Risk Management Plan
Risk Management Plan
The paper seeks to outline the measures and metrics that can be utilized in the identification of hazards inherent in construction projects. In addition, it will provide an analysis of the issues, which may impede the successful completion of the proposed project on Cardigan Street. The measures and standards provided resonate with industry regulations and compliance expectations for construction projects in Australia and around the world.
Table of Contents
Risk Management Plan
Risk management practices are utilized on a variety of industries. These industries have specific standards and measures, which are designed to suit the practices and conduct in each sector. The risk management process is made up of four distinctive steps namely identification of the risks, the assessment, action to mitigate and monitoring these risks. In these four areas, it becomes easy to utilize a variety of techniques and measures for the handling of the identified risks. Risk Management Practices (RMP) have become important elements in project management within the construction industry (Wu 12). The uncertainty of the construction industry due to variations in project complexity make risk management practices a critical part of managing projects. Risk management can facilitate the achievement of goals and objectives in terms of successful completion of a construction project.
The primary aim of this risk management plan is to set out a variety of measures, policies, and standards in line with industry requirements to ensure optimal levels of safety and mitigation of risks inherent in construction projects. It outlines the various measures and practices that can be utilized by the entity in the management of its construction projects. This will be important towards ensuring the appropriate delegation of resources, duties, and responsibilities to the employees as a means of achievement of safety and security in the workplace.
The company aims to ensure optimal reduction and mitigation of risks inherent to its construction projects. The plan will ensure reduction of project costs, risks and optimize the success rate of completion of the project. The company is highly committed towards successful completion of the project, which will demand the need to use this risk management plan. Using this plan the organization will be able to avoid liabilities in the form of civil suits, which usually arise from injury and safety issues in the construction setting (Puil and Weele 22). The organization has a duty of care to ensure that all its construction projects, both in progress and completed are characterized by safe environments.
The construction of a three-storey building with intricate areas such as wet areas and plant room. The building has a lower ground room, ground floor, levels one through to three. These areas provide a basement car park, café on the ground floor, offices on the second, apartments on the second and third floors culminating with a plant-room in the topmost section of the building.
- ABC Construction Project Management Team
- Risk Owner (Work-Breakdown Structure (WBS) Task Manager)
- Project Manager
- Risk Manager
- Subject matter Experts
- Independent Project Oversight Consultant
- Project Director and Project Sponsor
- Steering Committee
- Prime Contractor
|ABC Construction Project Management Team|| I. The members of this team are tasked with the attendance to risk meetings as demanded
II. They are also responsible for the identification of risks and provision of support for the classification of emergent risks
III. They provide recommendations on the actions and approaches to be utilized in identification, classification monitoring and mitigation of risks
IV. In addition, the team is also tasked with the categorization and prioritization of identified risks
V. They may undertake consultations with the subject matter experts in the event that the need arises
|Risk Owner (Work-Breakdown Structure (WBS) Task Manager)|| I. The party is expected to attend the risk meetings as demanded.
II. They are also tasked with the identification and mapping out of the high, medium and low risks in the work breakdown structure elements, which includes the necessary response activities for the identified risks.
III. The party is also responsible for the determination of the probability of occurrence, anticipated outcome/impact, and the exposure rating for the selected risks.
IV. The party is also tasked with ensuring a high level of accuracy ion the determination of the probability, impact, and possible outcomes in timeframe estimates provided.
V. The party is tasked with outlining the measures and alternative strategies that can be used to address the high, medium, and low risks in the project.
VI. Reporting of the results from the analysis to the Risk Manger with inclusion of the Risk Identification and Response Plan form.
VII. Tasked with the implementation of the individual risk response plans.
VIII. Responding to the Risk manager within the agreeable timeframe.
IX. Undertaking consultations with the subject matter experts as necessary.
|Project Manager|| I. The party is tasked with the participation in risk management process utilized by the organization.
II. He or she is also tasked with undertaking control decisions namely analysis, decision-making and execution of strategies in the high priority project risks.
III. Responsible for assignment and alteration of responsibilities for risks and mitigation plans in the project.
IV. The party is authorized with approval of expenditures on resources for effective contingency or mitigation planning and execution in the organization’s projects.
V. Escalation of risks as necessary and outlined within this plan
VI. Review existing the risk measures with oversight and consultants
VII. Final decision-making on the appropriate actions to be undertake in relation to identified risks in the project
|Risk Manager|| I. The party is responsible for initiation of the risk management process
II. Tasked with sponsoring risk identification processes used by the organization
III. Tasked with facilitation of communication in all the risk management activities and processes
IV. Report on risk management processes during biweekly reports and utilizing the risk spreadsheet
V. The party may undertake consultations with the subject matter experts when the need arises
|Subject matter Experts|| I. The party is tasked with the participation in risk meetings and various reviews when necessary
II. Provision of expertise in the project execution
III. Provision of assistance in the determination of the probability, incidence, impact and timeframe of the occurrence of risks
IV. Responsible for advising parties on the accuracy and level of completeness of information held on the various expertise levels
|Independent Project Oversight Consultant|| I. Participation in all the risk meetings and subsequent reviews
II. Tasked with performance of risk identification and evaluations
III. Responsible for providing Oversight and delivery of status of the project to the external stakeholders
IV. Provide a status report
|Project Director and Project Sponsor|| I. Receipt of the escalated risk report and delivery of assistance with contingency and mitigation actions as necessary
II. Participation in risk identification and subsequent risk management process as deemed necessary
|Steering Committee||I. Review and undertake diligent adoption or rejection of the risk response strategies presented by the Project Manager|
|Prime Contractor|| I. The party is responsible for the identification of risks and presenting them to the project manager. He or she is also responsible for management of risks inherent in the internal activities of the organization during the project
II. Provides assistance with the various contingency and mitigation activities associated with project risks
III. The party is also required to deliver monthly status reports with consideration of risks and their respective statuses and influence on project success.
