risk management risk management practical processes for tunnelling and underground works kevin...

Risk ManagementRisk Management

RISK MANAGEMENTRISK MANAGEMENT

Practical Processes for Tunnelling and Underground Works

Kevin McManus

Kevin McManusKevin McManus27 March 201427 March 2014

KMc Mar 2013


MSc 2014 Risk workshopMSc 2014 Risk workshop



Purpose of Risk Purpose of Risk ManagementManagement

Elimination of Risk

or

Reduction of risk

to

Acceptable level



Elements of Risk Elements of Risk ManagementManagement

Identify and Describe

Evaluate and Assess

Eliminate or Reduce

Monitor and Manage



““..expect to be ..expect to be

surprised surprised

but never but never

astonished..”astonished..” Kevin McManusKevin McManus27 March 201427 March 2014


Key DefinitionsKey DefinitionsDanger:




Danger arises when situations that could

result in harm are not properly controlled.





result in harm are not properly controlled

Hazard:





result in harm are not properly controlled

Hazard:

A situation with the potential to cause

harm

to people or adverse impacts on a project:





result in harm are not properly controlled.

Hazard:

A situation with the potential to cause

harm

to people or adverse impacts on a project:

Health; Safety; Environment; Quality

Design; Construction; Cost; Programme

Third parties and existing facilities

Reputation; Viability of EnterpriseKevin McManusKevin McManus27 March 201427 March 2014


Key DefinitionsKey Definitions

Risk:




Risk: Probability of a hazard event occurring




Risk: Probability of a hazard event occurring Severity or consequence hazard occurring



Hazard

Event

Risk

Probability Severity

Risk

Rating

n p s p x s


Risk: Probability of a hazard event occurring Severity or consequence hazard occurring



Acceptability of RiskAcceptability of Risk

Constraints and GuidanceConstraints and Guidance Subjectivity

General Opinion; Third Party

Requirements

Statute

Regulatory Guidance

Standards

Industry Guidance

Joint Code of Practice : Risk

Management



X

Acceptability

of Risk

Hazard

Event

Risk


Acceptable

Tolerable

Unacceptable

X V Likely V High




X Y

Unacceptable

Y Unlikely V High

X V Likely V High


Acceptable

Tolerable

Hazard

Event

Risk Acceptability

of Risk







Requirements

Statute

Regulatory Guidance

Standards

Industry Guidance


Management Kevin McManusKevin McManus27 March 201427 March 2014


General Opinion Third Party Requirements






Requirements

Statute

Regulatory Guidance

Standards

Industry Guidance




StatuteStatuteHealth and Safety at Work Act 1976



StatuteStatuteHealth and Safety at Work Act 1976

General Duty on every employer So Far As is Reasonably Practicable (SFAIRP) Ensure that Employees and others are not

exposed to Health & Safety risks



StatuteStatute

Management of Health and Safety at Work Regulations 1999

Health and Safety at Work Act 1976





StatuteStatute

Management of Health and Safety at Work Regulations 1999

Every employer shall make a suitable and sufficient assessment of:

The risks to ……. his employees …....at work

Risks to persons not in his employment arising out of

or in connection with the conduct by him of his

undertaking

Health and Safety at Work Act 1976





StatuteStatuteConstruction (Design and Management) Regulations 2007




Clients should:

Allow sufficient time and resources for all stages

Appoint CDM Coordinator




Clients should:



Designers should:

Eliminate hazards and reduce risks during design

Provide information about remaining risk




Clients should:



Designers should:

Eliminate hazards and reduce risks during design

Provide information about remaining risk

Contractors should:

