ARDHI UNIVERSITY

SCHOOL OF ARCHITECTURE, CONSTRUCTION ECONOMICS AND

MANAGEMENT.

QUANTITY SURVEY IN CONSTRUCTION ECONOMIS.

COURSE: PROJECT RISK MANAGEMENT (CM 343)

GROUP NO 6

NO NAME REGSTRATION
NUMBER

1 MARIMOTO WILLRICK K. 22954/T.2019

2 CHILALA DISMAS L. 22863/T.2019

3 MASSAWE ALVIN E 22837/T.2019

4 MOLLEL COLINS C. 22850/T.2019

5 LUGENGE GLADNESS 22880/T.2019

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 RISK RESPONSE

Risk response is a critical component of risk management process, that determines what action
(if any) will be taken to address risk issues in a project or organization. The main goal of risk
response is to develop and implement a plan to address identified risks in a way that is both
effective and efficient. There several different types of risk response that can be used to address
identified risk such as avoiding the risk, accepting the risk, transferring the risk.

Avoiding the risk: This involves taking steps to eliminate the risk all together, this can be done
by canceling the activity that is causing the risk, or by choosing a different approach that does
not involve the risk

Accepting the risk: This involves deciding to live with the risk, rather than taking action to
eliminate it. This can be done when the cost of avoiding the risk is greater than the potential
impact of the risk

Transferring the risk: This involves transferring the responsibility for managing the risk to
another party such as through insurance or a contract Risks can be transferred to a variety of
organizations and individuals outside the project, including

• Insurers (including warranty firms, guarantors, and bondsmen)

• Subcontractors

• Vendors

• Partners

• Customers

Risk mitigation: this involves taking steps to reduce the impact of the risk. This can be done by
implementing controls such as security measures or quality assurance, by setting up a
contingency plan to deal with the risk if it does occur

In conclusion, risk response is a vital process in risk management that involves identifying,
assessing risk in order to minimize their impact on an organization or project.

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 RISK PLANNING
According to Parker, D., & Mobey, A. (2004) risk planning can be defined as the process
which used to identify all potential problems that could cause trouble for your project, analyze
how likely they are to occur, take action to prevent the risks you can avoid as well as to
minimize the ones that you can’t.
Before dealing directly with the risks which have occurred, you must have planning meetings,
According to Risk Management Concepts and Guidance, plan meetings are formal meeting
which are conducted to ensure the organization has a consistent vision in terms of the project’s
risk methodology, roles and responsibilities, timing and approaches for tracking. Planning
meetings focus on bringing together key stake-holders on risk to determine the risk practices to
be pursued and the approach to be used in pursuing them.
The technique is most effective in the initial risk planning stages but will apply in other
processes as well. When conducting risk reviews and evaluations, the basic risk management
plan may be reconsidered.
The following are the benefits of risk planning;
➢ It ensures that risks are managed properly. The goal is to reduce impact of negative
risks and to increase the impact of opportunities. Also provide a tool for reporting risk
to senior managements as well as the project sponsor and the team.
➢ It details on how the team will manage risk ( Newton, 2015). It describes the level of
risk that is tolerable for the organization hence to ensure that the level of risk
management is commensurate with the identified risks and the organization’s appetite
for the risk.
➢ Also, it is important during the project initiation, planning and execution; well managed
risks significantly increase the likelihood of project success.
➢ Better quality data for decision making. Senior leaders have access to better quality and
more helpful data which enables them to make better decisions more grounded in the
reality of a project
➢ It is easier to spot the project into trouble. It let you see where projects need attention,
and which projects these are, and also to give you a context for understanding the
performance of a project and contribute to any health checks, peer reviews or audits.
The following are consequences of failing to carry out risk planning
➢ Not being aware with the hazards
➢ Not controlling the risks
➢ Enforcement action
➢ Projects delays
➢ Financial consequences
➢ Losing clients.
➢ Increased risk of accidents

