Risk Management is a Dynamic and Continuous Process.

Risk Management is a Dynamic and Continuous

Process

Introduction

“Project Management: the art of directing and coordinating human and material resources

throughout the life of a project by using modern management techniques to achieve

predetermined objectives of scope, cost, time, quality and participant satisfaction,” (Wideman,

2010). For efficiently managing a project, a methodical comprehension and absolute

information on the concept of the project lifecycle is a necessary quality to be developed by

the project manager. Construction projects differ from other projects in that they are subjected

to different types of challenges and issues in achieving the project goals in a timely manner.

Project organizations in general do not remain static but undergo changes as the project passes

through the lifecycle. Almost all the projects go through similar series of lifecycle stages. The

lifecycle stages begin with the initial concept and end with the commissioning of the project.

Project management literature has identified the following stages that are involved in the

project lifecycle. They are: (i) conception, (ii) design, (iii) planning, (iv) allocation, (v)

execution, (vi) delivery, (vii) review and (vi) support. These lifecycle stages are not always

separate but usually overlap each other to a considerable extent.

The concept of ‘Project Risk management has been a subject matter of increasing attention in

the literature in recent years. It is true that all projects face some risk or other during their

lifecycle phases. Managing risk, in general, has two major objectives. The first is to avoid

exposure to downside risks affecting the project performance and the second is to exploit all

available opportunities to result in positive project performance. Comprehensive project risk

management does not represent an extension of the concept of project management. It should

cover risk management as it relates to the entire project management process. If one needs to

appreciate the potential scope of risk management fully, it is necessary that the structure of the

project lifecycle be examined in detail. The concept of project lifecycle has enabled the division

of a project into several discreet phases and each of the phases has a predetermined purpose.

The project lifecycle, therefore, provides an identifiable scope of work for the different phases.

With this project structure, it has now become possible to generate information during each

phase, which becomes an assessment of the project risks. Risk assessment at each stage of the

project has, therefore, become a key feature in deciding on proceeding to the next phase of the

project. In this context, this paper examines the concept of risk management as it applies to

different phases of the project lifecycle.

Definition of Risk Management

Risk management has always been one of the most critical practices of project management,

which forms the base for the successful completion of a project (Turner, 1999; Chapman, C.,

1997). Royer (2000) outlines the importance of risk management by stating that risks that are

unmanaged or unmitigated have been the primary cause for the failure of many projects. Since

risks and opportunities are often linked with each other, risks are capable of rising the value of

the projects and it is but usual that the higher the risks the more are opportunities (Miller &

Lessard, 2001).

Flanagan & Normann (1993) define risk management as a discipline structured to live with the

possibility of future events causing an adverse impact on the progress of any project. Other

definitions describe risk management as the process leading the management to arrive at

decisions to reduce the likelihood and/or impact of the possible occurrences of risks (Broome,

2002; Bunni, 2003; Treceno et al., 2003). Risk management has to be carried as a continuous

process during which the sources of uncertainties are identified in a systematic way and the

impact of such uncertainties are assessed and qualified. It also involves the assessment of the

impact of the uncertainties and management of the likelihood of such uncertainties to arrive at

an acceptable balance of the risks and opportunities (Dawson, 1997; Williams et al., 1998).

Smith, (1999) defines risk management as the process of understanding a project and arriving

at a better decision to manage the project in the future.

Although different definitions have attributed different connotations to the term ‘risk

management’ Dawson (1997) has summarized the essential similarities among the definitions

and has listed the common characteristics of risk management as identified by these definitions.

Risk management has a formal process and it employs systematic and scientific methods to

assess and manage risks. The objective of risk management is to identify the risks in any

business including a construction project and to evaluate the impact of the risks on the conduct

of the business or completion of the project.

Since opportunities and threats are often closely associated, it is possible to deal with them at

the same time as a combined element (Chapman &Ward, 2002). Risk is often referred to as

‘uncertainty’ as any risk has both positive and negative aspects. The purpose of the risk

management process in a wider sense, therefore, is not just to aim at the successful completion

of the project but also to increase the organizational objectives as a whole (Mills, 2001). Thus,

project risk management also takes the form of project uncertainty management (Ward and

Chapman, 2003).

