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Project Risk Management

- Why Project Risk Management?
- AEA Technology's approach
- The benefits

Project Risk Management

Managing a substantial capital expenditure programme is fraught with risks. They include financial, commercial and management risks, but also quality, performance, health and safety and company risks.

By using AEA Technology's sysematic and validated process of risk identification and assessment, clients can be confident that the risks are being adequately controlled. 

To learn more about Project Risk Managegement at AEA Technology:
Download a PDF file

Copyright © 2001 AEA Technology plc  Author: peter.finch@aeat.co.uk
Last updated: September 2001.

For any major project and especially Major Capital Programmes, Project Managers need to ensure delivery of projects to cost, schedule and performance requirements.  To achieve this involves identifying and managing the risks to the project at all project stages:

• initial assessment of strategic options
• procurement
• fabrication,
• construction
• commissioning
• implementation
• close out

This need is underpinned by the requirement to take account of subsequent operation and  maintenance of the new plant or system, plus any expected decommissioning and disposal of assets on project completion.

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The AEA Technology approach to Project Risk Management is specifically tailored for each individual customers requirements. The approach typically involves:

• identification of threats and quantification of the risks to the project
• identification of risk control measures and cost-effective management responses to threats
• production of a “live” risk management plan to ensure the effective implementation of control measures
• quantification of project risk and production of monte-carlo based project total cost “S” curves
• preparation of "risk budgets" to ensure contingency funding is effectively managed throughout the project
• measurement of the financial saving by quantifying how effectively the control measures have reduced risk

Risks are categorised according to their significance and can be managed accordingly in line with the risk management plan and risk budgets.  Awareness of key project risks among the project team members is raised by a clear analysis and presentation of where the risks lie within the project organization, who is managing the risks, and how.

AEA Technology uses both standard and bespoke procedures for project risk management. Bespoke procedure are particularly suitable for major projects (typically involving capital expenditure greater than £100M).

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For more information e-mail us or write to the address above.

Managing project risk is an integral part of good project management and is something most managers do already in one form or another. However, managing the risks of a project is often seen as an activity confined to already established project outline activities.

AEA Technology extends the concept of project risk management to the assessments of all risks associated with the project, including those associated with the definition of specific project goals and the interactions of the project with other company activities.

A formalised approach ensures that this is done in a structured way, so that all risks are identified and managed appropriately. The principal benefits are:

• managing and thus reducing a project’s exposure to risk
• minimisation of financial loss from project risks
• improving the confidence of meeting the project cost, schedule and performance targets
• having an auditable system for risk identification, assessment and control

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