Strategic Response To Risk Management For Greater Manchester Strategic Alliance

Key Assumptions

Tasks

Your task is to develop a strategic response to this scenario.  This should be presented as a report for the head of the GMSA.  You are required to produce a report that satisfies the following requirements:

Critically evaluate, using appropriate theories and literature, the importance of risk management to the clients project. Your discussion should make reference to:

Risk breakdown structures and risk categories;

Risk identification techniques;

Qualitative and quantitative risk analysis tools;

The robustness of risk management strategies to the occurrence of Black Swan risk events.

Develop a draft risk management strategy (part of the overall risk execution plan) for the Advanced Manufacturing Research Centre and University College.

Critically appraise the role of the risk register as a primary risk management tool, explaining how this can be embodied into both the procurement and contract strategy for this project.

Produce a detailed risk assessment and risk register for ten primary risks, identifying the financial and other impacts of these events and a potential risk mitigation strategy.

Explain the principles of value management, emphasising how adopting ‘value management’ techniques would enhance both the quality and user experience/satisfaction in relation to the Advanced Manufacturing Research Centre and University College.

Every company should be well equipped with a better value and risk management process in order to eliminate or reduce the chances of risks, especially arising from financial transactions during a particular financial year (Fewings 2013). This particular assignment highlights the different aspects of Risk management techniques for the chosen company. The importance and critical evaluation of the risk management will be highlighted in the assignment along with identifying the risk breakdown structure.

Risk management technique highlights the matters that are considered for undertaking the different activities related with strategic development of an organization in terms of risk management.

In order to highlight the risk assessment process, a particular company needs to be chosen. Hence, the company chosen for this research is Greater Manchester Strategic Alliance.

The chosen company is based on the partnership of different colleges, and learning providers as well as stakeholders that collectively delivers a network of learning process for life time services. The company also promotes the progress of vocational learners focused towards development of Higher Education facilities.

Risk management plans helps in contributing towards success of a project by establishing the internal as well as the external risks identified in course of the organization. Risk management plans include identification of risks, occurrence probability and potential capability of identifying the accurate actions needed. Even the project managers communicate with the different stakeholders of the organization in order to make an effective planning of the undertaking the business operations.

According to Walker (2015), Risk Breakdown Structure (RBS) is the hierarchically organized structures that is evaluated by the companies while undertaking the risks of the companies at the time of undertaking a new project. With the help of this technique, the project manager tries to evaluate the cost, quality and process of undertaking the projects of the company. On the other hand, Hwang and Ng (2013) pointed out that RBS is dependent on Work Breakdown Structure and thus hierarchal home-grown techniques using spreadsheets and taxonomy is created at the construction process. Thus, it can be said that for a construction process, the best approach would be to develop Work Breakdown Structure followed by Risk Breakdown Structure.

Chosen organization

Figure 1: Risk Breakdown Category

(Source: Mikes and Kaplan 2014)

According to Hwang and Ng (2013), the projects always consist of risks and the risks are classified according to the degree of threat possessed by the risks to the company. For example, schedule risk, resource risks are some of the risks that are considered by the project managers while evaluating a new risk of the company. On the other hand, Sears et al. (2015) pointed out that for the construction process of research university, main risk is managing the contractor. The risk lies within the employer, as quite often the contractor of one department such as R&D does not comply with the necessities of infrastructure, which halts the construction process leading to higher resource consumption.

The different techniques applied in order to identify the risks are stated as below table:

Serial Number	Risk Identification Technique	Explanation
1	Brainstorming	Clear architecture has will be created, which needs soliciting one idea from each of the constructors especially for the laboratory development
2	Interviewing	This technique is the initial approach where primary contractors and supervisors will be interviewed regarding the type of risks they are aware. After that right person will be selected
3	Delphi technique	This is an interactive and systematic forecasting technique that delivers the amount of reasons, which were not justified in the previous activities of the construction. In this way, delaying of activities will be addressed.
4	Checklist evaluation	Each of the activities in a work breakdown structure, describes the processes that are to be done in required timeframe, and after completion of the activities, checklist gives the evaluation of risks which are to be addressed
5	Assumption analysis	Much of the resources are assumed prior to the construction process, which will be addressed as the process executes. Any assumed resource that is over-consumed indicates the risk in process.
6	Root cause Analysis	Occupational health and safety and accident analysis; quality control and industrial manufacturing; production  based system; failure and maintenance are the factors, which are justified by root cause analysis
7	Diagramming techniques	Diagram representation of construction plan for each phase of construction will help in determining the risk forecasting.