Risk management also provides mechanisms for monitoring and controlling individual risks to

reach an acceptable level of overall exposure. Risk management is a continuous process and

cannot be considered a one-off event.

A number of uncertain factors pose challenges to the different parties involved in a construction

project. All these factors are categorized as risks. Arriving at decisions based on assumptions,

expectations, estimates, and forecasts of the likely future events gives rise to risks associated

with any construction project. In risk and uncertain situations, the actual outcomes for a

particular event would deviate from the anticipated outcomes causing disturbances to the

progress of the event (Raftery, 1994, p 9). The nature of activities involved, processes, and

external environment relating to the construction industry makes it a more dynamic, risky, and

challenging venture. However, the construction industry possesses poor risk management skills

leading to delay in completion and cost escalation in various construction projects. This in the

past has resulted in significant losses to clients, contractors, and the public (Edwards, 1995).

Construction risks are events that have a profound effect on the cost, time of completion, and

quality of construction. While it is possible to predict and easily identify some of the risks

associated with the construction processes, there are other risks, which are totally unforeseen

and unpredictable (Ahmed & Azhar, 2004). The level and scope of the risks associated with

the construction industry vary with the size and nature of different projects. Generally, these

risks relate to the context of the contract implying the environment in which the construction

project is executed, such as the geographical location and regulations governing the

construction. They are also dependent on the scope of physical elements of the project such as

scope, budget, and materials representing the content of the project (Davis & Prichard, 2000).

It is usual that with the construction project becoming more technical and complex, that there

would be an increase in the risks associated with the contracts. This ultimately leads to the

increase of negative impacts on the execution of the project itself. Therefore, for managing risk

efficiently there is the need to identify the risk in time and analyze them for mitigating them.

In the present day’s complex business environment, it has become important that the risk at

each project lifecycle stage be assessed to ensure the successful completion of the project.

Gray and Lars observe risk management as a proactive approach undertaken to control the level

of risk and to offset the impact of such risks. Risk management enables the project manager to

face the risks with the possible advantage of time, cost, and technical issues connected with the

project. Efficient risk management assists the project manager to have better control over the

future events and in achieving the project objectives of meeting the time and the expected

standards of technical and functional performance (Gray & Larson, 2008, p 4).

Risk Management as a Dynamic and Continuous Process

Effective risk management requires the successful implementation of the risk management

procedures identified in the process of risk management. The implementation of risk

management requires a structure capable of reviewing and providing feedback on the

effectiveness of the risk management procedures to ensure that all the risks are recognized

efficiently. Successful risk management implementation ensures that appropriate controls and

responses are in place. The process requires regular audits of policy and standards of

compliance. The systems, procedures, and performance targets need to be evaluated

periodically to recognize potential areas and chances for progress. It is important to recognize

the fact that projects themselves, especially large civil engineering projects are dynamic and

that they always function in vibrant circumstances necessitating constant evaluation of the risk

management procedures during their lifecycle. Therefore, changes in the organizations as well

as in the environments in which organizations operate need to be identified in order to bring

inappropriate changes to the systems and procedures. The implementation of risk management

will not be complete with only proper reporting on the likely risks and their consequences on

which the management can take decisions. It extends to the institutions of policies, procedures,

systems, and controls to ensure that the decisions taken by the management in the area of risk

management are carried out effectively to ensure the avoidance of risks or to reduce the impact

of such risks. Posting of the feedbacks on the risk management procedures adopted is also

included in the scope of the implementation of risk management. The top management should

get proper feedback on the decisions they have taken to protect the organizations from the

impact of risks, so that they will be able to make suitable amends, in case some of the decisions

do not serve the required purpose.

