APC 2026 > RISK > Flashcards

RISK Flashcards

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1
Q

What is risk in construction?

A

Risk is the possibility of an uncertain event occurring that could affect cost, time, quality or scope.

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2
Q

What are the four main risk response strategies?

A

Avoid, Reduce (mitigate), Transfer, Accept.

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3
Q

What are the four common risk categories in construction?

A

Client / Employer risk, Design risk, Construction risk, External risk (statutory, planning, utilities, third party)

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4
Q

What is Employer risk?

A

Risks retained by the Employer under the contract, such as changes in scope or delayed instructions.

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5
Q

What is design development risk?

A

The risk that the design is not fully developed, leading to changes, coordination issues or cost increases.

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6
Q

What is construction risk?

A

Risks arising from the construction process, such as unforeseen ground conditions, labour shortages or sequencing issues.

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7
Q

What is external risk?

A

Risks outside the direct control of project parties, such as statutory approvals, weather or third-party delays.

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8
Q

What is a risk register?

A

A live document used to identify, assess, allocate and manage risks throughout a project.

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9
Q

What should a risk register include?

A

Risk description, Likelihood, Impact (cost and/or time), Mitigation measures, Risk owner, Status and review date

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10
Q

What is the difference between inherent and residual risk?

A

Inherent risk is the level of risk before mitigation; residual risk is the level remaining after mitigation measures are applied.

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11
Q

What is risk apportionment?

A

The allocation of risk between parties within the contract.

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12
Q

Why is clear risk allocation important?

A

Because unclear allocation leads to risk premiums and reduced cost certainty.

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13
Q

What is contingency?

A

An allowance included within a cost plan to address identified and assessed project risks.

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14
Q

What is the difference between contingency and optimism bias?

A

Contingency covers identified project risks; optimism bias accounts for systemic underestimation of cost at early stages.

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15
Q

What is quantitative risk analysis?

A

A structured method of analysing risk using probability and impact to assess potential cost or programme exposure.

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16
Q

What is Monte Carlo analysis?

A

A statistical simulation technique used to model potential outcomes based on variable risk inputs.

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17
Q

How should risk evolve through RIBA stages?

A

Risk should reduce as design develops and uncertainty decreases.

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18
Q

How is risk allocated under Traditional procurement?

A

The Employer retains design risk; the Contractor carries construction risk.

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19
Q

How is risk allocated under Design & Build?

A

The Contractor carries both design and construction risk, subject to Employer’s Requirements.

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20
Q

What risks remain with the Employer under Design & Build?

A

Scope definition risk, planning risk and risks expressly retained under the contract.

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21
Q

What is the risk of heavily amending a standard form contract?

A

It may create pricing uncertainty and increase contractor risk premiums.

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22
Q

Can an Employer transfer all risk to the Contractor?

A

No, excessive risk transfer can lead to inflated pricing or reduced market appetite.

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23
Q

What type of risk is a Section 278 approval delay?

A

An external statutory risk.

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24
Q

How would you assess the likelihood of a Section 278 delay?

A

By reviewing programme constraints, approval timelines and precedent from similar projects.

