Page 50 - Urban Construction Project Management

Risk Assessment and Problem Solving 25
7. Controlling claims and litigation
8. Risk management plan
9. Risk avoidance and mitigation
10. Risk transfer

Categories of Risk
Risks are sometimes broken down into three categories depending on their size and fre-
quency as follows:
1. Small, reoccurring, routine risk. These risks taken together usually pose no signifi-
cant financial impact and the costs associated with them are absorbed by the CM/GC
or the project budget contingency and loss control procedures. An example of this
might be stolen small tools from the project site.
2. Accidental risk. These are usually small in number, but large in cost, both individu-
ally and taken together. These are usually covered by insurance and loss control
procedures. An example of this might be a pedestrian being struck by some con-
struction material while walking by the site.
3. Catastrophic risk. These risks are usually small in number, but could have significant
impact on the CM/GC and/or project, depending on the company’s liquidity, retained
earnings, profitability, and level and types of insurance coverage. An example of a
catastrophic risk is a building catching fire during the construction process, or a tower
crane collapsing during the construction process.

RISKS ENCOUNTERED DURING
THE PROJECT LIFE CYCLE

During the life cycle of the project it is likely that new risks may be encountered that
had not been previously identified. Exhibit 2-4 is a sample list of such risks.

After a new project risk has been identified, the member of the project team who
identified the risk should raise the issue to the person on the project team responsible
for risk management, usually the project manager (PM). The PM should then review
the risk to determine its validity and level of priority. The PM should then take the
appropriate action to resolve the issue, if that action is within their capabilities. These
actions are:

1. Identify and evaluate the risks.
2. Complete risk assessment form and log them into the risk management log.
3. Investigate project risks and develop alternative approaches.
4. Assess impact on cost, schedule, and project logistics.
5. Assess if there is any governing code considerations.
6. Obtain approval of the owner.