PROJECT RISK MANAGEMENT

Using a wide-ranging list of capital project risk elements characteristic of a client’s project we audit or provide assistance with development and implementation processes for project risk management, focusing on risk identification, analysis and response planning strategies and the project’s methods for monitoring and control of its risk management program.

Our advisory services are based upon an industry standard approach to risk management that addresses two process categories – risk planning and risk monitoring and control. We examine a client’s performance against the objectives of these processes, which are: decreasing the probability of negative events and increasing probability of positive events to influence a project’s outcome. We address both development and implementation processes for risk management.

PLANNING RISK

Our audit of risk management planning focuses on risk identification, risk analysis and risk response planning. Using information from project initiation documents and the project management plan, and meetings with senior level project stakeholders, we ensure the project’s risk management plan reflects an owner or contractor’s acceptable level of exposure to risk based on the project’s characteristics. We analyze key features of the plan, including identification of methods used to approach risk management; participant roles; its budget; the activity schedule; risk category and impact probability definition; and tracking and reporting formats together with the risk register.  

Special attention is given to ensuring risk identification processes document existing risks and provide ability to anticipate events and decide items for the project risk register. For example, activity duration and cost estimates are examined to identify significant time and cost risks; uncertainty of assumptions in a project’s scope baseline is reviewed for identification of potential risk; and complexity and level of detail of procurement documents is analyzed for identification of contract risk. 

Using expert judgement and analysis we examine the project’s risk analysis processes to evaluate the project team’s ability to increase levels of certainty, to focus on high-level risks, and to produce decision making information toward reducing project uncertainty. 

Finally, we address risk response planning processes to ensure risks are addressed by their priority and risk management resources, and strategies are reflected in the project’s budget, schedule and project management plan.  Strategies for both threats and opportunities are evaluated for planned actions on specific risks and implementation of contingency or fallback plans.

CONTROLLING RISK

We analyze a project’s process for monitoring and control of risk to judge its ability to improve the efficiency of risk management and to continuously optimize risk response throughout its life cycle. Using the risk register, work performance reports, meetings and expert judgement we evaluate the project team’s auditing, trend analysis, and technical performance measurement processes against the risk management plan. We focus on adequacy of contingency reserves, the impact of contingency plans and workarounds on the project’s change management process, and the team’s management of recommended corrective or preventive actions arising out of the risk monitoring and control activities.