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Stage 5 of 7 · Plan

Risk management

Identify, assess and act on project risks, and hold a contingency that matches them.

  • CoursesCourse in preparation
  • Free videosNo video yet
How it runs
Risk register with probability and impact matrix and contingency total
Quantify risk Risk register with probability and impact matrix and contingency total
Output
Risk register with scored risks, owners and mitigation
Module
Cost control, EVM and risk
Documents
  • Risk register
  • Risk response plan
Standards and references
  • ISO 31000
  • NEC4 clause 15 (early warning)

What it is

Risk management identifies what could go wrong, or better than expected, on a project, assesses how likely and how serious it is, and decides what to do before it happens. Risks cover cost, time, design, ground, procurement, safety and the contract itself. Each one needs an owner and an action, not just a score.

The register is reviewed regularly, usually monthly, and linked to the cost plan and programme. Contingency is sized from the risks that remain after mitigation and drawn down as risks occur or close. Under collaborative contracts the parties share an early warning register, so problems are raised while there is still time to act.

Who does it

Project manager
Owns the risk process and chairs risk reviews.
Risk owners
Carry out mitigation actions and report status.
Commercial manager / QS
Prices risks and manages contingency.
Planner
Assesses schedule effects and supports schedule risk analysis.
Client
Agrees the allocation of risks and holds client-side contingency.

How it runs

  1. Identify risks

    Hold workshops with design, commercial and site staff, and review the contract for allocated risks.

  2. Describe clearly

    Write each risk as cause, event and effect so it can be managed.

  3. Assess

    Score probability and impact on cost and time, and record who carries the risk under the contract.

  4. Plan responses

    Choose to avoid, reduce, transfer or accept, and assign actions with dates and owners.

  5. Set contingency

    Size contingency from the residual risk and link it to the cost plan.

  6. Review and update

    Review the register regularly, close expired risks, add new ones and report trends.

How it differs by country

United Kingdom
NEC4 clause 15 requires early warnings and an Early Warning Register kept by the Project Manager. ISO 31000 is commonly used as the risk management framework.
Germany
Risk allocation is set mainly by the contract and VOB/B. Ground risk (Baugrundrisiko) is generally borne by the client, which makes ground investigation important.
France
Public contracts allocate risks through the contract documents and CCAG-Travaux, and the théorie de l'imprévision can apply to unforeseeable economic events. Dommages-ouvrage and décennale insurance are part of the risk picture.
United States
AIA A201 deals with concealed or unknown conditions and sets insurance obligations. Owners often hold separate contingencies.
International
ISO 31000 provides risk management guidelines. FIDIC 2017 allocates key risks such as unforeseeable physical conditions under Sub-Clause 4.12 and requires advance warning under Sub-Clause 8.4.

Common mistakes

  • Listing vague risks like 'design risk' with no cause or effect.
  • Scoring risks once and never reviewing them.
  • No owner or action, so the register is just a list.
  • Setting contingency as a flat percentage instead of from assessed risks.
  • Ignoring opportunities.
  • Not linking risks to the programme, so time effects are missed.

In OpenConstructionERP

Module: Cost control, EVM and risk

The Cost control, EVM and risk modules support this process. Risk Register tracks risks, scores probability and impact and manages mitigation. The team links risk exposure to the commercial picture with the 5D Cost Model and with Full EVM forecasting and S-curves, and uses Cost-Value Reconciliation & Cashflow to see how risks that occur affect margin. Project Controls shows cost, schedule, quality, safety, risk and change in one executive dashboard for review meetings.

Risk Register · 5D Cost Model · Full EVM · Cost-Value Reconciliation & Cashflow · Project Controls

The app runs at openconstructionacademy.com/app for course learners.

Risk register with probability and impact matrix and contingency total
Quantify risk Risk register with probability and impact matrix and contingency total

Free videos

There is no free video on this process yet.

Courses

Course in preparation

Practise it in OpenConstructionERP

The free videos explain the process. The full course lets you run it yourself in the ERP, task by task.

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