Table 1: Risk Identification Technique

(Source: Edwards and Bowen 2013)

Figure 2: Root Cause Analyzer Diagram

(Source: De Marco and Narbaev 2013)

The different tools for risk assessment are:

According to Taylan et al. (2015), the best qualitative tools for analysis are Risk Register and Probability Impact (PI) Matrix. Risk register acts as the scatterplot to fulfill regulatory compliance as repository identified risks in the construction process. Probability impact matrix will help in identifying risks and opportunities in 5 quadrants, which are very likely, likely, possible, unlikely and very unlikely. On the other hand, Aminbakhsh, Gunduz and Sonmez (2013) contradicted that risk categorization and expert judgment helps in identifying risks in the preliminary stages of any construction process. Thus, it can be said that for intense risk identification, PI and Risk Register are the most important qualitative tools.

Figure 3: Probability Impact Matrix

(Source: Taylan et al. 2015)

According to Afsari and Murphy (2015), sensitivity analysis and Monte Carlo Simulation are the best quantitative tools for risk analysis. This is because sensitivity analysis defines the robustness of a construction model, such as Work Breakdown Structure for construction process. Monte Carlo Simulation helps in computing algorithms for probability distribution and numerical integration of each of the activities in a construction process. On the other hand, sKerzner (2013) pointed out that Decision Tree Analysis and Scenario analysis helps in identifying the possibility of risks in a deeper way. In Decision Tree Analysis, decision nodes, chance nodes and end notes are created that helps in segregating activities and identification of risk associated in each activity.

Figure 4: Risk Analysis Tools

(Source: Afsari and Murphy 2015)

Management of Black Swan Events is not only restricted to regrouping company but also survival of devastating consequences.  According to Flage and Aven (2015), counteract shock is predominant in any construction related project, but survivor psychology must be paramount for company leadership. Risk management strategy must relate with factual, accurate and objective data, as numbers do not lie. On the other hand, Sanders (2013) pointed out that project manager must not be limited by assumptions but has to explore additional responsibilities so that any risk is adjusted instantly. Thus, robustness relates to concrete leadership and survivor mentality, which can be ensured by factual data.

Critical evaluation of importance of risk management

According to Davis (2014), black swan response team has to be created within the first 3 months of construction. The team will delegate responsibilities related to Enterprise Risk management, crisis communication, risk management and data integrity management. Bai, Zhang and Wen (2015) pointed out that black swan team will consist of members who are having the knowledge of management claiming and analytics. Analytics will consist of “construction intelligence data development”. Communications, measurements and informed decision-making are to be entrusted by the black swan team. As opined by Mikes and Kaplan (2014), key operation involvement consists of human resources, financial, legal and construction stakeholders who will help in contributing solution development and tactical action steps.

According to Patéâ€ÂCornell (2012), black swan techniques one of the major activities such as pursuing research and development with the help of engineering activities. The University construction is supposed to be made carbon free, and thus, facilitating construction possibilities with innovative mechanism must be the key strategy of GMSA. On the other hand, Murphy and Conner (2012) pointed out that at the time of striking Black Swan, senior management must act proactively rather than implementing and monitoring. One of the best tools is “Incurred But Not Reported (IBNR)”, which acts as the monitoring report between accrual analysis and accrual assumptions. Thus, the construction process by GMSA does not need to wait six to twelve months for strategies to be working.

According to Edwards and Bowen (2013), communication optimization must be entrusted by strategic identification of root cause. Most of the impacts are generally concentrated to only 7% but the other parts are not packed well and hence typos are visible. Project manager and site engineers have to convert the raw impact data into future construction information that will be meaningful and quantifiable.

Thus, from the Black Swan analysis, it can be identified that the main robustness of risk management lies within leadership, proactiveness, communication, research, and development.

