16.1.3 Risk Management
Risk management may be decomposed into four separate but related activities:
(1) planning for risk management
(2) risk assessment
(3) risk analysis
(4) risk handling
The planning phase consists of defining the tasks, identifying suitable methodologies, scheduling the tasks and determining the organization which will overlook
their performance. Among these activities, scheduling deserves some special attention, because the timing of risk management tasks may be critical to their effectiveness. Among the risk drivers, programmatic risk is identified and evaluated at
the tender phase, and risk handling tasks are attended to immediately after signing
the contract. This should be reassessed on a regular basis, and any alteration in the
evaluation will entail a new or modified risk handling strategies. Technical and
supportability risk management are set in motion during the first weeks after
contract signature, with data collection from subcontractors often being the major
task, but otherwise, risk management tasks are tied to the important technical
reviews.
The execution phase of risk management consists of the three activities: risk
assessment, risk analysis and risk handling.
The first step in risk assessment is risk identification. If risk is defined as (1) the
probability of occurrence of an undesirable event and (2) of its entailing significant
consequences, it is essential to pinpoint both the undesirable event and its possible
consequences. The identification is approached as follows:
(a) Form a matrix with the five main project phases along one axis and the three risk
drivers (technical, programmatic and supportability) along the other.
(b) For each matrix element, write down the goals to be achieved and the strategies
for achieving them. The latter are contained in the relevant plans.
(c) Detect undesirable events by contrasting the strategies against the goals. Is every
goal covered by a strategy? Are the strategies optimal, or have they been
constrained by external circumstances?
(d) Recognise further unwanted events from familiarity with similar projects.
(e) For each undesirable event, identify the potential consequences in terms of cost
and/or schedule, that is, as specified in penalty clauses of the contract.
The second step in risk assessment is to obtain a quantitative measure of the risks
as they relate to this particular project. On the one hand, this involves estimating the
probability of an undesirable event happening. On the other hand, it involves
determining the probability of each possible outcome resulting from the event
occurring. All such estimates are based on experience and are obtained through
interviewing experts and studying analogous projects.
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16 Decision Taking with Infrastructure
Risk management may be decomposed into four separate but related activities:
(1) planning for risk management
(2) risk assessment
(3) risk analysis
(4) risk handling
The planning phase consists of defining the tasks, identifying suitable methodologies, scheduling the tasks and determining the organization which will overlook
their performance. Among these activities, scheduling deserves some special attention, because the timing of risk management tasks may be critical to their effectiveness. Among the risk drivers, programmatic risk is identified and evaluated at
the tender phase, and risk handling tasks are attended to immediately after signing
the contract. This should be reassessed on a regular basis, and any alteration in the
evaluation will entail a new or modified risk handling strategies. Technical and
supportability risk management are set in motion during the first weeks after
contract signature, with data collection from subcontractors often being the major
task, but otherwise, risk management tasks are tied to the important technical
reviews.
The execution phase of risk management consists of the three activities: risk
assessment, risk analysis and risk handling.
The first step in risk assessment is risk identification. If risk is defined as (1) the
probability of occurrence of an undesirable event and (2) of its entailing significant
consequences, it is essential to pinpoint both the undesirable event and its possible
consequences. The identification is approached as follows:
(a) Form a matrix with the five main project phases along one axis and the three risk
drivers (technical, programmatic and supportability) along the other.
(b) For each matrix element, write down the goals to be achieved and the strategies
for achieving them. The latter are contained in the relevant plans.
(c) Detect undesirable events by contrasting the strategies against the goals. Is every
goal covered by a strategy? Are the strategies optimal, or have they been
constrained by external circumstances?
(d) Recognise further unwanted events from familiarity with similar projects.
(e) For each undesirable event, identify the potential consequences in terms of cost
and/or schedule, that is, as specified in penalty clauses of the contract.
The second step in risk assessment is to obtain a quantitative measure of the risks
as they relate to this particular project. On the one hand, this involves estimating the
probability of an undesirable event happening. On the other hand, it involves
determining the probability of each possible outcome resulting from the event
occurring. All such estimates are based on experience and are obtained through
interviewing experts and studying analogous projects.
444
16 Decision Taking with Infrastructure