PIARC INTERNATIONAL WORKSHOP ON RISK AND

EMERGENCY MANAGEMENT FOR ROADS

MERIDA, MEXICO OCTOBER 2013

TRINE VEICHERTS

RISK MANAGEMENT IN

ROAD PLANNING AND CONSTRUCTION

DENMARK

THE DANISH ROAD DIRECTORATE

We are responsible for the state-owned roads.

We promote an integrated road and transport system.

With special consideration to our environment, we are

working towards a safe, secure and easy journey on the

roads for people as well as for goods.

THE DANISH ROAD DIRECTORATE PLANS,

CONSTRUCTS, OPERATES AND MAINTAINS

THE STATE ROAD NETWORK

4.000 km state road network

5 % of the entire road network

in Denmark

45 % of the entire road traffic

in Denmark

WHY RISK MANAGEMENT

We take risks very seriously and believe we can save money

and time through RM! (And it is a requirement by law)

Objectives:

• Identify, assess, manage and mitigate significant risks and

uncertainties

• Increase awareness and attention given to uncertainty and risk in cost

estimating and in project management

• Systematic registration and documentation of economic project risk

development in hazard log

• Manage economic project risk in all projects consistently

• Build experience for future risk analyses

ISO 31000 – RISK MANAGEMENT –

PRINCIPLES AND GUIDELINES

ROAD DIRECTORATE’S PHASE MODEL

Planning Construction

Feasibility

studies

EIA, cost

estimate

Project for

Construction

Construction

works

Finshing

works

Project for

Surveying

ContractingDECISION

Construction Act

NEW PRINCIPLES OF BUDGETING

In 2007 it was decided to introduce new budgeting

principles for construction projects. It was further

decided that the principles first should be tested on the

transport ministry area (road & rail)

The key principles are:

• Strenghtening the internal quality assurance of the estimated

construction cost budget

• New external quality assurance of the estimated construction

cost budget (by an external consultant engaged by the Ministry

of Transport Department).

• A new ”change log”

• A new risk management regime

. DTU lecture - 3. november 2011

ESTIMATE – CONSTRUCTION ACT (LAW)

+ Roads (Known elements + experience-based cost increases)

+ Bridges and buildings (Known elements + experience-based cost increases)

+ Other contracts (Known elements + experience-based cost increases)

+ Other construction costs (Known elements + experience-based cost increases)

Contracts total

+ Land acqusition

Construction cost total

+ Management and administration

Base estimate

+ Project reserve A (Correction supplement A - 10 %)

Project Budget/Appropriation

+ Project reserve B (Correction supplement B - 20 %, ”The central reserve”)

Total Budget/Appropriation

REGISTRATION OF

BUDGET CHANGES AND

MANAGEMENT OF CONTINGENCIES

Current cost

estimate/ bugdet(Present)

Change logCertain/known

budget changes

(Past)

Risk logUncertain/potential

budget changes

(Future)

MANAGEMENT TOOL IN ALL PROJECT

PHASES

Phases 1-2 (PLANNING):

Together with EIA and cost estimate political decision

basis and subject to required external check

Identification, registration and assessment of

significant economic risks and uncertainties

Identification of economic differences between

alternative solutions

Possible re-design of project and changes in cost

estimate

Phases 3-6 (CONSTRUCTION):

Practical management tool /‘One-pagers’

‘Early warnings’

PM IN PROJECT OFFICES

Management of risk,risk workshops and

state reports

PM updates with project controller

Coordinating to change log

‘Emergency’ risk workshops

IDENTIFICATION

10 PROJECT MILESTONES FOR

RISK ANALYSIS

- OR EVERY YEAR!

Systematic approach

Workshops

Brainstorming

Check lists / Defaults

RISK WORKSHOPS

7-12 participants, 3-7 working hours

Project manager

Project owner

Designers

Supervision

‘The devil’s advocate’