Plan manage and monitor construction phase

Liaise with CDM coordinator with respect to ongoing design






Requirements

Statute

Regulatory Guidance

Standards

Industry Guidance




AcceptabilityAcceptabilityGuidance from Regulatory Bodies

So Far As Is Reasonably Practicable SFAIRP

As Low As Reasonably Practicable ALARP

reasonably practicable



AcceptabilityAcceptabilityGuidance from Regulatory Bodies

So Far As Is Reasonably Practicable SFAIRP


reasonably practicable

A state of affairs where the effort and cost (sacrifice) of

reducing risk remains proportionate to the risk



AcceptabilityAcceptability

Guidance from Regulatory Bodies


•does NOT mean

• Standards have to be continually raised

• Exceptionally high standards set the ALARP level

• All possible control measures are required

• There will be no accidents or incidents






Requirements

Statute

Regulatory Guidance

Standards

Industry Guidance



StandardsStandards

BS EN 1997-1 : 2004Eurocode 7: Geotechnical Design

Elements of “observational method”

Acceptable limits of behaviour established

Range of possible behaviour assessed

Acceptable probability that actual behaviour will be within acceptable limits

Plan of monitoring devised

Monitor early & at short intervals to see if behaviour stays in acceptable limits

Contingency plan for use if monitoring shows behaviour outside limits







Requirements

Statute

Regulatory Guidance

Standards

Industry Guidance





CIRIA 125





Requirements

Statute

Regulatory Guidance

Standards

Industry Guidance

Code of Practice for Risk



Munich Underground 27 September 1994Munich Underground 27 September 1994

Hazard EventsHazard Events


DLR February 1998DLR February 1998



CTRLCTRL

Lavender St 2003Lavender St 2003




Hull 1999Hull 1999

Original Contract Value£60M

Length of tunnel10km

~~ cost per metre £6k

Collapse damage length150m

Damaged length “value”£900k

Insurance cost £42M

Hazard EventsHazard Events



X Y

Unacceptable

Y Unlikely V High

X V Likely V High


Acceptable

Tolerable

Hazard

Event

Risk Acceptability

of Risk




Code of Practice for Risk Management of Tunnel Code of Practice for Risk Management of Tunnel WorksWorks

Development Purpose and structure

2nd Edition May 2012 International Tunnelling Insurance Group (ITIG)

From Joint CoP for Risk Management of Tunnel Works in UK (BTS/ABI 2003)

Promote and secure best practice for minimising and managing risks

Operate in parallel and not derogate from national statute standards etc

Use of Risk assessment and Risk Registers at all project stages

•Project Development

•Procurement for Construction

•Design

•Construction


Principles of Code

Hazard identification and management to ensure reduction to ALARP

Responsibility for risk management explicitly allocated to relevant parties

Risks addressed adequately and appropriately in planning and management

Appropriate financial allowances made

Formalised Risk Management system to be used as means of

documenting risk:

•Identification

•Evaluation

•Allocation




Client Roles and Responsibilities

Client shall have demonstrable technical and contract management competence

Absence of appropriate experience; Client shall appoint a Client’s

Representative

•Named competent key Personnel

•Capability in design management and related Risk Assessments &

Registers

•Capability to indentify risks that will impact on Third Parties

Ensure competence and adequacy of site and ground investigations

Indentify arrangements for design checks, construction supervision-

monitoring

Develop and Maintain Overall Management Organization Chart




Assessment and evaluation of Project OptionsAssessment and evaluation of Project Options

Geology, hydro geology and hydrology

Appropriate tunnelling methodologies

Temporary and permanent ground support measures

Ground movements and settlements and impact on third

parties

Hazardous materials and utilities

All other particular local factors

Associated safety, health and programme implications

Associated costs

Appropriate forms of contract

Risk RegisterRisk Register



Contract; procurement; prequalification & Contract; procurement; prequalification & tendertender

Form of contract & detailed terms - allocation of risks and liabilities

Sufficient and adequate time for preparation and assessment of

tenders

Full Disclosure of hazards identified in project development risk

register

Ground Reference Conditions either by Client or Tenderer

Key Method Statements

Tenderer’s Risk Register

Tenderer’s experience; key staff; focused technical submission



RiskTransfer

ProjectDevelopment

FeasibilitySI & GI

Identify man made and natural hazardsProvide information for assessment of methods and viability

