Executive Summary
This report is a study of an Australian construction project known as Sydney Light Rail Construction and Extension. The project costs around US$ 100 million. It is a continuing project which is highly manageable.
This project has been shown to be specifically risky in terms of safety. Risk management is therefore predominantly applicable for this project with special techniques and education being established for risk management. The project stakeholders relevant to this project are the contractors.
The methodological approaches used in risk management in this project are risk identification, risk analysis and evaluation, risk treatment, risk management and control.
The main safety risks identified on this project include site condition risks, fire outbreaks, wars leading to disputes, earth quakes, tsunamis, whirlwinds, low management capabilities of contractors, price increase of raw materials, environmental risks, accidents, water availability, contraction of major water pump components, lack of training, difficulties in capturing and stipulating the construction requirements and poor relationships between the incorporated organizations incorporated.
The report focuses on coming up with a detailed Safety Management Plan. It will clearly identify the specific safety risks and requirements of this project excluding other risk variables. The risks will be controlled through arranging risk management duties, actions and financial plans.
A risk officer who in most cases is a team member will be assigned the duty of managing safety risks in this project. He will be kept responsible of predicting possible project problems. A live project risk record will be maintained. In this record, each risk will have elements such as the opening date, name, a short explanation, probability and significance.
A risk reporting means will be created whereby each project member will be endowed with the task of reporting risks he foresees. Mitigation plans for risks that are to be controlled will be prepared. Finally, planned and met threats, efficiency of the control activities and attempts made for risk management will be summarized.
Introduction
Sydney Metro Light Rail Construction and Extension is a construction project in Australia. It was opened in 1998 and is owned by Metro Transport Sydney. It is managed by Connex which is a principal transport operator in Australia on an agreement of seven years.
It has a route length of 7.2 km (4.5 miles). This project came to Australia with the opening of the present tramway from the central station to the town area of paramount (Bent, Nils and Werner 2003). This project has shown high growth with the pronouncement meant on 2008 that geotechnical explorations that are very important in constructing its tunnels had begun.
The late South Wales regime has instigated a number of key transport projects such as Sydney link, The North West Metro and most probably west and south east in the future.
The Metro link, which is a major component of Sydney link, is likely to change Sydney’s civil property with metro handrails.17 new stations are to be established in the North West Metro whereby some are to be through by 2015 and others by 2017.
It is postulated that the North West Metro will offer high quality transport links for its dwellers as well as provide rail services to the inner Sydney environs. It is to function as a stand- alone system integrating world class plans and expertise.
The objective of this report is to come up with a risk management plan for the construction projects in this company focusing on the safety risks involved in construction and how they can be controlled. Manual and intuitive risk management approaches will be used.
Establishment of the context
This report is prepared on the managers’ perspective. Managers in this construction project have legal liabilities in relation to the safety of this project. These includes providing a general risk plan and organizing the project risk management team. The project risk manager will come from outside to ensure neutrality.
This report is relevant to both internal and external stakeholders mostly the construction head contractors and the sub contractors.
The key performance indicators that will be used to measure the success of this construction project include quantifiable indicators, performance measurements, billability and percentage of projects profitable. The projects safety risks will be evaluated based on the likelihood of risk occurrence also known as the Consequence matrix.
Communications and Consultation Plan
The project stakeholders that have been consulted in the preparation of this report are the head contractors, sub contractors and the clients. These have provided inputs such as informing the managers of the most common safety risks and giving their views on how these risks can be managed.
The project stakeholders that need to comply with the safety risk management plan are the contractors in general. This will be communicated through seminars which will educate them on how to mitigate risks involved in this safety risk management plan (Covello and Frederick 1988).
Risk Identification
Risk identification approach used in this project involved pinpointing and classifying safety risks that could affect this project and writing them down. These resulted to a list of risks. The project risk events were then compiled.
This included a close scrutiny on the issues and concerns established by the project development team. This was derived from an assessment of the project depiction, collapsing work structure, cost approximation, outline and construction schedules.
Top down risk identification approach which entailed the use of chief executives with a complete view of the construction project was applied. Intangible risk identification approach which involved pin pointing new types of risks which had a high chance of occurring though being ignored by the construction company was also used.
The uncertainty involved in this construction project came from many sources and frequently involved many partakers. The safety risks relating to this Australian construction project are listed below.
Environmental protection is the first safety risk. This is due to the incapability by the contractors to be familiar with the requirements of the construction and the time it will take to obtain authorization from the dictatorial agencies.
Risks due to public safety regulations were identified. This was related to situations where the risks involved in construction were likely to affect the people’s health and well being.
