Qualitative and Quantitative Risk Analysis in Construction
The Risk Management process involves many sequential steps that constitute a carefully structured plan, like the one that we have developed in KEN International through our extensive experience and in-depth knowledge. Unlike simplistic and generalistic approaches, we opt to go back and forth between the spectrum of the qualitative and quantitative risk analysis, in an effort to establish a robust system of insightful evaluation and achieve the subsequent risk management plan optimization. Here is what each of the two elements involve, according to our plan of action.
Qualitative Risk Analysis
Identifying the associated risks presupposes the development and laying out of the complete work items plan, and pre-execution planning is in the core of our expertise. Assessing an identified risk element from a qualitative point of view means considering its probability and impact, test various assumptions that the team comes up with, and rate the data as to their precision. The outcome of this process is the deduction of the overall risk rating (necessary for the feasibility evaluation), as well as the identification of any trends which help in optimizing the prioritization of the identified risks.
We conduct this type of analysis by developing a risk probability and impact matrix, conducting an FMEA (Failure Mode and Effect Analysis) on specialized software, and by drawing Ishikawa diagrams (for root-cause analysis), and fault trees so the risks can be prioritized with precision. Our probability and impact evaluation is not limited to a “yes or no” outcome, but positioned on a scale of severity, allowing for further optimization and categorization. The impact is also split into categories underpinning the impact on cost, schedule/progression, and work performance. The total aggregate helps us tag the risk item with the corresponding identification rating.
Quantitative Risk Analysis
Following the qualitative, we proceed to the quantitative risk analysis which helps us express the probability of each identified risk item and its scope of impact numerically. Rough estimates and long-shot predictions have no value in efficient engineering, and KEN International wins the trust of its customers not by randomly betting and making promises, but by presenting actual numbers that support the proposed management plan.
Not only risks are evaluated in this step though, as the probability of achieving a specific objective or even a set of goals is actually of equal importance, as it’s the other side of the same coin. Our considerations during quantitative risk analysis include the results of a sensitivity analysis, the results of a decision tree analysis, and many hours of simulation on risk assessment software tools. This helps us prioritize the list of the risks, run a probabilistic analysis on firm ground, identify trends, and finally come up with a golden number that indicates whether achieving the cost and time objectives is doable or not. Also during this step, we implement all of our mitigation techniques, as the bow-tie diagram that we develop help us put the source of hazards in order against the consequences of each control measure path that we can take.