Yes, yes I know, we all know.

Large construction projects carry complex risks from among the many parties involved, which may include contractors, suppliers, owners, architects, engineers, consultants and lenders.

Even for small projects, there significant risks when construction takes place near commercial, industrial areas or any congested area.  Project Managers often overlook common risks such as :

• Disruptions to ongoing operations,
• Damage to existing properties,
• Accidents and injuries,
• Design and construction errors that manifest during construction or after completion

However, risk mean different thing to different people, and people have different attitude toward risks.

• Common definition of risk include sense of danger for something which may produce negative, undesired consequences.
• In project management, risk is associated with uncertain over event or condition which has a positive or negative effect the project objectives which include Schedule (time), Cost and Scope (quality).

Risk management is a key part of project management and is characterize by focus on:

• Uncertainty.
• Negative or positive effects.

Examples of uncertainty in a project may be:

• A risk can delay the completion or make it possible to finish the project earlier.

For a Project Manager to effectively manage risks, you need to recognize the following stages of risk management which includes:

1. Planning risk management,
2. Identifying and analyzing the risks,
3. Preparing the response plan,
4. Implementing the risk response plan,
5. Monitoring and controlling the implementation.

The above stages can be further detail out as follows:

1. Plan risk management.
   • How to conduct risk management and be certain that activities planned are carried out.
2. Identify risks.
   • How to identify and document risks that might occur.
3. Perform qualitative risk analysis.
   • What are the probability for a risk to occur and what would be the likely impact
   • Which risks should be given higher priority for responses.
4. Perform quantitative risk analysis.
   • How to analyze numerically the effect of some identified risks.
5. Plan risk responses.
   • How to prepare response plan to increase the positive impact and decrease the negative impact of risks.
6. Monitoring and control risks.
   • What do the project team members need to do to track identified risks, identify new risks, executing risk responses, and evaluating effectiveness of risks responses.

Monitoring and controlling risks is part of monitoring and controlling the project and should be conducted throughout the lifecycle of the project.  Unless you conduct a project risk management effectively, you are probably depending much on luck.

Related articles

• Measuring ROI on Project Management / Project Controls (jamkib.wordpress.com)
• Project Planning Roadmap (brighthub.com)
• “Doing” Risk Management (herdingcats.typepad.com)