Evaluating project risks at the bid stage

A leading international engineering, construction and services business had a well-established risk identification and mapping process for major projects worth in excess of £30M. The Board wanted to develop the process to enable its application to smaller projects, which had hitherto not been given as much detailed attention. The purpose was to ensure that:

• prior to final bid submission, all risks within projects could be evaluated using the most appropriate means
• risks could be tracked in more detail throughout the life of each project undertaken

Zurich consultants provided guidance on practical risk analysis methodologies that were based on subjective probability and designed to enhance the client’s approach.

The aim was to minimise disruption to the overall risk management process which the company had taken so long to develop. Risks that would otherwise be difficult to quantify were addressed in terms that project managers and risk owners could directly relate to, using their existing terminology.

This enabled the development of software to apply a practical but mathematically robust approach to risk quantification. The result was that:

• quick decisions could be taken on opportunities to bid
• most project risks could be assessed on a common basis
• bid terms were aligned with the resulting risk profile
• priorities for mitigation could be identified

Zurich delivered the basis for the methodology, and third party software providers were used for the application development.