risk management kmc mar 2013 risk management practical processes for tunnelling and underground...
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Risk ManagementRisk ManagementKMc Mar 2013KMc Mar 2013
RISK MANAGEMENTRISK MANAGEMENT
Practical Processes for Tunnelling and Underground Works
Kevin McManus
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk ManagementKMc Mar 2013KMc Mar 2013
Purpose of Risk Purpose of Risk ManagementManagement
Elimination of Risk
or
Reduction of risk
to
Acceptable level
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk ManagementKMc Mar 2013KMc Mar 2013
Kevin McManusKevin McManus21 March 201321 March 2013
KMc Mar 2013
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Risk ManagementRisk ManagementKMc Mar 2013
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk ManagementKMc Mar 2013
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk ManagementKMc Mar 2013
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk ManagementKMc Mar 2013
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk ManagementKMc Mar 2013
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk ManagementKMc Mar 2013
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk ManagementKMc Mar 2013
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
“..expect to be
surprised
but never
astonished..”
Risk ManagementRisk Management
Key DefinitionsKey DefinitionsDanger:
Danger arises when situations that could
result in harm are not properly controlled
Hazard:
A thing or situation with the potential to
cause harm to people or adverse impacts
on a project:
•Health; Safety; Environment; Quality
•Design; Construction; Cost; Programme
•Third parties and existing facilities
•Reputation; Viability of EnterpriseKevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Hazard
Event
Risk
Probability Severity
Risk
Rating
n p s p x s
Key DefinitionsKey Definitions
Risk:• Probability of a hazard occurring•Severity or consequence hazard occurring
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Acceptability of RiskAcceptability of Risk
Constraints and GuidanceConstraints and Guidance
•Subjectivity
•General Opinion; Third Party
Requirements
•Statute
•Regulatory Guidance
•Standards
•Industry Guidance
•Joint Code of Practice : Risk
Management Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Acceptability of RiskAcceptability of Risk
Constraints and GuidanceConstraints and Guidance
•Subjectivity
•General Opinion; Third Party
Requirements
•Statute
•Regulatory Guidance
•Standards
•Industry Guidance
•Joint Code of Practice : Risk
Management
Risk ManagementRisk Management
X
Acceptability
of Risk
Hazard
Event
Risk
Probability Severity
Acceptable
Tolerable
Unacceptable
X V Likely V High
Acceptability of RiskAcceptability of Risk
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
X Y
Probability Severity
Acceptable
Tolerable
Hazard
Event
Risk Acceptability
of Risk
Unacceptable
Y Unlikely V High
X V Likely V High
Acceptability of RiskAcceptability of Risk
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Acceptability of RiskAcceptability of Risk
Constraints and GuidanceConstraints and Guidance
•Subjectivity
•General Opinion; Third Party
Requirements
•Statute
•Regulatory Guidance
•Standards
•Industry Guidance
•Joint Code of Practice : Risk
Management Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Acceptability of RiskAcceptability of Risk
Constraints and GuidanceConstraints and Guidance
•Subjectivity
•General Opinion; Third Party
Requirements
•Statute
•Regulatory Guidance
•Standards
•Industry Guidance
•Joint Code of Practice : Risk
Management Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
StatuteStatute
Management of Health and Safety at Work Regulations 1999
Every employer shall make a suitable and sufficient assessment of:
• The risks to ……. his employees …....at work
•Risks to persons not in his employment arising out of or
in connection with the conduct by him of his
undertaking
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
StatuteStatuteConstruction (Design and Management) Regulations 2007
Clients should:
•Allow sufficient time and resources for all stages
•Appoint CDM Coordinator
Designers should:
• Eliminate hazards and reduce risks during design
• Provide information about remaining risk.