Since all the projects are susceptible to some kind of risks, it is necessary to evolve a “project

risk management plan”. The purpose of this planning is to define and document those

procedures that will be used throughout the project lifecycle. In the planning stage, the

procedures to manage the risks are documented and they are later executed through the life of

the project. Risk management planning is the core task in the whole risk management process,

as risk management is after all thinking about all potential undesirable outcomes before they

take place and determining the procedures to avoid the incidence of such risks with the intent

to minimize their impact or to cope with such impact. The process of risk management

comprises several activities including identification, quantification, and providing responses to

different risks and it covers monitoring and controlling risks.

It is ideal to have risk management as its own process in the whole project management ambit

but at the same time. It is important to risk management is made closely tied to all processes

and phases of the project (Chapman, 1997).

All theoretical models base the risk management processes more or less in the same steps, with

a variation only in the degree of the description of the processes. It is important that all the

steps be to be maintained as iterative processes where the risk management phases remain

ongoing during the entire life cycle of the project. This is evident from the study conducted by

Floricel and Miller (2001), where they have identified some unexpected incidents occurring in

every project they studied despite the fact that there existed a detailed, thorough, and careful

identification process in each of the projects.

It is critical that the risk management process is implemented in the early stages of the project,

as there would be ample time left for still making any changes, which are fundamental in nature.

A careful analysis of the project needs to be undertaken to identify the suitability of methods

to be used in the different project phases and it is also necessary that a customized risk

management process according to all the project characteristics is evolved. After all the

underlying objective of adopting a risk management process is to ensure that the decision-

making is facilitated to be exercised without any bias at all stages of the project (Artto et al.,

2007).

There are many sources in a project environment, from which risks and uncertainties may stem.

In addition, with the progress of the project over time, there are likely to be changed in the mix

and intensity of risks. Such changes in the mix and intensity signified the dynamic environment

within which the projects are progressing. It is not necessary that all such changes must be

negative. There are good chances that some of such changes pose opportunities for the projects.

The lifecycle model of project management offers a systematic and formal approach for

managing the risks and uncertainties affecting project performance. The lifecycle project

management works on the assumption that with the availability of correct and timely

information and with some means of evaluating the plausible future outcomes, the organization

must be able to avoid losses. Similarly, by using correct and timely information at each stage

of the project lifecycle, the organization may be able to capitalize on opportunities, which go

to strengthen the base value of the project.

The utility and value of breaking the project lifecycle into different phases, stages, and steps

can be countered with the following arguments – (i) in practice it may not be really possible to

distinguish the stages and steps clearly; (ii) there may not be any real utility for some of the

steps in practice; and (iii) this level of detailing may make the project management more

complex, instead of making it simpler.

However, it can be argued that such distinction of stages and steps beforehand is important

from their significant potential in facilitating effective risk management in the context of any

large and complex project. “Many of the really serious risks projects are late realizations of

unmanaged risks from earlier project stages,” (Chapman and Ward, 2003 p 27). In many of the

projects, there is a lack in the systems and procedures to offer definite go/no-

go/maybe decisions, which acts to the detriment to the success of the projects. Making these

decisions involve a careful evaluation of the risks involved in all the stages and steps. Such

evaluation helps the project management to appreciate the risks inherent in its decision to go

ahead with the project and it helps to recognize the benefits that would be foregone if a no-go

decision were taken. Many projects seem to have only a choice between a go and no-

go decision to be reached at the end of the conception stage. However, analysis of the large

number of projects, which suffered from major issues of cost escalation, time overruns, and

poor quality suggests that major disasters would have been avoided with the presence of

chances for a go/no-go/maybe decisions at later stages of the projects. Another argument in

favor of breaking down the project lifecycle into different stages and steps is that such an

exercise highlights the formation of project objectives and underlines the importance of such

classification from the purview of project risk management. While applying the concept of the

project lifecycle, even though the project objectives and performance criteria it is important to

progressively clarify and refine them during the four different phases of the lifecycle. From the

perspective of risk management in the context of projects, it is imperative that changes in

project goals and performance criteria at the different stages of the project lifecycle need to be

evaluated for assessing the implications of the risks on the project.

