Risk management is one of the tasks that need unparalleled attention in the construction industry. Risk management may refer to the process of identifying, assessing, and mitigating the hazards or the uncertainties that alter the objectives or focus of a firm (Taylor 2003). The process of risk management is critical in the construction industry as it entails a myriad of evaluation techniques and problem-solving approaches to reducing harm or altering adverse circumstances associated with a project (Thai 2001).
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The focus of this section is to provide a risk assessment report through an evaluation of a risk-associated case study. The essay focuses on the Welsh Rugby Union (WRU) as the organisation in a predesigned case to evaluate several aspects and concepts associated with risk management in a construction paradigm.
Identification of the Key Stakeholders
According to the definitions from reliable construction studies, a stakeholder is an organisation or an individual with interests or a specific concern in a business or an organisation (Taylor 2003). Stakeholders can be organisational owners, organisational employees, organisational customers, or organisational suppliers.
The primary stakeholders of the Welsh Rugby Union project are the Cardiff County Council and the Welsh Rugby Union, who were subsidiary organisations under the Millennium Stadium Plc. For the individual persons, Vemon Pugh and Glanmor Griffith were the respective chairperson and treasurer of the Welsh Rugby Union.
For the Cardiff County Council, the person stakeholders were Russell Goodway (the Council Leader), Bryon Davies (the Chief Executive), and Pat Thompson (The Project Coordinator and Operations Manager). The main contractor was Liang Construction. For the subcontractors, the primary stakeholders were James Armstrong and Simon Turner.
Identification of the WRU’s Organisational Objectives
WRU had specific targets on each of the mentioned stakeholders. The Welsh Rugby Union itself took part in the project as the principal fundraiser to source for financial resources for the stadium project. The WRU organisation entrusted the Cardiff County Council to take part in the construction of the stadium as project coordinator and operations controllers. The Cardiff Country Council was to take care of project coordination and project controlling.
The main contractor, the Liang Construction Company, was to take care of the construction of the stadium project through either its constructors or the subsidiary contractors (subcontractors).
The aim of hiring the Liang Construction Company was to help the Cardiff County Council in project coordination through the processes of project management and project directorship. The subcontractors, James Armstrong and Simon Turner, were to support in project directorship and project management while the bankers were to fund the project.
WRU’s desirable behavioural outcomes for the Identified Stakeholders
For the stadium project to get the expected completion, WRU had some desirable behavioural outcomes for each of the identified stakeholders above (Xavier 2015a). For the Cardiff County Council, these stakeholders were to conduct themselves with the utmost professionalism, high levels of trust and cooperation, and demonstrate their power of influence in the project coordination and operations processes (Xavier 2015a).
The WRU organisation expected the Liang Construction Company to conduct itself with maximum reliability, efficiency in construction deals, a high responsibility in their construction strategies, strategic planning, and execution efforts, and high levels of trust.
For the subcontractors, the WRU organisation expected the managers of the sub-contraction companies, James Armstrong and Simon Turner to act with utmost professionalism, be highly time conscious, be submissive to their primary contractors, and be strategic in decision-making.
The potential risks faced by the WRU
Following the failure of the primary contractor, Liang Constructions, to deliver the Millennium Stadium Project within the estimated budget and expected timeline, WRU might face some potential risks. The first risk that the WRU organisation might face is financial losses due to the underestimated budget that later exceeded in several construction phases.
The second risk that the WRU organisation might face is the transfer of litigation from the main contractor to the owner following the border scandal between the WRU and the CRFC airspace.
The first solution to the problem of financial losses was the hiring of financial experts, who could provide financial assessments and expert audits to determine the actual expenditures against the estimated costs. To create a remedial action against the second problem that relates to border litigation, the Millennium Stadium Plc should have hired an independent design consultant.
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The Strategic Factors of Each of the Stakeholders
The primary stakeholders had strategic considerations that they required from the employer. For the Welsh Rugby Union, the strategic factors that the company considered from its employer, the Millennium Stadium Plc. were financial support and stability, strategic governmental associations, influence over the public, and the power to attend to legitimate complaints. The other important stakeholder is the Cardiff County Council, which relied on five main strategic factors from the employer.
These strategic factors included the stability of the organisation in strategic event planning and coordination, its ability to release the finances on time, its ability to source for financial solutions whenever necessary, and its ability to offer periodical changes for the coordinators. These strategic factors would help the project coordinators and operators to seek for necessary support from the employers whenever needed.
Another significant stakeholder was the Liang construction company. The Liang Construction Company expected the following from the employer. The main strategic factors for the Liang Construction Company included the ability of the employer to negotiate for reasonable construction issues, the ability of the company to remain legally accountable for the issues that resulted from its mishap, and the ability of then employer to influence its subsidiary stakeholders to cooperate effectively in the program development.
The other two stakeholders, who are the subcontractors, needed the company to remain responsible for supervising its main contractor, to offer the required financial and social support in the project development. For the bankers, the Barclays Bank and the Debenture Holders, the Millennium Stadium Plc was to have enough assets to support the loan, have the financial capacity to manage the finance, and have the appropriate human resource to avert the probable financial risks.
Some Measures for the Stakeholders in their Business with WRU
WRU seems to be an organisation that allows a certain level of corruption in its tendering procedures. To provide a sufficient benchmark for working professionally with the WRU organisations, the stakeholders, including the contractors, subcontractors, and the financiers, should develop stringent policy frameworks that will be sufficient to uphold the WRU members accountable of any malpractices (Al-bizri & Gray 2010).
The policy framework that the contractors and subcontractors may rely on efficient contracting process that will allow the companies to subvert the risk damping the WRU may practice during the tendering and implementation of the contract (Al-bizri & Gray 2010).