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25
How would you assess the impact of a Section 278 delay?
By analysing potential programme delay and associated preliminaries and inflation implications.
26
How would you allow for this risk in a cost plan?
By including a risk allowance informed by likelihood and impact assessment, reviewed regularly as approvals progress.
27
How could Section 278 delay risk be mitigated?
Early engagement with the highway authority and proactive submission management.
28
How have you used a risk register in practice?
I maintained a live risk register identifying key risks, assigning owners and reviewing at regular project meetings.
29
How did you manage design development risk?
By allowing contingency at early stages and reducing it as design information became more certain.
30
How did procurement route influence risk on your project?
Under Design & Build, design and construction risk transferred to the contractor, improving cost certainty post-contract.
31
How did you deal with low risk appetite from a Client?
By advising on procurement strategy and maintaining appropriate contingency to protect budget certainty.
32
How did you ensure risk allowances were realistic?
Through team discussions, precedent analysis and ongoing review as the project developed.
33
What is the difference between risk and uncertainty?
Risk can be identified and assessed; uncertainty is unknown and cannot be measured accurately.
34
What is the relationship between risk and value engineering?
Value engineering can reduce cost but must not introduce unacceptable risk.
35
How does inflation create risk?
Inflation increases construction costs over time and can affect budget certainty.
36
Why should risk reduce as the design develops?
Because uncertainty reduces as more information becomes available.
37
What is the commercial consequence of unclear risk allocation?
Contractors include risk premiums, reducing cost competitiveness.
38
39
Why are ground conditions considered a significant construction risk?
Because unforeseen ground conditions can lead to additional foundations, remediation works, delays and increased costs.
40
What are examples of ground condition risks?
* Unforeseen obstructions * Contaminated land * Poor bearing capacity * High water table * Existing services
41
Why are ground risks often high impact?
Because they affect substructure works, which are critical path activities and difficult to alter once construction has commenced.
42
How can ground condition risk be reduced pre-contract?
Through site investigations, boreholes, trial pits, ground reports and geotechnical surveys.
43
What ground condition risk arose on your Harrow project?
There was uncertainty around bearing capacity and potential obstructions due to limited site investigation data at early stage.
44
How was this risk initially identified?
Through review of existing ground investigation reports and discussion with the design team during risk workshops.
45
How was the risk assessed?
We considered the likelihood of poor ground conditions and the potential cost and programme impact if additional piling or remediation was required.
46
How was this risk costed in the pre-contract stage?
A risk allowance was included within the cost plan to reflect potential additional foundation or ground remediation works.
47
How was the risk managed prior to contract?
By recommending further site investigation and clarifying foundation strategy prior to tender where possible.
48
How was the ground risk allocated contractually?
Through a contract amendment making it clear that the contractor accepted ground condition risk.
49
Why was this amendment included?
To provide commercial clarity and reduce Employer exposure to unforeseen ground condition claims.
50
How does transferring ground risk to the contractor affect pricing?
The contractor may include a risk premium within their tender to account for uncertainty.
51
What are the advantages of allocating ground risk to the contractor?
Greater cost certainty for the Employer post-contract.
52
What are the disadvantages of allocating ground risk to the contractor?
Potentially higher tender pricing and reduced contractor appetite if risk is perceived as excessive.
53
How did you ensure the risk transfer was commercially appropriate?
By reviewing available ground information, ensuring transparency within tender documentation and assessing market appetite.
54
What could happen if ground risk allocation is unclear?
It may lead to disputes, claims for additional payment and programme delay.
55
Under a standard JCT contract, who typically carries ground condition risk?
Unless amended, unforeseen ground conditions are generally a contractor risk, but entitlement may depend on the contract wording.
56
How does ground risk allocation differ between Traditional and Design & Build?
Under Traditional, the Employer retains design risk but ground risk often sits with the contractor. Under Design & Build, the contractor carries greater design and build risk, including ground conditions unless expressly stated otherwise.
57
What is the commercial impact of transferring ground risk entirely to the contractor?
It improves Employer cost certainty but may increase initial tender pricing.
58
How would you mitigate ground condition risk without full transfer?
By commissioning detailed site investigations pre-contract and clearly defining foundation design parameters.
59
60
What is risk in construction?
A risk is an uncertain event that may occur and could impact cost, programme or quality.
61
What is the difference between risk and uncertainty?
Risk can be identified and assessed in terms of likelihood and impact, whereas uncertainty cannot be reliably quantified.
62
Why is understanding the Client’s risk appetite important?
Because it influences procurement strategy, contingency levels and how risk is allocated contractually.
63
What is meant by risk appetite?
The level of risk a Client is willing to accept in relation to cost, programme and quality.
64
What are the four risk categories outlined in NRM1?
* Employer risk * Design risk * Construction risk * External risk
65
Why does NRM1 require risks to be included within cost plans?
To ensure estimates reflect potential exposure and provide realistic budget allowances.
66
What is a risk register?
A live document used to identify, assess, allocate and monitor risks throughout a project.
67
What information should be included in a risk register?
Risk description, likelihood, impact, mitigation strategy, risk owner and review status.
68
What is a risk scoring matrix?
A tool used to assess risks based on probability and impact to prioritise management focus.
69
What is Expected Monetary Value (EMV)?
A risk quantification technique where the probability of a risk occurring is multiplied by its potential financial impact.
70
Why is EMV useful in cost planning?
Because it provides a rational basis for calculating contingency allowances.
71
What is contingency?
An allowance within a cost plan to address identified project risks.
72
What is the difference between mitigation and transfer?
Mitigation reduces likelihood or impact; transfer allocates the risk to another party contractually.
73
How did you identify risks on your High Wycombe project?
Through design team discussions and structured risk workshops.
74
How were risks assessed during workshops?
Stakeholders evaluated probability and severity using a scoring matrix.
75
What was your role in the risk workshop?
I contributed to discussions, assessed financial exposure and informed cost allowances within the cost plan.
76
How did you quantify design development risk?
By estimating the potential cost impact of scope changes and applying Expected Monetary Value to calculate an appropriate allowance.
77
Why is design development risk significant?
Because incomplete design can lead to scope changes, cost increases and programme delay.
78
How did the EMV calculation influence the cost plan?
It informed the contingency allowance included within the overall budget.
79
How were risk ownership and management handled?
Risks were assigned to stakeholders with agreed management deadlines.
80
How did you monitor risk throughout the project?
By maintaining and reviewing the risk register regularly as the design progressed.
81
How does risk change as the project develops?
Risk should reduce as design information becomes more certain.
82
How did you contribute to mitigation strategies?
By discussing ways to reduce likelihood or financial exposure, such as clarifying scope or progressing design earlier.
83
How did you determine the probability of design development risk?
Through collaborative assessment in risk workshops using team experience and precedent projects.
84
How did you determine the potential cost impact?
By reviewing similar scope changes and assessing potential additional works.
85
Why is EMV better than simply adding a flat percentage?
Because it links contingency directly to assessed likelihood and impact rather than applying arbitrary assumptions.
86
What happens to contingency as the project moves through RIBA stages?
It should reduce as uncertainty decreases.
87
What would you do if a Client had a very low risk appetite?
Recommend appropriate procurement strategy, increase contingency allowances and prioritise early risk mitigation.
88
How does procurement strategy relate to risk?
Different procurement routes allocate risk differently between Employer and Contractor.
89
What is the difference between qualitative and quantitative risk analysis?
Qualitative assesses risk descriptively; quantitative uses numerical methods such as EMV.
90
What is residual risk?
The level of risk remaining after mitigation measures are implemented.
91
What is the relationship between risk and value engineering?
Cost savings must not introduce unacceptable risk exposure.
92
Why is early risk identification important?
Because mitigation is more effective and less costly at earlier stages.
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