Category Construction Management. for Industrial Projects


Brainstorming, probably the most popular technique for identify­ing risks, entails a session, usually not more than two hours long, involving between ten and fifteen participants. Less than 10 risks limiting interaction, while more than 15 poses problems of meeting control / chairmanship and maintenance of focus. (For larger proj­ects, it may be necessary to hold several meetings. In that case, each session addresses only distinct parts of the project and the risks that could arise in that part.) The facilitator / chair should come from a part of the organization not involved in the immediate project and its risk issues, but who has some experience with the type of project involved.

The facilitator introduces the project briefly. A chart hanging on the wall indicates the project time schedule and key stages. The facilitator defines at the outset the stakeholder(s), budget, and location of the project.

From this point, a dialogue begins about the potential risks, directed by the facilitator and team leader. At this point, before dis­cussion is engaged on any particular item, every expected or defined risk should be put on a list visible to all. After this listing task is completed, the next stage of actual brainstorming can be launched. Care should be taken by the facilitator with regard to the following:

• Not to stop or reject any idea.

• Not to entertain any suggestion to remove any idea.

• Not to allow interruption of the discussion.

• Not to permit too-deep delving into the detail of any particular risk item.

The collected list of items can now be "filtered," and any two or three more or less similar connected risks merged with a single more general one. The result becomes the content to be filled into Table (9.1).

Methods of Defining Risk

There are many ways to discover and identify risks, several of which are discussed here. Brainstorming remains the most tradi­tional and practical method for "kicking off" this process, although other approaches can also be used in special circumstances:

• Brainstorming

• Delphi technique

• Nominal group technique

• Crawford slip

• Expert interviews

• Root cause identification

• Checklists

• Documentation reviews

• Strengths, weaknesses, opportunities, and threats (SWOT) analysis

• Analogy

Risk Identification

The identification of risks is very important. Each item must be described in detail so that it will not be confused with any other risk or project task that must be done. Each risk should be given an identification number. During the course of the project, as more information is gathered about the risk, all of this information can be consolidated.

Initially a meeting of the working team should convene to dis­cuss and identify risks. The meeting should be convened offsite at a hotel or other meeting room away from the work environment. The reasons for such an approach are twofold. First, the team has to start working together, and for this some discussion venue away from the stress of the workplace work can help "melt the ice." Second, team members’ minds need to work free from any outside stress, so that the benefits of their previous experience can be brought more fully into play.

At this meeting, a "brainstorming" approach can be applied to encourage each individual to bring forward his or her own thoughts regarding expected risks during the project. These can be collected and reduced to written form in the order illustrated in Table (9.1). This list will become a basic document of the project.

Project Name:

Project Manager:

Client Name:


Risk Degree: High Medium Low






The Probability: 1-9



Key Stage Code



Project manager signature: Date:

Project Risk Management 305

The first component to discuss is the identification of the risk event. The project team, subject-matter experts, stakeholders, and other project managers are all called upon to contribute to this risk – identification process. Much of the work already done in the project will be utilized in the risk management process. Among these items that will be used are the project charter, the work breakdown struc­ture, project description, project schedule, cost estimates, budgets, resource availability, resource schedules, procurement information, and assumptions that have been made and recorded.

Risk Assessment

The risk assessment procedure is shown in Figure (9.4). The first step is to define the expected risks during the project execution and then analyze this risk. The last step is to prioritize these risks.

Each project has a risk, no matter what the project. Focusing on the risks affecting the management of the project, priorities can be set to develop solutions and mitigation.

In order to assess these risks, the following questions must be addressed accurately and impartially:

• What is the risk exactly?

• How do these risks affect the project?

• What can be done to reduce the impact of the risks?

In this stage the risks will be assessed by their effects on the objectives, time, and cost. Now we need an easy way to assess the risks practically, and this method is called "qualitative risk assessment."

Project Risks

After completing the time schedule, the potential risk will be more obvious. Knowledge of the risks that may be faced during the proj­ect is extremely important for the project manager, as he is responsi­ble for identifying the activities of higher risk impact on the overall project implementation, which will either increase the duration or increase the cost.