For the construction of the University, the main types of risks will come from stakeholders, environment and financial factors. The risk management will be consisted of mitigating the risks and time management so that resource consumption is limited. Most of the risks will be from delaying of project due to unscheduled activities and improper planning. On the other hand, there is black swan team who are trained with instantaneous decision making activities. Financial risks may not be easily mitigated but still there will be Work Breakdown Structure, which will define the types of activities that are required to be completed within required timeframe. The types of risks and management strategy are as follows:

Serial Number	Risks	Strategy
1	Financial Risk	Base estimates of scheduling and cost has to be reviewed and validated by estimating experts. Schedule reviewers and cost leads and subject matter experts has to generate reports prior to the scheduling of building (Sanders 2013). Schedule ranges and estimated project costs will be developed by document constraints and assumptions. Expert meetings will be set up with investors. Traditional contingency methods will be changed with respective Black Swan team so that project is not delayed. Estimated schedule and costs will be quantified with Monte Carlo Simulation method.
2	Environmental and community risks	Factory sites such as asbestos and off-site construction areas will surely impose flags from society and therefore permission for the local community and municipality along with government will be required. Each of the factory sites from fabrication of coffee shop styles area to seminar requirements will need to have good waste management strategies so that harmful and hazardous substances do not come in direct contact with air. Specific banners and hoardings needs to be hung up in certain areas where growing population come to know about the new research institute so that they can compromise the society disturbances for a certain amount of time.
3	Stakeholder Risk	Hiring professionals and experienced faculty may be the risk as the University will be new with new policies and academic standards. Professional fees will be considerably higher than the rest of the Universities. This University will provide the complete package of higher education and hence the amount of fees for students will be high enough, which will compensate the professional fees. Government may not allow the permission for research center immediately and therefore, GSMA may need to wait for long time.
4	Construction Risk	This is the main impactful risk and strategies include Risk breakdown structure (RBS), Black Swan event team and Risk register. Work breakdown Structure will be followed by RBS and therefore any delayed activity will be finished without extending the time for next activities (Odeyinka, Lowe and Kaka 2013). Black Swan team will be presented within first three months of project scheduling with project scheduling plan and compliances from stakeholders. IBNR tool will be used by Black Swan team. Risk register software is the main component, which will record individual risks and mitigation measures, which will help the project manager to come across the necessary measures that will be needed in future (Davis 2014).

Table 2: Draft Risk Management Strategy

(Source: Kovacs, Koppany and Szabo 2015)

According to Kendrick (2015), risk register helps in establishing programs and practices for supporting business objectives and simultaneously protecting business assets such as income, reputation, property and employees. Eadie et al. (2013) pointed out that risk register helps in identifying the probability of risk occurrence against each of the activities. Thus, it can be understood that risk register helps in identifying the number of risks that are possible in any project according to the degree of occurrence.

Risk Breakdown structure

Generally, a risk register is formed in a format containing typical components described below:

Date	Risk register is the living document the records the number of date and the number of occurrence of risks against each date. This helps in reviewing the types of risks and their repetition
Risk Number	Each of the risk categories has its own categorized number. Moreover, under each category, there are several risks in accordance to date of occurrence. Each of the risks is given unique number, which are recorded in software.
Risk Description	Against each of the risks, descriptions of the risk are given. This helps in identifying the causes and impact of each of the risks.
Consequences	Consequences are viewed in the form of rating, which helps in identifying the severity of each of the risks.
Likelihood	Likelihood is also provided in the form of rating (1 to 5), where 5 mean the most likely event. In this way, severity impact of each risk is identified.
Mitigation	This is an optional factor, which helps in identifying the how the risk occurrence can be reduced by rectifying measures.
Overall Risk score	This is determined by multiplying the likelihood with consequence and rated in the scale from 1 to 25.
Risk Ranking	Each of the risks is ranked related to the overall score against each of the risks.
Risk response	This defines the immediate action to be taken in future against each risk
Trigger	This indicates the types of risk that has already occurred or in the verge of occurrence (visible in risk register monitor in real time basis)
Risk Owner	With the occurrence of each of the risks, the project manager assigns the person who looks after the risk trigger and its response in future.

Table 3: General Risk register format

(Source: Kovacs, Koppány and Szabo 2015)

According to Qiang et al. (2015), risk register starts with risk management plan where the project manager is able to view the associated risks of the project with course of time. Project manager will be able to know about the types of risks with each activity and its severity and finally can take remedial measures to counter fight the risk. On the other hand, Ebrahimnejad et al. (2012) argued that risk register has to be made visible to the project stakeholders, so that they become aware of the type of supplies that are needed for the project. If the site engineers become aware of the type of risks, then they can be change the procedure of construction. As opined by Brinkhoff et al. (2015), project stakeholders can give the idea of identified risk mitigation procedures that were not known by the project manager, and therefore new optimized ways for risk mitigation will be identified by the manager.

