3 TOOLS FOR RISK IDENTIFICATION IN CONSTRUCTION PROJECTS

Why do project delays and related issues crop up over and over again?  The company has project managers with experience and knowledge, but it also has project team members whose knowledge isn’t so extensive.  And most of all, once the project is underway, no one seems to have time to plan, look ahead and strategize.  As a consequence, the project manager ends up putting out fires yet again.                                    Risk Identification                                            ‘

Risk management is essential before the project is in full swing – early on – in the planning stages.

And where are the sources of crucial information concerning risk? That’s easy – just take a look at previous projects and talk to experienced project managers!

And how exactly do you garner the information?

The first method is the formalized “Grampa Simpson” method, or the Expert Interview.  Create a series of questions like those below.  Ask PMs, site supers and foremen with experience in these projects, to talk about it – and record that info.   Then review and synthesize.  With the “Grampa Simpson” method – tongue in cheek – you end up with the biggest, noisiest problems, but not necessarily the most costly. And yes, sometimes you’ll have to sit through the whole story – including how Gerry, that knucklehead engineer or consultant, said this or that and so on.

To get this to work, create a standard set of open questions, keep good records and synthesize the information. Simply examining the project plan in isolation is often insufficient.  Risk deals with uncertainty and unknowns.  Mitigation of risk encompasses every bit of information that is available.  In identifying risk, the following tools or techniques can been used:

  1. Expert interviews: Your company employs people with experience.  The company that contracted you for this project has experience.  Typical interview questions are:
  • Did anything go off schedule or not as planned in the last project?
  • What were the biggest issues faced in terms of meeting the deadlines? Costs?  Scope?
  • Were there any significant shortcomings?
  • Were there any significant areas of uncertainty?
  • What drove the project off course?

The interview questions will not give you a risk analysis.  They will point you in a direction of inquiry.

  1. Brainstorming: Everyone has been to meetings where the open ended question has been asked. The markers, white boards and flip charts are out and a lot of random thoughts are expressed.  Sometimes good ideas come out of brainstorming, but this technique has a few flaws:
    • It is very hard to keep a meeting on-topic.
    • The strongest personalities usually dominate, and definitely, the management hierarchy will influence whether a good idea is voiced or not. Everyone censors when the boss is in the room.

So to make brainstorming work, we suggest conducting surveys outside of meetings.  Ask the questions, but ask them electronically.  Gather the results and synthesize.  This methodology has been formalized and is typically referred to as the ‘Delphi Technique’.  The anonymity of the responses ensures that respondents will not be worried about what the boss will say, or what their co-workers will think.  People can get more creative at no risk.  There is expertise in the field and in the office that can be tapped into.

Questions similar to those asked in the expert interviews can be asked, but the questions should be framed in a future tense:

  • Is XYZ likely to happen?
  • What is the impact?
  • How do we mitigate this impact?
  • How do we prevent XYZ from occurring?
  1. Delphi Technique : The essence of the Delphi Technique is:
    • Coordinator formulates problem and distributes it to experts (site people, consultants, PMs, trades, anyone with an interest)
    • Experts send written response.
    • Coordinator sends out position papers and experts have a chance to reconsider and resubmit.
    • Resubmissions are reviewed and a finalized list of risks is placed on the risk listing form.

Because this is a more structured methodology, and because the questions are revisited and re-examined,   reliable results can be achieved.

“The Delphi method is a structured communication technique, originally developed as a systematic, interactive forecasting method which relies on a panel of experts.  The experts answer questionnaires in two or more rounds. After each round, a facilitator provides an anonymous summary of the experts’ forecasts from the previous round as well as the reasons they provided for their judgements. Thus, experts are encouraged to revise their earlier answers in light of the replies of other members of their panel. It is believed that during this process the range of the answers will decrease and the group will converge towards the “correct” answer. Finally, the process is stopped after a pre-defined stop criterion (e.g. number of rounds, achievement of consensus, and stability of results) and the mean or median scores of the final rounds determine the results. Delphi is based on the principle that forecasts (or decisions) from a structured group of individuals are more accurate than those from unstructured groups.  Delphi has been widely used for business.”  [1]

Key characteristics of this methodology include

  • Anonymity of the participants. The identity of participants is not revealed even after final completion.  This eliminates bias (a key feature of groupthink) as well as the bandwagon effect.
  • Information is structured by the facilitator to eliminate irrelevant comments.
  • Participants can provide as much feedback as they wish and modify their own answers.
  • The facilitator sends out questionnaires, collects and analyzes responses, identifies common and conflicting views and provides these views for re-evaluation by the participants. This round continues until consensus is reached.

[1] http://en.wikipedia.org/wiki/Delphi_method   Wikipedia