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RISK_MANAGEMENT_ppt

Risk Management

Muhammad843
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RISK_MANAGEMENT_ppt

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  1. RISK MANAGEMENT

  2. Introduction Risk • Uncertainties • Hazard or danger • Chance of bad consequence or loss • Exposure to mischance • Amount of insurance • Person or thing insured or otherwise representing the source of risk

  3. Introduction (Cont’d) • Risk - the way in describing an outcome of an event that is uncertain • Risk Management • ability in managing and controlling these uncertainties • is a process by which the likelihood of risk occurring or its impact on the project is reduced

  4. Introduction (Cont’d)

  5. Introduction (Cont’d) • More formal project risk management has only been developed quite recently in response to the recognition of the magnitude of the exposure to uncertaintybeing faced on many projects and the need to reduce volatility of these risks or at least prepare for their occurrence

  6. Process • Identify potential sources of risk • Determine their individual impact, and select those with a significant impact for further analysis • Assess the overall impact of the significant risks • Determine how the likelihood or impact of the risk can be reduced • Develop and implement a plan for controlling the risks and achieving the reductions

  7. Process (Cont’d)

  8. Risks in Construction Projects • Time • Cost • Quality • Resources • Safety • Environment • Company image or reputation • Business strategy

  9. Risks in Construction Projects (cont’d) • External Risks – unpredictable • Government regulations (on imports, tax, interest) • Third parties (sabotage or war) • Act of God (earthquake, flood, inclement weather)

  10. Risks in Construction Projects (cont’d) • External Risks –Predictable but uncertain • Beyond control of management • Activity of market (raw materials) • Policies affecting curency, inflation and taxation • Weather • Social impact

  11. Risks in Construction Projects (cont’d) • Internal Risks – Technical • Arise directly from the technology, design, construction method or operation • Arise from changes or from a failure to achieve desired level of performance • Inappropriate project design

  12. Risks in Construction Projects (cont’d) • Internal Risks – Non – Technical • Within the control of management • Failure of organizing resources effectively • May result in • Time overrun • Cost overrun • Interruption in operations • Negative cash flows • bankruptcy

  13. Risks in Construction Projects (cont’d) • Legal Risks • Coming under civil or criminal law • Contractual arrangements with clients, contractors or third parties – contractual failure • Illegal act by employees (criminal law) • Negligence by the staff (harming to others)

  14. Employer’s Risks Contractor’s risks Risks in Construction Projects (cont’d)

  15. Potential factors with related causes • People – skills, knowledge, experience, motivation • Plans – estimates, completeness, dependencies • Products – specifications, quality • Process – standards, procedures, guidelines, activity, measurement • Equipment – calibration, availability, reliability, plant, tools

  16. Potential factors with related causes (Cont’d) • Management – scheduling, documentation, leadership • Materials - quality, quantity, availability, delivery, removal • Environment – temperature, cleanliness, comfort

  17. In the form of matrix Risk impact Analysis

  18. Mitigation strategies for controlling risks • Avoidance or elimination – changing the project plan • Transfer - sub contracting • Loss prevention techniques – safety precautions • Loss reduction techniques – seat belts, sprinkler system, alarming system • Segregation technique – having multiple copies, back up facilities, designing for standard components, number of suppliers • Contingency planning to deal with low probability but high impact exposure – management training

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