For the financiers, the WRU may use the weakness of the contractors to swindle finances and subject the contractors to frustrations. Developing a policy framework that involves the incorporation of independent financial auditors to evaluate the financial progress in the project from the tendering to the contract awarding and project construction will be imperative.
Identification of the Hazards and Risks for the Stakeholders
A risk may befall any stakeholder (Jorgensen & Emmitt 2008). The first and the most important part of risk management is the identification of the hazards and their associated risks in a construction project. For the contractors and constructors, the first risk related to the building of the Millennium Stadia is the presence of the un-barricaded cliff located around the Blue Mountains.
This risk will probably affect the contractors and constructors in a manner that without setting up a remedial action to counter the problem, the situation may result in physical and residual risk to the public (Jorgensen & Emmitt 2008).
The contractors and the constructors are also at a likelihood of suffering from the risk of falling of the un-barricaded cliff at the Blue Mountains and cause human suffering through an injury or death. The falling of the un-barricaded cliff may cause financial problems, political instabilities, stakeholder disagreements, and environmental depletions.
Probability (Likelihood) of Hazard and Risk Occurrence
Risks will likely or unlikely occur depending on the prevailing situations in a construction site or a construction facility (Xavier 2015b). Based on the provided information on risk management, fundamental and advanced tools, the likelihood of the occurrence of a risk associated with the falling of the un-barricaded cliff at the Blue Mountains, if no remedial actions placed is three in a scale of five (3/5).
This fraction represents 60% chances of risk occurrence, which means that there is a partial belief that the cliff may fall off. Without the remedial actions, the risk may occur, and the consequences may befall the public (Xavier 2015b). The potential consequences associated with the falling of the cliff at the Blue Mountains rate at five in a scale of five (5/5). The figures depict that the falling of the cliff will have severe consequences of high magnitude impact.
The Mitigation (Control) Measures for the Risks
Any risk associated with a construction facility or a construction project must receive attention and measures to mitigate it (Forgues & Koskela 2009). A construction project under a risk of falling requires remedial solutions to avert the risk from befalling the public or the residents located within the construction premise (Forgues & Koskela 2009).
Providing sufficient control measures to avert a risk or hazard from affecting the civilians is the first approach that assures the compliance of the contractors in a construction project (Xavier 2015a). In the first incidence of the falling of the un-barricaded cliffs at the Blue Mountains, the mitigation or control measure instituted by the constructors is the installation of only a safety net at the base of the cliff. According to Forgues and Koskela (2009), a safety net is relevant in reducing the amount of debris or in subverting the falling debris.
In the second incidence of the falling of the un-barricaded cliff at the Blue Mountains, the mitigation strategy instituted is the construction or installation of only a fence at the foot of the cliff (Xavier 2015b). The installation of the fence at the foot of the cliff would reduce the hazards associated with the falling debris that could affect the citizens or people living near the construction premise (Forgues & Koskela 2009).
During the occurrence of the third incidence, that is, whenever the two remedies failed absolutely to prevent the falling of the un-barricaded cliff at the Blue Mountains, the instituted plan involves the installation of both a fence at the edge of the cliff and the construction of a safety net at the base of the un-barricaded cliff.
Re-Assessment of the Likelihood of Risk Occurrence
After the establishment of the three remedies, the risks associated with the falling of the cliffs changed significantly. During the first incidence, the proposed remedial action was the installation of a safety net at the base of the cliff. With the safety net installed in the desired construction place, the likelihood of risk occurrence remained at three in a scale of five (3/5), a fraction that represents 60% likelihood of the risk occurrence.
Concerning the expected consequences, the repercussion rated at three in a scale of five (3/5), a fraction that also represents 60% chances of occurrence of consequences. The risk rating associated with the occurrence of the hazards mentioned above after the installation of the safety net was still high. This aspect means that despite the presence of the safety net, there was no assurance that the cliff could not collapse.
The second remedial solution to mitigate or avert the occurrence of the risk of the collapsing cliff involved the installation of a fence at the edge of the cliff. When they installed a fence at the periphery of the cliff, the risk likelihood reduced to one in a scale of five (1/5), a fraction that represents 20% chances of risk occurrence in the construction project.
Concerning the resultant consequences expected after the installation of a fence, the severity of the consequences were rated at three in a scale of five (3/5), a fraction that represents 60% of the expected consequences. Concerning the risk occurrence, the risk rating remained considerably high. When they installed both the fence and the safety net at the same time, the risk likelihood reduced to one in a scale of five (1/5), the consequences reduced to three out of five (3/5), and the risk rating was medium or average.
The Type of Risk Assessable With a Quantitative Risk Tool
Of the three risks that could occur in different incidences, the risk that deserves a quantitative risk assessment tool is the last risk incidence. Quantitative assessment methods are suitable when finding the conceptual differences between various aspects using the numerical values as data (Jorgensen & Emmitt 2008).
According to the standards of research, quantitative methods will mostly provide numerical solutions where two different concepts are requiring comparison through the provision of numerical data to assess the differences (Jorgensen & Emmitt 2008).
The third incidence comprises a combination of two solutions integrated together in a solution matrix to provide a sustainable answer to the problem of the risky cliff. With a quantitative tool, the assessor will get varied numerical values in the two concepts before ascertaining which of the two remedies could offer the best solution.
Project construction involves various risks that can befall both the project owner and the contractors. The case of the Millennium Stadium Plc and the Liang Construction is one among the construction contracts that reveal significant lapses in the proper tendering and procurement of the contractor services in the public construction tenders.
Lack of proper understanding of the procurement and tendering processes, hurry towards winning the construction tenders, and improper cost estimations are among the first lapses that most of the employers and prime contractors fail to understand while entering in construction agreements. However, in the case where hazards are identified, it is important to avert the risks by setting up remedial actions to subvert the risks.
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