Risk Management Plan
Project Name: Lithuanian Construction Project
Learner Name: Gaylon Barcom
Course Name: PM-FPX5334
Date: November 12, 2019
Table
... [Show More] of Contents
Section 1 – Introduction to the Plan______________________________________________________________________________3
1.1 Benefits of Risk Management________________________________________________________________________________________3
1.2 Project Goals and Objectives_________________________________________________________________________________________4
1.3 Company Background______________________________________________________________________________________________4
1.4 Risk Identification_________________________________________________________________________________________________5
Section 2 – Risk Scope, Components, and Value_____________________________________________________________________5
2.1 Scope of the Risk Management Plan__________________________________________________________________________________5
2.2 Risk Management Plan Components__________________________________________________________________________________8
2.3 Expected Monetary Value___________________________________________________________________________________________9
2.4 Determine the Risks_______________________________________________________________________________________________11
2.5 Evaluate and Assess the Risks_______________________________________________________________________________________12
2.6 Qualitative and Quantitative Processes_______________________________________________________________________________13
Section 3 – Risk Analysis and Assessment________________________________________________________________________16
3.1 Major and Minor Risks____________________________________________________________________________________________16
3.2 Risk Probability__________________________________________________________________________________________________18
3.3 Risk Matrix Template______________________________________________________________________________________________21
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3.4 Risk Data Quality Strategy__________________________________________________________________________________________22
3.5 Risk Reviews_____________________________________________________________________________________________________22
Section 4 – Corrective Action and Monitoring_____________________________________________________________________23
4.1 Risk Tolerance___________________________________________________________________________________________________23
4.2 Risk Mitigation___________________________________________________________________________________________________24
4.3 Corrective Risk Management Strategy________________________________________________________________________________24
4.4 Corrective Action Plan_____________________________________________________________________________________________24
Section 5 – Postmortem Plan___________________________________________________________________________________24
5.1 Results_________________________________________________________________________________________________________24
5.2 Follow Up_______________________________________________________________________________________________________24
Section 6 – References________________________________________________________________________________________25
Pritchard, C. L., PMP, PMI-RMP, EVP. Risk Management. [Capella]. Retrieved
from https://capella.vitalsource.com/#/books/9780429798566/_____________________________________________________________25
Templates__________________________________________________________________________________________________26
Risk Matrix Legend Example___________________________________________________________________________________________26
Risk Matrix Example_________________________________________________________________________________________________27
Risk Monitoring and Control Example___________________________________________________________________________________28
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Section 1 – Introduction to the Plan
1.1 Benefits of Risk Management
According the Project Management Institute (PMI), Risk is one of the Nine (9) process areas that are considered. Sound Stratagems
for Risk Management is paramount for the project manager (PM) to be effective in determining those areas that will be pitfalls to the
project as well as those areas that will bring about opportunities and showcase the strength of the organization. By preparing a plan
that accounts for the unknown, the project team can build in reactivity to mitigate or ward off these events should the arise.
Additionally, this plan will allow the team to maintain separation from these issues if deemed necessary. Meeting the project
objectives requires that the project be planned, prepared and evaluated in such a manner that the results align with the strategic
goals of the project.
Risk management planning examines, identifies and lists risk factors that are both internal and external to the project thus, adding to
the success of the project. Provisions within the risk management plan (RMP) identify the plausibility of incident, the potential
consequences, and perceived mitigations. Risk events are usually classified as having a Low, Moderate or High impact on the team’s
performance within the budget or schedule. These events usually carry the following descriptors: (Pritchard, 2015)
Low probability and low impact equal low risk
High probability and high impact equal high risk
High probability and low impact equal low risk (to the project’s overall success)
Moderate risk is usually a mixed group of the above that is something more than Low but does not meet the criteria to be considered
High.
