Project Management

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Project Management

• Project Risk Management
• Jiwei Ma

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Content

• Concepts
• Risk Identification
• Risk Assessment
• Risk Control

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Concept

• Risk
• The possibility of loss, damage, or any other
  undesirable event
• Project Risk
• Any loss, damage, or undesirable event that may
  impact the project to be accomplished on time,
  under budget, and to required quality standard
• Project Risk Management
• Effort in project management to reduce the
  occurrence possibility, minimize the impact of
  project risks, and assure the success of the
  project

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Risk Identification

• To locate and identify the potential risks
  existing within the system or in the environment
• Methods
• Previous statistical data
• Previous experience
• Survey
• Brainstorm

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Project Risk Identification

• Methods
• Survey or brainstorm
• Applicable for small project
• Systematic approach
• Component analysis
• Process analysis
• Participant analysis
• Project objective analysis
• Project environment

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Risk Assessment

• Concept
• A scientifically based process of evaluating
  risks and the likelihood of exposure to those
  risks, and then estimating the resulting impact
• Methodologies
• Qualitative
• To distinguish risks as high, medium and low
  level
• Semi-quantitative
• To prioritize risks in relation to one another
• Quantitative
• To measure, calculate and analyze the value of
  risks and the impact

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Risk Assessment

• Basic procedure
• To clarify the risks which have significant or
  measurable impacts on project
• To analyze the consequences of the risks
  occurrence
• To evaluate the severity of the impact caused by
  the risk
• To prioritize risks by calculating risk impact,
  and then formulate possible improvements or
  preventive measures

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Risk Assessment Techniques

• Fault tree analysis
• Used to identify the causal relationships leading
  to the undesirable event
• Based on deductive logic
• Can be qualitative or quantitative

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Risk Assessment Techniques

• Event tree analysis
• Used to illustrate the sequence of the outcome
  after the occurrence of a selected initial event
• Based on inductive logic
• Mainly used in consequence analysis

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Risk Assessment Techniques

• Cause-consequence analysis
• A blend of fault tree and event tree analysis
• Based on both deductive and inductive logic
• The risk level of the system can be established
  by calculating probabilities of various
  consequences with the probabilities of various
  events

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Risk Assessment Techniques

• Frequency/severity diagram
• Used to evaluate the impact of risks and
  prioritize the preventive measures
• Based on consequence evaluation and probability
  calculation
• Can be semi-quantitative or quantitative
• Risk value Severity x Frequency

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Risk Control

• To identify, select, and implement measures that
  can be applied to reduce the risk identified and
  evaluated during the previous phases
• Measures
• To avoid risk
• To remove/reallocate risk
• To share risk
• To reduce risk
• To mitigate damage caused by risk

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Construction Project Risks

• List of risks
• Planning and selection risks
• Contract formation risks
• Entity formation risks
• Entity management risks
• Site risks
• Resource risks
• Environmental risks
• Technology risks
• Communication risks
• Expectation risks

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Construction Project Risks

• List of risks
• Financial risks
• Completion risks (cost)
• Completion risks (time)
• Completion risks (quality)
• Payment risks
• Project administration risks
• Force majeure risks
• Political risks
• Currency risks

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Construction Project Risk Control

• Major measures
• Improved procurement method to minimize
  implementation risks
• Safety programs to reduce on-site accidents
• Strict construction measurements to confine
  environmental hazards
• Various insurance to reallocate risks
• Bond company involved to share risks with owner
  and contractor

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Construction Project Risk Control

• Improved procurement method
• Performance based procurement
• Construction management / management contracting
• Contractor prequalification in competitive bid
• Contract negotiation after bid opening
• Partnering or building long-term relationship

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Construction Project Risk Control

• Safety programs
• On-site safety management program including
  owner, contractor, sub contractor, etc.
• Regulatory safety control by government bodies
• Safety control and education by professional
  organizations, i.e. OSHA, BG, HSC, etc.

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Construction Project Risk Control

• Insurance
• Contractors liability insurance
• Workers compensation
• Employers liability
• Commercial general liability
• Automobile liability
• Owners liability insurance
• Usually general liability insurance
• Management protective liability insurance
• Professional liability insurance
• Property insurance
• Project owners obligation

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Construction Project Risk Control

• Bond
• Types of bond
• Bid bond
• Performance bond
• Payment bond
• Impact of bond
• Contractor classification and prequalification
• Review of contractors financial sustainability
• Assurance of contractors performance and behavior

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Thank You

• Jiwei Ma
• jiweima_at_hotmail.com