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Utilise our 5-step process

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Step 1:   Identify your risks

Identify and describe all the risks, adding detail as information becomes available

Time

Check the programme of works, paying attention to key dates, milestones, constraints and deadlines. Ensure that all timings/ calendars, seqencing, and dependencies (with lead/ lag) are realistic and achievable.

Cost

Check your overhead costs, fixed costs and variable costs for vulnerabilities. Ensure that your cost-rates are updated and confirmed. Align your expenditure with your forecast and cashflow expectations.

Scope

Check the site layout, drawings and specs. Beware of scope-screep, re-work and changes to quantities/ variations to the scope/ spec. Understand the workload, resource requirements, and contractual obligations.

Quality

Check your clients' credentials, and the quality standards that they require. Ensure that your workforce can work within the site conditions (H,S&W). Consider the snagging, defects, and hand-over procedures.

Time

Check the programme of works, paying attention to key dates, milestones, constraints and deadlines. Ensure that all timings/ calendars, seqencing, and dependencies (with lead/ lag) are realistic and achievable.

Cost

Check your overhead costs, fixed costs and variable costs for vulnerabilities. Ensure that your cost-rates are updated and confirmed. Align your expenditure with your forecast and cashflow expectations.

Scope

Check the site layout, drawings and specs. Beware of scope-screep, re-work and changes to quantities/ variations to the scope/ spec. Understand the workload, resource requirements, and contractual obligations.

Quality

Check your clients' credentials, and the quality standards that they require. Ensure that your workforce can work within the site conditions (H,S&W). Consider the snagging, defects, and hand-over procedures.

Risk is “an uncertain event or condition that, if it occurs, has a positive or a negative effect on at least one project objective, such as time, cost, scope, or quality”
Project Management Institute, A Guide to the Project Management Body of Knowledge, Third Edition

Issues Vs Risks

An issue is a risk that has already impacted your business - it's a current problem which you need to deal with, whereas a risk is not an issue yet. A risk may be avoided or mitigated.

Assumptions

Assumptions are bad for business, as they stem from a lack of reliable information. If you need to make assumptions, then at least qualify them with reasons why they exist. Avoid making assumptions upon assumption, and seek clarifications as early as possible.

Step 2:   Evaluate your risks

Determine the likelihood and impact of each risk, to determine its risk score

Definition of evaluate
transitive verb

1: to determine or fix the value of
2: to determine the significance, worth, or condition of usually by careful appraisal and study
Merriam-Webster, merriam-webster.com

Risk register

Most contracts call for a risk register to be maintained by the main contractor, however it is best practice to keep one for internal purposes.

Risk matrix

A risk matrix is a visual-aid, used for comparing the likelihood against the risk's impact. This provides each risk with a score to ensure that all risks are approached in the same way.

Consider the source

Appraise the reliability and credibility of the source - does it come from someone with speciallist knowledge or experience in the matter?

Categorise the risk

Place each risk into a category (e.g. technical, contractual, operational) and determine the contractual liability/ ownership for each risk.

Assess the likelihood

Make a judgement on the likelihood of the risk becoming an issue on balance, based on historic performance records, or trusted professional advice/ opinions.

Weigh the impact

Take an all-encompassing snapshot of the situation before the risk became apparent, then add each risk as an impacting event to simulate the outcomes.

Quantify the effects

Determine the likely effects on your business, in terms of time, money, scope and quality. Give each risk a score to deduce the risk strategy.

Step 3:   Respond to your risks

Develop a plan to respond to the risk, depending on the nature of the risk and its score

Tolerate

If the risk score is low, you may decide to tolerate the risk. This means to allow the risk event to occur. For example, to accept prolongation due to inclement weather.

Treat

You may decide that a moderate risk should be treated by changing the circumstances to mitigate it (to avoid or reduce it). For example, to re-sequence your workload.

Transfer

A risk, which may not be tolerated or treated, may be transferred to supplier, subcontractor or your insurance provider. For example, to claim against an SLA.

Terminate

If the risk score is too high, it may be prudent to stop or not start the work in question. Eliminate the risk completely. For example, to reduce the scope of work.

Tolerate

If the risk score is low, you may decide to tolerate the risk. This means to allow the risk event to occur. For example, to accept prolongation due to inclement weather.

Treat

You may decide that a moderate risk should be treated by changing the circumstances to mitigate it (to avoid or reduce it). For example, to re-sequence your workload.

Transfer

A risk, which may not be tolerated or treated, may be transferred to supplier, subcontractor or your insurance provider. For example, to claim against an SLA.

Terminate

If the risk score is too high, it may be prudent to stop or not start the work in question. Eliminate the risk completely. For example, to reduce the scope of work.

The risk score may be calculated using various factors and weightings. Each score will be subjective, based on opinion, although each score will be relative. A risk score is simply a method to rank each risk, based on logic and reasoning.

Risk Impact/s

A risk event may have several points of impact to be considered:

  1. Time impact (e.g. delay, prolongation)
  2. Cost impact (e.g. inflation, taxes)
  3. Scope impact (e.g. reduced quantity)
  4. Quality impact (e.g. change of spec)

Step 4:   Control your risks

Take action to maintain control over each risk to your business

Definition of control
transitive verb

1
  •   a:   to exercise restraining or directing influence over;
  •   b:   to have power over;
  •   c:   to reduce the incidence or severity of especially to innocuous levels;
Merriam-Webster, merriam-webster.com
Isolate the risk

If you decide to tolerate or treat the risk, ensure that you minimise its effects to prevent further risk events from occurring.

Notify the stakeholders

Some contracts, such the NEC suite, require formal written notification of a risk event - submit your EWN as soon as possible.

Take action

Implement your response plan. Adjust the risk score as more information becomes available, and update your response accordingly.

Maintain control

Predict when the risk event will take place, and maintain control over the situation until the risk has been fully resolved.

Step 5:   Monitor your risks

Update the risk register and make notes on what lessons you have learned

Residual risks

Be mindful that some risks may recur at a later date as residual risks, which could sneek up on you. Don't be complacent. Look out for the early signs of a potential risk event.

Latent risks

Not all risks are obvious - some can be latent, laying beneath the surface until the right conditions arise. Make an effort to identify hidden or less-obvious risks.

Risk ownership

Check your contract to determine who is responsible for the risk, or who owns the risk. Consider making a claim, or raise a dispute, if you are contractually entitled to.

Assumptions

You may have made assumptions at the time of identifying the risk. Check if these assumption came true or if they added to the risk itself. Consider their logic and reasoning.

Residual risks

Be mindful that some risks may recur at a later date as residual risks, which could sneek up on you. Don't be complacent. Look out for the early signs of a potential risk event.

Latent risks

Not all risks are obvious - some can be latent, laying beneath the surface until the right conditions arise. Make an effort to identify hidden or less-obvious risks.

Risk ownership

Check your contract to determine who is responsible for the risk, or who owns the risk. Consider making a claim, or raise a dispute, if you are contractually entitled to.

Assumptions

You may have made assumptions at the time of identifying the risk. Check if these assumption came true or if they added to the risk itself. Consider their logic and reasoning.

Develop a mindset to capture the 'lessons learned'. This means to look back through the risks, and the process you followed to identify, evaluate, respond and control them. What did you get right? What did you get wrong?

Review & update

Ensure that you review the risk register at regular intervals, as you'll need to know what to look out for. Keep notes on the most relevant and useful facts and figures that you'll need to reference when the time comes.

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