Safety risks occurring as a result of poor relationships between the organizations incorporated in the construction process were also identified. Such safety risks led to problems often concentrated on people other than project needs.
Technological issues presented another form of safety risks. This was attributed to fast improvements in new technologies which impart new problems to designers and constructors.
Technology was considered as a safety risk in this project since several design assumptions which have helped the professions well in the ancient times may be outdated in working with new types of constructions especially those with larger complications and scales. New buildings may thus end up collapsing in the future hence harming the public.
Site condition is a safety risk to this construction project. This is specifically due to under surface conditions which constantly impart some degree of insecurity for structures with unknown features during operation. Other safety risks identified included contractual relations, poor attitude of contractors, communication problems and construction occupational safety.
Climate conditions also posed a safety risk due to unfavorable weather changes. Risks associated with fire outbreaks, wars and poor relationships between the constructors were also identified.
Other safety risks involved in this construction project included poor safety alertness of top management, lack of sufficient training, uncontrolled operations, unwillingness to input resources to safety, difficulties in capturing and stipulating the construction requirements, difficulties in specifying the time and resources required to complete the construction and difficulties involved in measuring the development of the design during construction.
Other safety risks included acute noise pollution caused by the construction, low management capabilities of sub contractors, tight project plans, unsuitable construction programme planning, variations of construction programmes, lack of dexterity between project participants, unavailability of sufficient professionals, lack of adequate amount of skilled labour, dispute occurrences, imprecise cost estimates, government systems, excessive approval procedures in administrative government department, incomplete approval and other documents, lack of resources, inefficiencies in operations, regulatory risks, rebellions, strikes, personal risks, price increase of raw materials, supplier and subcontractor default, credit risks, legal liabilities, accidents, natural disasters, intentional attacks from an adversary, rain, water availability, inefficient energy sources, contraction of key water pump components, earthquakes, floods, storms, tsunamis, whirlwinds, risks that the project will not be completed in time, construction difficulties, political risks and environmental risks.
Risk analysis and evaluation
In risk analysis, the likelihood and effect of the ordinary risk events in this construction project were weighed up. Likelihood entailed assessing the regularity of these risks and gauging them as either qualitative or quantitative.
The effect was examined by taking into account the elements depicted to a safety risk event or a sequence of events and their susceptibility. A good understanding of risk, disclosure and susceptibility of risks caused by natural hazards was ensured.
Evaluation criteria in this project involved identifying the initial stages of the risk management procedure. This helped in establishing the focal point of the risk analysis and setting points of risk approval (Dorfman 2007).To reduce the consequences of ordinary catastrophes, improved understanding of the risks and their prospective effects was held important.
Risk analysis in these project involved analyzing and establishing a ranking of these risks. The Likelihood of occurrence also known as the consequence matrix was used. The velocity of occurrence was multiplied by the impact of the risk. The impact of the risk was calculated on a degree of 1 to 5.
This signified the least and greatest possible impact of risk occurrence. The likelihood of occurrence was measured on a range of 1 to 5, where 1 stood for a very low likelihood of the risk happening in reality while 5 signified a very high likelihood of the risk occurring.
Both probability of risk occurrence and risk impact changed in extents depending on the sufficiency of risk aversion and prevention actions taken.
The top 10- 15 risks in this construction industry can therefore be ranked in the following order. Site condition risk, fire outbreaks, wars leading to disputes, earth quakes, tsunamis, whirlwinds, low management capabilities of contractors, price changes of raw materials, environmental risks, accidents, water availability, contraction of major water pump components, lack of training, difficulties in capturing and stipulating the construction requirements and poor relationships between the incorporated organizations.
Risk Treatment/ Response
Risk treatment techniques involved in these project included risk avoidance, risk reduction, risk sharing and risk retention. Risk avoidance would involve keeping away from all the activities that could bring in risks to the project. This would entail doing away with, abandoning or not getting involved in such activities.
It would also involve avoiding risks by shutting down a specific high risk construction area. Site condition risks could be avoided by selecting stable sites for construction.
Wars leading to disputes among the contractors could be avoided by ensuring good relationships between the contractors. Risks as a result of accidents in the company could be avoided by enhancing carefulness.
Risk reduction is another strategy that I would adopt to treat these risks. This would entail minimizing the cruelty of the loss arising from a safety risk or the probability of the loss from coming about. Sprinklers would be installed to reduce risks associated with fire breakouts.
Risks associated with price changes of raw materials could be reduced by having cost budgets which plan for unexpected changes.
Risk optimization strategy could also be adopted. This would involve finding equilibrium between adverse risks and the gains associated with their operation. This would also entail getting a balance between threat reduction and the applied effort.
