Risk Management in Construction Projects - Revision history

Tkokotas at 16:58, 16 November 2018

2018-11-16T16:58:44Z

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			''Developed by Mint Rasmussen''


	Uncertainty is a fundamental factor of projects. We know that we cannot predict the future with certainty. Uncertainty converse all of the environmental conditions in which a project has to operate, e.g. costs of people or materials, etc. <ref name= Taylor> Taylor, Harvey \| 2010 \| Project Management \| (4th Edition) </ref>		Uncertainty is a fundamental factor of projects. We know that we cannot predict the future with certainty. Uncertainty converse all of the environmental conditions in which a project has to operate, e.g. costs of people or materials, etc. <ref name= Taylor> Taylor, Harvey \| 2010 \| Project Management \| (4th Edition) </ref>

S133819 at 07:23, 25 February 2018

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	</blockquote>		</blockquote>

	The first box shows the ~~‘’risk source’’~~, which consists of the problem or the issue that can form into a ~~‘’risk event’’~~ along a project life cycle. When the decision-maker knows the ~~‘’risk source’’~~, they have to respond to prevent the ~~‘’risk event’’~~ to occur.		The first box shows the ''risk source'', which consists of the problem or the issue that can form into a ''risk event'' along a project life cycle. When the decision-maker knows the ''risk source'', they have to respond to prevent the ''risk event'' to occur.

	As mentioned, the ~~‘’risk event’’~~, illustrated by the third box in the figure, will occur if the ~~‘’risk source’’~~ is not prevented or solved in the beginning of the process.		As mentioned, the ''risk event'', illustrated by the third box in the figure, will occur if the ''risk source'' is not prevented or solved in the beginning of the process.

	An example of a ~~‘’risk event’’~~ could be; a delayed delivery of a certain concrete element; permission to do a certain type of task; an accident on the construction site.		An example of a ''risk event'' could be; a delayed delivery of a certain concrete element; permission to do a certain type of task; an accident on the construction site.

	The decision-maker need to evaluate and respond to these ~~‘’risk events’’~~. This will lead us back to the third box, ~~‘’risk event’’~~: “how was the situation handled?”, and then back to the first box, ~~‘’risk source’’~~: “how can we prevent it from occurring again?”<ref name =Winch />.		The decision-maker need to evaluate and respond to these ''risk events''. This will lead us back to the third box, ''risk event'': “how was the situation handled?”, and then back to the first box, ''risk source'': “how can we prevent it from occurring again?”<ref name =Winch />.

	=Risk Management Process=		=Risk Management Process=
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	The identification process helps determine potential risk events that might either have a positive (opportunities) or negative (threats) impact on the construction project’s goals <ref name = DS> Dansk Standard \| 2013 \| "Guidance on project management" \| DS/ISO 21500 \| (2nd version) </ref>.		The identification process helps determine potential risk events that might either have a positive (opportunities) or negative (threats) impact on the construction project’s goals <ref name = DS> Dansk Standard \| 2013 \| "Guidance on project management" \| DS/ISO 21500 \| (2nd version) </ref>.

	There are many approaches to identify risks, some of them are listed below. While identifying the risks, a ~~‘’risk register’’~~ can be convenient. ~~‘’Risk register’’~~ is a “library” in which the result of risk analysis and risk response that have been treated before are registered. It is essential that the scope is as clear as possible so those risks can be minimized or have the opportunities to become recognized before the construction project begins. <ref name = PMBOK/>		There are many approaches to identify risks, some of them are listed below. While identifying the risks, a ''risk register'' can be convenient. ''Risk register'' is a “library” in which the result of risk analysis and risk response that have been treated before are registered. It is essential that the scope is as clear as possible so those risks can be minimized or have the opportunities to become recognized before the construction project begins. <ref name = PMBOK/>

	===Risk Checklist===		===Risk Checklist===
	Risk identification checklists are developed based on older information, experiences from previous similar projects and from other types of information. The risk checklist is a helpful tool that can ensure that risks identified in previous similar projects will aid to identify risks in future projects. When a project team receives a ~~Risk Checklist~~ from a previous and similar project, the team should furthermore investigate which new elements are present in the ongoing project and update the list accordingly. Moreover, the checklist should be updated before the closure of the construction project, to improve the list for future use on other similar projects<ref name = PMBOK/>.		Risk identification checklists are developed based on older information, experiences from previous similar projects and from other types of information. The'' risk checklist'' is a helpful tool that can ensure that risks identified in previous similar projects will aid to identify risks in future projects. When a project team receives a ''risk checklist'' from a previous and similar project, the team should furthermore investigate which new elements are present in the ongoing project and update the list accordingly. Moreover, the checklist should be updated before the closure of the construction project, to improve the list for future use on other similar projects<ref name = PMBOK/>.