According to Finnerty (2013), risk register helps in identifying the project risks in real-time basis and it is the stepwise manner that includes the following:

• Establishment of risk content
• Classification of risk
• Evaluation and assessing of risk
• Risk treatment

On the other hand, Taillandier and Taillandier (2014) pointed out that risk register tool helps in customizing the risk entry areas that includes:

• Rating scales of risk including likelihood, consequence and control effectiveness
• Business units
• Risk categories
• Heat map coloring (5 x 5 matrix)
• Strategic objectives
• Risk owners

Thus, from the above critical analysis it can be said that risk register helps in progressing and escalating risk measures with the progress in construction.

In the concerned construction project, the most vital blocks include seminar rooms, central catering facility, coffee shop area, advanced learning centre and central learning centre. Thus, the procurement and contract strategy includes the following considerations.

According to Hartmann et al. (2012), identification of planning and need of purchase related to procurement is one of the most vital factors for a project. According to them, the most identifiable risks for procurement are understatement and overstatement of need as purchase of unsuitable items may lead to project derailing and even wastage of money. On the other hand, Meng (2012) pointed out that development of specification such as disguised commercial specification and inappropriate use of brand name increases the cost of project. This is because performance specifications are not measured earlier, which are recorded on the risk register. For the construction of research center, carbon neutral materials are to be selected, which the management resulting to risk may not procure.

According to Porwal and Hewage (2013), increased procurement cost, unethical conduct and misuse of resources often delay the project and its delivery time. Most of the time, the contracts are made unethically leading to derailing of project. On the other hand, Kelly, Male and Graham (2014) argued that biased specification for procurement and contract, leads to project derailing as most of the time, inadequate response from tenderers and unfair dealing claims result in risks for the project. Thus, it can be said that for the concerned project, ethical contracts are to be made and resources are to be categorized so that each of the building blocks are satisfied. Such risks generally delay the project and reduce the quality of construction, which can be easily recorded in the risk register.

Risk Categories

According to Harris and McCaffer (2013), selection of purchasing method affects the quality of a project, which includes unsuitable tenderers, cost variations in market and obtaining accurate value for money. On the other hand, Bryde, Broquetas and Volm (2013) argued that purchasing documentation often violates the terms and conditions of unacceptable tenderers, which creates disruption and low response of the project. For the concerned project as well, the advanced learning center will surely get to know about the associated risks of contract and therefore, will be able to involve Crown Law documentation, purchase type document selection and tender planning.

According to Zhou, Whyte and Sacks (2012), construction process is often differentiated into off-site and on-site construction. This is because the environmental impact can be reduced. For this, sufficient response from the stakeholder is not received, as there is an instinct of poor value for money. Moreover, the response from quality suppliers are not received as off-site construction does not increase the quality of project. On the other hand, Pryke and Smyth (2012) contradicted that inconsistent evaluation, subjective evaluation and unethical fair trade practices are inevitable for procurement. Thus, for the concerned project as well, most of the procurement will be done in bulk for seminar hall and central learning centre. This may not be possible for the project manager to identify and evaluate the quality of each of the components of procurement, which may later alter the project deliverables.