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Risk planning process
Now you know the meaning of risk planning, benefits from conduct risk planning as well as
the consequences of failing to conduct risk planning; its time to run through on how to create a
risk plan.
1) Identify potential risks
Before putting your plan to paper, you need to be aware of the kind of risks your project might
face. With your entire team resource and all project stakeholders, come up with the potential
risks for your risk plan.
Each participant should thoroughly consider the project from the perspective of their role and
identify everything within their scope that could be seen as a risk event or condition.
Also, the project manager can draw from: industry research, their past experience, advice and
guidance from other project managers and outcomes of similar project in the past.
2) Create a risk assessment plan
Next, evaluate and assess potential risks.
Organize your comprehensive list of potential risks by likelihood: low, moderate and high risk
as well as impact in the same order.
This information can be compiled in what is called a risk register. It will tell you how likely a
risk is to occur and illustrate the urgency of responding to it in relation to the rest of your
workload.
While it isn’t part of the project planning phase, think of the risk register as a living document
that you will return to and possibly change during the project.
3) Assign ownership for each potential risk.
In assign team members to oversee risks, have your list prioritized and know how many
resources you will need on each risk. Designated team members will be responsible for
jumping into action should the potential risk turn into actual issue.
You will also have an idea what kind of manpower and time you will need on an issue as it
arises, so you can better plan for covering it. And by assigning risk ownership in your risk
management plan ensures that someone is always keeping an eye out for each potential
problem.
4) Create preemptive responses
The project manager and owner of each risk should work together and use the risk register to
determine the appropriate response, if and when a risk becomes an issue. Your response should
be proportionate to the impact of the issue.
As your risk response plan takes shape, you will decide which of the following four responses
is appropriate

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 • Avoid- change your plans or approach to eliminate the risk entirely.
• Transfer- assign the risk to someone else within the team, within the company or
outsource.
• Mitigate- take the necessary steps to reduce the probability and impact of the threat on
the project.
• Accept- allow for the risk and adjust to be able to handle its consequences.
Your risk plan should be visible across all team members so that everyone knows which risks
to watch out for and who to contact should one of them arise.
5) Continuously monitor risks
This is where a risk management system comes into play, as well as your ongoing monitoring
and controlling of risks.
Risk management requires tracking and reporting on triggering events that require your
initiating your response plan. It will also mean analyzing the risk against your original
assessment for learning and future planning.
Additionally; the practice of anticipating risk will only encourage your team to remain flexible
and unafraid to try new things.

RISK CONTROL AND MONITORING.

Risk management cannot end with the initial planning. Your project starts with its plan, just as a
lengthy automobile trip begins with an itinerary based on maps and other information. But what
trip ever goes exactly as planned? As the driver continues on the trip, small adjustments based
on events and conditions are necessary. More serious issues such as vehicle problems or
automobile accidents may result in major modifications to the itinerary. Throughout the trip, the
driver must remain alert and reasonably flexible.

Managing risk in projects is about detecting things that are not proceeding as planned in your
project. Like the driver who must remain alert and responsive to things that happen on the road,
the project leader uses tracking, reviews, and reapplication of the planning concepts discussed
in the preceding chapters to adjust to the prevailing project conditions, seeking to bring it to
successful to closure. Effective management of project risk relies on frequent and disciplined
reassessment of new information and status as the project proceeds. Particularly on longer

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projects, you cannot know everything about the work at the beginning. Periodic project reviews
are necessary to keep the project moving and productive.

Continuous monitoring by the PM ensures that new and changing risks are detected and managed
and that risk response actions are implemented and effective.

Risk monitoring and control keep track of the identified risks, residual risks and new risks, also
monitors the execution of planned strategies for the identified risks and evaluates the
effectiveness.

Risk monitoring and control continues for the life project, risk rating and prioritizations can also
change during the project life cycle. During project execution, risk meeting should have held
regularly to update the status of risk and add new risk in the risk register.

