School of Engineering and Electronics & Bovis Lend Lease

1. School of Engineering and Electronics& Bovis Lend Lease Risk Management in Construction Engineering

2. Introduction • We have looked H&S legislation • It must be remembered that legislation alone will not protect – it is merely the ‘rules’ • We have considered the behavioural and cultural aspects of H&S Management • We have looked at practical aspects of health & safety on construction sites • We have considered specific areas where hazards occur • We have also considered the identification of hazards • Today we will consider • how H&S management is implemented at a site level • the wider concept of engineering risk management

3. Health & Safety Hierarchy General site safety management Fundamental topic: covered in greater depth

4. Health & Safety File • To recap: • contains all H&S information about the project for those that follow (i.e. clients & users) • should contain information about the design & construction of every structure & element of the project • responsibility lies with the CDM Co-ordinator who must • keep it up to date • deliver to client at end of project

5. The Method Statement • A Method Statement defines the scope of the work to be performed in producing a significant section or phase of the project • It is also produced as part of the Project Quality Plan • It is a statement about the desired level of quality • As a definition of the work involved it allows assessments of the risks involved to be made • Once prepared it should be passed to every person involved in that part of the project – whatever capacity they may have

7. Method Statements – areas covered • A method statement is a large document and therefore cannot be prepared for all activities • Work activities are therefore split into areas – usually geographic but also process areas • The project manager is responsible for determining what method statements are required – he must find the right balance: • too broad a scope and detail will be lost • too narrow and the volume of paperwork will dominate

8. Method Statements – examples • On a road project we may have the following method statements: • One for each major structure (e.g. bridges) • One for a group of minor structures (e.g. culverts) • Earthworks • Fencing • Site clearance • Drainage • Road surfacing • Traffic management • Safety fencing • Any other specialist subcontractor operations

9. Preparation of a method statement • The project manager will decide which person in the team will prepare which method statements • This person is usually the senior engineer for that area of work • or the subcontractor • Safety is just one (though major) part of a method statement • All method statements should be set out on similar lines in order that the information contained can be easily identified

10. Content of a method statement • The operations concerned • A risk assessment of the operations • A listing of key drawings • The direction and sequence of work • The types of resources to be used • A basic layout or sketch • Delegated responsibility for the work • Any other specific aspects of the work

11. Operation Plans • The next level in the H&S hierarchy • It is prepared for each discrete activity of work • There may be a number of operation plans for an area of work already covered by a method statement • The operation plan is usually drawn up by the site engineer looking after the work • A pro-form is usually used

12. Operation Plans – pro-forma

13. Risk Assessments • ‘Risk’ is a large part of any project • financial, technical & safety risk • It is just one stage in the overall risk management strategy prepared for every project • We shall look at the subject in greater depth in a moment • Each method statement will have detailed risk assessments:

15. Risk assessment only useful if the info in it is well considered...

16. Risk Management • Risks are ever present • The management of risk is an area of significant expansion over the last decade. • Within the construction and process industries the consequences of an accident can be significant (e.g.Piper Alpha) • Detailed management of risks are routinely carried out, conducted at all stages of a project life cycle • This lecture will: • Define risk concepts • Introduce the Risk Management Procedure • Piper Alpha Case Study

17. Foolish Risks

18. Poor Planning...

19. Engineering: Small Risks

20. Large Risks - Piper Alpha (before)

21. Piper Alpha - After

22. Large Consequences: Hatfield & Ladbroke Grove Rail Crash

23. Definitions Harm “Physical injury or damage to health, property or the environment” BS8444: Part 3: 1996 • In all aspects of project management, we want to minimise, if not eliminate any kind of harm • Harm may be, for example: • Employee accidents or death • Financial collapse • Environmental accident

24. Definitions cont. Hazard “A source of potential harm or a situation with potential for harm in terms of human injury, damage to property, damage to the environment, or combination thereof” • In project management terms, we need to control financial hazards as well as physical ones • Examples may be: • Falls from heights • Collapse of excavations • Dropped objects • Poor environmental management • Abnormal inflation • Abnormal weather conditions

