Fundamentals of Risk Management

Project risk management
373
ground conditions as a possible cause for concern in any construction project.
In the case of the Olympic Games 2012, the construction of the Olympic village
received a boost in terms of time and cost because the ground was found to be less 
contaminated than expected.
Figure 31.2 represents the risk management process in project management as
a bow-tie. In this use of the bow-tie, the sources of risk are shown as inception,
planning, execution and closure. At the centre of the bow-tie are the uncertainties 
associated with the project, because the management of uncertainties is the essence of 
project risk management. The purpose of this bow-tie representation is to illustrate 
that controls can be introduced to reduce the uncertainties in the centre of the bow-
tie, manage the uncertainties as they arise, and introduce further controls to limit the 
impact of those uncertainties on quality, cost, time and compliance.
FIgURE 
31.1
Risk matrix to represent project risks
Adverse
around
conditions
Time delay
Cost
increase
Cautious
zone
Comfort
zone
Concerned
zone
Critical
zone
Supplier
failure
Weather
disruption
Machinery
breakdown
note: size of bubble represents likelihood.

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Risk governance
374
Project lifecycle
Project risk management has become one of the best-developed and respected 
branches of risk management. This is not surprising given the dynamic and pressured 
environment in which many projects are undertaken. Projects can range from the 
implementation of a new software package on a computer system through to the 
building and commissioning of a substantial new sports stadium or delivering
the Olympic Games in London (2012).
Whatever the size of the project, a number of specific stages will always be present. 
Figure 31.3 illustrates the key stages in the project lifecycle. An important additional 
feature of project risk assessment is that the requirements of the client should always 
be of the utmost importance. The client may be external to the organization, but is 
sometimes part of the same organization.