Contractors should:
•Plan manage and monitor construction phase
•Liaise with CDM coordinator with respect to ongoing design
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Acceptability of RiskAcceptability of Risk
Constraints and GuidanceConstraints and Guidance
•Subjectivity
•General Opinion; Third Party
Requirements
•Statute
•Regulatory Guidance
•Standards
•Industry Guidance
•Joint Code of Practice : Risk
Management Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
AcceptabilityAcceptabilityGuidance from Regulatory Bodies
As Low As Reasonably Practicable ALARP
•does NOT mean
•Standards have to be continually raised
•Exceptionally high standards set the ALARP level
•All possible control measures are required
•There will be no accidents or incidents
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Acceptability of RiskAcceptability of Risk
Constraints and GuidanceConstraints and Guidance
•Subjectivity
•General Opinion; Third Party
Requirements
•Statute
•Regulatory Guidance
•Standards
•Industry Guidance
•Joint Code of Practice : Risk
Management Kevin McManusKevin McManus21 March 201321 March 2013
StandardsStandards
Kevin McManusKevin McManus21 March 201321 March 2013
BS EN 1997-1 : 2004Eurocode 7: Geotechnical Design
Elements of “observational method”
•Acceptable limits of behaviour established
•Range of possible behaviour assessed
•Acceptable probability that actual behaviour will be within acceptable limits
•Plan of monitoring devised
•Monitor early & at short intervals to see if behaviour stays within acceptable limits
•Contingency plan devised and used if monitoring shows behaviour outside limits
Risk ManagementRisk Management
Risk ManagementRisk Management
Acceptability of RiskAcceptability of Risk
Constraints and GuidanceConstraints and Guidance
•Subjectivity
•General Opinion; Third Party
Requirements
•Statute
•Regulatory Guidance
•Standards
•Industry Guidance
•Joint Code of Practice : Risk
Management Kevin McManusKevin McManus21 March 201321 March 2013
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Risk ManagementRisk Management
Acceptability of RiskAcceptability of Risk
Constraints and GuidanceConstraints and Guidance
•Subjectivity
•General Opinion; Third Party
Requirements
•Statute
•Regulatory Guidance
•Standards
•Industry Guidance
•Code of Practice for Risk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Munich Underground 27 September 1994
Kevin McManusKevin McManus21 March 201321 March 2013
DLR February 1998
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
CTRL
Lavender St 2003
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Hull 1999
Original Contract Value £60M
Length of tunnel10km
~~ cost per metre £6k
Collapse damage length150m
Damaged length “value”£900k
Insurance cost £42M
Kevin McManusKevin McManus21 March 201321 March 2013
InsuranceInsurance
Contract for the transfer of liability for the outcome of risk
Insurer sells insurance for agreed risks in exchange for a premium
Insured expects compensation for loss or damage suffered
Conditions apply
Loss or damage has to be accidental / fortuitous
If loss or damage can be foreseen and is expected:-
•it should be avoided by intentional planning
• not wishful thinking and reliance on the insurer
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Structure of insurance market
Broker
•Experts – normally act for
Insured
•Not a party to insurance
contract
•Does not accept the risks
insured.
•Expected to:
Assess of risks and needs
Recommend insurer and
policy
Advise on sums to be
insured Advise on level of
premium
Assist with claims
settlement
Risk ManagementRisk Management
Insurer
Sells insurance (indemnity for risk events) in exchange for a
premium.
Reinsurer
Second tier insurers who sell insurance for part o the main risk.
