Built Environment

BLDG3012 - Construction Commercial Risk,

Health and Safety
Welcome

Week 2
Introduction

The views expressed in this presentation are

those of Pedram Danesh-Mand and do not
reflect or represent the official policy, position
or recommendation of the KPMG Australia,
Pedram Danesh-Mand Engineers Australia (EA) or Risk Engineering
Society (RES). Any written or verbal
Director, KPMG recommendation has a general nature and
should not be used for any decision making
PDaneshMand@kpmg.com.au
without further assessment for specific
z3116065@unsw.edu.au project and organisation requirements.
Course Learning Outcomes
At the successful completion of this course, you will be able to:

• Explain risks and uncertainties in relation to stakeholders’ objectives within the process
of risk management.
• Develop and apply tools to assess risks and contingencies for construction projects.
• Analyse and evaluate risks and contingencies applicable in commercial construction
projects.
• Explain risk and contingency plan development and implementation.
• Present a project Risk Management Plan.
Weekly Course Schedule
Construction Commercial Risk, Health and Safety

• Week 1: Introduction to Project Risk Management (Assignment 1)

• Week 2: Risk Management Process (ISO 31000)
• Week 3: Contingency Determination
• Week 4: Contingency Management (RES Contingency Guideline) (Assignment 1)
• Week 5: Risk Management Plan (RMP) (Assignment 2)
• Week 6: Risk Assessment Techniques (ISO 31010)
• Week 7: Risk Assessment Techniques (ISO 31010)
• Week 8: Risk Treatment
• Week 9: Risk-based Decision Making (RBDM)
• Week 10: Assignment 2 Presentations (Assignment 2)
Week 2 – Agenda
• Establishing and planning risk management
• Risks and construction industry – overview of risk and WHS management on
construction projects
• Overview of industry standards and generic frameworks for project risk management
• Introduction to Uncertainty Management
• Risk Management Process (ISO 31000)
• Risk Identification
• Risk Assessment Techniques
Future Reading & Risk Management
Building and Construction Industry
The building and construction industry includes:
• residential and non-residential construction
• building structure services
• installation services
• heavy and civil engineering
• land development
• site preparation
Risk Definition
Effect of uncertainty on objectives, ISO 31000
An effect is a deviation from the expected – positive or negative
Uncertainty generally grouped into two types:
• Inherent, Planned or Uncertainty
• Contingent, Un-Planned or Event
Risk vs. Issue
• RISK might happen, so it’s a function of consequence and likelihood
• ISSUE has already happened, so it’s only consequence/s.
Objectives
• Work Health & Safety
• Environment
• Financial
• Reputation
• Time
• Cost
• Quality
• Compliance, etc.
Compliance with laws
If you are a building contractor or a building industry participant in Australia, you are
required to comply with a number of laws. These include:
• National Construction Code
• Designated Building Laws, e.g. BCIIP Act (Building & Construction Industry Improving
Productivity Act 2016, Independent Contractors (IC) Act 2006, Fair Work Act 2009, etc.
• Competition and Consumer Act 2010
• Australian Consumer Law (ACL)
• Work Health and Safety Laws,
• Migration Laws,
• Compliance Notices,
• Disability (Access to Premises-Buildings) Standards 2010
• National Prequalification System for Civil (Road and Bridge) Construction Contracts
• Environment Protection and Biodiversity Conservation Act 1999
• Heritage protection
• National Native title Tribunal, etc.
Licences & Permits
The licences and permits you may need include:
• building licences
• plumbing licences
• gas fitting licences
• electrical licences
• development applications • use of blasting explosives
• zoning approvals • removal of asbestos
• heavy vehicle licences • use of public land
• obtaining a white card • work on heritage properties
• water usage or constructing a bore or well • building energy efficiency
• connection or work on sewerage/drain • disposal of waste
• carrying out high risk work • handling, storage and use of
• protecting trees and wildlife chemicals or dangerous
• fire management and safety substances
Work Health & Safety
WHS involves the management of risks to the health and safety of everyone in your
workplace. This includes the health and safety of anyone who does work for you as well as
your customers, visitors and suppliers.

Under Australian WHS laws your business must ensure the health and safety of your
workers and not put the health and safety of other people at risk. To do this you must:
• provide a safe work environment
• provide and maintain safe machinery and structures
• provide safe ways of working
• ensure safe use, handling and storage of machinery, structures and substances
• provide and maintain adequate facilities
• provide any information, training, instruction or supervision needed for safety
• monitor the health of workers and conditions at the workplace
Work Health & Safety
People working in your business have WHS obligations to themselves and others at work.
They must:

• take care of their own health and safety

• take care not to do anything that could hurt others
• follow WHS instructions
• follow the workplace’s WHS policies and procedures
Work Health & Safety
In Australia, each state has its own WHS laws and a regulator to enforce them. The WHS
framework for each state includes:

• Act – outlines your broad responsibilities.

