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

29 June

2009

In Plain Sight - Recommendations

In Plain Sight - Recommendations

Morandi Bridge, Genoa

Collapsed on August 14, 2018

43 deaths

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

Thank you

tim.broyd@ucl.ac.uk