Used to spread risk and free up reserves of lead insurer
Kevin McManusKevin McManus21 March 201321 March 2013
Types of Insurer
Mutual
Companies owned by insurance policy holders
Unlimited liability
e.g. Lloyds of London
Limited Liability
Guaranteed Capital forms limit of liability
Beyond this the Insurer becomes insolvent
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Types of insurance required for construction
Property
Material, equipment & machinery
Contractor’s All Risk
Excludes stated risks
Liability
Covers Specific Legal Liabilities
Employer's LiabilityPublic LiabilityProfessional Indemnity
Generally hinges on negligence
Non Negligence
Cover for liabilities under circumstances where Client may face liabilities even though the Contractor has not been negligent
Risk ManagementRisk Management
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Insurable
Needs to be a degree of uncertainty
Risk should be quantifiable
Should be acceptable to insurance market
Damage should be capable of being assessed
Uninsurable
Foreseeable events
Consequential losses or risks
Political risks or international turmoil e.g. war
Absence of cause and event connection
Limitations of Insurance
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Terms of Insurance
Indemnity
Place the insured in same position as before the risk event
Compensation for actual loss or damage
Loss of profit not considered
Utmost Good Faith
Proposer (Insured) expect to divulge all available knowledge about risks - not conceal
Insurer relies on information to assess risk and set premium
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Code of Practice for Risk Management of Tunnel Code of Practice for Risk Management of Tunnel WorksWorks
Development Purpose and structure
2nd Edition May 2012 International Tunnelling Insurance Group (ITIG)
Based on Joint CoP for Risk Management of Tunnel Works in UK (BTS/ABI 2003)
Promote and secure best practice for minimisation and management of risks
Operate in parallel and not derogate from national statute standards etc
Use of Risk assessment and Risk Registers at all project stages•Project Development•Procurement for Construction•Design•Construction
Kevin McManusKevin McManus21 March 201321 March 2013
Principles of Code
•Hazard identification and management to ensure reduction to ALARP
•Responsibility for risk management explicitly allocated to relevant contract parties
•Risks addressed adequately and appropriately in planning and management
•Appropriate financial allowances made
•Formalised Risk Management system to be used as means of
documenting risk:
•Identification
•Evaluation
•Allocation
Risk ManagementRisk Management
Code of Practice for Risk Management of Tunnel Code of Practice for Risk Management of Tunnel WorksWorks
Kevin McManusKevin McManus21 March 201321 March 2013
Client Roles and Responsibilities
Client shall have demonstrable technical and contract management competence
Absence of appropriate experience; Client shall appoint a Client’s
Representative
•Named competent key Personnel
•Capability in design management and related Risk Assessments &
Registers
•Capability to indentify risks that will impact on Third Parties
Ensure competence and adequacy of site and ground investigations
Indentify arrangements for design checks, construction supervision &
monitoring
Develop and Maintain Overall Management Organization Chart
Risk ManagementRisk Management
Code of Practice for Risk Management of Tunnel Code of Practice for Risk Management of Tunnel WorksWorks
Kevin McManusKevin McManus21 March 201321 March 2013
Assessment and evaluation of Project OptionsAssessment and evaluation of Project Options
•Geology, hydro geology and hydrology
•Appropriate tunnelling methodologies
•Temporary and permanent ground support measures
•Ground movements and settlements and impact on third parties
•Hazardous materials and utilities
•All other particular local factors
•Associated safety, health and programme implications
•Associated costs
•Appropriate forms of contract
•Risk RegisterRisk Register
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Contract; procurement; prequalification & Contract; procurement; prequalification & tendertender
•Form of contract (sub contract) & detailed terms - allocation of risks
and liabilities
•Sufficient and adequate time for preparation and assessment of tenders
•Full Disclosure of hazards identified in project development risk register
•Ground reference Conditions either by Client or Tenderer
•Key Method Statements
•Tenderer’s Risk Register
•Tenderer’s experience; key staff; focused technical submission
Risk ManagementRisk Management
RiskTransfer
ProjectDevelopment
FeasibilitySI & GI
Identify man made and natural hazardsProvide information for assessment of methods and viability
OptionsHSEQ Geology Methodology Time & Cost
Risk
Asse
ssments
Risk
Registe
r
Ref Design
ContractProcurement
DocumentPreparation
Disclose Hazards GBR Sufficient time for tender
PreselectionExperience Key Staff
StatusSubletting
GBR
DetailedDesign
Information Transfer
Permanent &Temporary
Works
Transfer of Information
Sensitivity Studies
Design Checks
Emergencies
Tolerances Methods
Constructability Geotechnical Mitigation
Validation Materials Natural Perils
Monitoring Data Review Confirm/ Amend Contingencies
Construction
Pre-construction Implementation and Risk Plans Consents Constructability
Tender Assessment
Method Statements
Detailed Methodology
Plant Selection Criteria
Quality Records Independent Supervision
Management Plans Key Staff Design Self certification
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Client Tenderers Designer Contractor
SI Factual ReportRisk AssessmentContract FormsGround Reference Ground Reference OorganisationChart
Key Method Statements
Risk AssessmentTender Risk Register
Design Brief Design BriefThird party AssetsConstructability Reviews
Risk Management Plan Construction Risk RegisterRisk AssessmentsMethod Statements & ITPsManagement & Audit PlansSite Organisation ChartIndependent Supervision PlanPlan Selection CriteriaValue Engineering Proposals
Options
Pre
-sel
ection
Des
ign
Con
stru
ctio
n
Risk ManagementRisk Management
Code of Practice DeliverablesCode of Practice Deliverables
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Identify and Describe
Ref
No.
