**6.4 Risk response planning**

*Perspectives on Risk, Assessment and Management Paradigms*

**time (months)**

Traditional method 8 10(0.3) = 3

**Method Design** 

Construction management

Design and construct

*Problem on decision tree.*

**Table 6.**

**192**

**Table 7.**

**Parameter Outputs**

*6.3.5 Quantitative risk assessment: outputs*

*6.3.4 Multiple estimating using risk analysis*

organisation

the estimate that has 90% chance of not being exceeded.

Estimates are made of potential project schedule and cost outcomes listing the possible completion dates and costs with their confidence levels. This output is described as cumulative distribution and also risk tolerances for permitting quantification of cost and time contingency reserves. Contingency reserves bring the risk of overshooting stated project objectives to acceptable levels to the

This can be depicted in the form of decision trees and the expected value (EV) in terms of time for each of the three scenarios is furnished. The least of this i.e.

**Construction period in months and probabilities**

> 18(0.4) = 7.2 **Total 16.2 months**

**Total = 13.8 months** 14(0.5) = 7 16(0.2) = 3.2

12(0.7) = 8.4 **Total 11.4 months**

2 15 (0.6) = 9

3 12(0.3) = 3.6

**Total time (construction period + design time) (months)**

18.2

16.8

19.4

Multiple estimating using risk analysis (MERA) attempts to provide a range of estimates. These are presented as risk free base estimate, average risk estimate (ARE) and maximum likely risk estimate (MLRE). ARE is the sum of risk free base estimate and average risk allowance and MLRE is the sum of ARE and maximum risk allowance. MERA attempts to finds a level i.e. the estimate that has a 50% chance of being successful. This is known as average risk estimate (ARE) which is found out by multiplying the average allowance with average probability of occurrence. Maximum risk allowance is found out by multiplying the maximum allowance with maximum probability of occurrence of that risk. This is added to ARE to get MLRE which is

construction management will be preferred since it consumes less time.

The output of quantitative risk assessment is presented in **Table 7**.

This list includes risks that pose the greatest threat or present the greatest opportunity

As the risk analysis is repeated, a trend becomes apparent that leads to conclusions affecting risk responses, Historical information on project's schedule, cost, quality and performance reflects new insights gained through quantitative process. This

in a project. These risks also have the greatest impact on cost contingency

takes the form of quantitative risk analysis report.

Probabilistic Analysis of project

Prioritised list of quantified risks

*Quantitative risk assessment: outputs.*

Trends in quantitative risk analysis results

The risk response will be in the form of mitigation by adopting necessary strategies in respect of positive and negative risks which is furnished below (**Tables 8**–**10**).
