Project 2 – Project Risk Management
Assignment 2 required candidates to produce a project risk management plan. This required us to investigate and apply risk management techniques and illustrate our understanding of them through the conduit of the CH2 project.
10.0 Project time management
10.1 Goals
- To build the project to the desired specifications and drawings.
- To deliver the project within the time constraints outlined in the contract program.
- To deliver the project to the required quality.
- To deliver the project within the client’s specified budget.
10.2 Strategies
- Maintain the project program by tracking the project stages using Microsoft Project. This will allow the project team to maintain the program and also to ascertain how the project is progressing and if need be, put in place strategies to make up lost time.
- Ensure individual trade subcontractors are maintaining the required progress in regard to the program that forms part of their subcontract.
10.3Methods
- Hold regular progress meetings with each trade subcontractor to track progress and ensure milestones are being met.
- Ensure progress payments are only made to individual subcontractors based upon current progress. This will aid in ensuring progress is kept.
11.0 Project risk management
11.1 Goals
- Identifying, analysing and responding to project risk.
- Paying close attention to risk identification, risk quantification and impact, response development and risk control.
11.2 Strategies
· Analysing historical records and closeout reports, structured questionnaires, structured interviews, brainstorming, structured checklists, flow charts, judgment based on knowledge and experience, system analysis and scenario analysis.
· Employ a balanced team which incorporates, experience, knowledge, judgment, entrepreneurial innovation, creativity, enthusiasm, internal members and external consultants.
· Understand the scope of works will require regular meetings, accurate reading of specification and plans to prevent any problems from misinterpretation.
· Have appropriate insurances, work cover, occupational health and safety policies in place and abide to relevant government acts.
· Employ a full or part time, on site risk manager if necessary.
Construction
The construction stage of a project can be affected by many varying risks that have arisen as a result of issues such as:
- Design decisions
- Planning Decisions
- Cost Implicating Decisions
- Industrial relations issues
- OHS issues
- Poor Management and supervision
Design Decisions
The construction phase of a project can be affected by poor design decisions such absence of key design requirements such as fittings, fixtures, services, buildability and practicality. Once a head contractor has been engaged and mobilisation of the site and construction has begun it can be very costly to the client to change the design. This often results in variations that can result in considerable addition cost and possibly even lengthened project duration.
Risk Management Procedure
All designers could possibly have their work double checked by a suitably experience peer who can take an objective view of the design. Feedback can help to prevent any grey areas in the documentation and in doing so prevent major variations and the resulting inherent cost.
Planning Decisions
It is crucial to the success of a construction project that all planning decisions and issues have been sorted out and decided upon before a head contractor is engaged. Planning restrictions such as height of structure and setback from the public walkways need to be thoroughly accounted for before engaging a contractor. Poor planning decisions and investigation can result in huge overhauls of design resulting in impacts on construction that be both costly and resultant in an untimely completion date of the project.
Risk Management Procedure
Designers should endeavour to understand and consult with the Melbourne City Council to ascertain any planning restrictions that may affect the construction of CH2. In all cases the information needs to be documented and signed off by an appropriate town planner for the local municipality.
Cost Implicating Decisions
During the design phase of the project lifecycle it is important that the client receives value for money. For example decisions regarding structure need to be made after investigating the cost implications for a number of options to achieve the client’s desired result. Simple decisions such as a concrete vs. steel structure can have a huge impact on the cost and duration of a project.
Risk Management Procedure
Options need to be explored and clearly explained to the client so as they can come to an informed decision regarding cost saving alternatives to achieve a similar goal regarding a determined aspect of the building.
Industrial Relations
As the building and construction industry has a large trade union presence within it there are risks that result in this aspect of the industry too. Industrial action can be caused by many varying site specific and non site specific issues to name a few:
- Fast approaching end to a current enterprise bargaining agreement (EBA)
- OHS issue
- Amenities issue
- Industrial action that has nothing to do with that site.