Another advantage with the project lifecycle concept is that it facilitates the application of risk

management principles to one or more stages of the project lifecycle independent of the

implications on earlier or subsequent stages.

Risk Management over the Project Lifecycle

Project lifecycle is an expedient way to conceptualize the common nature of the projects over

their lives. Adams and Barndt (1988) have identified four different phases of conceptualization,

planning, execution, and termination in a project lifecycle. There are different terms used by

practitioners and theorists to describe these phases in the project lifecycle. Despite the different

names used, the underlying phases identified are essentially identical. The project lifecycle can

be illustrated based on the extent to which each phase in the lifecycle utilizes the resources

employed in the project. The description of the project lifecycle can also be based on the extent

of definition, degree of conflict or the amount of expenditure involved, and several other

factors.

This approach of dividing the project lifecycle into different phases enables the management

to decide on the level of attention that it has to attach to each phase, as it may vary over different

phases. The objective of describing the project lifecycle phases is to ensure that risk assessment

is made in respect of the lifecycle phases before major resource commitments are made in

respect of each phase. “However a deeper appreciation of the scope for risk management of

PLC processes requires consideration of the individual phases and the processes within each

phase” (Ward & Chapman, 1995 p 147). The breakdown of the project lifecycle, into phases

and stages helps in identifying the sources of process risk. There can be a further detailed

description of these stages into different steps, which will enable management to underline the

sources of risk in the project lifecycle. It also informs the management as to the areas where

risk management might be most effective. The following table shows the phases of the project

lifecycle and each phase is divided further into stages.

Phases

Stages

Steps

Conceptualization

Conceive

Trigger event,

Concept capture,

Clarification of purpose

Concept elaboration

Concept Evaluation

Planning

Design

Plan

Basic design,

Development of performance criteria

Design development

Allocate

Design evaluation

Base plan

Development of targets and milestones

Plan development

Plan evaluation

Base design and plan detail

Development of allocation criteria

Allocation of development

Allocation of evaluation

Execution

Execute

Coordinate and control

Monitor progress

Modification of targets and milestones

Allocation modification

Control evaluation

Termination

Deliver

Review

Support

Basic deliverable verification

Deliverable modification

Modification of performance criteria

Deliver evaluation

Basic review

Review development

Review evaluation

Basic maintenance and liability perception

Development of support criteria

Support perception development

Support evaluation

Source: Turner (2007) P 428

Conceptualization Phase

The first phase in the project lifecycle is the “conceptualization phase” which involves the stage

of “definition, initiate or conceive.” Establishing the need for the project output is the starting

point of this phase. This phase involves the identification of a deliverable to result from the

execution of the project and the benefits that could be expected from the deliverable.

Assignment of a project manager and other core team members, and defining the project scope

takes place in this phase. Estimation on completion period and resources required for

completing the project are made to assess whether the project is financially viable and whether

the project can produce the expected deliverable. Exploration of different strategies and

alternative approaches to achieve the project goals is undertaken and the best among them is

selected for adoption. Approval to proceed to the next phase marks the completion of the

conceive phase. “Other individuals, organizations, or potential stakeholders may become

involved. Support at this stage may be passive, merely allowing conceptualization to proceed

rather than an expression of positive approval of the project,” (Ward & Chapman, 1995, p 147).

Effective risk management at the early stage of a project lifecycle can be more useful. “There

is scope for much more fundamental improvements in the project plans, perhaps including a

risk driven initial design or redesign of the product of the project,” (Turner, 2007, p 447). The

opportunity elements available in a comprehensive risk management plan can be of

significance in the implementation of the risk management plan at the conceive stage of the

project lifecycle. It is also imperative that clarity about the project objectives is achieved, as

pre-emptive responses to risk based on clearly identified objectives facilitate lateral thinking,

which paves the ways for achieving the objectives using new ideas. Thus risk management at

the conceive stage helps find new ways of achieving project objectives. Capturing new

opportunities becomes a reality with effective risk management at the conceive stage, as the

risk management at this stage possesses characteristics of being amenable to all changes

required to be made to make the project a success.

