Project Risk Profiling
In today's society of multi-million dollar projects, risk seems to have become second currency. If a new project is mooted, the first hurdle is how much will it cost (meaning what community resources are required) and the second question is, has there been a risk sign-off? Risk sign-off includes compliance with statute and common law provisions in addition to probity and other issues. These days, both money and the risk hurdles must be met for project to proceed (project due diligence).
Depending on the stage of the project the risk profile changes. However, conceptually projects assume an upside risk position taking into consideration all the associated benefits. Risk assessments then generally focus on the issues that prevent the assumed upside benefits from being achieved. That is, it is a downside risk assessment process from an assumed upside risk position which can be represented by the diagram opposite. Some market or business risk techniques can also be laid over the top to tweak the upside benefits often in terms of cost savings at tender and pre-construction stages.
Analysis can be done at any stage of a project's life cycle and each proponent will undertake due diligence reviews from there own perspective to minimise risk and liabilities to themselves.
At the project planning stage, the proponent letting the tender wants to ensure that all credible potential vulnerabilities have been identified and credible potential 'show stoppers' mitigated prior to the tender and subsequence contract being let. It is important that both ultimate project performance and delivery aspects are considered during the process. This is also the stage where most of the value added and opportunities are identified and included in the scope or design of the project.
Once the project scope has been fairly tightly defined and the project is put up for tender, the tenderer has a different set of risk tasks. This can be represented by the augmented strengths, weaknesses, opportunities and threats (SWOT) diagram. Firstly, the tenderer must ensure there are no credible critical vulnerabilities to the bid. The main focus is on delivery of the project but it is important if possible to identify and keep in mind the critical success factors for the project performance. The second task is a strength assessment to determine the opportunities to the bid.
Once awarded, most of the benefits of the project have been realised although some small project cost savings may be able to be tweaked from the budget. The main focus of any risk task at this stage is to ensure there are not credible issues that can affect the functional performance of the project once constructed, that is during normal operation and maintenance or during the delivery of the project.
In today's society of multi-million dollar projects, risk seems to have become second currency. If a new project is mooted, the first hurdle is how much will it cost (meaning what community resources are required) and the second question is, has there been a risk sign-off? Risk sign-off includes compliance with statute and common law provisions in addition to probity and other issues. These days, both money and the risk hurdles must be met for project to proceed (project due diligence).
Depending on the stage of the project the risk profile changes. However, conceptually projects assume an upside risk position taking into consideration all the associated benefits. Risk assessments then generally focus on the issues that prevent the assumed upside benefits from being achieved. That is, it is a downside risk assessment process from an assumed upside risk position which can be represented by the diagram opposite. Some market or business risk techniques can also be laid over the top to tweak the upside benefits often in terms of cost savings at tender and pre-construction stages. Analysis can be done at any stage of a project's life cycle and each proponent will undertake due diligence reviews from there own perspective to minimise risk and liabilities to themselves.
At the project planning stage, the proponent letting the tender wants to ensure that all credible potential vulnerabilities have been identified and credible potential 'show stoppers' mitigated prior to the tender and subsequence contract being let. It is important that both ultimate project performance and delivery aspects are considered during the process. This is also the stage where most of the value added and opportunities are identified and included in the scope or design of the project.
Once the project scope has been fairly tightly defined and the project is put up for tender, the tenderer has a different set of risk tasks. This can be represented by the augmented strengths, weaknesses, opportunities and threats (SWOT) diagram. Firstly, the tenderer must ensure there are no credible critical vulnerabilities to the bid. The main focus is on delivery of the project but it is important if possible to identify and keep in mind the critical success factors for the project performance. The second task is a strength assessment to determine the opportunities to the bid.
Once awarded, most of the benefits of the project have been realised although some small project cost savings may be able to be tweaked from the budget. The main focus of any risk task at this stage is to ensure there are not credible issues that can affect the functional performance of the project once constructed, that is during normal operation and maintenance or during the delivery of the project.