BSBPMG508A-Manage Project Risk

Objective

The purpose of risk management is to ensure levels of risk and uncertainty are identified and then properly managed in a structured way, so any potential threat to the delivery of outputs (level of resourcing, time, cost and quality) and the realisation of outcomes/benefits by the Business Owner(s) is appropriately managed to ensure the project is completed successfully. The objectives of the risk management approach in the Project are to identify, assess and mitigate risks where possible and to continually monitor risks throughout the remainder of the project as other risks or threats emerge or a risk’s impact or likelihood changes. As risk management is an ongoing process over the life of a project, this Risk Management Plan and Risk Register must be considered a ‘snap shot’ of relevant risks at one point in time. Where required, the process of risk identification, assessment and the development of countermeasures will involve consultation with the Steering Committee members, the Reference Group, other relevant stakeholders and Project team members

Task

Your company has won the tender for the WSI Blue Mountains TAFE project (19735 Project?) and the tender requirements require you to include a Risk Management Plan for the project that complies with all relevant industry and Australian Standards. Your company is a small to medium sized construction company, currently undertaking a variety of commercial and residential construction projects, with annual turnover of approximately $25 million or more.

Listed below are a number of risks that your company could typically encounter in the

completion of this building project.

• Contractual

• Technical e.g. design faults

• Logistical

• Construction

• Financial

Using the learning resource notes together with AS/NZS ISO 31000:2009 complete a Risk Management Plan (including the Risk Register) for this project.

Risk Assessment

Risk identification involves determining which risks or threats are likely to affect the project. It involves the identification of risks or threats that may lead to project outputs being delayed or reduced, outlays being advanced or increased and/or output quality (fitness for purpose) being reduced or compromised.

For most large/complex projects, a number of high level risks should have been identified during the project initiation stage – these should be used as the basis for a more thorough analysis of the risks facing the project

One of the most difficult things is ensuring that all major risks are identified. A useful way of identifying relevant risks is defining causal categories under which risks might be identified. For example, corporate risks, business risks, project risks and infrastructure risks. These can be broken down even further into categories such as environmental, economic, political, human, etc. Another way is to categorise in terms of risks external to the project and those that are internal

See the Project Management Risk Identification Tool for some useful prompts in identifying project risks. The Australian Standard for Risk Management AS/NZS 4360: 2004 Appendix D refers to generic sources of risk

The wording or articulation of each risk should follow a simple two-step approach:

1. Consider what might be a ‘trigger’ event or threat (eg. ‘poor quality materials causes costs to rise’) – several triggers may reveal the same inherent risk; then

2. Identify the risk - use a ‘newspaper headline’ style statement – short, sharp and snappy (eg. ‘budget blow out’) then describe the nature of the risk and the impact on the project if the risk is not mitigated or managed (eg. project delayed or abandoned, expenditure to date wasted, outcomes not realised, government embarrassed etc.).