Outsourcing is another good strategy I would use to treat these risks. For instance, the construction company could outsource the assemblage of hard goods to another company while dealing with project management itself. This way, the construction company could deal with the project management without getting concerned with the manufacturing processes (Roehrig 2006).
Risk sharing is another risk treatment criterion I would use. This would involve risk transfer whereby the safety risks associated with this construction project are moved to a third party through outsourcing or indemnity.
Risk retention which involves admitting the loss or profit of gain from a risk when it happens is a good way of treating risks. It would involve real self insurance of all the parties involved in the construction.
Risk retention may also be acceptable in cases where possibilities of large losses occurring are small and costs associated with their insurance are too high that it would hinder the achievement of the organizations goals. Risk retention therefore involves precise retainance of the risk by the group.
Examples of risks treated through retention include wars. This is because losses attached to war are mostly retained by the ensured.
Risk management and control
The top 10-15 risks in this project could be managed by analytically selecting cost effective tactics for reducing the effect of threat realization to the firm. This is due to the fact that in any project all risks can never be completely avoided due to economic and practical restrictions (Crockford 1986, p 18).
These risks could also be managed by sticking to a precedention process whereby the risks causing the highest harm to the project and the utmost possibility of occurring are dealt with first. Examples of such risks include site condition risks, fire outbreaks, wars leading to disputes, earth quakes, tsunamis, whirlwinds and price changes of raw materials.
This is followed by the risks with low occurrence probability and very little loss to the project such as low management capabilities of contractors, environmental risks, accidents, water availability, contraction of major water pump components, lack of training, difficulties in capturing and stipulating the construction requirements and poor relationships between the incorporated contractors.
Equilibrium between hazards with high occurring probabilities but low deficits versus those with low occurrence probabilities but high deficits should be maintained. (Hubbard 2009, p 46).
Risk management in this project could also involve detecting, categorizing and assessing risks. This could be followed by gauging the vulnerability of the key assets to particular risks and establishing the anticipated effects of these risks. Ways of minimizing these risks would then be ascertained and risk reduction procedures prioritized based on certain approaches.
For these risk management approaches to be effective, it was ensured that they created some worth, were a fundamental part of the construction undertakings and formed part of supervisory management. They were to openly address improbabilities, be logical, well organized, comprehensive and consider individuals wellbeing.
The control of the top ten risks involved in this project included activities such as arranging how the risks will be managed. This was to include risk management duties, actions and financial plans. A risk officer who in most cases is a team member was assigned.
He was kept responsible of predicting possible project problems. A live project risk record was also maintained. In this record, each risk would have elements such as the opening date, name, short explanation, probability and significance.
Risk reporting means were to be created whereby each project member was endowed with the task of reporting risks he foresees.
Mitigation plans for risks that are to be controlled were prepared illustrating how a particular risk would be dealt with. Finally, planned and met threats, efficiency of the control activities and attempts made for risk management were summarized.
Conclusion
Risks directly decrease the productivity and knowledge of the employees, decreases expenses, good turn, brand value and character. Indefinable risk management permits risk management to create direct value from the pinpointing and reduction of risks that reduce productivity.
If risks are inappropriately considered and prioritized, time can be washed out in dealing with loss risks that may not occur. Using a lot of time evaluating and managing unlikely risks can reroute resources that could be used more beneficially. Emergencies do occur and when they do, retaining the risk associated with it and dealing with the outcome is recommended.
Senior managers should however avoid prioritization of risk management processes since these can prevent them from ever finishing a project or even commencing a project. They should control conflicts among the employees.
Senior managers should also recognize that there is need for provision of incentives to reduce these risks. They should always be aware of risk problems and should always try to tackle some of these problems.
Proper harmonization throughout the project period and good organizational communication should be enhanced. It is therefore clear that senior managers of this construction project should participate actively to control and manage the mentioned safety risks.
References
Bent, F. Nils, B. and Werner, R. (2003) Megaprojects and Risk: An Anatomy of Ambition. London: Cambridge University Press.
Covello, V. & Frederick, H. (1988) Seven Cardinal Rules of Risk Communication. Washington, DC: Environmental Protection Agency.
Crockford, N. (1986) An Introduction to Risk Management (2 ed.). Cambridge: Woodhead-Faulkner, p.18.
Dorfman, M. (2007) Introduction to Risk Management and Insurance (9 ed.), Englewood Cliffs, N.J: Prentice Hall.
Hubbard, D, (2009) The Failure of Risk Management: Why It’s Broken and How to Fix It, NY: John Wiley & Sons, P 46.
Roehrig, P. (2006) Bet On Governance To Manage Outsourcing Risk. Business Trends Quarterly, (1) 5-6.