Therefore, the project manager should review the planning schedule and identify areas of planning that contain high risks, as known from the following: ‘

1. Tasks on the critical path

2. Tasks that need a long time period in which to be executed

3. Tasks that have a little overtime

4. Activities that start with the beginning of other activities

5. Tasks that need many individuals for their execution

6. Complex tasks

7. Activities and tasks that need condensed training

8. Tasks that need new advanced technology

After selecting the tasks that would cause risk to the project and thus determine their position relative to other risks and tasks, the necessary steps to implement those tasks and how to follow up on implementation daily and assign reasonable persons who will be responsible for follow-up in that stage of the project must be identified and planned.

To better illuminate what sorts of things can be considered high – risk activities during project execution, the example of pouring concrete in Chapter 4 is instructive.

One of the riskiest activity of that project is excavation work. It needs a long time period in execution and it lies on the project’s critical path. Therefore it has a high probability of delay which has a high potential impact on the complete project.

In any project the longest activity located on the critical path is the riskiest. On the other hand, delivery of machinery and other mechan­ical equipment ordered abroad has a known and hence more man­ageable risk of suffering delays. The consequences of such delay may be somewhat mitigated by rearranging tasks that can be performed without that equipment, to be started or finished before delivery of the equipment. The complexity of such task rescheduling will be a function of how many other activities depend on the delivery of the awaited equipment. Both these examples — excavation and await­ing delivery of needed equipment — have a high-risk assessment, as they lie beyond the full control of project management.

The success of the project means that the project’s objectives were achieved according to a specific time schedule and budget. During the project’s execution, however, specific costs, the time period, and the objectives of the project can increase or decrease. These three elements affect one another, so the project success is really a mea­sure of how cohesively these elements work together, as presented in Figure (9.2).

From the probability theory discussed earlier in Chapter 3, it emerges that the probability of success is small. The goal is to locate the project in the zone of mutual intersection.

There are many areas in the project that are not specific, and these are sources of risks. These can be any of the following:

• Activities of a long period of time and on the critical path

• A lack of identification of the project objectives

• A non-competent project manager

• An inaccurate cost estimate

• A bad atmosphere, in general, in the project

• Achieving customer satisfaction

• A rapid change in resources during time periods, as shown in Figure (9.3)

Figure (9.3) presents staff and other resources distribution onsite within a construction period. At the start of the project, the activities and resources are low. There is a transition zone, in which resources increase consequent upon an increase in activities. This transition

Figure 9.3 Change in staff volume during a project.

zone will be one of high risk, as it will rapidly increase the working resources in the project in a short time period. Therefore, the likeli­hood of bad quality, misunderstanding the objective, and mistakes in safety procedure will be very high.

In the middle of the project, there will be stability in the number of resources, so the risk will be less. After that, start the other tran­sition zone by decreasing the resources which this stage will be a high risk also as in this case there will be a likelihood of manpower shortage fast and missing the handover or transfer equipment by mistake that you may need it later, in the same time the staff decreasing, so everyone in the project will be busy for searching to the other opportunity in another projects.

The list below can be your guide as a checklist for defining uncertainty risks in your project. In general, the common sources of uncertainty in a project are as follows:

• Scope of work

• Quality of estimates

• False assumptions

• Technological novelty

• Changes in technical specs

• User interface

• Staffing

• Staff productivity

• Skill levels

• Contractor performance

• Subcontractor performance

• Approvals and funding

• Market share

• Competition

• Economic climate

• Inflation and exchange rate

• Site conditions, such as soil characteristics

• Weather, as it has a high impact in the case of offshore projects

• Transportation logistics

• Change in law

• Political environment

• Public relations

• Customers

• Extensive software development

The Risk Management Process

The Project Management Institute (PMI) uses the systems approach to risk management found in the Guide to the PMBOK. The risk process is divided into six major processes:

1. Risk management planning

2. Risk identification

3. Risk assessment

4. Risk quantification

5. Risk response planning

6. Risk monitoring and control

These will be discussed in the following section.

Project Risk Management

9.1 Introduction

Earlier in Chapter 3, risk assessment was discussed from the standpoint of the overall economic prospects, positive and negative, of a project proposal. This chapter discusses how to define, control, and mitigate risks that emerge during project execution.

