Risk Management in the Built Environment Qualitative and Quantitative Risk Management By Professor Simon Burtonshaw-Gunn – licensed under the Creative Commons Attribution – Non- Commercial – Share Alike License

Risk Management in the Built Environment School of the Built Environment MSc Construction Management Risk Management in the Built Environment Presentation 3: Risk Response, Monitoring and Control Professor Simon Burtonshaw-Gunn

Risk Management in the Built Environment Typical closed loop Risk Management Process Approval Managed and Control Risk Reporting Contingency Identify Evaluate (Quantitative) Assess (Qualitative) Risk Actions Risk Response Planning, Monitoring and Control

Risk Management in the Built Environment Engage Stakeholders Independent Review Appropriate Assessment Decision Needed Proposed Options Review and Acceptance Approval to Proceed Communicate and Implement Monitor and Improved Performance Validation A standard framework for the decision making process where the importance of the change dictates the extent and formality of the assessment, documentation, review, consultation and approval stages. Note that implementing the change effectively is the most important step, since it is only at this point that the risk is reduced. Risk Response Planning, Monitoring and Control

Risk Management in the Built Environment The options available to address risks will be based on one or more of the ‘4Ts’ risk response actions: Terminate, Treat, Tolerate, Transfer. Risk Response Planning, Monitoring and Control

Risk Management in the Built Environment Terminate Risk termination or avoidance centres on changing the project plan to eliminate the risk or to protect the project objectives from its impact. Although not all risks can be totally eliminated some may be avoided by taking this pre-emptive action. Risk Response Planning, Monitoring and Control

Risk Management in the Built Environment Risk transfer is seeking to move the consequence of a risk to a third party together with ownership of the response. Transferring the risk does not eliminate it; it simple gives another party responsibility for its management. This is the most effective way of dealing with financial risk exposure and can be by a contract to another party or by payment of a premium in the case of insurance. Transfer Risk Response Planning, Monitoring and Control

Risk Management in the Built Environment This strategy seeks to reduce the risk probability or its impact by taking early action to reduce the occurrence of the risk to an acceptable limit. Risk mitigation may take the form of implementing new processes, undertaking more preliminary work or selecting more stable suppliers. Risk mitigation can also include changing conditions so that the probability of the risk is reduced, by adding resources or time to the programme. Treat Risk Response Planning, Monitoring and Control

Risk Management in the Built Environment This strategy indicates that the project has decided not to change the project plan and to deal with a risk or is unable to identify any other suitable strategy to adopt. Risk acceptance may also occur when the cost of dealing with it would not be cost effective. In this event the development of a contingency plan to execute should the identified risk occur is a natural step. Tolerate Risk Response Planning, Monitoring and Control

Risk Management in the Built Environment In addition to the 4T’s is the action to Reject the risk if considered that it will not be a threat to the project. Reject Risk Response Planning, Monitoring and Control

Risk Management in the Built Environment Risk Response Planning, Monitoring and Control Reject Terminate Tolerate Treat Examples for your experience?

Risk Management in the Built Environment Risk Response Planning, Monitoring and Control Risk Monitoring and Control Workaround Plan Corrective action Project change requests Updates to the Risk Response Plan Risk database Updates to Risk Identification checklists Project Risk response audits Periodic risk reviews Earned value analysis Critical design features management Design reviews Additional risk response planning Risk Management Plan Response Management Plan Project Communication Additional risk identification and analysis Scope changes Risk Monitoring and Control Workaround Plan Corrective action Project change requests Updates to the Risk Response Plan Risk database Updates to Risk Identification checklists Project Risk response audits Periodic risk reviews Earned value analysis Critical design features management Design reviews Additional risk response planning Risk Management Plan Response Management Plan Project Communication Additional risk identification and analysis

Risk Management in the Built Environment Typical closed loop feedback system – where would you use this as part of a project control system??

Risk Management in the Built Environment School of the Built Environment MSc Construction Management Risk Management in the Built Environment Presentation 3: Risk Response, Monitoring and Control Professor Simon Burtonshaw-Gunn