However, it may be difficult to implement a risk management plan in the early stage of a project

lifecycle. This is because, in this stage, the project is more fluid and less well-defined. “A more

fluid project means more degrees of freedom, more alternatives to consider, including

alternatives which may be eliminated as the project matures for reasons unrelated to the risk

management plan,” (Turner, 2007, p 447). In a less well-defined plan, it would be difficult to

expect appropriate documentation. Usually, it may not be possible to resolve all the issues, and

at an early stage in a project lifecycle, attempting full-scale risk management would be difficult

and risky.

Planning Phase

The second phase in the project lifecycle is the planning phase, which involves stages of design,

planning, and allocation. “Sometimes this stage is broken into two or more stages such as

preliminary planning and detailed planning” (Kloppenborg, 2010). The design stage gives a

definitive form to the deliverable expected from the project. This stage involves a considerable

increase in effort and resources. In this phase, further project team members may be inducted.

For a number of projects, the design stage may lead to refining the project goals; but it may

involve the identification of additional goals. At this stage, a decision of “no-go” will terminate

the process. A “maybe” evaluation is likely to lead to iteration through further steps. However,

if there are fundamental challenges, which were not anticipated in the conceptualization phase

are faced, the loop may be turned back to the first phase of conceptualization again. A “Go”

decision at this stage takes the project to the planning stage. The basic process risk involved at

the design stage is to undertake the project planning without effective evaluation of the project

design.

In the plan stage, a base plan outlining the ways in which the design can be executed, the

resources required, and the estimated time needed for completing the project are evolved. This

stage involves the development of targets and milestones involving the determination of

specific targets defining project deliverables. The targets are established in the form of

estimated cost and time. Targets may also represent limits on the usage of resources or any

other feasible considerations. While a “no-go” decision ends the project, a “maybe” decision

leads to the development of further targets and milestones within the planning stage itself. If

there are new fundamental challenges faced at this stage, the process turns back to the

development of a new design or even to the first phase of conceptualization. The basic risk

involved in this stage is to move on to the allocated stage before undertaking an effective

evaluation of the project program.

In the “allocate” stage, there is a comprehensive allocation of internal resources, which are

meant to facilitate achieving the project goals. “The Allocate stage is a significant task

involving decisions about project organization, identification of appropriate participants and

allocation of tasks between them,” (Chapman & Ward, 2003, p 21). Under the allocation stage,

there is an allocation of execution risks between the project members and other stakeholders.

The allocate stage is a major source of process risk. This is because the allocation of execution

risks can influence the project participants’ behaviors significantly and therefore, the project

performance. The extent and manner in which the risks at this stage are managed depend largely

on the allocation of execution and termination phase risks. Once the allocation is completed,

the process moves on to allocation evaluation. A “no-go” decision will be a serious disaster in

the case of many projects.

Thus in the planning stage “Scope, quality standards, risks, interim deliverables, work

activities, a schedule, resource needs, and responsibilities are defined or further refined. Once

this planning is complete, approval to proceed to the next stage is obtained” (Kloppenborg,

2010).

The recommended initiation point for the implementation of risk management programs in a

project lifecycle is the planning stage, where it is possible to avoid all common problems

experienced in the conceive stage. Because of the difficulties involved in the implementation

of risk management in the conceptualization stage, the planning stage seems to be the correct

initiation point. The introduction of the concept of risk management at this stage will highlight

the missing insights, which the project members should have acquired earlier. The risk

management process introduced at this stage may act to review the risk assessment process in

place at an earlier stage. For the success of the project, there is the need to review the strategic

issues thoroughly at the planning stage through a risk assessment process.