Identifying and implementing the use of the proper techniques and toolset increases the level of performance of the risk management
plan in the delivery of a project that meets the goals and objectives laid out by the stakeholders. There is a plethora of tools and
techniques that can be used to manage risk within the construction industry. When choosing the tools and techniques to be used the
team must ensure that they align with the project goals and objectives. Some of these tools are appropriate for all project phases.
The trick to risk management is the identification, analysis and reaction to risks within a single process most methods are not able to
do this. The simple use of checklist and brain dumping events will not allow for the risks and consequences to be properly identified
and prioritized. Using a decision tree does not identify the result of risk occurrence. SWOT and PERT also lack the ability to be a one
size fits all solution as well .By utilizing bits and pieces of all the approaches such as risk register, checklists, hazard assessments
and develop a group charette geared toward risk management allows for a more contemporary and progressive approach, This
charette fits the bill for planning, identification and analysis while giving the team the ability to respond to the risk. Charettes are a
great way to get opinions and buy in from all stakeholders, it also gives the greatest opportunity to identify and mitigate all risks.
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1.2 Project Goals and Objectives
As the complexity of construction projects continue to grow, the unknowns and the risks associated with these unknowns can be of
huge detriment to the industry. The natural uniqueness of a construction allows for a large array of risks, little to no research has be
done to prove the performance of a charette in the identification of risk and the improvement of risk management approaches. The
goal within this project / assignment is to examine the validity of using a charette to manage project risk, the charette used was
specifically designed for the construction project discussed in this paper. The Charette gathered the necessary stakeholders into a
designated place and hypothesized and various risk related topics.
The number one sector at risk of an accident in Europe is the construction industry. Over 1000 individuals die in construction related
accidents within the European sector, this means that in Europe a construction worker is at twice the risk of dying than a person in
any other industry. Deaths and accidents within any industry are a huge financial impact on the rising costs that are included in
contacts, Liability Insurance costs can be upwards of 30% of the overall price of the contract. In 2011, Lithuania’s construction
industry provides primary employment to approximately 94,000 individuals and had a financial turnover of almost two (2) Billion
Euros. It is safe to say that The Construction industry is one of Lithuania’s most prolific industries, However, Lithuania’s construction
sector is rife with occupation safety and health issues. More severe health maladies and deaths result from this industry that any
other industry.
For this Risk Management plan Techniques and analysis methods have been singled out as; Risk Identification, Assessment,
Mitigation and Monitoring. With construction projects having such complex risks for everyone involved, inclusive of stakeholders such
as the owner, vendors and consultants, which increase dependent on the location of the project such as next to a largely populated
or congested area. Risks can be inclusive of EPA conditions, accidents, geographical issues and operational interference by local
and national governments. Other risks can be within the design itself and all these an impact the project before during and after the
project completes.
1.3 Company Background
The economic and financial crisis for Lithuania has its ups and downs over the last few years. In 2010 The GDP dropped almost 3%
from 6.7% to 4.4% in the course of one quarter. Other Lithuanian sectors decreased upward of 43% as in the case of the
Construction market. The trade, transport and communications sector – by 16.6% (Sl, 2010). Since then the Economic growth has
been in recovery mode, “GDP grew 2.2% in 2016, mostly driven by private consumption and recovering exports. The number of
people employed in the broad construction sector increased by 23.4% between 2010 and 2016” (ECEuropa.eu, 2018). Due to the
reduction of demand in the construction sector there has been an uptick in the competition for projects. There has been increased
need for quality and productivity as well as a reduction of overall cost. The need for the aforementioned items forces the additional
need for “project strategies and management that can appropriately and effectively manage project risk” as stated in Risk
Management in Construction Projects” (http://dx.doi.org/10.5772/51460).
Due to the low financial standing and low income of Lithuanians it is difficult for Lithuanian owned construction companies to qualify
for a loan therefore the construction monies are guaranteed by the sector’s Primary Stakeholder, the Lithuanian Government. As a [Show Less]