25. Definitions cont. Risk “The combination of the probability of an abnormal event or failure and the consequence(s) of that event or failure to a system’s operators, users or its environment” • Risk involves two aspects: • Probability of a hazard taking place, and • The severity of the harm that occurs • Low probability, high severity = high risk • High probability, low severity = intermediate risk • Low probability, low severity = low risk

26. Definitions cont. Risk Management “The systematic application of management policies, procedures and practises to the tasks of identifying, analysing, evaluating, responding and monitoring risk” • Five stages:

27. Risk Identification • The stage where all potential hazards in a project are identified • Three main methods of identification • Individual Consultation • interviews with project personnel • lengthy & time consuming • Group discussions • formal brainstorming • requires motivation & teamwork • HAZOP • HAZard and OPerability studies • Formal questioning of processes, e.g design

28. Risk Estimation • Potential hazards have been identified • Now need to assess: • Probability of occurrence • Severity if occurs • Can be done in two main ways: • Qualitatively • in a linguistic manner • usually done first; high probability/severity cases then may be examined: • Quantitatively • in a numerical manner

29. Risk Estimation cont Qualitative Techniques • Fuzzy set analysis • expresses the likelihood and consequences of a risk in readily understood language terms. • Interviewing and Brainstorming • is an extension of two of the techniques employed in the identification stage. • Personal and Corporate Experience • if it exists should be exploited. • Engineering Judgment

30. Risk Estimation cont Quantitative Techniques • Expected Monetary Value (EMV) • i.e. putting a financial value to the expected result of a risk. • Expected Net Present Value (ENPV) • is an extension of EMV by calculating the net present value of a probability state. • Decision Analysis • looks at possible outcomes and determining optimal choices

31. Risk Estimation cont Quantitative Techniques cont • Sensitivity Analysis • tests how sensitive an event outcome is to slight changes on the input variables. • Delphi peer groups • attempts to put quantitative values to results obtained in a manner similar to discussion groups and brainstorming. • Simulation • creates a probable life history of an event and thus allows its outcome to be predicted.

32. Risk Evaluation • 3rd part of Risk Assessment • Need to combine the severity and probability of the identified hazards • Can be done using a risk matrix:

33. Practical Risk Assessment Procedure • Identify the principal hazards that will be present in the operation. • Assign a number 1 to 5 for both Consequences of Hazard and Probability of Occurrence. • The Risk (i.e. the product of Consequence x Probability), indicates the level of action. • Identify persons affected by the risk • Respond to the risk • Monitor and update as necessary.

34. Risk Response • If risks are identified as being intolerable how can these be dealt with? • There are four main methods of responding to such risks: • Risk Avoidance • Risk Transfer • Risk Retention • Risk Reduction

35. Risk Response Risk Avoidance • Managingor developing a situation in which the identified risks do not occur, e.g: • not proceeding with the project • tendering at a very high bid • placing conditions on a bid • changing design

36. Risk Response cont Risk Transfer • Via Subcontractors • a third party undertakes the high risk portion of the work and the responsibility that goes with it • Via Insurance • A pre-determined insurance premium is often better than unexpected costs due to risk • may be done using a captive insurance company • involves excesses • some risks may result in premiums higher than the probable financial loss

37. Risk Response cont Risk Retention • Some risks may be better managed internally • High frequency/low severity or very low frequency/high severity risks may be best retained Risk Reduction • The most usual way in which to manage common risks is to reduce either the severity, the chance of occurrence or both. E.g: • early warning systems • improved maintenance • better housekeeping

38. Risk Response cont • The choice of method used to respond to risk will largely depend on company policy • Using the risk matrix model, a typical company scenario may be:

39. Risk Monitoring • The final stage of risk management • Risk situation will continue to change throughout the life of the project • New hazards will become present • Existing hazards will stop or change • The management must be continually monitored, reviewed and improved • Existing risks may be managed differently • therefore • Risk monitoring completes cycle back to risk identification