Activityor
HazardHazard Event
Persons and
Assets at Risk
Outcome
Identification of HazardsIdentification of Hazards
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Identification of HazardsIdentification of Hazards
• involve a combination of knowledge, skills and experience
•previously assessed hazards that didn’t occur should not be discounted
•include mechanisms by which hazards can occur
•complex and high risk cases may need specialist expertise and techniques
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
P S R
Evaluate and Assess
Ref
No.
HazardEvent
Persons Assetsat Risk
OutcomeRisk
Kevin McManusKevin McManus21 March 201321 March 2013
Evaluate and AssesEvaluate and Asses
Risk ManagementRisk Management
Evaluation of ProbabilityEvaluation of Probability
Score1 Improbable2 Remote3 Occasional4 Probable5 Frequent
Score1 Improbable2 Remote3 Occasional4 Probable5 Frequent
Probability EvaluationGeneral Tunnelling
Unlikely Less than one every 100,000 metresRare 10,000 to 100,000 metresIrregular 1,000 to 10,000 metresLikely 100 to 1,000 metresRegular 0 to 100 metres
Construction Operations RailwaysLess than 1 in every 10,000 cycles Less than 100 years1,000 to 10,000 cycles 10 to 100 years100 to 1,000 cycles 1 to 10 years10 to 100 cycles Monthly to annually1 to 10 cycles Daily to monthly
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Score
1 Insignificant
2 Minor
3 Serious
4 Critical/Severe
5 Catastrophic
Severity EvaluationFirst aid injury, slight property damage with minimal cost that is unlikely to impact upon works, insignificant environmental impact contained within site.Short term illness, lost time accident, minor damage to property involving minimal down time, minor environmental impact with no lasting effect.Instance of occupational ill health, over 3 day injury, localised damage to property, environmental impact with possible public or media exposureMajor injury or acute ill health, significant damage to property, major environmental impact involving potential prosecutionFatality, environmental disaster, collapse or destruction of property
Evaluation of SeverityEvaluation of Severity
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Risk Rating MatrixRisk Rating Matrix
1 2 3 4 51 1 2 3 4 52 2 4 6 8 103 3 6 9 12 154 4 8 12 16 205 5 10 15 20 25
Risk Scoring Matrix Probability of Occurrence
Severity of Hazard
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk Ranking
1 to 3 LOW4 to 9 MEDIUM10 to 25 HIGH
Mitigation RequirementsSuitable attention to working proceduresCorrective actions, improvement and control measuresElimination or reduction strategies
Kevin McManusKevin McManus21 March 201321 March 2013
Risk Reduction RequirementsRisk Reduction Requirements
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
SeverityLow
High
High
Risk ManagementRisk Management
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Principles of Prevention
a) Avoiding risks
b) Evaluating risks which cannot be avoided
c) Combating risks at source
d) Adapting work to the individual
e) Adapting to technical progress
f) Replace potential danger by non or less dangerous
g) Developing a consistent overall prevention policy
h) Priority of collective protection over individual protection
i) Giving appropriate instructions to employees
Avoid
Substitute
Engineer Out
Administer controls
Provide Protective Equipment
Emergency and Recovery Measures
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Hierarchy of MitigationHierarchy of Mitigation
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Emergency and Recovery Measures
Provide Protective Equipment
Administer Controls
Engineer Out
Substitute
Avoid
Hierarchy of MitigationHierarchy of Mitigation
P S R P S R
Eliminate or Reduce
Residual RiskRef
No.