Risk Register
Risk ID	Risk Description	Date	Qualitative Risk Analysis	Risk Priority	Mitigation measure
Threat or Opportunity	How likely is the event	Consequence rating	Event Consequence
1.0	Financial Events (Project Estimating and scope)
1.1	Design Change (scope for addition)		Threat	Likely	Substantial	Additional work may be required that will increase the initial cost allocated for the construction project	Extreme threat	VIP process must be managed that will agree with extent of works. If possible, Black Swan team has to be incorporated.
1.2	Cost escalation above and over 3% (excluding the SAR value)		Threat	Quite Common	Medium	Increase the overall budget of the project and affect the stakeholders	Normal threat	Project manager has to take care of the event so that in future further cost escalation does not affect the project
1.3	Estimating risk (increase in material cost, labor and plant exceeded predicted levels)		Threat	Quite Common	Medium	Escalation may proceed beyond predicted levels and funding may not be signed	Very high threat	Site prefabrication may be required so that cost of procurement can be reduced. Opportunities need to be identified for future construction.
1.4	Delay in securing funding		Threat	Quite Common	Medium	Increased cost of project and delay in start of next activities	Very High threat	Project manager and Black Swan team has to remain informed in timely manner so that future risk related consequences are reduced
2.0	Financial Events (Community, land and property and environmental)
2.1	Injury and fatality during construction phase of 10 storey, 30,000m2 main building		Threat	Rare	Medium	Serious injury, loss of life, poor image and construction delay, increase in project cost due to more worker involvement	Moderate Threat	Effective traffic management, caution flags, risk indicators and risk signs. This will help the workers to be aware of future risks.
2.2	Vibration complaints, air quality and noise complaints from the stakeholders		Threat	Usual	Medium	Regional media coverage will produce a negative impact on the mind of stakeholders, which will generate negative publicity	High Threat	Early modeling and more investment in off-site construction, which will increase the cost of construction
2.3	Delay in land acquiring property		Threat	Unlikely	Major	Media issues will be raised creating negative publicity on the stakeholders	Very high threat	Management design processes are to be increased
3.0	Financial Events (Site Construction, natural events and engineering services)
3.1	Without geo-technical investigation, ground conditions are not visible and therefore risk may arise in the construction phase		Threat	Quite Common	Substantial	This will increase the cost and time of the project, which indicates the resource consumption	Extreme Threat	Future investigation is required for conservative improvements
3.2	Amplification in disposal of contaminated material		Threat	Quite common	Medium	This will affect in stakeholder relationships and environmental issues. Further, health and safety issues of the workers will be raised	Very high threat	Consultant will need to be hired so that potential problems are addressed
3.3	Excessive heap in culvert areas hindering the flow of waste and contaminants		Threat	Quite Common	Medium	Additional cost and delay in time.	Very High threat	Geotechnical investigation is required for confirmation of ground water
4.0	Project Lifetime Risk
4.1	Insufficient resources for decant strategy management and convincing		Threat	Quite Common	High	This will delay the project and relationship with contractors will be hampered	High	According to WBS, each of the activities will need to be ascertained about the types of resources that will be required and the quantity of resources
4.2	Expiration of planning commission		Threat	Unlikely	Low	Hampering project scheduling	Medium	Monitor ECI and progress in acquisition by the help of steering groups
4.3	Submission to LCC for checking design and drawing		Threat	Common	Medium	Delay in planning and less consideration from project stakeholders	Medium	Close relationship between the project stakeholders
4.4	Lack of team working and team cohesiveness and lacking in agendas that are not perused		Threat	Quite Common	High	Inappropriate use of resources and affect in project budget	High	Responsibility of the team members are to be shared and different teams are to be created. Teams are to be monitored in timely manner.
5.0	Design Risks
5.1	Proposed design and layout affected by inappropriate design		Threat	Unlikely	High	More demolition will occur leading to more resource consumption and therefore cost of construction is increased	High	Trial trenches needs to be undertaken and service locations are to be accurately measured. Rader surveys needs to be included in specified lengths so that design is maintained.
5.2	Agreed program milestone is not met for design delivery		Threat	Common	High	Delaying the activities of the next schedule and increase in resource consumption for incomplete schedule	High	Internal teams that are responsible for design must have periodic meetings and sessions so that the reports that are provided give the picture of delays in activities.
6.0	Design Risks
6.1	Without exception report safety audit recommendations cannot be covered, which results in extra work		Threat	Common	High	Finalization of project schedules will be delayed	High	Uncertain safety element selection has to be advised to the site engineers just after the design is finished
6.2	Procurement methodology related to streetscape elements and high quality paving		Threat	Common	High	Selection of raw materials and selection of suppliers will be affected, which will result in relationship between stakeholders	High	Planners and discussions with supply chain will need to be scheduled with alternate materials
7.0	Third Party Risks
7.1	Fluctuation in material prices		Threat	Common	High	This will increase the cost of procurement and thus, contractors will need to have different suppliers, which will result in deregulated procurement	High	Increased contingency figure has to be included that will take into account of the increased prices of materials in the market
8.0	Transport and water supply
8.1	Expiration in contract with transport agency		Threat	Common	High	Decline in on-site construction as transfer of fabricated supplies will be delayed	High	Alternate transport means will have to be included
9.0	Change in weather condition
9.1	Inappropriate rain and storm, which is different from that is projected		Threat	Common	High	Onsite construction will be halt leading to increasing timeframe	High	Best option is to make sure of off-side construction method so that project continuation is not hampered
10.0	Labor Union Risk
10.1	Unsettled agitation and discrepancies among the labor will surely arise with the change in project scheduling		Threat	Unlikely	High	Labors may be found to strike and halt the construction execution if their demands are not fulfilled, which will impact in financial		Contractors need to take care of the labor unions after every 3 months so that any dispute is resolved and justified.