Periodic project risk review repeats the process of identification, analysis and response planning.
If unanticipated risk emerges. Or risk impacts are greater than expected, the planned response
may not be adequate. The project manager should coordinate the development of addition
response to control the risk.

Control and monitoring also determines weather

❖ Procedures are subject to change without notice

❖ Initial Risk owners are performing periodic risk reviews and updating appropriately
❖ Risk management policies and procedures are being followed
❖ The remaining contingency reserves for cost and schedule are adequate.

Project monitoring can begin as soon as there is a clear, validated baseline plan that has been
approved by the project sponsor and accepted by the project leader and team. Other prerequisites
for effective project tracking are a functioning communications infrastructure, functioning
tracking methods, and thorough project planning data available to all team members and
stakeholders.

Risk control and management involves recommending the following

❖ Alternative risk response

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 ❖ Implementing a contingency plan
❖ Take a corrective action
❖ Changing the project objectives.

Risk review and updating.

Periodically. the PM may convene the designer and initial risk owner to review the project’s risk
register and update risk response strategies and actions plans.

Project Status

Project status information is of two types: hard data (facts and figures) and soft data (anecdotal
information, rumours, and less specific information). Both types of data are useful for risk
management. Hard data includes the project metrics, and most of them are diagnostic metrics—
telling you how the project is proceeding. Some of the hard data collected will relate to, or may
even be, a risk event trigger, and other data may reveal dangerous trends. Soft data can tell you
the causes for your project status; it may also provide early warnings of future problems and risk
situations.

Hard data, Hard project data includes metrics that assess progress, including revised start and
completion estimates for future work. Hard data collection should be routine, easy, and not too
time consuming. On most technical projects, people are so busy that if collecting hard status
information is not simple, it will not get done. At a minimum, collect:

❖ Schedule data, such as activities completed and activities scheduled but not completed,
milestones completed or missed, actual activity start and finish dates, and duration
remaining for incomplete activities
❖ Resource data, including actual effort consumed, cost data, remaining effort for
incomplete work, and missing resources
❖ Data regarding issues, problems, and specification changes

Soft data Additional information of a less tangible nature also permeates your project.
Information about the project contributors may alert you to potential threats to needed resources,
individual productivity, and other potential sources of project risk. Changes in the work

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environment, a rumoured reorganization, or individual team members having personal problems
may also adversely affect upcoming project work. Soft data may also provide information on
opportunities to help the project. Soft project data includes issues such as:

❖ Conflicts arising from expected new projects or other work

❖ Falling productivity of individual team members
❖ Suspected changes to the project environment
❖ Changes needed by your project that seem threatened
❖ Potential problem situations with a common, persistent root cause
❖ Frequent situations requiring more authority than you have
❖ Long delays getting resolution of escalated issues and decisions

And the review to be performed should include the following tasks Review the execution of risk
response actions and evaluate their effectiveness

❖ Re-assess existing risks, verify that the assumptions are still valid and modify the
previous assessments as necessary.
❖ Assign additional risk response efforts to the initial risk owner
❖ Retire risk whose opportunity to impact the project has elapsed or whose residual impact
on the project is deemed to have reached an acceptable level
❖ Tracks and evaluates the effectiveness of risk handling actions against established
metrics.

METRICS AND TRENDS ANALYSIS.

After collecting status, look for project problems by analysing variances. Variance analysis
involves comparing the status information you collected with the project baseline plan to identify
any differences.

Variances, both positive and negative, need to be analysed for impact; positive variances may
provide opportunities for improved execution of future work, and negative variances need
attention so that they do not send the project spiralling out of control. Trend analysis on the
metrics may also reveal potential future risks and disruptions.