OptionsHSEQ Geology Methodology Time & Cost

Risk

Asse

ssments

Risk

Registe

r

Ref Design

ContractProcurement

DocumentPreparation

Disclose Hazards GBR Sufficient time for tender

PreselectionExperience Key Staff

StatusSubletting

GBR

DetailedDesign

Information Transfer

Permanent &Temporary

Works

Transfer of Information

Sensitivity Studies

Design Checks

Emergencies

Tolerances Methods

Constructability Geotechnical Mitigation

Validation Materials Natural Perils

Monitoring Data Review Confirm/ Amend Contingencies

Construction

Pre-construction Implementation and Risk Plans Consents Constructability

Tender Assessment

Method Statements

Detailed Methodology

Plant Selection Criteria

Quality Records Independent Supervision

Management Plans Key Staff Design Self certification



Client Tenderers Designer Contractor

SI Factual ReportRisk AssessmentContract FormsGround Reference Ground Reference OrganisationChart

Key Method Statements

Risk AssessmentTender Risk Register

Design Brief Design BriefThird party AssetsConstructability Reviews

Risk Management Plan Construction Risk RegisterRisk AssessmentsMethod Statements & ITPsManagement & Audit PlansSite Organisation ChartIndependent Supervision PlanPlan Selection CriteriaValue Engineering Proposals

Options

Pre

-sel

ection

Des

ign

Con

stru

ctio

n


Code of Practice DeliverablesCode of Practice Deliverables





Evaluate and Assess

Eliminate or Reduce

Monitor and Manage




Ref

No.

Activityor

HazardHazard Event

Persons and

Assets at Risk

Outcome

Identification of HazardsIdentification of Hazards




use a combination of knowledge, skills and experience

previously assessed hazards that didn’t occur should not be discounted

include mechanisms by which hazards can occur

complex high risk cases may need specialist expertise and techniques



a Tunnelling Face Collapse Staff & Public Multiple Fatalities


Ref

No.

Activityor

HazardHazard Event

Persons and

Assets at Risk

Outcome






Evaluate and Assess

Eliminate or Reduce

Monitor and Manage


P S R

RiskOutcome

Evaluate and Assess

Ref

No.

HazardEvent

Persons Assetsat Risk

Evaluate and AssesEvaluate and Asses



Evaluation of ProbabilityEvaluation of Probability

Score1 Improbable2 Remote3 Occasional4 Probable5 Frequent

Score1 Improbable2 Remote3 Occasional4 Probable5 Frequent

100 to 1,000 cycles 1 to 10 years10 to 100 cycles Monthly to annually1 to 10 cycles Daily to monthly

Construction Operations RailwaysLess than 1 in every 10,000 cycles Less than 100 years1,000 to 10,000 cycles 10 to 100 years

Irregular 1,000 to 10,000 metresLikely 100 to 1,000 metresRegular 0 to 100 metres

Probability EvaluationGeneral Tunnelling

Unlikely Less than one every 100,000 metresRare 10,000 to 100,000 metres



Score

1 Insignificant

2 Minor

3 Serious

4 Critical/Severe

5 Catastrophic

Severity EvaluationFirst aid injury, slight property damage with minimal cost that is unlikely to impact upon works, insignificant environmental impact contained within site.Short term illness, lost time accident, minor damage to property involving minimal down time, minor environmental impact with no lasting effect.Instance of occupational ill health, over 3 day injury, localised damage to property, environmental impact with possible public or media exposureMajor injury or acute ill health, significant damage to property, major environmental impact involving potential prosecutionFatality, environmental disaster, collapse or destruction of property

Evaluation of SeverityEvaluation of SeverityRisk ManagementRisk Management


Risk Rating MatrixRisk Rating Matrix

1 2 3 4 51 1 2 3 4 52 2 4 6 8 103 3 6 9 12 154 4 8 12 16 205 5 10 15 20 25

Risk Scoring Matrix Probability of Occurrence

Severity of Hazard



P S Ra 4 5 20

Evaluate and Assess

Ref

No.

