A risk management plan is a document that a project manager creates to foresee risks, estimate their impacts, and define risk responses. Risk management plans should be reviewed on a regular basis by the project team to avoid the analysis becoming stale and no longer reflects actual potential project risks.
The Risk Management Plan comprises four sections of risk assessment:
- Risk Identification
- Risk Analysis (Qualitative & Quantitative)
- Risk Response Strategy
- Risk Monitoring and Control
1.Risk Identification Process
Risk Identification in Risk Management Plan determines which risk might affect the project & documents their characteristics. Risk identification is an iterative process because some new risks may become known as the project progresses through its life.
The frequency of iterations & who participates in each cycle will vary from case to case. The project team is involved in this process to develop & maintain a sense of ownership of, and responsibility for, risks and associated risk response strategies.
The Risk Identification process in the risk management plan leads to one of the two main segments of the Risk Analysis section.
2.Qualitative Risk Analysis Definition
It includes methods for prioritizing the identified risks for further action, such as Quantitative Risk Analysis or Risk Response Planning.
Qualitative Risk Analysis Assess risk priorities by using their likelihood of occurrence, the associated effect on project objectives where there are risks, as well as other variables such as time frame & risk tolerance of project limitations of scope, schedule, budget, and quality.
3.Risk Response Planning
It is the process of developing options and determining actions to be taken to enhance opportunities & reduce threats to the objectives of the project. The planned risk responses must be appropriate to the significance of the risk, cost-effective, timely, realistic in the context of the project, agreed by all involved parties, and owned by a responsible person.
4.Risk Monitoring and Control
Tracks identified risks, monitors remaining risks, and identifies fresh risks, ensuring that risk plans are executed and assessing their efficiency in decreasing risk. Risk Monitoring & Control is an ongoing method for project life.
Risk management in construction
Risk management in construction is designed to plan, monitor & control those needed measures to prevent exposure to risk. So, to do a risk management plan, it is important to identify the hazard, assess the extent of the risk, provide measures to control the risk and manage any residual risks. The Risk Management Plan Template will be useful for you when creating a risk management plan.
Construction Risk Logs
In construction projects, the use of risk logs that are similar to those in other industries, but may assess time & cost impact without controls and also include actions on residual risks. Risk identification will look at generic risks that apply across all construction projects, risks specific to the project in hand & risks that remain despite the controls put in place (residual risks).
Risk Management Plan
When the project planning engineer starts to plan any construction project, risks are still uncertain: they haven’t happened yet. But, some of the risks that you plan for do happen, and that’s when you have to deal with them. Typically, construction projects face the risk of MEP works being delayed due to delays in the delivery of MEP Plumbing items, MEP Electrical items, etc.
There are four basic ways to handle risk.
- Avoid: The best thing you can do with risk is to avoid any risk. If you can prevent this risk from happening, it definitely won’t hurt your project.
- Mitigate: If you can’t avoid the risk, you can mitigate this risk. This means taking some sort of action that will cause it to do some damage to your project as possible.
- Transfer: One effective way to deal with a risk is to pay someone else to accept this risk for you. The most common way to transfer the risk is to buy insurance.
- Accept: When you can’t avoid this risk, mitigate, or transfer risk, then you have to accept it. But even when you accept this risk, at least you’ve looked at the alternatives and you know what will happen if it occurs. If you can’t avoid this risk, and there’s nothing you can do to reduce risk’s impact, then accepting it is your only choice.
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