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Diagnostic Metrics

After contrasting the status data with the plan, the first thing to do is to validate the differences,
particularly large ones. Before spending time on impact analysis, check with the people who
provided the data to make certain that the problems (or for positive variances, any apparent
opportunities) are real. For each difference, determine the root cause of the variance, not just the
symptoms. (Root-cause analysis as explored Work with both hard and soft project data to
understand why each variance occurred. Metrics seldom slip out of expected ranges in isolation;
the project schedule, resources, and scope are all interrelated, so problems with one of these
parameters will probably affect the others.

Armed with the underlying cause of each variance, you can best decide how to respond. Dealing
with the root cause of a problem also prepares you for similar problems later in the project. In
variance analysis, focus on understanding the data; never just look for someone to blame.

Schedule metrics

Schedule variances are generally examined first, whether positive or negative. If there are
positive variances—work completed early—there may be an opportunity to pull in the start date
of other work. It is also worthwhile to discuss the early finish with the activity owner to see
whether it is the result of an approach or method that could be applied to similar work scheduled
later in the project, or whether you could shorten any duration estimates.

The more common situation is an adverse variance, which for critical activities will impact the
start of at least one scheduled project activity. Unless an activity following the slip can be
compressed, it will affect all of the activities and milestones later in the project, including the
final deadline. Even for noncritical activities, adverse variances are worth investigating; the slip
may exceed the flexibility in the schedule, or it might reveal an analysis error that could
invalidate duration estimates for later project activities.

Finally, schedule variances may be due to root causes that were not detected during risk analysis.
If the root cause of a slip suggests new risks and project failure modes, note the risks and set a
time for additional risk analysis and response planning

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Resource metrics

Resource variances are also significant. Metrics related to the concept earned value management
(EVM) are particularly useful in examining resource use throughout the project. EVM metrics,
such as the cost performance index (CPI), measure the effort or money consumed by the project
in relation to the plan. If the consumption is low (CPI less than one) but the schedule progress is
adequate, there may be an opportunity to complete the project under budget. If it is too low and
the schedule is also slipping, the root cause is likely to be inadequate staffing or too little of some
other resource available. Whenever project progress is too slow because of insufficient
resources, escalate the situation to higher management promptly, especially if your project is
being denied access to committed resources.

Whenever resources are being used in excess of what is expected—that is, when CPI is higher
than one or another metric shows your “burn rate” is too high—the variance is almost certainly
a serious problem. The likelihood is strong that the project will ultimately require more resources
to complete than the plan indicates, because it is very difficult to reverse resource
overconsumption. Even as early as 20 percent through the project schedule, a project with an
adverse CPI variance has essentially no chance of finishing within budget. Using more resources
than planned may cause your project to hit a limit on staff, money, or some other hard constraint,
and halt the project well before it is completed. Publicly admitting to this sort of problem is never
easy, but if you wait it will be worse. Problems like this increase with time, and the options for
recovery diminish later in the project. Sympathy from your project sponsors and stakeholders
will drop from little to none at all if you wait too late to deliver bad news.

Some resource issues are acute, having impact on only a short portion of the project; others are
chronic and will recur throughout the work. Chronic situations not only create project budget
problems, they also may lead to frequent overtime and constant stress on project staff. Risk
probabilities rise with increased stress and lowered motivation. Chronic resource problems may
also have an impact on your ability to execute existing contingency.

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Scope metrics

Although schedule and resource data provide the most common status variances, at least some
of the data relates to the project deliverables. The results of tests, integration attempts, feasibility
studies, and other work will either support the expectations set out in the project requirements,
or they will not. Significant variances related to scope may indicate a need to propose project
changes. Major variances may even foreshadow ultimate project failure. If a scope-related metric
exceeds the result expected, you should explore whether there might be an opportunity for the
project to deliver a superior result within the same time frame and budget. It may even be
possible to deliver the stated result sooner or less expensively. Although this situation is
relatively rare, it does happen, and how best to exploit such opportunities may not be obvious.
Discuss them with your project sponsors, customers, and other stakeholders before adding
something to the project scope “just because you can.” Use your change management process to
assess the value and utility of any additional product feature before incorporating it into the
project.

