Practical ways of managing risk
Tim Broyd
Professor of Built Environment Foresight, UCL
Hon. Professor of Civil Engineering, UCL
Past President, ICE
Sixth national construction conference, LGA,
London – 7 February 2019
Risk and performance vary according to the business type
Three types of transport – very different appetites for risk
• Formula 1 – “We risk everything. We risk the car. We risk ourselves. We risk
everything to get to the front of the grid” Mark Webber
• Airline – ‘We will never compromise on safety: Safety will always be our first priority.
We will never do anything that undermines this core commitment’ first statement in the
QANTAS Customer Charter. Note that other performance aspects important to
customers, such as on-time running and baggage handling, fall lower on the priority list
• Rail Operator – ‘We are committed to delivering the best possible service to you – our
customers – by providing a safe, reliable and comfortable service’ Queensland Rail
• Note – ability to achieve required level of performance/risk has significant cost
implications
from ‘Asset Management for Directors’, Australian Institute of Company Directors, December 2016
Risk and external assurance
Key points
• Asset management takes a risk based approach to creating value from assets
• Relative risks will help to determine repair vs run to failure decisions for assets
• The risk of asset obsolescence is an important consideration in asset investment
decisions
• Intangible assets may form a significant proportion of the total assets in some
companies
• Intangible assets can have a well-defined lifecycle, just as physical assets do
• Protection of intellectual property is a critical risk for boards to consider
from ‘Asset Management for Directors’, Australian Institute of Company Directors, December 2016
Risk and external assuranceKey questions for directors
• What is our risk management approach and how is this reflected in our asset management system?
• How do we balance risk against cost and performance from an asset perspective?
• How do we identify and quantify the risks in our business?
• How do we protect our intellectual property?
• How do we protect high risk assets?
• Are maintenance provisions adequate to reduce risk to an acceptable level across lifecycle of critical assets?
• Does our crisis management plan effectively consider our critical assets?
• Do our asset information systems adequately support a risk-based approach?
• How can implementing the fundamentals of ISO 5500X help us to manage risk?
• What costs would be incurred and what resources would be required to achieve certification to ISO5500X?
from ‘Asset Management for Directors’, Australian Institute of Company Directors, December 2016
Risk Management
5 ways of managing risks
1. Accept – deal with outcome if it happens
2. Avoid – change plans as necessary
3. Transfer – to the organisation/person who can best deal with it
4. Mitigate – limit the outcome of the risk
5. Exploit – for cases where outcome is positive
BUT – what if it’s an unknown unknown?
Reduce risk through self knowledge
6 important tips
1. Know what you want before you start – what you really, really want
2. Know what your budget is – not what you hope it might be
3. Cost EVERYTHING – to as close an estimate as you can
4. Collaborate – don’t just share
5. Use an appropriate form of contract
6. Use appropriate people in key roles – only change them if absolutely necessary
Architect
Structural
Engineer
Building
Owner
Construction
Manager
Building
Services
Engineer
Controls
Engineer
Civil
Engineer
Facilities
Manager
The 1999 James Forrest Lecture
Progress within projects - communications
Current information interchange
Civil
Engineer
Architect
Structural
Engineer
Building
Owner
Facilities
ManagerConstruction
Manager
Building
ServicesEngineer
Controls
Engineer
Shared Project
Model
The 1999 James Forrest Lecture
Progress within projects - communications
Shared information
29 June 2009
Interoperability: Shift to Digital Design
Concept Outline Design
Detail design
Const Docs Construction
Eff
ort
Time
Traditional
DesignDigital
Design
Digital Design shifts the bulk of project work to the
Design phase to help coordinate building systems
and the project and manage project costs
Source: International Alliance for Interoperability, 2007
22
1World class
railway
5Tunnel main
drives
19Boroughs
passed through
37Upgraded or
new stations
2x21KM of tunnel
under London
Setting the scene
Project Manage
rArchite
ct
Civil Enginee
r
QS
OwnerFacilities Maintaine
r
Construction
Manager
Systems
Engineer
MEP Enginee
r1 Common Data Environment
• EDMS
• ECMS
• Master data management
• Client owns the systems
• Client owns the data
3 key requirements
Reskilling needs in Companies
• Need to
understand
WHY
• Investment:
• In Skilling
• In Processes
• In Hardware
• In Software
• In Collab.
• Need to
understand
WHAT
• Training:
• New Processes
• New Hardware
• New Software
• Sharing
Strategic
Tactical
Operational