This refers to the identification of risks and determining their effects on the outcome and success levels for the project. This is considered an iterative activity that is takes place continuously throughout the lifecycle of the project.
The risks can be classified as external, internal, and legal, with each segment having a variety of factors that may influence the overall success rate of a given project. In addition, the risks may also be termed as either controllable or uncontrollable with diversity in terms of magnitude of occurrence.
Time overrun can result in delays in delivery and more so influence the overall cost associated with the completion of the project. The deviation caused by both time and budget overruns are seen as high risks towards the successful completion of the project. Research is indicative that the management of a project plays a critical role in the determination of the successful completion of the project and more so its success rate.
The deviation from initial design as well as the scope may negatively influence the completion of the project in relation to initial budget and schedule estimates.
The emergence of challenges towards approval of construction may impede the successful completion of the project in relation to cost and timeframe estimates provided by the subject matter experts. Litigation is considered as a high risk that may impede the successful completion of a project.
Threat to the safety of the employees, stakeholders and customers may render a project as unprofitable and unsuccessful.
These are classified as external factors, and may be either controllable or uncontrollable. They usually result in time and budget overruns, thus negatively influence the completion of the project.
This is usually understood as a time constraint, whereby inaccurate scheduling may result in time overruns. It may negatively affect the completion of the project by extending the period of successful completion, as well as the associated costs.
These can be classified in a variety of segments such as safety considerations, inadequacy, or unavailability of resources, site restrictions, and contractor challenges.
These risks are usually manifested in the form of market instability, weather, cultural values, law, and shifts in consumer preferences. Market instability is manifested by inflation, which negatively influences the costs associated with materials and labor. In addition, this impedes the overall costs and successful completion of the project within allowable budget estimates. Political environment may impede the successful completion of the project. This includes the emergence of new regulations and polices guiding construction activity in Australia. This may necessitate the need for compliance with new measures, giving rise to new costs and extending the timeframe estimated for completion of the project.
The use of checklists, forms, and risk registers may provide critical project information on possible occurrence of the identified incidences. Experience in terms of success rate of past projects completed may provide critical information on possible success and manifestation of the risks identified.
Research indicates that a number of specific factors influence untimely delivery and budget overruns in relation to successful completion of projects. Such issues include third party influences and labor availability concerns. Third party influences such as the presence of multiple stakeholders may impede successful completion due to issues such as design and funding challenges. Secondly, the availability of specialized labor may impede initiation and successful completion of the project, especially for long-term undertakings. A variety of factors and strategies can be effective in the mitigation of risks in construction projects.
- Adequate and effective up-front planning is critical towards identification of resources and possible constraints, which may impede access, cost, and timeframe of completion of the project.
- Realistic scheduling and estimation is critical towards ensuring positive outcomes in terms of successful project completion. In addition, over-optimism may be avoided by focusing on realistic timeframe of completion of the project.
- Familiarity, experience, capacity, and adequacy of knowledge in relation to a project is deemed as critical towards optimal involvement of the contractors and owners in the project delivery processes. This eliminates incidences of failure.
- Rigorous assessment of risk and mitigation of the same usually starts at project inception and utilizes a variety of metrics for tracking the performance and comparison of such with the inherent risks of a project.
The risks are classified and evaluated based on control. Controllable and uncontrollable risks differ from one another, demanding the need for diverse and differentiated avenues for treatment and control. The controllable risks are easily avoided and can be mitigated with ease. On the other hand, the uncontrollable risks are impossible to control and can be avoided through adequate plan to eliminate incidences of deviation from project goals and objectives.
Continuous appraisal of all construction activities is critical towards identification of risks and threats, which may impede the successful completion of the construction project. Appraisals and evaluations conducted by the contractors and other professionals tasked with oversight of the project are important to ensure early identification of risks before they occur.
Using appropriate measures, tools, and approaches would ensure that all information related to prior construction projects and more so this project would provide critical knowledge for effective management of risks (Taylor 41). Irrespective of the strategy utilized for controlling the identified hazards, it is imperative that evaluations on the impact on the use of equipment, construction methods, and technology are carried out to minimize the emergence of new hazards or recurrence of old risks.
Puil, van J, and Weele A. van. International Contracting: Contract Management in Complex Construction Projects, 2014. Print.
Taylor, Malcolm. Avoiding Claims in Building Design: Risk Management in Practice. Oxford, UK: Blackwell Science, 2000. Print.
Wu, Desheng D. Modeling Risk Management in Sustainable Construction. Berlin: Springer, 2011. Print.
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