07-02-2018

Risk Identification
and
Qualitative Risk Assessment
5th February 2018

ricssbe.org

Types of Risks in Construction Projects – Stage Wise

Pre-construction Stage:
• Inadequate soil and other required investigations and surveys;
• Inadequate detailed project reports (DPRs) including inadequate cost estimates;
• Delay in project specific clearances including environmental clearances;
• Inadequate handling of social issues;
• Incomplete/inadequate project drawings and documents;
• Inappropriate technology adoption decision;
• Unrealistic project schedules and inadequate programme scheduling;
• Lack of proper study of project documents; and
• Inadequate project tenders and bidder response.

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Types of Risks in Construction Projects – Stage Wise

Construction stage:
• Land acquisition and non- availability of site free of encumbrances;
• Organisational inter-disciplinary interfaces;
• Variations in geotechnical conditions;
• Delay in issue of ‘good for construction drawings';
• Design variations and other changes by consultants, client and other stakeholders;
• Variations in construction programme;
• Non-availability/shortage of adequate resources including manpower, material and
machines;
• Lack of commitment/co-ordination by various stakeholders/project participants;
• Lack of team work and inter-disciplinary interfaces;
• Lack of commitment and leadership skills in senior management;

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• Inadequate disputes’ settlement mechanism;
• Lack of awareness of safety norms and lack of implementation of safety reqs.;
• Accidents;
• Multiplicity of laws to be followed and delay in project specific clearances required
at the construction stage;
• Inefficient payment system/paucity of funds;
• Ineffective contract management;
• Interpretation of contract clauses;
• Law and order issues;
• Currency fluctuation;
• Political uncertainty;
• Unpredictable weather conditions;
• Transportation and infrastructure availability;
• Force majeure; and
• Change in statutory stipulations.
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Types of Risks in Construction Projects – Stage Wise

Commissioning and Handing over Stage:

• Final payments and related settlements;

• Contract closure;
• Final project documentation;
• Final disputes resolution;
• Political interference/public pressure; and
• Concessionaire’s apathy (if applicable).

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Types of Risks in Construction Projects – Category Wise

• Financial
• Technical
• Commercial
• Execution
• Contractual Or Legal
• Political
• Force Majeure incl. Acts Of God
• Earthquakes
• Floods and Hurricanes/ Cyclones/ Volcanic Eruptions
• War/ Act of Terrorism/ Disruption Due to Serious Law & Order issues(External)
• Harmful Radiations/Poisonous Contamination
• Judicial Injunction
• Unusually Adverse Weather Conditions
• Adverse Environmental Issues
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Types of Risks in Construction Projects – Stakeholder Wise

• Clients
• Architects
• Different consultants
• Contractors
• Vendors
• Public
• Govt. regulatory departments

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Risk identification – Tools and Techniques

• Documentation Review
• Information gathering techniques
• Brainstorming
• Delphi technique
• Interviewing
• Root cause analysis
• Checklist analysis
• Assumptions analysis

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Risk identification – Tools and Techniques

• Diagramming techniques
• Cause and Effect diagram
• System or process flow charts
• Influence diagrams
• SWOT Analysis
• Expert judgement

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RISK IDENTIFICATION TECHNIQUES

Cause-and-effect-diagram

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Risk Identification Outputs

• List of Identified Risks

• Risk Statement
• EVENT may occur causing IMPACT
• If CAUSE exists, EVENT may occur, causing IMPACT
• Risks linked to project objectives
• Risks ownership
• Risks categorization and Risk Breakdown structure
• Risk Triggers/ Sources
• Risk Register preparation initiation

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Risk Statement
Metro Project
Change in the State Government may lead to
- change of Metro alignment and it would lead to -
- delay in project completion, increased cost and claims from contractors to whom work has
been awarded.

GST
Due to rolling out of GST
- contractual clauses with respect to taxation may change and would lead to
- Disputes and delays.

Global Design Teams

Hiring a foreign architect
– may impact the approval process and functionality of the facility as
-. the firm might not be aware of Indian design reqs. and guidelines.
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Risk Breakdown Structure

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Enterprise Environmental Factors

• External factors not in the control of the project team
• Govt. or industry standards
• Stakeholder risk tolerances
• Existing human resources and infrastructure
• Commercial databases
• PMIS tools

Organizational Process Assets

• Processes and procedures
• Corporate knowledge base
• Report templates

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Risk Qualitative Assessment Tools and Techniques

• Risk Probability and Impact Assessment

• Risk data quality assessment
• Usefulness of data for risk assessment
• Degree to which the risk is understood
• Accuracy, quality, reliability and integrity of data about risk
• Identification

• Identification of project areas most prone to risks

• Risk urgency assessment

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Risk Assessment Matrix

ricssbe.org

Risk Assessment Example - I

Risk Probabili Effects
ty
Organisational financial problems may force reductions Low Catastrophic
R1
in the project budget.
R2 It may be impossible to recruit staff with the skills High Catastrophic
required for the project.
R3
Key staff may be at critical times in the project. Moderate Serious
R4 Critical Components of Lifts may contain defects Moderate Serious
which limit their functionality.
Client may changes to requirements that require major Moderate Serious
R5
design rework are proposed.
R6 The organisation is restructured so that different High Serious
management may be responsible for the project.

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RISK ASSESSMENT (II)

Risk Probabili Effects

ty
R7 The database used in the Procurement Moderate Serious
system may not be adequate to meet
special requirements.
R8 The time required to prepare drawings High Serious
may be underestimated.

R9 Customers may fail to understand the Moderate Tolerable

impact of requirements changes.
R10
Required training for staff is not Moderate Tolerable
available.

RISK MATRIX

CONSEQUENCES
Negligible Low Tolerable Serious Catastrophic
P
R Very High
O
B High R6,R8 R2
A
B Moderate R9, R10 R3, R4, R5
I R7,

L Low R1

T
Y Very Low

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Probability Impact Matrix

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Risk Management – Example 2nd

Indira Gandhi International Airport, Delhi

For Example details refer the associated word document

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Risk Management – 2nd Example 23

Indira Gandhi International Airport, Delhi

R1 – Phase I Execution Risks I1 – Market Reputation

(Probability 0.5) (Impact 0.8)

Impact 0.8
Collective
R2 – Real Estate Risks I2 – Funding for Subsequent Phases
(Probability 0.5) (Impact 0.4)

R3 – Noida Airport Risks I3 – Viability of subsequent phases

(Probability 0.5) (Impact 0.8)

R4 – Reduced Revenue Risks I4 – Immediate Financial Losses

(Probability 0.3) (Impact 0.2)

I5 – Long term financial losses

(Impact 0.4)
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Probability Impact Matrix

R2 R1, R3

R4

High risk project

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