HazardEvent

Persons Assetsat Risk

Outcome

Multiple FatalitesStaff & Public

Risk

Face Collapse

Evaluate and AssesEvaluate and Asses






Evaluate and Assess

Eliminate or Reduce

Monitor and Manage


Risk Ranking

1 to 3 LOW4 to 9 MEDIUM10 to 25 HIGH

Risk Ranking Mitigation Requirements

Suitable attention to working proceduresCorrective actions, improvement and control measuresElimination or reduction strategies

Risk Reduction RequirementsRisk Reduction Requirements



SeverityLow

High

High




Emergency and Recovery Measures

Provide Protective Equipment

Administer Controls

Engineer Out

Substitute

Avoid

Hierarchy of MitigationHierarchy of Mitigation


Avoid

Substitute

Engineer Out

Administer controls

Provide Protective Equipment

Emergency and Recovery Measures


Hierarchy of MitigationHierarchy of Mitigation



Principles of Prevention

a) Avoiding risks

b) Evaluating risks which cannot be avoided

c) Combating risks at source

d) Adapting work to the individual

e) Adapting to technical progress

f) Replace potential danger by non or less dangerous

g) Developing a consistent overall prevention policy

h) Priority of collective protection over individual protection

i) Giving appropriate instructions to employees


P S R P S R

Ref

No.

Mitigated Outcome

Initial Risk Mitigation Measures

Residual Risk

Eliminate or Reduce

Eliminate or Reduce Eliminate or Reduce



P S R P S R1 5 5 25 3 5 15

Eliminate or Reduce

Slow Landing

Residual RiskRef

No.

Mitigated Outcome

Initial Risk Mitigation Measures

Use Parachute

Eliminate or Reduce Eliminate or Reduce






Evaluate and Assess

Eliminate or Reduce

Monitor and Manage



Expecting UncertaintyExpecting Uncertainty



Reducing UncertaintyReducing Uncertainty


P S R

Risk Owner

ActionsReview Date

Residual RiskMitigation Measures

Ref

No.

Mitigated Outcome

Monitor and Manage

Monitor and ManageMonitor and Manage



P S R1 3 3 9 Jumper

Risk Owner

ActionsReview Date

Check Kit & Cert

Residual RiskMitigation Measures

Use Parachute

Ref

No.

Mitigated Outcome

Slow Landing

Monitor and Manage




P S R1 3 3 9 Jumper

1a 3 5 15 Packer

Monitor and Manage

Ref

No.

Mitigated Outcome

Slow LandingParachute OK

Mitigation Measures

Use ParachutePack Parachute

Residual Risk Risk Owner

ActionsReview Date

Check Kit & CertDue Diligence





Face Loss Back AnalysisFace Loss Back Analysis


Zones & Triggers Trigger Description Action Required

Standard Conditions

Black

Red Emergency Preparedness Plan

Amber

Additional Measures

Contingency Action

ClearReview

GreenReview

RED Predicted x 2.0

AMBER Predicted x 1.5

GREEN Predicted x 0.9


Trigger ValuesTrigger Values



Low Probability High Consequence Low Probability High Consequence EventsEvents

..where a high severity risk has been

mitigated by construction methods to an

acceptable level…

..the contractor shall provide an outline

Emergency and Contingency Plan for dealing

with the risk in the event that it is realised…Kevin McManusKevin McManus27 March 201427 March 2014