Mitigated Outcome
Initial Risk Mitigation Measures
Kevin McManusKevin McManus21 March 201321 March 2013
Eliminate or ReduceEliminate or Reduce
Risk ManagementRisk Management
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Expecting UncertaintyExpecting Uncertainty
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Reducing UncertaintyReducing Uncertainty
P S R
Risk Owner
ActionsReview Date
Residual RiskRef
No.
Mitigated Outcome
Mitigation Measures
Monitor and Manage
Kevin McManusKevin McManus21 March 201321 March 2013
Monitor and ManageMonitor and Manage
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Monitor and ManageMonitor and Manage
Kevin McManusKevin McManus21 March 201321 March 2013
Zones & Triggers Trigger Description Action Required
Standard Conditions
Black
Red Emergency Preparedness Plan
Amber
Additional Measures
Contingency Action
ClearReview
GreenReview
RED Predicted x 2.0
AMBER Predicted x 1.5
GREEN Predicted x 0.9
Risk ManagementRisk Management
Trigger ValuesTrigger Values
Kevin McManusKevin McManus21 March 201321 March 2013
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Kevin McManusKevin McManus21 March 201321 March 2013
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Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Face Loss Back AnalysisFace Loss Back Analysis
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Low Probability High Consequence Low Probability High Consequence EventsEvents
..where a high severity risk has been
mitigated by construction methods to an
acceptable level…
..the contractor shall provide an outline
Emergency and Contingency Plan for dealing
with the risk in the event that it is realised…
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Risk and Insurance NEC 3Risk and Insurance NEC 3
Employer’s Risks
Unavoidable result of works
Negligence by employer ‘s
staff
Fault in Employer’s design
War, riot , general strikes etc
Prior damage to free issues
Any others in Contract Data
Contractor’s Risks
Anything not the Employer’s Risk
Contractor’s Insurance Obligations
Contractor insures for contracted
risks to the minimum amount of
cover stated in the contract……
Except where the Employer
provides the insurance and charges
the Contractor
Risk ManagementRisk Management
Kevin McManusKevin McManus21 March 201321 March 2013
Prob. Minimum Most Likely MaximumMean Output
Triangular 0.7 1,000 3,000 5,000 £ 2,100 Delay to design w ith potential further delays to construction
Triangular 0.5 1,000 3,000 5,000 £ 1,500 Delay to design w ith potential further delays to construction
Triangular 0.3 1,000 3,000 5,000 £ 900 Delay to design w ith potential further delays to construction
Triangular 0.3 1,000 3,000 5,000 £ 900 Delay to design w ith potential further delays to construction
Triangular 0.3 1,000 3,000 5,000 £ 900 Delay to design w ith potential further delays to construction
Current Quantitative Cost Impact (£k)Impact DescriptionDistribution
Cost EvaluationCost Evaluation
Kevin McManusKevin McManus21 March 201321 March 2013
Risk ManagementRisk Management
Quantitative EvaluationQuantitative Evaluation
Kevin McManusKevin McManus21 March 201321 March 2013
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Kevin McManusKevin McManus21 March 201321 March 2013
Any Any Questions?Questions?
Risk ManagementRisk Management