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can come into play. A less successful project is Berlin’s Brandenberg Airport: its planned 2011 opening remains delayed, as budget overruns resulted from planning errors and construction faults. In Singapore, poor understanding of works brought fatalities following the collapse of an elevated highway. Other projects have failed to conform to initial perceptions. Objectives, the project specification and key
performance indicators are designed to prevent harm, be it physical injury, material damage, budget issues or time delay.
Risk categories The term ‘hazard’ means something with the potential to cause harm, while ‘risk’ is the likelihood of that hazard causing harm using risk mitigation, he explained. Risks can be particular (such as insurable risks like car damage); speculative and contractual (eg design); fundamental (fire, flood, tax etc); and organisational, requiring liability or specialist insurance (health and safety management, structure and operations, time and schedule, reputational, etc). Insurance should be part of the project risk management toolkit, helping pay for financial loss arising from material damage and decay, though not wider construction costs such as budget and reputation. From the Latham Report of 1994, he quoted: ‘No construction project is risk free. Risk can be managed, minimised, accepted, shared or transferred. It cannot be ignored’. Contract and project structure should reflect this, considering the potential risk from change, disruption to
50 OCTOBER 2018
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(and from) the project and the objectives. However, he warned that the supply chain does not accept risk – it will price it, manage it or transfer it. Methods include negotiating the contract conditions ahead of the contract and agreeing price with limitations of liability; sub contracting or transferring along the supply chain; insurance (financial risk management of a particular risk such as material damage) and project management (management of risk). The project brief and objectives must be defined early in the lifecycle. Project scoping identifies objectives, financing, management and contract arrangements, along with design and build, pre tender designs, tender and award, leading to detailed design, construction, handover and operational use. A useful breakdown of this process into stages can be found in the Royal Institute of British Architects’ Plan of Work. Mr Allen said a Risk Register clearly shows the allocation of risks and those responsible for them. He gave three examples of contract: Lump Sum; Cost Plus; or Target Cost. The first option may be best suited to a new build process plant having limited interaction with people. For a tunnel project where the risk lies with the contractor for which they charge, Target Cost may be more appropriate and economical; while for an operational runway, Cost Plus may be best. Moving on, he said risk must be managed
from the outset and allocated to the most appropriate people. ‘Risk management (RM) means high level actions undertaken looking down,’ he explained, ‘while management of risks (MoR) are specific actions usually carried out from the ground up during actual works.’
Geotechnical risk Unforeseen ground conditions are a major risk to the success of any building or civil engineering project. Disputes are common, but issues are not always dealt with adequately, due to poor planning or investigation. Illustrating RM/MoR in action from both
contractor and client viewpoints, Mr Allen described a geotechnical risk – the construction of a railway line in East London, emphasising that RM actions don’t preclude MoR actions on site. This was a new build Lump Sum project with stringent contract conditions, but also some latitude regarding project organisation. While digging up an area of hardstanding, an old dried up wall was discovered that brought significant consequences from design amendments, excavation costs and noise restrictions in a built up area. RM should check that sufficient financial
resources are set aside and that the contract allows for design modifications; while MoR should
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