	=== Information Gathering by Brainstorming ===		=== Information Gathering by Brainstorming ===
	Brainstorming is a good technique to use as information gathering because group thinking is more effective than individual thinking. Group thinking will include relevant people to brainstorm a list of potential risks. Risks will be identified and categorized by type<ref name = PMBOK/>.		''Brainstorming'' is a good technique to use as information gathering because group thinking is more effective than individual thinking. Group thinking will include relevant people to brainstorm a list of potential risks. Risks will be identified and categorized by type<ref name = PMBOK/>.


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	[[File:Rumsfeld.png\|thumb\|Rumsfeld known-known concept (''adapted from How to DO projects'') <ref name = HowTo/>]]		[[File:Rumsfeld.png\|thumb\|Rumsfeld known-known concept (''adapted from How to DO projects'') <ref name = HowTo/>]]

	Donald Rumsfeld’s known knowns concept helps categorize types of risks associated with a project.		Donald Rumsfeld’s ''known knowns'' concept helps categorize types of risks associated with a project.

	The ''known-knowns'' refer to things that are known to be known; risks that already are identified/assessed. The ''known-unknowns'' refer to things that we know we don’t know yet <ref name = HowTo/>, an example could be a need for extra employees in the construction processes due to a schedule delay; if the construction project has to be put on hold due to bad weather conditions. The ''unknown-knowns'' refer to things that are considered to be known but is known wrongly, or not known at all <ref name = HowTo/>; Examples of these are risks that someone already knows about but is keeping private<ref name = Winch/>. Lastly, the ''unknown-unknowns'' refer to things that are unknown to be unknown <ref name = HowTo/>, also referred to as “black swans”. These are risks that have not been identified and therefore are not known of<ref name = Winch/>.		The ''known-knowns'' refer to things that are known to be known; risks that already are identified/assessed. The ''known-unknowns'' refer to things that we know we don’t know yet <ref name = HowTo/>, an example could be a need for extra employees in the construction processes due to a schedule delay; if the construction project has to be put on hold due to bad weather conditions. The ''unknown-knowns'' refer to things that are considered to be known but is known wrongly, or not known at all <ref name = HowTo/>; Examples of these are risks that someone already knows about but is keeping private<ref name = Winch/>. Lastly, the ''unknown-unknowns'' refer to things that are unknown to be unknown <ref name = HowTo/>, also referred to as “black swans”. These are risks that have not been identified and therefore are not known of<ref name = Winch/>.

S133819 at 07:17, 25 February 2018

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	<blockquote>		<blockquote>
	<p>''”The risk source is the underlying condition that can generate a possible risk event at some time forward from the point of decision-making.”''</p>		<p>'''''”The risk source is the underlying condition that can generate a possible risk event at some time forward from the point of decision-making."'''''</p>
	<p>Graham M. Winch <ref name =Winch /></p>		<p>"Graham M. Winch" <ref name =Winch /></p>
	</blockquote>		</blockquote>

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	[[File:Pv.png\|thumb\|Probability/Impact Matrix (''adapted from How to DO projects'')<ref name = HowTo/>]]		[[File:Pv.png\|thumb\|Probability/Impact Matrix (''adapted from How to DO projects'')<ref name = HowTo/>]]

	The most common tool to assess theses risks is ~~‘’Probability~~/Impact ~~Matrix’’~~. Each risk identified are rated on its probability of occurrence and impact on the construction project. The risk can be classified as low, moderate and high as seen on the figure on the right. This matrix gives an overview of how much each risk have of a negative impact or threat to the construction project.		The most common tool to assess theses risks is ''Probability/Impact Matrix''. Each risk identified are rated on its probability of occurrence and impact on the construction project. The risk can be classified as low, moderate and high as seen on the figure on the right. This matrix gives an overview of how much each risk have of a negative impact or threat to the construction project.

