Risk Management

1.  Introduction

1.1Purpose Of The Risk Management Plan

A risk is an event or condition that could have a positive or negative effect on a project’s objectives. Risk Management is the process of identifying, assessing, responding to, monitoring, and reporting risks. This Risk Management Plan defines how risks associated with AP Construction will be identified, analyzed, and managed. It outlines how risk management activities will be performed, recorded, and monitored throughout the lifecycle of the project.

2.  Risk Management Procedure

2.1Process

The project manager working with the project team and project sponsors will ensure that risks are actively identified, analyzed, and managed throughout the life of the project. Risks will be identified as early as possible in the project so as to minimize their impact. The steps for accomplishing this are outlined in the following sections. The project manager or other designee will serve as the Risk Manager for this project.

2.2Risk Identification

Risk identification will include an evaluation of environmental factors, the project management plan, overall cost to the project and the impact on the project’s success.

2.3Risk Analysis

All risks identified will be assessed to identify the range of possible project outcomes. We will then determine which risks are high risks to pursue and fix and which risks can be ignored.

1. Qualitative Risk Analysis

The probability and impact of occurrence for each identified risk will be assessed and categorized using the following method:

Probability

• High – Greater than 70% probability of occurrence
• Medium – Between 30% and 70% probability of occurrence
• Low – Below 30% probability of occurrence

Impact

• Impact	H
  	M
  	L
  		L	M	H
  	Probability

  High – Chance to greatly impact project cost, project schedule or performance
• Medium – Chance to slightly impact project cost, project schedule or performance
• Low – Little chance to little impact cost, schedule or performance

RED and YELLOW risk zones will undergo risk mitigation and creation of possible contingency plans.

1. Risk Response

Each major risk will be assigned to a project team member to ensure that the risk is properly monitored and assessed.

For each major risk, one of the following approaches will be selected to address it:

• Avoid – eliminate the threat by eliminating the cause
• Mitigate – Identify ways to reduce the probability or the impact of the risk
• Accept – Nothing will be done
• Transfer – Make another party responsible for the risk. You can do this by buying insurance, bonding, etc.
  
  

MITIGATION

When a high risk is mitigated, the project team will identify ways to prevent the risk from occurring or reduce its impact or probability of occurring. This may include extending the time line, adding work to the project schedule to lower the risk, adding more manpower or resources, or further testing and prototyping.

2. Risk Monitoring, Controlling, And Reporting

A “Top 10 Risk List” will be maintained by the project team and will be reported as a component of the project status. All risks on this list will be monitored especially carefully as they most impact the project cost and success. All project change requests will be analyzed for their possible impact to these project risks.

CONCLUSION

It is always preferable to try and avoid possible high risks if possible by using industry experience to locate and isolate any possible problem areas ahead of time. Eventually though you will run into multiple risks that you will need to identify, assess, and manage accordingly.