---
title: "Impact of unmanaged risk; risks by phase"
subject: "Project Engineering"
chapter: 5
key: "semester_7/project_engineering:risk-impact-unmanaged-phases"
source: https://www.bctengineer.com/q/semester_7/project_engineering/risk-impact-unmanaged-phases
site: BCT Engineering
---

# Impact of unmanaged risk; risks by phase

Project Engineering · Chapter 5: Project Risk Analysis and Management

- Asked in: 2075 Asoj, 8 marks
- Video: [Project Risk Management Overview | PMBOK Video Course](https://www.youtube.com/watch?v=h7UjWPfD47g) — David McLachlan
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/project_engineering/risk-impact-unmanaged-phases
- Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-5

## Question

What would be the impact on a project due to unmanaged risk in a project? Write down the risks in a project in different phases of the project life cycle.

## Short answer

Unmanaged risk causes cost and time overruns, poor quality, scope reduction, safety problems, disputes, financial loss, and reputational damage. Risks vary by phase: conceptual (unclear objectives), planning (design errors), procurement (wrong contractor), construction (weather, quality), commissioning (defects), and operation (maintenance, low demand).

## Answer

#### Impact of unmanaged risk

1. **Cost overrun:** unexpected loss is paid from the project budget.
2. **Time overrun:** delay in completion and handover.
3. **Poor quality:** failure to meet the standards, defects and rework.
4. **Scope reduction or project failure:** the project may be stopped or abandoned.
5. **Safety problems:** accidents, injury and environmental damage.
6. **Disputes, claims and legal cases** between parties.
7. **Loss of reputation and confidence** of client, donors and lenders.
8. **Financial problems:** loan repayment trouble and low return.
9. **Stress and low morale** in the team, as the project moves from one crisis to another.

#### Risks in different phases of the project life cycle

| Phase | Typical risks |
|---|---|
| Conceptual / initiation | Wrong need analysis, unclear objectives, unrealistic benefits, political pressure |
| Planning and design | Incomplete survey, wrong estimate, design error, funding not arranged, unrealistic schedule |
| Procurement | Wrong contractor selection, bid collusion, late approvals, price change |
| Implementation / construction | Material and labour shortage, quality failure, weather, accidents, scope change, payment delay, disputes |
| Commissioning and closing | Defects, performance not as designed, delay in handover, claims, lack of training |
| Operation | Maintenance problems, low demand, natural hazards |

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Which is a direct consequence of unmanaged risk on a project?
   A. Guaranteed reduction of cost
   B. Cost and time overrun, poor quality and possible failure of the project
   C. Faster completion because fewer checks are done
   D. Higher confidence of lenders and donors
   Answer: B. Unmanaged risk causes cost and time overrun, poor quality, scope reduction or failure, disputes and loss of confidence. (Key point: Impact of unmanaged risk)

2. Why does unmanaged risk lead to cost overrun?
   A. Contractors always reduce their rates after a risk
   B. Risk events increase the project's contingency automatically
   C. Unexpected losses must be paid from the project budget
   D. Insurance always pays all the losses
   Answer: C. When a risk occurs unmanaged, the loss has to be met from the project budget. (Key point: Cost overrun reason)

3. Which risk belongs to the planning and design phase?
   A. Bid collusion
   B. Defects at handover
   C. Low demand during operation
   D. Incomplete survey, wrong estimate, design error
   Answer: D. Incomplete survey, wrong estimate, design error and unrealistic schedule are planning and design risks. (Key point: Planning phase risks)

4. Which is a typical procurement-phase risk?
   A. Wrong contractor selection and bid collusion
   B. Unclear objectives and wrong need analysis
   C. Maintenance problems
   D. Delay in handover and lack of training
   Answer: A. Wrong contractor selection, bid collusion, late approvals and price change are procurement risks. (Key point: Procurement phase risks)

## Related in Project Engineering

- [Project life cycle phases and activities](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Alife-cycle-phases-activities) — Project Engineering, chapter 1, asked 5×
- [Life cycle phases and goal setting example](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Alife-cycle-phase-goal-example) — Project Engineering, chapter 1
- [Managing three hydropower project risks](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-manage-three-hydropower-risks) — Project Engineering, chapter 5
- [Internal risk of Nepalese construction project](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-internal-construction-nepalese-company) — Project Engineering, chapter 5
- [Define risk, types, manage with risk cycle](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-define-types-manage-cycle) — Project Engineering, chapter 5
- [Risk management cycle; managing risk effectively](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-management-cycle-manage-effectively) — Project Engineering, chapter 5

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- [Gumbel flood at given risk, 50-year project life](https://www.bctengineer.com/question.md?key=semester_5%2Fengineering_hydrology%3Agumbel-risk-63-58-4200) — Engineering Hydrology, chapter 6
- [Product versus project life cycle](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aproduct-vs-project-life-cycle) — ICT Project Management, chapter 4