• Regulations – set out specific requirements for particular hazards and risks, such as
noise, machinery, and manual handling.
• Codes of practice – provide practical information on how you can meet the
requirements in the Act and Regulations.
• Regulating agency (regulator) – administers WHS laws, inspects workplaces,
provides advice and enforces the laws. Check their website for WHS information and
resources.
Key Standards & RP’s
• ISO 9000: 2000, Quality management systems – Fundamentals and vocabulary
• ISO 9004: 2000, Quality management systems – Guidelines for performance
improvement
• ISO 9001: 2015
• ISO 10001, 10002, 10003, and 10004, Quality management – Customer satisfaction
• ISO 10005, Quality management systems – Guidelines for quality plans
• AS ISO 10006, Quality management systems – Guidelines for quality management in
projects
• AS ISO 31000: 2018, Risk management – Principles and guidelines
• ISO 31010, Risk Assessment Techniques
• PMBOK
• PMI Standards
• AACEi Recommended Practices
Risk Function

Risk = function of ‘consequence’ and ‘likelihood’ of occurrence

Group Activity
• Potential fire risk in this room
– Likelihood/s
– Consequence/s
Inherent vs. Contingent Risks
Inherent Risks Contingent Risks
Uncertainty in the scope of work & its Unmeasured items outside the Base
elements in Base Estimate Estimate
Likelihood = 100% Likelihood usually < 100%
Examples: Examples:
• Quantity: volume of earthworks • Extreme Wet Weather
• Productivity Rate: rate of excavation • Industrial issues
Group Activity
In your group, identify and assess top inherent and contingent risks (3 each)
• 10m x 10m x 5m – Concept Design
• No geotechnical data, assume 80% soil, 20% rock
• Productivity rate in soil: 20m3/d
• Productivity rate in rock: 10m3/d 10m
• Excavator: $2000/d 10m
• Labor: $500/d
• Overhead including profit: $200/d
5m
Risk Management Process
• ISO 31000

Establish Context
COMMUNICATE AND CONSULT

MONITOR AND REVIEW

RISK ASSESSMENT
Identify Risks
HB 327:2010

ISO 31010
Analyse Risks

Evaluate Risks

Treat Risks
Establish Context
• Define relationship between organisation and its environment
• Plan the remainder of the process and scope of the exercise
• Identify objectives of internal and external stakeholders
• Develop Evaluation Criteria
• Decide Structure and Framework
Establish Context

Consequence Table

Likelihood Table

Escalation Table

Risk Matrix
Risk Matrix & its Problems!!
Q&A and Break
Identify Risks
• What can go wrong or different with expectation?
• Where are the areas of uncertainties?
• How?
• Why?
Identify Risks Tools
• Checklists (Experience or knowledge based, structured or unstructured);
• Interviews and questionnaires (Including market research);
• Group idea generation session, such as brainstorming workshop;
• Analysis methods (e.g. “what if”, Fault/Event trees, Flowchart, etc.);
• Past records; and
• Specialist expertise.
Analyse Risks
Risk Analysis is about developing an understanding of the risk by:

• Controls – to assess adequacy and effectiveness of existing controls;

• Consequence analysis – to determine the nature and type of impact which could occur
assuming that a particular event situation or circumstance has occurred;
• Likelihood analysis and probability estimation;
• Preliminary analysis;
• Uncertainties and sensitivities; and
• Correlations
Analyse Risks
• What can happen and why?
• What are the consequences?
• What is probability of their future
occurrence?
• Are there any factors that mitigate the
consequence of the risk or that reduce
the probability of the risk?
Evaluate Risks
• Assessing the level of risk found during the analysis and action needs to be taken;
• Consideration of the objectives of the activity and function or process as well as
potential benefits resulting from taking the risk;
• Consideration of the tolerability of the risks borne by parties that do not receive the
benefits of the risks
• Risks that fall into low or acceptable risk categories, need no further treatment.
However, they should be monitored and reviewed.
Treat Risks
• Transfer the risk: causing another party to accept the risk, typically by contract or by
hedging.
• Avoid the risk: not to proceed with the activity likely to generate risk.
• Mitigate the risk: reduce likelihood and/or consequence
• Accept the risk: after risks have been reduced or transferred, there may be residual
risks which are retained.
Communicate & Consult
Reference to HB 327:2010
Monitor & Review
Reference to ISO 31000
 Risk Register

Risk Assess Assess Cost Impact

Controls Treatment
Identification w/Controls w/Treatment Schedule Impact
Group Activity
XYZ team is preparing a lump sum price for As part of their submission, XYZ Contractor
digging an underground hole. should prepare a risk management plan.
Help them to:
• 10m x 10m x 5m – Concept Design
• Identify top 3 risks
• No geotechnical data, assume 80% soil,
20% rock • Assess top risks
• Productivity rate in soil: 20m3/d • Treat top risks
• Productivity rate in rock: 10m3/d 10m
• Excavator: $2000/d 10m
• Labor: $500/d
5m
• Overhead including profit: $200/d
Additional Readings
• ISO 31000:2018
• ISO 31010:2019
• Project Management Institute (PMI) Risk Management Standard
• Risk Engineering Society (RES) Contingency Guideline, 2nd Edition, 2019
• AACEi, Recommended Practices
• Cognitive and Motivational Biases in Decision and Risk Analysis, Gilberto Montibeller
and Detlof von Winterfeldt, Risk Analysis, Vol. 35, No 7, 2015
• Edwards, P J and Bowen, P A (2005) Risk management in project organisations, UNSW
• Uher, T and Loosemore, M (2004) Essentials of project management, UNSW Press.
• Boothroyd, C and Emmett, J (1996) Risk management – a practical guide for
construction professionals, Witherby and Co, London.
• Wideman, R M (ed) (1992) Project and program risk management, PMI, London.
• ICE (2000) Risk analysis and management for projects, ICE, London.
• Edwards, L (1995) Practical risk management in the construction industry, Thomas
Telford, London
Q&A & Conclusion