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Published by Raees Ahamed

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Published by: Raees Ahamed on Jun 25, 2012
Copyright:Attribution Non-commercial


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Risk acceptability is required early in a projects execution life cycle in orderto receive the full benefit of mitigating potential harm or capitalizing on opportunities. Once potential risks are flagged a decision analysis process is used to decide on a best course of action.Risk acceptability is shown as a decision block in the upper right portion of Figure 5. If an identified risk is acceptable it only needs to be monitored during the construction process. An identified risk event that is unacceptable or anopportunity attractive enough must be mitigated or the opportunity taken advantage of. A decision analysis process is used to identify the best solution. Once these events have been acted on they should be monitored for the life of the project.Execution Phase Update Risk Assessment and Earned ValueThis risk assessment process should be dynamic or constantly evaluating risks for the life of the project. Once a project is progressing managers need a dynamic risk assessment process that will not be too time consuming and should be scheduled at regular intervals. This constant assessment of risk includes updatingrisk profiles and should coincide with the updating of the earned value charts.In Figure 5 this updating of information is depicted in the lower right hand portion of the figure. Earned value data and risk assessment data are collected monthly. The type of data collected for earned value analysis is the actual costof performing the activities to date and the physically accomplished value of the activities performed to date (earned value). Additionally, a review and reassessment of identified risk profiles needs to be updated along with the earned value data.As shown in the lower center portion of Figure 5, once the earned value and riskassessment data is updated a variance may be observed. If a variance occurs the reasons for it must be understood and action taken to correct the situation.If a variance does not occur when the monthly update is made the risk profiles and earned value data continues to be monitored through monthly updates.Execution Phase Decision AnalysisA decision technique is also required as shown in the bottom left of Figure 5.This decision process is used to decide how a particular risk is best mitigatedor taken advantage of.For those risks that must or should be mitigated or taken advantage of a goal ordecision tree analysis is used to determine the appropriate strategy. A goal tree technique could be used in this portion of the execution phase for several reasons: 1) time is of the essence, 2) availability of accurate data, and 3) systematical and simple.Time is of the essence during the execution phase because a decision must be made early enough to affect the projectâ
s outcome. This window of opportunity is greatest at the beginning of a project and decreases proportionally with the time remaining on a project. The typical complex construction project will be one of akind or significantly different from past projects, therefore accurate data on past projects may not be available to populate a similar decision analysis that requires probabilistic data. Goal trees are a systematic process that exposes several options for management to consider. To aid in rapid decision making theyare swiftly and simply constructed.The advantage of goal trees is speed and simplicity. Unfortunately goal trees do not provide an Expected Monetary Value (EMV) or a probability of success. This may be acceptable due to the short window of opportunity and the lack of accurate data in the execution phase. Should time allow and accurate data is available decision trees should be used to help decision-makers decide between alternatives.Execution Phase Cost ControlIn this stage of a projectâ
s life cycle management takes action to correct an observed variance. Once a decision has been made and action taken the results must be

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