Subject: Project Risk Management
Presented to : Mr. Saif ur Rehman
Mr. Agha Nadir ID 168404
Mr. Imran Khan ID 168402
Case Study Salient Features:
• A project has taken several years for pre-contractual requirements is now ready to invite tenders to construct.
• Tendering contractors are forced to evaluate their fee in unrealistic time frame.
• Tenderers have been through an extensive and costly prequalification exercise to evaluate the efforts and potential risk involved
site assessment team, dispatched to the site with instructions to gather all method and cost related information needed for preparing the bid
Various construction techniques has to be investigated along with temporary work proposals
ground conditions and many
other factors to
by further investigation and inspired guesswork
• Evaluation of risk begins by questioning
within contractors organization
and arriving at the consensus of the ‘gut feelings’ expressed
• Possible claims opportunities are evaluated
Considering the case study, what type of problems encountered in risk management plan and how these are managed?
Type of Problems in the context of plan risk management :
• Unrealistic time frame given to evaluate contract documents
• Unaware project risks and uncertainties
• High probability of quoting un-rational fee to cater risk involved
How the issues are Managed:
• Organizing site assessment team
• Evaluate opportunities for claims
• Brainstorming sessions with experienced project managers
• Establishing intuitive approach by looking at overall program and desk study
Author Foremost Evaluation and Recommendation: (Sheet 1 of 2)
• Apparently the client poses to transfer the risk on to the bidder
• Lack of site information together with unrealistic time frame will lead to improper or incomplete evaluation of project risk.
• The lesser the detail provided by the client, the greater the price quoted by the contractor to incorporate risk factor
Contractors should not be expected to bear risks that cannot be cost-effectively quantified with sufficient certainty
Joint identification of risk by client and tendering contractors
are always preferable; means both parties should fully aware of the risks involved.
Author Foremost Evaluation and Recommendation: (Sheet 2 of 2)
Bidding Price and Risk Analysis:
• Additional factors considered by the contractor beside initial cost to perform the work
• Contractors’ perspective risk analysis governs the level of responsibility involved on completing the work
• Terms of payment and cash flow? – client cannot dictate the type of contract
• Cause potential imbalance between the risks involved in not winning the bid and risk associated with possible profits or losses if the contract is obtained.
Type of Contract to mitigate risk:
• Contractor to take the ownership from his perspective and dictate the type of contract that covers maximum claims and incentives to mitigate risk.