Risk Management Procedure
It would be advisable for any project manager to consider prior to beginning construction to invite union representatives from each involved trade such as the CFMEU, PTEU and ETU to have an informal sit down meeting and discuss issues that could result in stop work action and work together to manage the prevention of any action.
Occupational Health and Safety
The contemporary nature of the construction industry puts a huge emphasis on occupation health and safety. OHS is of the highest importance to all parties of a project whether it be workers, employers, the client, the designers and the public in general. A death or injury can not only take a moral toll on all involved but can also have a negative affect on the outcome of a construction project.
Risk Management Procedure
Fortunately in today’s construction industry there are many legislative frameworks and legal documents that need to be presented and used by head contractors and subcontractors. Documents and requirements such as insurance, job safety analyses, safe work methods, safety committees, red card training and inductions are used to help safe guard against dangers that are inherent in the industry. These are legal requirements that are in place to not only protect clients, designers, employers and managers but more importantly to ensure the health, safety and well being of construction workers.
Commissioning Risks
The commissioning phase, which involves the handing over of the project, there is risk that building contractors will failt to supply all required industry certificates on time to allow occupation. Buildings need to be inspected by building surveyors so that they can be approved for handover. The inspector must have all required trade certificates for the certified plumbing and electrical work for example, to give approval for handover. This risk can arise from poor quality management systems and even poor workmanship by subcontractor engaged to install a system
The consequence of this risk is delay in handover time, extra costs due to the requirement of repeat inspections, extra costs resultant of an extended project completion date and extra costs incurred by the Melbourne City Council due to continued payment of rent at the former premises. If a plumber missed an important piece of documentation that was stated in the contract and needed to be included, it is the project or site manager’s fault for not ensuring all documentation required for building handover have been received. The plumber’s reputation could be affected, as well as the builder’s site manager. This risk could also slightly affect the ‘green star’ rating as management is part of the assessment criteria.
The response plan involves the project manager to ensure certificates are received prior to commissioning phase, phone the inspectors and other authorities to ensure the certificates obtained are sufficient and correct when the project is ready for handover. The contract should be checked to ensure the documents in possession coincide with the documents stated in the contract. The project manager must also ensure quality procedures are in place when certified work is being carried out.
Operation
A possible operating risk for the CH2 ‘green’ building is that it may incur extra costs for servicing custom made systems by specialist technicians and also if increased frequency maintenance is required for such systems. A complex water recycling system could save huge amounts of water, however the specialist maintenance required on the unconventional turbines may be difficult to do, it may be hard to find the right contractor to service the system, or there may be a limited number of specialised people that know how to service that particular system. The risk is that the engineers may design a system that is impractical to service, or just by the designers being negligent in regards to how much and how often a system needs to be maintained even if the system saves a lot of energy.
The major consequence could be that the public will be informed through the media, once the building is in operation, how the energy saving initiatives are functioning, and whether they are performing as expected. The maintenance of these systems may cost more than predicted and contractors may be hard to find. If this risk becomes an issue, the media could criticise the use of extreme energy saving systems, causing the project to suffer a non desirable outcome and detract from the original goal of a ‘green’ building.
The response plan must ensure contracts are made with maintenance subcontractors or the contractors that installed the specialised systems to perform regular checks of the equipment and maintenance when required, as well as any emergency repairs if needed. Backup subcontractors should be found and organised for each service required in case the primary subcontractor fails to meet these requirements or if their business or service ceases to exist for some reason. The plan should ensure backup subcontractors are available in emergencies if the primary subcontractors are unavailable. The team should be consulted to design with the idea in mind to reduce the maintenance by specialist technicians as much as possible. Unfamiliar systems in the design should be well described and modelled to the city of
Example Risk Matrix
Four major risks analysed:
1. Design fails to set a new world standard for ‘green’ building
2. Union strike causes construction to stop for several days
3. Poor OHS management resulting in a work related death
4. Unknown hidden costs arise with maintenance of specialised systems
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