When scope-related data indicates a problem that can be resolved with additional work, the
impact may be to the project schedule, resources, or both. Consider various alternatives by
analysing what realistically can be delivered consistent with the project budget and deadline.
Determine the most palatable option (or options) based on relative project priorities, and propose
required changes to the project objective.

If you cannot resolve a scope problem with extra work, your only options are to modify the
deliverable or to abandon the project. As with recognition of a resource overconsumption
problem, scope under delivery issues are always difficult to deal with. Some projects choose to
hide the problems, hoping that someone comes up with a brilliant idea to close the gap between
what is desired and what can credibly be delivered. This is a very high-risk strategy that seldom
works. The best course is to raise the issues as soon as you have validated the data. If you do this
early, project options are more numerous, the total investment in the project is still relatively
small, and expectations are less “locked in.” Although still painful and unpleasant, this is a lot

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easier than dealing with it later. When a project deliverable proves to be demonstrably
impossible, the best time to change (or kill) it is early, not late

In addition to the impact on the current project, scope problems may affect other projects. Inform
the leaders of projects depending on your deliverable (or who may be using similar flawed
assumptions), so that they can develop alternate strategies or work-arounds. Once you have
completed the variance analysis, document the impact. List the consequences of each variance
in terms of:

❖ Predicted schedule slip

❖ Budget or other resource requirements
❖ The effect on the project deliverable
❖ Impact on other projects

once you have determined the source and magnitude of the problem, you have a basis for
response.

Risk monitoring include the following process of:

I. Tracking and identified risk

II. Monitoring residual risks
III. Identify new risks
IV. Ensuring the execution of risk plans
V. Evaluating the effectiveness of risk plans in reducing risk.

Risk control and monitoring records metrics that are associated with implementing contingency
plans.

Purpose of risk control and monitoring is to determine:

❖ Risk response actions have been implemented as planned.

❖ Risk response actions are as effective as expected, or new response should be developed
❖ Project assumptions / expectations are still valid.
❖ Risk exposure has changed from its prior state with analysis of trends.

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 ❖ Risk trigger/ cause has occurred
❖ Risks have occurred or arisen that were not previously identified.

Monitoring results may provide a basis for

❖ Developing additional risk handling actions

❖ Updating existing risk handling strategies and
❖ Reanalysing known risk
❖ Used to identify new risks
❖ Revise the aspects of risk planning

The key aspects to the risk monitoring includes the following cash flow projections, work
program, contingency sums.

These aspects must provide early warning of potential problems to allow management actions
(that’s why progress report its very essential). Risk monitoring is not a problem solving
technique but rather proactive technique.

Provide objective information on the progress to date in reducing risks to acceptable levels,
inputs include risk management plan, project schedule and financial reports (e.g. interim
valuations, financial appraisals etc.) scope changes.

Output of risk control and monitoring.

Risk control and monitoring include the following

❖ Updates to the risk response plan

❖ Updates to the risk identification checklist
❖ Project change requests

Risk database; a repository /source that provides for collection. Analysis of data gathers and used
in RM process

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Therefore, the following are key ideas for controlling and monitoring of the project

• Collect status dogmatically.

• Monitor variances and trends frequently throughout your project

. • Respond to issues and problems promptly.

• Communicate clearly and often.

• On long projects, conduct periodic risk and project reviews.

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References
• Carl, L.P. (2015). Risk Management Concepts and Guidance. 5th Edition, Boca raton, London
• Tom Kendrick (2015), identify and managing project risk essential tools for failure. Proffing your project.
AMACOM
• Newton p(2015) managing project risk retrived from http://www.free-management-ebook.com/dldebk-
pdf/fme-project-risk-pdf
• Vacker .D &Mobey, A (2004). Action research to explore perception of risk in project management.
International journal of productivity and performance security 53(1), 18-32.

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