Built Environment

BLDG3012 - Construction Commercial Risk,

Health and Safety
Welcome

Week 5
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 5 – Agenda
• Risk Management Plan (RMP)
• Roles and responsibilities
• Software applications and systems
• Industry Case Studies
Risk Management Plan (RMP)
Group Activity
In your group, discuss how you would like to manage risks for this project.
• 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 Plan (RMP)
• RMP explains and documents:
– the processes, procedures, tools, roles, responsibilities, accountabilities and activities
that will/should be planned and implemented to manage uncertainties, both inherent
and contingent risks, which may impact objectives along lifecycle.
Risk Management Plan (RMP)
• The RMP will address these against:
– Risk Context
– Risk Identification
– Risk Analysis (both qualitative & quantitative)
– Risk Evaluation
– Risk Treatment
– Risk Communication & Consulting
– Risk Monitoring & Review
Group Activity – RMP
• You are a Risk Manager working for XYZ Contractor which has just been awarded a
$100m Engineering, Procurement and Construction (EPC) Solar Farm Project.
• Contractually XYZ Contractor is responsible to develop and implement a good practice
RMP. In your team:
– List the key aspects of the project risk management which need to be addressed;
– Discuss and develop the “Table of Contents” for RMP; and
– Identify top 3 risks and then explain how RMP can help the management of these
risks.

Share your learnings with other teams.

 Group Activity – RMP
Not an easy task!!

Engineering Procurement Construction

• Identify Risks • Identify Risks • Identify Risks

Contingent
Processes

Inherent &
• Analyse Risks • Analyse Risks • Analyse Risks

Risks
Tools
RACI

• Evaluate Risks • Evaluate Risks • Evaluate Risks

• Treat Risks • Treat Risks • Treat Risks
• Communicate • Communicate • Communicate
• Monitor/Review • Monitor/Review • Monitor/Review

Establish Context, i.e. rules, definitions, key risk-based decision points, etc.
Q&A and Break
Software Applications
Contingency Allocation

Ref: 2nd Edition, RES Contingency Guideline

Vertical Allocation
Horizontal Allocation
Within the project based on:
• Risk categories,
• Work packages,
• Phases, etc.
Group Activity
In your group, discuss the horizontal and vertical contingency allocations.
• 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
Contingency Control
Contingency Controls

Ref: 2nd Edition, RES Contingency Guideline

Case Study
$100m Power Plant EPC Contract

• Project Management
• Engineering & Design
• Procurement & Delivery
• Installation
– Earthwork & Civil
– Mech, Elec, & Control Systems
– Two Gas Turbine Generator Units
– Balance of Plant (BOP)
• Testing & Commissioning
Case Study
How to assess optimum contingency allowance (time and cost) for desired confidence level
during the Bid Phase?
How to monitor and maintain the desired confidence level during the Execution Phase i.e.
Contingency Management?
Case Study
Contingency & Project Performance

Ref: 2nd Edition, RES Contingency Guideline

Software Applications
Software Applications
• Quantitative Decision Trees
Risk-Based Decision • Probabilistic Optimisation
Making (RBDM) • Integrated Project Controls

• Bowtie Risk Analysis

Dynamic Risk • DRA
Assessment (DRA) • Enterprise Risk Management

Qualitative Risk • Risk Workshop Facilitation

Assessment • Risk Register

• Contingency Determination
Contingency • Contingency Allocation
Management • Contingency Control

Quantitative Risk Analysis • Joint Confidence Level (JCL)

(QRA) • Schedule/Cost Risk Analysis

Tools and Technologies include:

BowtieXP, DRA, Palisade Decision Tools & @Risk, Oracle Primavera,
Primavera Risk Analysis, Deltek Acumen Fuse & Risk, Risk Facilitator,
CURA, Sword ARM
Case Study 1 – Bowtie Risk Analysis
Preventive Recovery
Cause/Trigger Consequence
Actions Actions
Case Study 2 – Schedule Risk Analysis
Case Study 3 – Cost Risk Analysis
Case Study 4 – Schedule/Cost Risk Analysis
Case Study 4 – Schedule/Cost Risk Analysis
90.0 100% 20/03/2025 10:00

95% 13/01/2025 09:00

90% 17/12/2024 09:00

80.0
85% 02/12/2024 09:00

80% 13/11/2024 15:00

70.0
75% 29/10/2024 15:00

70% 17/10/2024 15:00

60.0
65% 09/10/2024 09:00

Cumulative Frequency
60% 30/09/2024 14:00

50.0 55% 23/09/2024 09:00

Hits

50% 16/09/2024 10:00

40.0 45% 10/09/2024 09:00

40% 04/09/2024 12:00

35% 26/08/2024 09:00

30.0
30% 15/08/2024 12:00

25% 07/08/2024 10:00

20.0
20% 26/07/2024 09:00

15% 15/07/2024 16:00

10.0
10% 05/07/2024 16:00

5% 19/06/2024 12:00

0.0 0% 09/05/2024 16:00

13/06/2024 01:00 04/09/2024 09:00 26/11/2024 17:00 18/02/2025 01:00
Distribution (start of interval)
Assignment 2 Introduction, due Wk 10, 60%
Refer to Course Outline
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