Inability to accept a

certain risk

Ability to pay

Ability to respond to risk event

Influence over cause and effect

Designer or other

Professional

Contractor Supplier

Manufacturer

Owner Employer

Society or Community

Insurer

Allocation of ResponsibilityAllocation of Responsibility



Risk and Insurance NEC 3Risk and Insurance NEC 3

Employer’s Risks

Unavoidable result of works

Negligence by employer ‘s

staff

Fault in Employer’s design

War, riot , general strikes etc

Prior damage to free issues

Any others in Contract Data




Employer’s Risks



staff





Contractor’s Risks

Anything not the Employer’s Risk




Employer’s Risks



staff





Contractor’s Risks

Anything not the Employer’s Risk

Contractor’s Insurance Obligations

Contractor insures for

contracted risks to the minimum

amount of cover stated in the

contract……

Except where the Employer

provides the insurance and charges

the ContractorKevin McManusKevin McManus27 March 201427 March 2014

InsuranceInsurance

Contract for the transfer of liability for the outcome of risk

Insurer sells insurance for agreed risks in exchange for a premium

Insured expects compensation for loss or damage suffered



InsuranceInsurance

Contract for the transfer of liability for the outcome of risk

Insurer sells insurance for agreed risks in exchange for a premium

Insured expects compensation for loss or damage suffered

Conditions apply

Loss or damage has to be accidental / fortuitous

If loss or damage can be foreseen and is expected:-

• should be avoided by intentional planning

• not wishful thinking and reliance on the insurer



Structure of insurance marketStructure of insurance market

Broker

Experts – normally act for

Insured

Not a party to insurance

contract

Does not accept the risks

insured.

Expected to:

• Assess of risks and needs

• Recommend insurer and

policy

• Advise on sums to be

insured

• Advise on level of premium

• Assist with claims

settlement





Insurer

Sells insurance (indemnity for risk events) in exchange for a

premium.

Broker


Insured


contract


insured.

Expected to:



policy


insured



settlement




Insurer

Sells insurance (indemnity for risk events) in exchange for a

premium.

Reinsurer

Second tier insurers who sell insurance for part o the main risk.

Used to spread risk and free up reserves of lead insurer

Broker


Insured


contract


insured.

Expected to:



policy


insured



settlement


Types of InsurerTypes of Insurer

Mutual

Companies owned by insurance policy holders

Unlimited liability

e.g. Lloyds of London

Limited Liability

Guaranteed Capital forms limit of liability

Beyond this the Insurer becomes insolvent



Types of insurance required for Types of insurance required for constructionconstruction

Property

Material, equipment & machinery

Contractor’s All Risk

Excludes stated risks




Property




Liability

Covers Specific Legal Liabilities

Employer's LiabilityPublic LiabilityProfessional Indemnity

Generally hinges on negligence




Property




Liability

Covers Specific Legal Liabilities

Employer's LiabilityPublic LiabilityProfessional Indemnity

Generally hinges on negligence

Non Negligence

Cover for liabilities under circumstances where Client may face liabilities even though the Contractor has not been negligent




Insurable Risks

Needs to be a degree of uncertainty

Risk should be quantifiable

Should be acceptable to insurance market

Damage should be capable of being assessed

Limitations of InsuranceLimitations of Insurance



Insurable Risks

Needs to be a degree of uncertainty

Risk should be quantifiable

Should be acceptable to insurance market

Damage should be capable of being assessed

Uninsurable Risks

Foreseeable events

Consequential losses or risks

Political risks or international turmoil e.g. war

Absence of cause and event connection

Limitations of InsuranceLimitations of Insurance



Terms of InsuranceTerms of Insurance

Indemnity

Place the insured in same position as before the risk event

Compensation for actual loss or damage

Loss of profit not considered



Terms of InsuranceTerms of Insurance

Indemnity

Place the insured in same position as before the risk event

Compensation for actual loss or damage

Loss of profit not considered

Utmost Good Faith

Proposer (Insured) expected to divulge all available knowledge about risks - not conceal

Insurer relies on information to assess risk and set premium



Quantitative EvaluationQuantitative Evaluation



Monte Carlo SimulationMonte Carlo Simulation



Prob. Minimum Most Likely MaximumMean Output

Triangular 0.7 1,000 3,000 5,000 £ 2,100 Delay to design w ith potential further delays to construction

Triangular 0.5 1,000 3,000 5,000 £ 1,500 Delay to design w ith potential further delays to construction

Triangular 0.3 1,000 3,000 5,000 £ 900 Delay to design w ith potential further delays to construction



Current Quantitative Cost Impact (£k)Impact DescriptionDistribution

Most Likely EvaluationMost Likely Evaluation



““No construction project is risk free.No construction project is risk free.

Risk can be managed, minimised,Risk can be managed, minimised,

shared, transferred or accepted.shared, transferred or accepted.

It cannot be ignored.”It cannot be ignored.”


Any Any Questions?Questions?



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