	The ''impact'' factor on the x-axis is defined as how large of a negative impact the risk has on the construction project. The ''probability'' factor on the y-axis is defined as probability of the risk occurring.		The ''impact'' factor on the x-axis is defined as how large of a negative impact the risk has on the construction project. The ''probability'' factor on the y-axis is defined as probability of the risk occurring.
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	[[File:Arta.png\|thumb\|ARTA grid (''adapted from How to DO projects'')<ref name = HowTo/>]]		[[File:Arta.png\|thumb\|ARTA grid (''adapted from How to DO projects'')<ref name = HowTo/>]]

	~~‘’ARTA’’~~ strategy are defined by four main strategies:		ARTA strategy are defined by four main strategies:
	*~~‘’Avoid’’~~		*''Avoid''
	*~~’Reduce’’~~		*''Reduce''
	*~~’’Transfer’’’~~		*''Transfer''
	*~~’’Accept’’~~		*''Accept''

	If the risk is of ''high impact and high probability'', the correct corresponding action would be to ''avoid'' the risk altogether. In such an event the project team acts to eliminate the threat or protect the construction project from the risk’s impacts. This typically involves changing the strategy or reducing the scope. Some risks can already be identified in the beginning of the construction projects, which means that these can be avoided by clarifying requirements, obtaining relevant information and expertise or improving communication.		If the risk is of ''high impact and high probability'', the correct corresponding action would be to ''avoid'' the risk altogether. In such an event the project team acts to eliminate the threat or protect the construction project from the risk’s impacts. This typically involves changing the strategy or reducing the scope. Some risks can already be identified in the beginning of the construction projects, which means that these can be avoided by clarifying requirements, obtaining relevant information and expertise or improving communication.

S133819 at 19:08, 22 February 2018

2018-02-22T19:08:25Z

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S133819 at 17:20, 22 February 2018

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	<blockquote>		<blockquote>
	<p>''”The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.”''</p>		<p>'''''”The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.”'''''</p>
	<p>~~'''~~''Project Management Institute~~'''~~'' <ref name=PMBOK/></p>		<p>''Project Management Institute'' <ref name=PMBOK/></p>
	</blockquote>		</blockquote>

S133819 at 13:32, 22 February 2018

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	<blockquote>		<blockquote>
	<p>''”The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.”''</p>		<p>''”The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.”''</p>
	<p>''''Project Management Institute'''' <ref name=PMBOK/></p>		<p>'''''Project Management Institute''''' <ref name=PMBOK/></p>
	</blockquote>		</blockquote>

S133819 at 13:31, 22 February 2018

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	<blockquote>		<blockquote>
	<p>''”The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.”''</p>		<p>''”The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.”''</p>
	<p>by ''Project Management Institute'' <ref name=PMBOK/></p>		<p>''''Project Management Institute'''' <ref name=PMBOK/></p>
	</blockquote>		</blockquote>

S133819 at 13:31, 22 February 2018

2018-02-22T13:31:23Z

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	<blockquote>		<blockquote>
	<p>''”The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.”''</p>		<p>''”The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.”''</p>
	<p>Project Management Institute <ref name=PMBOK/></p>		<p>by ''Project Management Institute'' <ref name=PMBOK/></p>
	</blockquote>		</blockquote>

S133819 at 13:30, 22 February 2018

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	=Limitation=		=Limitation=
			Risk management will improve numerous tasks of a construction project, but of course there are limitations. As mentioned earlier:

			<blockquote>
			<p>''”The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.”''</p>
			<p>Project Management Institute <ref name=PMBOK/></p>
			</blockquote>

			Risk management is not about removing all risks from construction projects, as this is impossible. But rather, it is to reduce the amount of negative impacts. Risk management is therefore only limited to the extent that it is possible to identify and assess risks, known or unknown. Furthermore, risk management can both be limited in its ability to decrease impact and likelihood of negative impacts, as well as in its ability to increase likelihood and impact of positive impacts.

			A common tendency amongst risk managers is that the majority of their focus is on decreasing negative impact associated risks. Ideally equal importance should be given to increasing positive impact associated risks. Limitations to the benefit of doing risk management therefore arise when an imbalanced prioritization is given to these <ref name=PMBOK/>.
	=Annotated bibliography=		=Annotated bibliography=

	=References=		=References=
	<references/>		<references/>

S133819 at 11:37, 22 February 2018

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	=Limitation=		=Limitation=

	=Annotated ~~References~~=		=Annotated bibliography=

	=References=		=References=
	<references/>		<references/>