Project controller

Specialists in e.g. environment / land use / noise

Other actors / authorities

Risk manager

SYSTEMATIC IDENTIFICATION

PROCESS

Project / geometry

Nature / EnvironmentSoil / Geotechnical

Approvals / permits

Market conditions

DEFAULTS

GENERISK RISIKOKATEGORI NR GENERISK RISIKOTITEL FASE 1 FASE 2 FASE 3 FASE 4 FASE 5

A. Projekt/geometri 1 Ændring af linjeføring/projektomfang ifm VVM

2 Mængderegulering og tillægsarbejder

3 Geometri / bygværksudformning giver uforudset udgift og/eller forsinkelse

4 Fejl og mangler i datagrundlag, projekterings- og/eller udbudsgrundlag

5 Eksisterende forhold er anderledes end ventet

6 Ændring i afvandingsprojekt

7 Ledningsarbejder giver uforudset udgift og/eller forsinkelse

8 Øvrige projektspecifikke forhold vedr. geometri

B. Jordbund og jordlogistik 9 Geotekniske forhold giver uforudsete problemer med fundering

10 Ringere kvalitet af råjord end ventet

11 Mere blødbund end forudsat

12 Jordbalance/ Jordlogistik

13 Uplanlagte udgifter til arkæologi og kulturarvsfund

14 Forhindringer i jorden

15 Ekstremt vejrlig

C. Miljø og natur, miljømyndigheder 16 Natura 2000 områder, habitatområder, bilag IV arter mv.

17 Drikkevandsinteresser og -ressourcer i området

18 Problemer med grundvand giver uforudset udgift og/eller forsinkelse

19 Ikke planlagt støjbekæmpning

20 Projektændringer pga klimatilpasning

21 Uventet stor forekomst af forurenet jord (enkeltfund, forureningsgrad)

22 Okkerforurening

23 Andre, projektspecifikke miljøforhold

D. Øvrige myndigheder og påbud 24 Politiske ønsker/krav giver ekstra udgifter og/eller forsinkelse

25 Kommunale ønsker/krav giver ekstra udgifter og/eller forsinkelse

26 Ændrede lov- og vejregler giver ekstra udgifter og/eller forsinkelse

27 Andre påbud, øvrige myndigheder (EU, Politi, Søfartsstyrelsen eller andre)

E. Marked og konjunkturer 28 Usikkerhed på entreprenørmarkedet (Udbudsform , -strategi og udbudstakt mv.)

29 Usikkerhed på arealerhvervelse

30 Entreprenørens konkurs

31 Claims (tvister og forlig)

F. Øvrige, væsentlige forhold 32 Grænseflader internt og eksternt (Bane DK, særlige naboer, entreprisegrænser)

33 Øgede udgifter til færdselsregulerende foranstaltninger

34 Skader på veje og ejendomme (tredjepart)

35 Skader på eksisterende konstruktioner

36 Stram tidsplan, særlige tidskritiske operationer

37 Større ulykke med personskade

G. Eventuelle øvrige, særlige forhold 38 Tolerance svigt

(kun relevant i visse projekter) 39 Svigt af kritisk udstyr

40 Hærværk/tyveri/sabotage

41 Æstetik/ visuelle udtryk giver anledning til ændringer

42 Nye krav fra Arbejdstilsynet

43 Særlige forhold vedr. beredskab og redningsveje

44 Andre projektspecifikke forhold (fx fast forbindelse samt større tunnel eller bro)

45 Ekstraordinær prisudvikling - udover alm. prisregulering, særlige forhold

RISK MATRIX

Very likely

Likely

Possible

Unlikely

Very unlikely

Insignificant Low Moderate Significant Disastrous

Low Moderate High

FREQUENCY CLASSES

Frequency class Descriptive P

1 Very unlikely Rare hazards 0-9%

2 Unlikely Occurs in every 5-10 projects 10-19%

3 Possible Occurs in less than half of projects 20-39%

4 Likely Fifty-fifty incidents 40-59%

5 Very likely Occurs in most or all projects 60-99%

UncertaintyWill definately occur with a certain +/-

variation (loss/opportunity)100%

Consequence

classDescriptive

1 billion DKK

Project

1 Insignificant < 1 % or no impact on construction cost < 10 mill. DKK

2 Low1-3% impact on construction cost

10-30 mill. DKK

3 Moderate3-10% impact on construction cost

30-100 mill. DKK

4 Large 10-25% impact on construction cost 100-250 mill. DKK

5 Disastrous > 25% impact on construction cost > 250 mill. DKK

1 mill. DKK 12 mill JPY 150.000 EUR

CONSEQUENCE CLASSES

FOLLOW-UP

Project level

• Follow up on risk mitigation actions

• Monitoring and control

• Update Risk register

Portfolio level

• Empirical data collection

• Trends

• Early warnings

• Learning

USING THE RISK DATABASE

TOOL…

RISK MANAGEMENT REPORT

S-curve

Risks

ranked/prioritized

Risk Matrix

THE ”ONE PAGER”

Provides an overview for the management

of the current status of each project

concerning:

• Master data (Construction Law,

Appropriation, Purpose, Opening year)

• Status from the Project Manager

• Timeline with milestones

• Project budget vs. Appropriation

•”Shadow Appropriation” (the estimated

future appropriation in the future price

index)

•Current vs. Initial annual budget

Risk matrix and Top 10 risks

ACCOMPLISMENTS AND

LESSONSLEARNED

In general we are satisfied.

The change log has been implemented.

The risk management system has been implemented.

The ”One pager” have been implemented

A larger organisational focus on budgeting have resulted in more qualified budget estimates.

We have over the past years experienced large savings due to the market situation (the financial crisis have resulted in price cuts from the contractors).

The projects are generally finished in the appointed year (often before)

CONTINUOUS

SYSTEM DEVELOPMENT

Collection of past experience on project portfolio(milestones, feed-back, move forward certain activities)

More stringency and precision in identification

process (Cause ► Consequense – development of ‘defaults’)

Possibilities in calculations (correlations, software tools)

Development of workshop process

Better daily use and PM ownership

MUCHAS GRACIAS