Select any risk identified in Topic One and describe how it may be analysed and suggest a suitable

response.

Risk as it pertains to project management is an uncertain event or condition that, if it occurs, has an
adverse effect on at least one project objective [1]. Risk management focuses on the identification,
analysis, assessment, control and avoidance, minimization, or elimination of unacceptable risks [2].
In construction projects, the risk management process could be articulated in five typical steps
including: risk identification, risk analysis, risk evaluation and prioritisation, risk response, and risk
monitoring and review [3]. In Risk Management discussion 1, the Etihad Campus development
project was assessed with a view to identifying the potential risks that could impede the project
progress. During this effort, the risk of the remediation tasks not being progressed to completion
due to insufficient funds, was identified a significant risk worth giving further attention. The
discussion presented here intends to qualitatively analyse the risk identified and propose suitable
responses.

Risk analysis in construction projects can be realised using the qualitative methods, semi-
quantitative methods, or the quantitative methods [4]. Qualitative methods are the most commonly
used risk analysis methods in early stage construction projects, where the numerical data available
are not adequate for a more quantitative analysis. At this point, little is known about the likelihood
of the risk other than “high probability” or “low probability” and the only thing known about the
implications area “high impact” or “low impact” [5].

The risk discussed above could be classified as a Grade 1 risk using the four-point scale detailed in
table 1. By definition, a Grade 1 risk is a high probability and high impact risk. To accurately
determine the level of probability to be assigned to a risk, the causal factors must be examined as
detailed below for the risk analysed:-

Risk causal factors

 The potential for remediation job scope increase: According to a report by the
Manchester’s Council’s executive, the remediation site shows high levels of contamination
resulting from the area’s industrial heritage, which has seen it being used previously for
fireclay and coal mining as well as industrial and chemical works. In addition, there are
records of some mine workings, and 13 mine shafts on the site [6]. Both of these points
suggests the risk of a remediation scope increase due to a mine shaft collapse for example,
or the need for a special and possibly more expensive remediation processes for de-
concentrating the chemical contamination on-site.

 Funding constraints: The costs of cleaning up the land around the City of Manchester
stadium are estimated at £19 million, according to the Manchester City Council Report. This
budget is expected to be funded by contributions from the Northwest Regional
Development agency (NWDA), the Homes and Communities Agency (HCA) and the European
Regional Development Fund (ERDF). Although, £9 million out the total project funds
required have already been secured from contributions between the trios, funding for the
remainder £10 million requires additional talks between the NWDA and HCA which is yet to
occur. Failure of these talks to be timely, successful and conclusive, could lead to a funding
delay or worse, insufficient funds to progress the site remediation, which is a key aspect of
the Etihad Campus project, earmarked for the training complex. Additionally, the proposed
 project schedule is tight and speculates a 7 months completion period [7], leaving no float
time to account for project disruptions due to delays in sourcing for project funding. The
impact of the analysed risk is very high considering the possibility of resulting in the
disruption or discontinuation of the Etihad campus project. The high impact level assigned is
justified when considered that a large part of the remediation site has previously been
subject to applications for remediation and redevelopment for residential purposes which
were supported in principle, but not progressed to full determination.

Probability of occurrence
High Low
High 1 3
Consequence
Low 2 4
Table 1: Four-point scale showing risk classifications

The qualitative risk analysis detailed above could be summarised using a qualitative risk proforma as
shown below.

Proforma for a Qualitative Risk Assessment

Reference No: Date: 08/04/2018
Potential risk: Importance of risk: High (Grade 1)
The risk of the remediation tasks not being progressed to Probability: High
completion due to insufficient funds Consequence: High

Stages of the project affected by this risk:

All stages of the Etihad campus development project

Statement of risk:
The elements of the project that could be affected
Cost, Schedule and Quality

Factors that could cause it to occur

The potential for remediation job scope increase, Funding constraints

Any relationship or dependency on other risks

No direct dependency

Likelihood of occurring
High

Consequences to project
Increase project operating cost due to increased schedule
Increased execution schedule

One of the main objectives of conducting a qualitative risk analysis is to identify the hierarch of risks,
their scope, factors that cause them to occur and potential dependencies, with a view to developing
suitable risk responses to mitigate the identified risks. Risk response for construction projects may
take any of the following forms:

a. Risk reduction and elimination

b. Risk transfer
 c. Risk retention

The form most suitable for a project would depend on the nature and type of risk in view. By and
large, risks are best left with the parties best capable of controlling or at least understanding the
problem. In the case of the risk in view, the main causal factors (project funding constraints and the
potential for remediation scope increase) indicate that risk retention is not a suitable response
option for the Etihad campus project client team. Both causal factors are not within their capacity to
mitigate. As such, the most viable risk response would be risk reduction and elimination, and risk
transfer. Both responses are elucidated on a point-by-point basis below.

Response type Risk type Response details

Seeking for more funding partners or seeking for
Project funding
additional funding from existing partners under
constraints
Risk reduction favourable funding terms.
or elimination The potential for Planning for more contingency on the project resources
remediation scope and schedule (in form of float time) to buffer the effect of
increase a potential scope and schedule increase.
Seeking for more funding partners or seeking for
Project funding
additional funding from existing partners under
constraints
favourable funding terms.
Making use of a private finance initiative (PFI) for
executing the Etihad campus project. The idea behind the
Risk transfer PFI is that the contractor will take responsibility for raising
The potential for
the finance, designing, constructing the project,
remediation scope
maintaining repairing and running the project. In this
increase
case, the Etihad campus after being commissioned will be
run and operated by the contractor, with the client and
users paying a rental fee to use the facilities provided.

Table 2: Risk response table

References

[1] Project Management Institute Inc: A Guide to the Project Management Body of Knowledge
(PMBOK Guide). Newtown Square, PA: Project Management Institute, Inc, 2008.4th:273.
[2] Business Dictionary: http://www.businessdictionary.com/definition/risk-management.html. Date
accessed: 04/04/2017 at 19:27 GMT.
[3] Continuing Professional Development : http://continuingprofessionaldevelopment.org/risk-
management-steps-in-risk-management-process/. Date accessed: 04/04/2018 at 20.48 GMT.
[4] Risk Management / Analysis and calculations:
http://www.madrid.org/cs/StaticFiles/Emprendedores/Analisis_Riesgos/pages/pdf/metodologia/4A
nalisisycuantificaciondelRiesgo%28AR%29_en.pdf. Date accessed: 05/04/2018 at 18:45 GMT.
[5] Manase D. Risk Management in Construction (Risk and Value Management Lecture Notes).
Glasgow Caledonian University. 2018.
[6] Ward B. Constraints removal works and preparatory ground works in order to prepare land for
future development (Application Number: 095911/FO/2011/N2). Manchester City Council: Planning
and Highways Committee; Date of Appln: 31st Mar 2011; Committee Date: 2 June 2011.
[7] Ove Arup & Partners L. Sportcity Remediation and Servicing Works. New East Manchester Ltd
Transport and Access Statement. February 2010;Job number: 210887-30.