3.9.

RISK MANAGEMENT

In the beginning of every project, there is always uncertainty that comes along with
the development of a new and unique product or service. The purpose of a risk
management plan is to establish a framework within which the project team will
identify risks and develop strategies to reduce or avoid those risks. However, before
risks can be identified and managed, there are early project elements that must be
completed. These elements are described in the risk management approach.

3.9.1 RISK MANAGEMENT APPROACH

The approach that has been taken to manage risk for this project includes a process
by which the project team identifies, assesses, and ranks various risks. The most
likely and highest risk impacts are included in the project schedule to ensure that the
assigned risk manager takes the necessary steps to implement the mitigation
response at the appropriate time during the schedule. The risk manager will provide
status updates on the risks assigned to them, in project meetings held every 2
weeks. After completing the project, during the closing process, the project manager
will analyze each risk as well as the risk management process. Based on this
analysis, the project manager will identify improvements that can be made to the risk
management process for future projects. These improvements will be captured as
part of the knowledge base lesson for future projects.

3.9.2 RISK IDENTIFICATION

For this project, risk identification was carried out in the initial project risk
assessment meeting. The project manager leads a risk assessment meeting and
notebooks are distributed to each team member and 10 minutes are allowed for all
team members to record as much risk as possible.

- Expert Interview

Two Expert Interviews were held for this project. These interviews reveal some of the
risks which are then mitigated by making changes to the project plan. The remaining
risks are included in the Risk List.

- Meeting Risk Assessment

Risk assessment meetings are held with key team members and stakeholders. The
risks identified during this meeting are added to the project plan and Risk List.

- Historical Review of Similar Projects

The project team provides a historical review of similar projects with the aim of
determining the most common risks and the strategies used to mitigate those risks.

3.9.3. RISK QUALIFICATION AND PRIORITIZATION

All identified risks will be assessed to identify the extent of the possible
consequences. Qualifications will be used to determine which risks must be
overcome and which risks can be avoided, in the sense of being left alone. Possible
risks arising and their impact on the project will be identified and assessed by the
project manager, with input from the team, using the following approach.

Possibility

- High – More than 70% chance

- Medium – Between 30% and 70% chance
- Low – below 30% probability of occurrence

Impact

- High – Risks that have the potential to have a major impact on cost, schedule
or project performance.
- Medium – Risk that has the potential to have a moderate impact on project
costs, schedule or performance.
- Low – A risk that has the potential to have little or no impact on project costs,
schedule or performance.

3.9.4. RISK MONITORING

The biggest and most likely impacts are included in the project plan to ensure that
these risks are monitored during this time. The project is affected by their respective
risks. At the appropriate time in the project schedule, a Risk Manager is assigned to
each risk. During the project team meeting which is held every two weeks, the Risk
Manager for each risk discusses the status of the risk, however, only the risks that
fall in the current time period will be discussed. Risk monitoring will be a continuous
process throughout the project. As a risk approach to the project schedule, the
project manager will ensure that the risk manager provides the necessary status
updates, including risk status, identification of trigger conditions, and documentation
of the results of the risk response.

3.9.5 RISK MITIGATION AND AVOIDANCE

The project manager has led the project team in developing responses to each
identified risk. As more risks are identified, they will be qualified and the team will
develop avoidance and mitigation strategies. These risks will also be added to the
Risk Register and project plan to ensure they are monitored in a timely manner and
responded to accordingly. The risks for this project will be managed and controlled
within the constraints of time, scope and cost. All identified risks will be evaluated to
determine how they affect existing constraints. The project manager, with assistance
from the project team, will determine how best to respond to each risk to ensure
compliance with the constraints.

In extreme cases it may be necessary to allow flexibility for any of the project
constraints. Only one constraint to this project allows flexibility as a last resort. If
necessary, funds can be added to the project to allow more resources to meet time
(schedule) and scope constraints. Time and scope of the company's constraints and
allow no flexibility. Again, the cost constraint is flexible only in extreme cases where
no other risk avoidance or mitigation strategy will work. Approaches used to address
risks include:

- Avoid - removes the threat by eliminating the cause

- Mitigation - Identify ways to reduce the likelihood or impact of the risk
- accept - Nothing will be done
- transfer - Makes the other party responsible for the risk (buying
insurance, outsourcing, etc.)
3.9.6. RISK REGISTER

The Risk Register for this project is a log of all identified risks, their probabilities and
impacts on the project, the category they belong to, mitigation strategies, and when
the risks will occur. The register was created through an initial project risk
management meeting chaired by the project manager. During this meeting, the
project team identified and categorized their respective risks. In addition, the team
assigned each risk a score based on the likelihood of it occurring and the impact it
could potentially have. The Risk List also contains risk mitigation strategies for each
as well as when risks are likely to occur. Based on the identified risks and the time
frame in the risk register, the respective risks have been added to the project plan. At
the appropriate time in the plan prior to when the risks are most likely to occur—the
project manager will assign a risk manager to ensure compliance with the agreed
mitigation strategy. Each risk manager will provide their assigned risk status at the
biweekly project team meetings for their planned risk period. The Risk List will be
maintained as an attachment to the Risk Management Plan.

