Schedule Risk Management - Construction Project Scheduling and Control - page 369

of average production rates. Once the durations are calculated, they are often used
as deterministic values, assuming the durations are accurate and unlikely to change.
This assumption ignores the fact that the schedule is attempting to predict how
long it will take to complete an activity at some unknown time in the future, using
an unknown crew composition, with variable experience, and working in unknown
conditions. Risk management recognizes the uncertainty in duration estimating
and provides a system to brainstorm other risks that may occur during the project.
Probability distributions are the best way to model planned activity durations, as
noted by Hulett (2009): “The best way to understand the activity durations that are
included in the schedule is as probabilistic statements of possible durations rather than
a deterministic statement about how long the future activity will take.”
TYPES OF RISK IN CONSTRUCTION PROJECTS
Everything that has ever gone wrong on a construction project is a potential risk for
the next project. Many project managers instinctively develop a “lessons-learned” list
of historical risks and take steps to minimize their exposure to those risks in the future.
Risks vary by industry and even by construction project type, as well as by per-
sonnel involved with the project. A roadway or bridge project has a different group of
risks than a facility or building, and the selected contractors may have different degrees
of influence on the level of risks to performance.
In addition to things that may go wrong on the project, the way the contract
is written, the type of project delivery method, the requirement for insurances, and
many other contractual and legal decisions will result in increased or decreased risk.
Of course, the general effort with contracts is to reduce risk or at least to remove it
from the owner.
Risks may affect cost, time, quality, safety, the contract, or anything else, from the
program level down to the project level. Each type of risk is treated differently and
with different emphasis by the project management team.
SCHEDULE RISK TYPES
Looking only at the risks associated with time, schedule risks are still extensive. Sched-
ule risks particularly drive cost risks more often than the reverse.
The selection of the project team can impact positively or negatively on the prob-
ability of the project's successful completion. Design-bid-build projects that use pro-
curement philosophies allowing all financially capable contractors to participate will
likely experience a much higher level of risk to on-time performance than a procure-
ment philosophy that requires qualification of proposed contractors to ensure that they
have the appropriate experience and resources to construct the project. A single weak
subcontractor on a project will increase the risk of performance and require more man-
agement than may be anticipated. If this is not considered, everyone will be surprised
when that subcontractor fails and the subcontractor's work subsequently must be aug-
mented or corrected. Problems related to the management and possible termination
of a failing subcontractor usually have serious negative impacts on the project.