Table 4: Risk Register for project

(Source:  Aarnes and Hill 2012, January)

Value management techniques and principles helps in maximizing and defining the “value for money” (VfM). Value management is consisted of team based systematic approach that collaborate among each other in solving the critical aspects of construction. For GMSA, the principles and techniques of Value management is highly required as construction process will consist of main building, seminar rooms, central catering facility, office accommodation and coffee shop area, engineering laboratory, learning center and infrastructural development.

According to Schwalbe (2015), at the initial stage, the main principle of Value management is to provide unique powerful tool to identify and explore the project objectives and how to satisfy those from the client’s perspectives. For the Advanced Manufacturing Research Centre and University College construction, design teams will be set up who will identify how the objectives will be figured out in terms of construction. Design team’s proposals, legal complication, design responsibility and even professional rivalry will be considered in the initial stages of construction.

As opined by Fang and Marle (2012), with the progress of time, the realization was that quality, cost and materials, which are governed at the time of construction, are not enough. Therefore, emphasis was shifted from specification to value, which consisted of cost encapsulation, technical and knowledge competency and performance. Thus, the principle of Value Management is to deal with efficient relationship between competency and performance, which is same for Advanced Manufacturing Research Centre and University College.

According to Cooke and Williams (2013), the principle of Value Management is to focus on the project’s expected outcome. There must be a complete process that includes only when the calculated outcomes satisfy the objective of construction, the expected benefits will be achieved. Functional attribute and design intent will quantify the resource involvement and according to that procurement will be figured out. The following Value Management process is to be fulfilled by the Advanced Manufacturing Research Centre and University College construction:

Risk Identification Techniques

Figure 5: Value Management Process

(Source: De Marco and Narbaev 2013)

Some of the additional principles Value Management in construction projects are:

• Antagonistic operation nature along with contractual relationship
• Requirement of supply chain integration
• Contractual arrangement and language simplicity
• Deviate from “cheapest option” to “best value” option

From the principles it is evident that Value Management is necessary for allocating resources in construction projects along with team collaboration, relationship and supply chain alignment so that project objectives are fulfilled.

For Advanced Manufacturing Research Centre and University College construction, the principles of value management will relate the following:

• Defining the requirements of value between owners and end users that will help in decision making
• Value management will act is the balancer between optimizing the expectations and needs of different stakeholders
• Priorities of Project sponsor and project brief will be improved between the stakeholders
• Both financial and nom-financial benefits will be addressed
• Improvements in design, communication, collaborative working and mutual learning through innovative solution will be provided
• The functional mechanism consisting of both financial and non-financial value of money will be ascertained

According to Hwang, Zhao and Gay (2013), function analysis helps in identifying the constituent parts of a project. Both structured and less formal approaches to function analysis such as mind maps and value trees are required for function analysis. Intended outcomes are analyzed and functional models are placed so that clear definition of the construction project is outlined through function analysis. A function cost matrix is presented where elemental functional costs are determined for a project through function analysis. Functions are generally named alphabetically and costs across each activity is represented with appropriate adjective such as maximize, minimize, create, safety, display and enable.

According to Alhawari et al. (2012), a FAST diagram represents people from logical liking functions with classified technical backgrounds to practice common language. The project team has to communicate with each other to customize and represent the FAST diagram, which can be understood by all the team members. The fast diagram from the University’s seminar room will be:

Figure 6: FAST Diagram of seminar room

(Source: Arnold and Javernick-Will 2012)

According to Acemoglu, Ozdaglar and Tahbaz-Salehi (2013), the most important function of VM is to identify and analyze each of the functions of a project and related cost for each activity through “functional cost matrix”. Certain functions whose cost exceeds the worth are explored with alternate methods to minimize resource consumption. On the other hand, Hopkin (2014) pointed out that for each function of a large project, determination of cost and worth would be highly critical and therefore SMART analysis is more efficient.

