development of Economy, 21(1), pp.65-78.
Kasapo?lu, E., 2018. Risk Management in Construction. In Sustainable Buildings-Interaction Between a Holistic Conceptual Act and Materials Properties. IntechOpen.
Musa, A.M., Abanda, F.H., Oti, A.H., Tah, J.H.M. and Boton, C., 2016. The potential of 4D modelling software systems for risk management in construction projects.
Osipova, E., 2014. Establishing cooperative relationships and joint risk management in construction projects: Agency theory perspective. Journal of management in engineering, 31(6), p.05014026.
Qazi, A., Quigley, J., Dickson, A. and Kirytopoulos, K., 2016. Project Complexity and Risk Management (ProCRiM): Towards modelling project complexity driven risk paths in construction projects. International Journal of Project Management, 34(7), pp.1183-1198.
Raj, M. and Wadsamudrakar, N.K., 2018. Risk management in construction project. International Journal of Engineering and Management Research (IJEMR), 8(3), pp.162-167.
Reddy, S., 2015. Risk Management in Construction Industry-A Case Study. International Journal of Innovative Research in Science, Engineering and Technology, 4(10).
Serpella, A.F., Ferrada, X., Howard, R. and Rubio, L., 2014. Risk management in construction projects: a knowledge-based approach. Procedia-Social and Behavioral Sciences, 119, pp.653-662.
slac.stanford.edu (2018). SLAC Home Page. [online] SLAC National Accelerator Laboratory. Available at: https://www6.slac.stanford.edu/ [Accessed 27 Sep. 2018].
Violante, A., Dominguez, C. and Paiva, A., 2018. Risk Management in Construction Projects: Are Small Companies Prepared? MOJ Civil Eng 4 (1): 00090. DOI: 10.15406/mojce. 2018.04. 00090. Risk Management in Construction Projects: Are Small Companies Prepared, 2(7).
Walker, A., 2015. Project management in construction. John Wiley & Sons.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