Implementing risk management plans at the planning phase of the project gives rise to different

types of problems, without resulting in any benefits to the progress of the project. Especially

at the allocate stage, contracts are in place and equipment might have been purchased. There

would have been commitments made to different stakeholders and the reputation of the

organization is one major issue that needs consideration when the project faces major risk at

this stage. Managing change becomes comparatively difficult and the changes would not lead

to rewards in favor of the project. Some of the practitioners argue that it is better to introduce

risk management even at this stage, as they are of the opinion that early warnings can help the

organization than late recognition of the fact that targets are incompatible or unattainable. More

specifically, when a risk management program is introduced for the first time in the allocate

stage the common practice is to make a tactical level analysis, as there would have been no

strategic consideration of uncertainty at any of the prior stages. This is viewed as very

counterproductive.

Execution Phase

A “go” decision at the end of the allocate stage leads to the core activity of the project, the

Execute stage. The start of the execution phase signifies a considerable increase in the

utilization of resources and consequent escalation of project expenditure, as the products and

services required for the completion of the project are procured. This stage witnesses the

implementation of “project organization, procedures, and reporting mechanisms”

(Kloppenborg, 2010). There is directing, monitoring, and redirecting of the project-related

activities, all aimed at achieving the project goals established earlier. The major process risk

during the execution phase is the inadequacy of coordination and control procedures.

“A common perceived source of risk in the Execute stage is the introduction of design changes,

but these may be earlier risks coming home to roost. Consequent adjustments to production

plans, costs, and payments to affected contractors ought to be based on an assessment of how

project risks are affected by the changes and the extent to which revised risk management plans

are needed,” (Ward & Chapman, 1995, p 146).

In the case of many of the projects, there might be the need for repeated iteration of the earlier

steps leading to the execute stage. Under exceptional circumstances, the process may have to

go back to earlier stages. If there are unexpected challenges, some of the aspects of the project

may have to be reverted to the concept stage. Such instances may also lead to a “no-go”

decision, leaving a chance of the abortion of the project. Such nasty surprises are the result of

the risks from earlier stages, which were left unidentified indicative of the failure of the risk

management process in the previous stages of the project lifecycle.

If a risk management plan is introduced at the execution stage, it may not give an effective

strategic view of the risk involved in the project. “It might be argued that event risk focus is

the best that can be done at this stage and a single pass process using post evaluation phase

‘response planning’ and ‘response management’ phases is essential,” (Turner, 2007, p 448).

When this line of thinking is considered the logical conclusion is that risk management plans

involving risk response planning and risk response management have been developed only with

a view to introducing risk management as late as at the execute stage. It is also argued that the

risk management plans with these components may not be effective at the early stages, where

the risks could not be identified with precision and the expected mitigation strategies.

Termination Phase

The termination phase of a project involves three distinct stages of delivery, review, and

support, with each of the three stages involving different risk management challenges. It is

necessary to consider the three stages separately because of the nature of the stages.

In the delivery stage, the project is commissioned and handed over and the issues faced by the

project in this stage are different from those faced at previous stages. The stage involves

verifying the actual performance of the project against the designed performance. One of the

most important risks at this stage is the potential failure of the deliverables to meet the expected

performance criteria. The project management may decide to modify the product performance

criteria or to influence stakeholder expectations, in which case there would be an enormous

adverse impact on the project’s reputation and on meeting the performance targets apart from

resulting financial losses.

“The review stage involves documentation of the process to learn a lesson from previous

experience” (Risk Management Basics, 2006). At this stage, it is necessary to provide for

sufficient resources to take advantage of the positive outcomes and to take care of the negative

effects. The major objective of this stage is to identify the negatives, since failure to identify

the negatives, the project will be infused with the potential of the negatives being repeated in

the future. “In terms of the performance criteria and other key areas of the project e.g.

objectives we should examine more closely how these changed during the project” (Risk

Management Basics, 2006). The review should cover more particularly, the ways in which

these occurrences were managed. It is probable that there may evolve a pattern in managing

the changes, which may be of help in the future management of other projects. A review of the

risk management process and its performance in this stage would reveal the areas of

weaknesses and the ways to improve them. There may be some risks, which have been

identified earlier, which did not occur and similarly, there may be some associated responses

in respect of risks, which have occurred newly. The review will reveal whether the risk

management process was adequate to protect the project from exposing itself to different risks.

