Sources of project risk

Project risk comes from the many uncertain conditions in and around a project. The main sources are:

1. Technical sources: incomplete or wrong design and drawings, inadequate survey and investigation, difficult geology, new technology, quality of materials and workmanship.
2. Estimating and planning sources: unrealistic cost estimate and schedule, missing activities, over-optimistic productivity, poor risk allowance.
3. Management sources: weak project manager, poor coordination between client, consultant and contractor, lack of skilled manpower, poor monitoring and decision making.
4. Financial sources: shortage of funds, delay in release of budget or payment, inflation, interest and exchange rate changes.
5. Contractual and legal sources: vague contract documents, variation orders, claims and disputes, change in laws, land acquisition and compensation problems.
6. Political and social sources: government change and policy change, bandh and strikes, local community demand, corruption, security situation.
7. Natural and environmental sources: flood, landslide, earthquake, heavy rain, climate change, environmental impact and clearance requirements.
8. Resource and market sources: shortage or price rise of material, fuel, labour and equipment; supplier delay; transport problem (especially in remote areas of Nepal).
9. Human and safety sources: accidents, labour dispute, health problems, errors and negligence.

These sources are grouped as internal (technical, estimating, management, human) and external (political, natural, market, legal). Knowing the sources lets the team look for risk systematically using checklists.