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Project Areas Affected by Risk
The common areas of project risk described below are intended to be used as a guide when identifying potential project risks. This list is not exhaustive. Identified risks should be categorised according to the appropriate project and corporate Categories of Risk.
The Risk Identification Prompt List [23KB PDF] provides ‘triggers’ that can help to identify risks.
| Risk Area |
Description |
| Business Risk |
Financial, legal, and management stability of contractors and sub-contractors should be considered. If any of the risks to the project are from the Contractor’s decision making and operating situation, do they have the necessary team and funding to carry out this project? |
| Commercial Risk |
What are the risks that the contractor may be affected by commercial forces e.g. takeovers, rationalisation, relocation, industrial relations and other work. |
| Contractor Selection and Tender Evaluation Risk |
In terms of contractor assessment, Integrated Project Team Leaders (IPTLs) and their teams will need to make value judgements on the level of identified risks and should include as a minimum the following aspects:
- Current performance on existing work.
- Current and future available capacity.
- Stability of contractor's organisation, staff and finances.
- Carrying out Pre-Contract Award Evaluation (PCAE) (to identify potential areas of weakness.
- Appropriate certification or accreditation.
- Contractor's previous experience.
- Whether the contractor is the Design Authority (particularly if the requirement is for the manufacture from a technical Data Package).
- Whether tenderers have underestimated the risks (compare the tenderer's risk management plans with the internal risk management plan and review their resource assumptions).
|
| Engineering Risk |
- What are the risks involved in the engineering processes required to design, develop, manufacture and test?
- Will the necessary resources in terms of plant, labour, skills, tooling, be available to carry out the required activities?
- Are there elements which cannot be completely defined in the contract and technical specification?
- What discrepancies are there between acceptance test and the service operating environment?
|
| Funding Risk |
Is there sufficient funding in the Equipment Plan to cover procurement and support activities? |
| Hazard Risk |
Consider the relationship between hazard risks and other project risks. Assessment of risk may well conclude that it is preferable to extend the timescale to avoid the risk of a major disaster which could impact on cost, time and performance. |
| International Risk |
In the case of collaborative projects, additional risk can occur ranging from fiscal exchange rates, to the possibility of withdrawal of a Nation. UK foreign policy and National Government policies are also risk factors. |
| Political Risk |
Could the project be affected by political decisions and what political events may introduce changes in policy? Anticipated changes in Defence Policy, Government industrial and environmental policy and foreign policy should also be taken into account. |
| Safety Risk |
Are there any safety aspects which need to be addressed? |
| Scarcity Risk |
- To what degree is the project dependent on the supply of goods or services which are scarce and/or may be subject to limitation or disruption?
- Are fullback supply routes likely to be available?
- Can alternative material be used and what penalties would arise from their substitution?
|
| Scientific Risk |
- Will it actually work? Are scientific principles proven? Is the specification within the bounds of physical (as opposed to scientific) possibility?
- Will the new technology, process or material introduce risks to the environment, or personal health and safety?
- The DG (Scrutiny and Analysis) Scientific Risk team are available to offer advise.
|
| Supply Risk |
- To what degree is the project dependent on the supply of goods or services?
- What material is particularly scarce?
|
| Supportability Risk |
- Will the product be supportable in service?
- Will the criteria to achieve Logistic Support Date be achieved to cost and time?
- Is funding for in-service support adequate?
|
| Technological Risk |
- Does the current state of technology allow the project to be undertaken within an acceptable level of risk?
- Is the technology mature and proven. (Many projects in the past have produced long delays, major cost overruns and performance shortfalls due to technological difficulties.) It is important not to underestimate the technical complexity of integrating new technology into old equipment and to recognise that until the integration has been proven, major mid-life-update projects should be regarded as high risk programmes and possible impacts on time and cost considered.
- Further guidance on Technology Management is available.
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