SEATTLE -- Risk management in construction projects often focuses on Monte Carlo simulations, safety plans and other such processes. At this year's AACE International Annual Meeting, two employees of McDonough Bolyard Peck suggested a more qualitative approach to risk management.

McDonough Bolyard Peck has a five-step qualitative risk management process. (This does not replace quantitative risk management but instead complements it.)

1. Before a construction project begins, form a team to study its risks. This team should include a scheduler, an estimator, the project manager and representatives of the owner and the engineer.
2. For each risk item, summarize the risk using if-then statements and pinpoint three things -- the probability that it will happen, the time and cost impact if it happens and when it is likely to happen. These should be general; cost impact should not be expressed in exact dollars and cents, and time impact need not be shown as man-hours. These risk summaries can be prepared and, later, monitored using Microsoft Excel or Access, noted Sagar B. Khadka, a project manager at the company's Fairfax, Va. office.
3. Prioritize the risks based on potential impact. Those with the highest level of impact are marked red, followed by yellow, blue and green. (Remember that cost is relative -- a $50,000 risk on a $400,000 project means a lot more than it does on a $4 million project.)
4. Develop a risk response plan. Possibilities here include avoidance, mitigation, transfer, and acceptance. These options will vary from one project to another.
5. Schedule a weekly meeting to focus on risk monitoring and control. Start with the red risk items and work your way down.

Using qualitative risk management puts the construction risk management process firmly in the hands of a contractor as opposed to a bondsman, lawyer or insurance agent, said Gator Galbraith, a branch manager in Fairfax. In addition, it helps contractors plan for risks long before they occur.

Finally, the simple act of getting the team involved in qualitative risk management helps reduce risks, Galbraith added: "People in general don't want to fail in front of one another."