Risk breakdown structure
However, this is also where project managers and risk subject-matter experts (SMEs) get the least help from recognized references, best practices, or work standards.
This team has identified one very good tool: the Risk Breakdown Structure (RBS).
The RBS will prove extremely valuable to better grasp when a project needs to receive special scrutiny, in other words, when risk might happen.
These methods include: spreadsheets, listing, generic risk taxonomy, based somewhat loosely on various standards and guidelines.
Dr. David Hillson, in the proceedings of the Project Management Institute Annual Seminars and Symposium, on Oct. 3–10, 2002,[8] provided several different RBS Structure examples, with topics similar to those already shown.
Dr. Hillson broke out two different examples, an RBS for Software Development, which had the following major topics: Product Engineering, Development Environment, Program Constraints; and an RBS for Construction Design, which has these major topics: Environment, Industry, Client, Project.
Several different techniques for defining the individual risks are available, including brain-storming, surveys, workshops, etc.
After the RBS has completed its first "pass" in the creation phase, it can then become an input to qualitative risk analysis, where probabilities, priorities, and impacts are determined.
Construction projects, like all complex activities, involve many partners with different objectives, who are subjected to many risks in an uncertain environment.
Thus, an iterative risk management should be carried out at all stages of the project life cycle.
Dr. Rasool Mehdizadeh has developed a methodology for a dynamic, multi-scale and multi-perspective risk management of construction projects.
[9] This method is based on the application of tailor-made risk breakdown structures (RBS) which are well adapted to: (1) the stage and degree of development of project, (2) specific requirements and objectives of project stakeholders, and (3) required level of details.
[9] The method combines consistently the quantitative and qualitative approaches, allowing the user to choose the best one for risk assessment at any level, based on the available information and required accuracy.
In this method, at the first step, the probability and impact factors of risk events are assessed quantitatively or qualitatively.
Finally, application of a multi-criteria decision method allows calculating the global risk score of each category.
A successful risk management process would also require a good knowledge and understanding of the business objectives of the project.
Using a hierarchical RBS, similar in its design to the WBS, allows the project and risk managers the opportunity to carefully align the risks in proper categories, using as deep an analysis as time and resources would permit.
