--- title: "Sources of project risk" subject: "Project Engineering" chapter: 5 key: "semester_7/project_engineering:sources-of-project-risk" source: https://www.bctengineer.com/q/semester_7/project_engineering/sources-of-project-risk site: BCT Engineering --- # Sources of project risk Project Engineering · Chapter 5: Project Risk Analysis and Management - Asked in: 2079 Bhadra, 6 marks - Video: [Project Risks: The Ultimate Project Management Guide to Risk Definition, Identification & Assessment](https://www.youtube.com/watch?v=uhE6n3_Z33g) — Americo e-Learning - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_7/project_engineering/sources-of-project-risk - Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-5 ## Question Describe the different sources of risk. ## Short answer Sources: technical (design flaws, geology), estimating (unrealistic plans), management (poor coordination), financial (funds, inflation), contractual (vague terms, claims), political (bandh, policy), natural (flood, earthquake), resource (material shortage), human (accidents, errors). Internal and external grouping aids systematic identification. ## Answer 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. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. Which is an estimating and planning source of risk? A. Unrealistic cost estimate, schedule and over-optimistic productivity B. Bandh and strikes C. Flood and earthquake D. Weak project manager Answer: A. Unrealistic estimates, missing activities and over-optimistic productivity belong to estimating and planning. (Key point: Estimating and planning sources) 2. Which item belongs to contractual and legal sources? A. Inflation B. Variation orders, claims, disputes and change in laws C. Landslide D. Accidents Answer: B. Vague documents, variation orders, claims, disputes, law changes and land compensation are contractual/legal. (Key point: Contractual and legal sources) 3. Which group of sources is classed as external? A. Technical, estimating, management and human B. Political, natural, market and legal C. Design, drawings and workmanship D. Estimate errors and weak planning Answer: B. Political, natural, market and legal sources are outside the team's control; technical, estimating, management and human are internal. (Key point: Internal vs external sources) 4. What is the benefit of knowing the sources of risk? A. It removes all risk B. The team can look for risk systematically using checklists C. It reduces the contract price D. It avoids the need for monitoring Answer: B. Grouping sources lets the team search for risks systematically with checklists. (Key point: Why know the sources) ## Related in Project Engineering - [Risk, sources of risk, risk management steps](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-define-sources-steps) — Project Engineering, chapter 5 - [Risk, sources, risk response planning](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-define-sources-response-planning) — Project Engineering, chapter 5 - [Risk sources in over-budget, delayed projects of Nepal](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-sources-nepal-delayed-projects) — Project Engineering, chapter 5 - [Risk types and sources; rectify via risk management](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-define-types-sources-steps-c75) — Project Engineering, chapter 5 - [Define risk; types of project risk](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Adefine-risk-types-of-risk) — Project Engineering, chapter 5, asked 2× - [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 ## Related in other subjects - [Sources of risk; best building height](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Arisk-sources-nepal-building-floors) — Engineering Economics, chapter 6 - [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 - [Project risk](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aproject-risk) — ICT Project Management, chapter 12 - [Importance of risk response planning](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Arisk-response-planning-importance) — ICT Project Management, chapter 12