Delivering Client Value through Uncertainty Management

1. Delivering Client Value through Uncertainty Management Tim Wells Halcrow Group Ltd

2. Introduction • PM for Halcrow Group Ltd

3. Our Markets

4. Seoul International Airport Clyde Arc Bridge Egyptian National Railways Chendu Ecological Park China Thames Barrier Rhudbar Dam Iran Selection of Projects

5. Scope Adding Client Value through management of uncertainty • What is Client Value • Robust Decision Making • Tour through hierarchy of case studies (coastal planning) • Take Home Messages & Barriers

6. What adds value to clients • Innovation • Predicting their needs • Compliance • Technically rigorous solutions • Sustainable solutions • Social / Ethical / Environmental Responsibility (SEE) • Manage project risks (cost and programme) • Robust decisions

7. Robust Decision Making Robust Decisions: • Decisions that are not sensitive to uncertainty • Stand the test of time / ‘Future Proofed’ / ‘No Regrets’ • Survival Strategies • Organisational level • Capital investment decisions • Business Strategies / Mergers & Acquisitions • Product development • Flood Risk Management Options Appraisal

8. Robust Solutions – Top Down Implement solutions that cope well with uncertainty Resistant, Resilient, Reliable, Adaptability, Flexibility

9. Robust Solutions – Bottom Up Understand and Formalise Uncertainty Identify Uncertainties / Assumptions, Model Building, Defining Parameters, Uncertainty / Probabilistic Analysis, Sensitivity Testing, Supporting Decision Making

10. Hierarchy of Case Studies • Technical - Flood defences ; Rock Sizing • Project - Project Risk Management • Strategic – Long Term Investment

11. Traditional Design Design for Standard of Protection - 1:200 (0.5%AP) Safety margin added on to represent uncertainty 99% 95% 50% Flood Defence Freeboard

12. Better understanding of existing performance Understand dominant parameters Provides scientific rigor - robust Better evidence for decision making Transparent (share) Potential cost savings Traditional Design Design for Standard of Protection - 1:200 (0.5%APF) Safety margin added on to represent uncertainty Added Value

13. Armouring for coastal structures Design based on empirical formulation (Van der Meer/Hudson) Many uncertain parameters / lots of correlations / expert choice Rock Sizing

14. Armouring for coastal structures Design based on empirical formulation (Van der Meer/Hudson) Many uncertain parameters / lots of correlations / expert choice Rock Sizing Wn50 5.5T

15. Deterministic Added Value • Understanding of performance envelope • Making informed choices • Trade-off [cost/safety & confidence in performance] • Support traditional methods Rock size needed to Prevent failure for Given range in Forcing events

16. The Environment Agency is the leading public body for protecting and improving the environment in England and Wales NCPMS – National Capital Programme Management Services = Delivery of the nations flood defence projects Project Risk Management

17. Drivers “The Environment Agency has accepted the culture of risk management. It is considered to be best practice and is mandatory.” £200M annual capital investment needs effective management (>500 live projects)

18. Dedicated Extranet Website

19. RM Process Facilitated workshops Key team members Focus on programme / activities ID Causes /Consequences Ownership Consensus Risk Register Understand Objectives Review cycle Manage actions Update risk register Share knowledge Continuous Integrated into PM Capture Lessons Prioritise (qualitative) ID Mitigation Residual probability Quantitative (3 point) Assumptions @Risk simulations Consensus Actions become programmed tasks Named ownership

20. Poor Decision Making Unrealistic Expectations Consultation process Insufficient Planning Access Problems Changes to Team Delays to Approvals Project Objectives Weakly defined outputs Supplier / client Performance Equipment Failure Unfamiliarity Unexpected Findings Time and Resource Constraints Errors Poor Weather Complexity Sources of Uncertainty

21. Risk Model – Risk Register

22. Risk Model – Risk Register

23. ∑ Multiple risks Risk Model Single Risk x =

24. Risk Model – sensitivity analysis Provide a means of prioritising management effort

25. Added Value (Project) • Improves the Deliverables (Critical Review) • Develops team Understanding (Sharing Knowledge) • Feel more in Control (Understanding Risks) • Develop targeted Contingencies (Quantify Risks) • Better Prepared for risk (resilience) (Dry-runs of issues) • Improves personal / Firm Capability (Thinking Differently) • Demonstrates Forward Thinking to clients (Proactive not Reactive) • Saves Money (Less Issues occurring)

26. Added Value (Programme) • Balanced view of risk exposure across programme (efficient decision making) • Understand likelihood of budget delivery • Early release of contingency - build more schemes! • Schedule certainty (phase procurement input) • Match supply with demand

27. Strategic Level -

28. Take Home Messages How can exploring uncertainty add value • Scientific Rigour & Richer understanding of the problem and solutions • Performance certainty, transparency, robust - defendable evidence • Prioritisation of management effort • Effective expenditure – potential to save £

29. Barriers / Challenges Barriers • Represents Change (expert & client) • Still faced with tough decisions (confidence level) • In hands of the Analyst Challenges • Communication of benefits and value • Training of technical staff • Selling value to clients (who get value and ultimately pay)

30. Thank you & Questions

31. Decision Making Process UKCIP decision making framework – a framework for decision making given uncertainty in climate change.