According to Banal-Estañol, Ottaviani and Winton (2013), SMART uses the method of value tree analysis and later according to importance of each function, hierarchy is maintained. With simple value adding attributes each of the project objectives are divided into several groups from left to right. Angeloni, Faia and Duca (2015) pointed out that after the SMART objectives are determined, each of the attributes are ranked by the client so that critical functions are executed in the early stages.

According to Sadgrove (2015), construction process usually circumvents certain abstract project values, such as management, efficiency and performance, which are addressed by Value Management. Other than the physical primary functions, abstract values must be simultaneously taken care so that generic values ae fulfilled. Similar project objectives are benchmarked against each other and therefore according to timeframe project is accomplished.

According to Aarnes and Hill (2012), with the identification of abstract values of a project, value priorities of a client is analyzed and from which value benchmarking profile is created. Parts of the project that are most potential for adding value to the project is benchmarked. Both value management team and client team creates value driving acceptable range from 1 to 10 scale rating. The range within which client’s objectives are met are selected as the benchmarked value.

Risk Analysis Tools

According to Xiang et al. (2012), with the help of value driver tool and option evaluation matrix, best options are selected that satisfies the value drivers of the clients to the most. For a construction process, such as Advanced Manufacturing Research Centre and University College, a scale of 1 to 4 will be created where each of the client’s values will be determined and value scores will be added against all functions. The highest score will determine the requirements are met.

According to Odeyinka, Lowe and Kaka (2013), “Value for Money (VFM)” technique is executed by dividing the score of value by cost allocated for individual option. This technique is totally calculative as it helps in differentiating two different values which are having similar high score by determining the cost between them. On the other hand, Besner and Hobbs (2012) pointed out that sensitivity analysis will be required in this stage as small change in weight of options will create a high difference in individual costs. Thus, for the concerned construction process, catering facility and seminar rooms will have to be differentiated as both of the sectors are having similar client requirements.

Target costing technique identifies the amount that the client is willing to pay for his wants. This is because, price is dictated by the client and as cost of materials are changing with time, hence designers will quantify price in consideration to both fluctuations in price of resource and client’s payment capability. Mehdizadeh (2012) pointed out that if the resulting cost is less than estimated cost, then clients will agree to work with suppliers and designers and they will align cost with functionality areas without confrontational or adversarial circumstances.

Conclusion and Recommendation

The construction project of Advanced Manufacturing Research Centre and University College is found to have several risks related to finance, procurement and contract, designing and scheduling. All of the risks will be mainly pertained to the initial stages of the construction as a least percentage of people is aware of the project. Therefore, it is recommended to announce the news to all over the locality so that objection from people is as low as possible.

Moreover, the construction is consisted of several parts such as advanced engineering centre, seminar rooms, office accommodations, catering centre and main building. It is recommended to start all the construction processes simultaneously so that resource consumption is limited. On the other hand, advertisements and opportunities for advanced learning center needs to be disclosed in wider areas so that more and more students are get registered. This will give the idea of the demand of advanced education in the locality.

The requirement of learning equipment, laboratory and research equipment and office designing equipment needs to be identified after the response from students and professionals. This is because designing of the whole infrastructure must not be done at a time as it may lead to misuse of resources. With the progress of time, with the increase of students and faculties, seminar rooms need to be opened. Initially, it is recommended to open just 10 seminar rooms. Finally, the waste management at the construction phase of the project has to be handled well as negative publicity is quite prone to construction projects. Therefore, wastes need to be covered and protected so that environment is not contaminated.

Finally, it can be concluded that the project has a lot of risk mitigation strategies, which will surely aid in its development with least consumption of resources. All the risks may not be addressed and therefore budget may proceed beyond £85m. With the help of risk register and risk mitigation techniques, procurement and contracts will be managed but the factory site issues may not be totally addressed as those will be controlled by sub-contractors.

Reference List

Aarnes, J. and Hill, G., 2012, January. Development of a Risk Register for an Integrated Carbon Capture and Storage Project. In Carbon Management Technology Conference. Carbon Management Technology Conference.

Acemoglu, D., Ozdaglar, A. and Tahbaz-Salehi, A., 2013. Systemic risk and stability in financial networks (No. w18727). National Bureau of Economic Research.

Afsari, N. and Murphy, B., 2015. Managing construction project risks. Risk Management, 62(4), pp.16-18.

Alhawari, S., Karadsheh, L., Talet, A.N. and Mansour, E., 2012. Knowledge-based risk management framework for information technology project.International Journal of Information Management, 32(1), pp.50-65.

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