Risk Management for Design and Construction

285 Pages·2011·8.22 MB·English

by  Ovidiu Cretu

RISK MANAGEMENT
FOR DESIGN AND CONSTRUCTION

RISK MANAGEMENT
FOR DESIGN AND CONSTRUCTION
OVIDIU CRETU
ROBERT STEWART
TERRY BERENDS
JohnWiley&Sons,Inc.
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LibraryofCongressCataloging-in-PublicationData:
Cretu,Ovidiu.
Riskmanagementfordesignandconstruction/OvidiuCretu,RobertStewart,TerryBerends.
p.cm.
Includesbibliographicalreferencesandindex.
ISBN978-0-470-63538-4(hardback);978-1-118-02861-2(ebk.);978-1-118-02862-9(ebk.);978-1-118-02863-6(ebk.)
1. Building—Safetymeasures.2. Constructionindustry—Accidents—Prevention.3. Constructionindustry—Risk
management. I.Stewart,Robert,1968-II.Berends,Terry.III.Title.
TH443.C742011
690(cid:1).22—dc22
2010047231
PrintedintheUnitedStatesofAmerica
10987654321
Firstandforemost,I’dliketothankmywife,Tamara,forenthusiasticallysupportingme
inallmyactivities,andmychildren,PetruandVlad,forbeingthere
andputtingupwithme.
—Ovidiu
IwishtodedicatethisbooktomylovingwifeJudiandtoourchildren,TyandCharli,
fortheirsupportandlove.
—Terry
Thankstomygirls,VanessaandDaphne,forheightening
mysensitivitytorisk.
—Rob
Forallofourcolleaguesinprojectmanagementwhoshareourpassion
tobuildbettervalues.
—All

CONTENTS
PREFACE xi
ACKNOWLEDGMENTS xix
CHAPTER 1:WHYANDWHATISRISKMANAGEMENT? 1
Introduction 1
What IsanEstimate? 3
What IsUncertainty? 4
What IsRisk? 4
What IsRiskManagement? 4
WhyRiskManagement? 5
TheLimitations ofRiskManagement 6
Objective ofThisBook 8
CHAPTER 2:PROJECTCOSTANDSCHEDULE ESTIMATES 11
Introduction 11
Cost Estimating Methodology 14
Cost Estimating Process 14
Cost Estimating Data 18
Cost Estimating andProject Development Level 18
Estimate Documentation 24
Basis ofEstimate 24
Conclusion 25
CHAPTER 3:THERISK-BASED ESTIMATE 27
RBE—The Process 27
Risk-Based Estimate—How ItWorks 42
BaseCostandSchedule 43
Risks asEvents 63
TheMicro-Project 87
vii
viii CONTENTS
Eastside Corridor Program 90
RBEandEstimate Accuracy 100
Conclusions 105
CHAPTER 4:RISKELICITATION 109
Importance ofElicitation forProject RiskManagement 109
Elicitation andBiases 111
RiskandBaseVariability 121
RiskConditionality 124
Summary 146
CHAPTER 5:RISKMANAGEMENT 149
Introduction 149
RiskResponse Planning 153
Value Engineering andRiskManagement 157
RiskMonitoring and Control 164
Summary 168
CHAPTER 6:RISK-BASED ESTIMATE SELF-MODELING
SPREADSHEET 169
Overview 169
Model Accuracy 172
RBES—Cost andSchedule DataInput andOutput 174
RiskConditionality andRBES 183
Model Outputs 198
RiskManagement 200
Critical Issues 207
Tutorials/Case Studies 208
Summary 229
CHAPTER 7:RISK-BASED ESTIMATE WORKSHOP 231
Introduction 231
Preworkshop Activities 234
Conditioning Workshop Participants 236
Workshop Objectives 237