When studying risk assessment for a project from an economic point of view, the probabilistic studies and Monte-Carlo simula­tion techniques are key in this assessment, which is called quanti­tative risk assessment. But this method of analysis and assessment requires special software with specialized skills. On applying risk assessment in the execution phase using qualitative risk assess­ment tools, as we will describe in detail in this chapter. This assessment method is not required a special skills or software. Risk management during project execution is a combination of experience and qualitative skills, deployed usually by a team involved in the project’s execution, led by someone experienced in qualitative risk assessment strategies from other similar proj­ects. One of the greatest sources of risk to be managed is poor, shoddy or otherwise inadequate execution of some programmed

task(s) whose correction will increase project costs, time or overall output quality.

Risk potential is less at the end of the project than at the outset.

The risks can be classified in two categories:

• Project risks are the risks that can happen during a project due to technical mistakes that can occur during construction.

• Process risks are the risks that can occur during the proj­ect due to procedural mistakes, poor communication between the project team, or poor team performance.

Figure 9.1 Sources of uncertainty.

In general, there are many sources of uncertainties, especially in the main elements of a project, which are cost, time, quality, and HSE as presented in Figure (9.1). Our target is to control these uncertainties, try to predict what could happen, and avoid it in a reasonable time.

As shown in Figure (9.1), the uncertainty involved is like the black box, in which no one can know what will happen. Objectives are things that must happen; uncertainties things that might.

Advantages for Total Building Commissioning System

This system was applied to different administration buildings. Table (8.11) presents the cost for the commissioning a retrofit proj­ect. Table (8.12) shows the cost for applying building commission­ing to existing buildings. One can see that the cost payback varies from 0.3 to 1.6 years.

Although little research has been completed to document the link between comfort and productivity in the office environment, com­fortable employees are generally considered to be more productive than are uncomfortable employees.

Table 8.11 Costs for commissioning retrofit project


Cost Range

Total building commissioning

0.5-1.5% of total construction contract cost

HVAC and automated control system

1.5-4% of mechanical contract cost

Electrical system

1-1.5% of electrical contract cost

Table 8.12 Existing building system commissioning cost

Building Type

Commissioning Cost (USD in 1995)

Annual Savings (USD in 1995)

Payback Cost (Years)

Computer facilities/ office




High rise office




Medical institute








Table 8.13 Annual energy and cost savings from commissioning existing building systems projects

Building Type



Cost Savings (USD in 1995)

2043 m2 office

130800 KWh


10200 m2 office

279000 KWh


5574 m2 high-tech manufacturing facility

336000 KWh


When occupants of an office building complain of discomfort, additional costs and lost productivity have been estimated to be significant.

One such estimate assumes that the typical building has one occupant per 200 square feet of space and an annual payroll cost of $34,680 per person (or $173 per square foot of office space).

If one out of every five employees spends 30 minutes a month complaining about the lighting, the temperature, or both, the employer loses $0.11 per square foot in annual productivity. In a 100,000-square-foot building, this loss amounts to $11,000 per year.

The comparison of cost savings in energy by applying the build­ing commissioning system for an existing building in 1995 is pre­sented in Table (8.13), noting that the cost saving is about $12,168 for 60,000ft2 manufacturing facilities.


Recommissioning shall generally include the following:

• Establishing that original basis of design and operation is still appropriate for use, occupancy, tenant agencies and GSA goals, and modify the operations/controls sequencing as appropriate for optimum operations

• Reviewing and benchmarking key systems opera­tions/performance against the Basis of Design

• Evaluating envelope tightness/pressurization by infrared or other methods

• Performing energy analysis

• Recommending repairs/modifkations to optimize building performance

It is important to recognize that at 3-5 years after occupancy, the GSA PM will likely not still be involved with a particular proj­ect. Therefore, the Customer Agency will take the lead on facility recommissioning.

Recommissioning shall include Commissioning Agent services. While there are obvious benefits of familiarity, the Customer

Agency may or may not bring back the project Commissioning Agent. Recommissioning is not part of the original CxA’s contract, and therefore the Customer Agency must procure these services through a RFQ/RFP process at the time of recommissioning.

Recommission Facility Every 3-5 Years

At this stage of operation a considerable investment has been put into assuring the facility operates as intended. Understanding that systems tend to shift from their as-installed conditions over time due to normal wear, user requests and facility modifications, it is strongly recommended that Customer Agencies consider recom­missioning facilities every 3-5 years.

A facility recommissioning program serves to assure opera­tional efficiency and continued user satisfaction. Maintaining good O&M and occupant complaint records is key to continued recommissioning efforts.