Question

Review each of the following scenarios and identify the risk events, the probability of those risks, and the impact of the risk events. Some scenarios may have more risks than others.

Scenario Two

A construction company has been awarded the contract to build a pipeline in Alaska. The project timeline is of the highest priority because work can only be completed during summer months due to adverse weather conditions. One of the suppliers of a key component has longer lead time than is required to complete the pipeline, but may be able to deliver if the construction company will pay fees to expedite. There are other suppliers, but these suppliers are not on the construction company’s approved supplier list and it would take time to get them approved. There is a huge penalty in the contract if the project is not completed on time.

Risk event	Probability of risk event (1=high; 3=medium; 5=low)	Impact of risk event (1=high; 3=medium; 5=low)

Answer 1

Various kinds of risks that are associated with the construction projects in Alaska to build a pipeline are as follows.

1. First kind of risk is the pure and particular risk. The risks that are termed under this pure and particular risks are damages to the persons and property that is caused due to natural calamities such as land slides, storms, fire and collapses. However the contract conditions would state specifically to take out adequate insurance to all those unforeseen circumstances. The result that is arising out of these risks are that the project might get delayed beyond the completion date. The construction company has to make allowances for this during the initial stages of the project itself or has to arrange for extra resources in the middle of the project in order to complete the project within the stipulated timelines.
2. The other kind of risk is the fundamental risks. These are the risks that arise if war happens in the country, which directly affects the construction companies. If there is a change in the government policy also, it affects the construction companies. The industrial disputes which might arise among the laborers also might pose a potential risk to the company.
3. The other kind of risk is the speculative risk. There might be a sudden unforeseen weather condition that might happen in Alaska, which might hamper the construction of the pipeline. The contractors during the process of contract signing itself make buffer for these speculative risks and accepts the contract conditions accordingly.