“As in previous stages, it is important to discuss the method of the review process itself and to

evaluate the review process in terms of the relevance of the issues and data raised for the benefit

of other projects” (Risk Management Basics, 2006). It must be remembered that at this stage

there is no chance for taking a go/no-go/maybe decision.

The support stage comes into being when there is the need to hold the deliverable in a working

condition after it has been put into use, even though the project may have been already

completed. The handing over of the project may be an affair either internal or external to the

project organization. The agreements entered into earlier with the project sponsors or

stakeholders will determine the extent and duration of the support. The relative merits and

demerits of these contracts and their impact on the project performance are matters for

consideration at the planning phase when the contracts were being discussed. This phase takes

into consideration the likelihood for potential risk management liabilities later. The legal

advisors would have identified any eventual risk management liabilities at the earlier design

phase. “Depending upon the outcome of the field trials in the ‘deliver’ stage, the ‘support’ could

either be withdrawn or the product itself could be withdrawn as an extreme case” (Risk

Management Basics, 2006).

The extension of the risk management process to the termination stage of the project lifecycle

will yield significant advantages to project management. In the delivery stage, the risks in

effecting delivery to the stakeholders can be identified easily and avoided. Analysis of the

deliveries affected will provide complete information on the feasibility of the delivery schedule

and on the ability of the project organization in meeting the performance criteria covering the

deliveries. If there is any need to modify the project deliverables based on the assessment of

the delver stage performance, the risk management program must be able to help the project

management in arriving at the requirements of resources required for modifying the

performance criteria. Risk management is especially is highly useful in the support area to

identify the likely future liabilities.

On the fillip side, any major failure on project performance is most likely to hit the project

organization financially heavily. Absence of proper risk management process at the previous

stages or failure of the process to identify major faults in systems or in any other performance,

areas alone would be responsible for such a disastrous situation in the lifecycle of the project.

This reiterates the need for evolving proper risk management process to be applied during the

entire lifecycle of the project and not just on some selected phases or steps. Since large

construction projects have to perform under dynamic conditions, risk management as applied

to project lifecycle has become vital.

Conclusion

The paper observed that a project could be divided into a number of separate phases based on

the project lifecycle. Efficient risk management involves an appraisal of each phase to assess

the risk involved in proceeding with the next phase. The management of risk, therefore, is to

be regarded as a continuous process and must span over the different phases of the project. It

is to be remembered that project risks are dynamic. Since the risks change along with changes

in market conditions and other external and internal circumstances, it becomes essential that

the organization conducts a risk assessment at the end of each phase, before a decision to

proceed to the next phase is taken. It is important for the successful completion of the project,

that active management of risk be continued through the review points until the project is

completed. Risks may also change their scope and extent during a particular phase in the project

lifecycle. If such change is significant, there will be the need to perform a complete reappraisal.

Especially in the case of large construction projects, where the individual phases may

themselves would extend to several months or years, regular risk assessments and updates have

been prescribed for achieving the project goals. Thus, risk management through different

phases of project lifecycle is one of the essential prerequisites for efficient project management.

It can reasonably be concluded that in order to be fully effective, risk management has to be

extended to cover the entire project lifecycle, instead of addressing the selected stages.

Assuming that the risk management undertakes a complete project approach, one can expect

the risk analysis to guide the handling of every stage of the project lifecycle to avoid the

potential risks and ensure successful completion of the project in time and with the expected

quality standards. There would be an increase in the scope and depth of risk analysis as the

project approaches the execute stage. A preliminary risk analysis undertaken before each stage

could guide the progress through that stage. However, with the increase in details and options

occurring in subsequent steps, there is the need for further risk analysis with enlarged details

and precision for continuous guidance throughout the project management process. This calls

for making risk management an integral part of each stage of the project lifecycle and to this

extent risk management becomes a dynamic and continuous process in the context of project

management.