3.9.7. RISK IDENTIFICATION

The risks for this project have been identified. The Project Manager will determine
and implement strategies for mitigating or reducing risks to minimize the possibility of
the following risks occurring:

No Risk identification
Administration
R1 Long Procurement/Administration Process
R2 Contract issuance delay
R3 Local regulation problem
R4 Permits, approvals problem
R5 Unrealistic Price

Material and Equipment

R6 Late Material Order
R7 Lack of Equipment
R8 More Material Availability
R9 Damage or Loss of Material
R10 Material Price Changes
R11 Lack of Material Storage Space
R12 Lack of Storage for Waste Materials
R13 Damage to Work Equipment
 Construction Method
R14 There is a new construction method that is wrongly applied to the
project
R15 Project priorities are not clear
R16 Field data interpretation error during tender
R17 New Technology
R18 Design Dynamics
R19 Lack technical documentation
R20 Too many design changes

Human Resource
R21 Labor Strike
R22 Labor Accident
R23 Labor Negligence
R24 Miscommunication between the personnel on project
R25 Less qualified contractor/subcontractor
R26 Failure of contractors to fulfil their obligations due to internal factors
R27 Lack Motivation
R28 High Number of errors
R29 Insufficient workers

Financial
R30 Global Financial Crisis
R31 Variation order from the contractor that affect the budget
R32 Currency value/inflation

Nature/Force Majeure
R33 Climate
R34 Fires
R35 Earthquakes
R36 Floods

Surrounding
R37 Traffic jams around the site
R38 Difficulty transporting heavy equipment to the project site/ mobilisation
problem
R39 Local people

Covid-19 Risks
R40 Covid-19 infection on site
R41 High accommodation cost due to Covid-19 protocol
R42 Lack of shelter for labor due to covid-19 protocol.
R43 The personnel or labor refuse to wear the mask and covid-19 protocol
R44 Contractor refuse to follow the protocol
 RISK BREAKDOWN STRUCTURE

PENANG BAY DEVELOPMENT PROJECT

External Internal

Material and Material and

Administration Administration
Equipment Equipment

R3 R4 R10 R1 R2 R6 R7

Construction Method Human Resource R5 R8 R9

R17 R18 R25 R26 R11 R12

Financial Nature R13

Construction
R30 R32 R33 R34 Human Resource
Method

R35 R36 R14 R15 R21 R22

Surrounding R16 R19 R23 R24

R37 R38 R20 R27 R28

R39 R29

Financial

R31
No Risk identification Strength Weakness Opportunity
Administration
R1 Long Procurement/Administration
Process
R2 Contract issuance delay
R3 Local regulation problem
R4 Permits, approvals problem
R5 Unrealistic Price

Material and Equipment

R6 Late Material Order
R7 Lack of Equipment
R8 More Material Availability
R9 Damage or Loss of Material
R10 Material Price Changes
R11 Lack of Material Storage Space
R12 Lack of Storage for Waste Materials
R13 Damage to Work Equipment

Construction Method
R14 There is a new construction method
that is wrongly applied to the project
R15 Project priorities are not clear
R16 Field data interpretation error during
tender
R17 New Technology
R18 Design Dynamics
R19 Lack technical documentation
R20 Too many design changes
 Human Resource
R21 Labor Strike
R22 Labor Accident
R23 Labor Negligence
R24 Miscommunication between the
personnel on project
R25 Less qualified contractor/subcontractor
R26 Failure of contractors to fulfil their
obligations due to internal factors
R27 Lack Motivation
R28 High Number of errors
R29 Insufficient workers

Financial
R30 Global Financial Crisis
R31 Variation order from the contractor that
affect the budget
R32 Currency value/inflation

Nature/Force Majeure
R33 Climate
R34 Fires
R35 Earthquakes
R36 Floods

Surrounding
R37 Traffic jams around the site
R38 Difficulty transporting heavy equipment
to the project site/ mobilisation problem
R39 Local people
 Covid-19 Risks
R40 Covid-19 infection on site
R41 High accommodation cost due to
Covid-19 protocol
R42 Lack of shelter for labor due to covid-
19 protocol.
R43 The personnel or labor refuse to wear
the mask and covid-19 protocol
R44 Contractor refuse to follow the protocol

RISK REGISTER
Impact
No Risk Statement Probability Score Response
Scope Quality Schedule Cost
Administration
R1 Long Procurement/ May
Administration Process happen due
to a lot of
project
package
need to be
released.
R2 Contract issuance delay
R3 Local regulation problem
R4 Permits, approvals problem
R5 Unrealistic Price
 Material and Equipment
R6 Late Material Order
R7 Lack of Equipment
R8 More Material Availability
R9 Damage or Loss of Material
R10 Material Price Changes
R11 Lack of Material Storage
Space
R12 Lack of Storage for Waste
Materials
R13 Damage to Work
Equipment
Construction Method
R14 There is a new construction
method that is wrongly
applied to the project
R15 Project priorities are not
clear
R16 Field data interpretation
error during tender
R17 New Technology
R18 Design Dynamics
R19 Lack technical
documentation
R20 Too many design changes
 Human Resource
R21 Labor Strike
R22 Labor Accident
R23 Labor Negligence
R24 Miscommunication
between the personnel on
project
R25 Less qualified
contractor/subcontractor
R26 Failure of contractors to
fulfil their obligations due to
internal factors
R27 Lack Motivation
R28 High Number of errors
R29 Insufficient workers

Financial
R30 Global Financial Crisis
R31 Variation order from the
contractor that affect the
budget
R32 Currency value/inflation

Nature/Force Majeure
R33 Climate
R34 Fires
R35 Earthquakes
R36 Floods
 Surrounding
R37 Traffic jams around the site
R38 Difficulty transporting heavy
equipment to the project
site/ mobilisation problem
R39 Local people

Covid-19 Risks
R40 Covid-19 infection on site
R41 High accommodation cost
due to Covid-19 protocol
R42 Lack of shelter for labor
due to covid-19 protocol.
R43 The personnel or labor
refuse to wear the mask
and covid-19 protocol
R44 Contractor refuse to follow
the protocol