school of engineering and electronics civil engineering management school of engineering and...

School of Engineering and Electronics Civil Engineering Management

School of Engineering and Electronics

& Bovis Lend Lease

Risk Management in Construction Engineering


Introduction

• We have looked H&S legislation

– It must be remembered that legislation alone will not protect – it is

merely the ‘rules’

• We have considered the behavioural and cultural aspects of H&S

Management

• We have looked at practical aspects of health & safety on

construction sites

• We have considered specific areas where hazards occur

• We have also considered the identification of hazards

• Today we will consider

– how H&S management is implemented at a site level

– the wider concept of engineering risk management


Health & Safety Hierarchy

H&S Legislation

H&S File

Method Statement

Operation Plan

Risk Assessment

General site safety

management

Fundamentaltopic: covered in

greaterdepth


Health & Safety File

• To recap:– contains all H&S information about the

project for those that follow (i.e. clients & users)

– should contain information about the design & construction of every structure & element of the project

– responsibility lies with the CDM Co-ordinator who must »keep it up to date»deliver to client at end of project


The Method Statement

• A Method Statement defines the scope of the work to be performed in producing a significant section or phase of the project

• It is also produced as part of the Project Quality Plan– It is a statement about the desired level of quality

• As a definition of the work involved it allows assessments of the risks involved to be made

• Once prepared it should be passed to every person involved in that part of the project – whatever capacity they may have


Method Statements – areas covered

• A method statement is a large document and therefore cannot be prepared for all activities

• Work activities are therefore split into areas – usually geographic but also process areas

• The project manager is responsible for determining what method statements are required – he must find the right balance:– too broad a scope and detail will be lost– too narrow and the volume of paperwork will

dominate


Method Statements – examples

• On a road project we may have the following method statements:– One for each major structure (e.g. bridges)– One for a group of minor structures (e.g.

culverts)– Earthworks– Fencing– Site clearance– Drainage– Road surfacing– Traffic management– Safety fencing– Any other specialist subcontractor operations


Preparation of a method statement

• The project manager will decide which person in the team will prepare which method statements

• This person is usually the senior engineer for that area of work – or the subcontractor

• Safety is just one (though major) part of a method statement

• All method statements should be set out on similar lines in order that the information contained can be easily identified


Content of a method statement

• The operations concerned• A risk assessment of the operations• A listing of key drawings• The direction and sequence of work• The types of resources to be used• A basic layout or sketch• Delegated responsibility for the work• Any other specific aspects of the work


Operation Plans

• The next level in the H&S hierarchy• It is prepared for each discrete activity

of work• There may be a number of operation

plans for an area of work already covered by a method statement

• The operation plan is usually drawn up by the site engineer looking after the work

• A pro-form is usually used


Operation Plans – pro-formaActivity No. Activity Description

OP RefN.B. The activity number and location should be included on all allocation sheets

Material Requirements / Sequence of Work

Sequence of Work Material Description Quantity

Sketch Ref. Inspection and Test Plan Ref.

Required Output

Remarks

(e.g. access etc.)

Plant/Lab

Risk Assessment

Hazard Risk

Control Measures Required

Permits Required (Y/N)Permit to Dig Permit to Enter Other Permit to Pump Hot Work Permit (Specify)Permit to Work Permit to Load

Prepared By Approved By

Date Date

Ensure any applicable permits and sketches are appended to this sheet

Sequence of Work & Resources

Operation Plan

Principal HazardsRating (H/M/L)

OpportunityPersons Affected


Risk Assessments

• ‘Risk’ is a large part of any project– financial, technical & safety risk

• It is just one stage in the overall risk management strategy prepared for every project

• We shall look at the subject in greater depth in a moment

• Each method statement will have detailed risk assessments:


Risk assessment only useful if the info in it is well considered...


Risk Management• Risks are ever present • The management of risk is an area of

significant expansion over the last decade. • Within the construction and process

industries the consequences of an accident can be significant (e.g.Piper Alpha)

• Detailed management of risks are routinely carried out, conducted at all stages of a project life cycle

• This lecture will:– Define risk concepts– Introduce the Risk Management Procedure– Piper Alpha Case Study


Foolish Risks


Poor Planning...


Engineering: Small Risks


Large Risks - Piper Alpha (before)


Piper Alpha - After


Large Consequences: Hatfield & Ladbroke Grove Rail Crash


Definitions

Harm“Physical injury or damage to health,

property or the environment”BS8444: Part 3: 1996

» In all aspects of project management, we want to minimise, if not eliminate any kind of harm

»Harm may be, for example: Employee accidents or death Financial collapse Environmental accident


Definitions cont.

Hazard“A source of potential harm or a situation with potential

for harm in terms of human injury, damage to property, damage to the environment, or combination thereof”

– In project management terms, we need to control financial hazards as well as physical ones

– Examples may be:» Falls from heights» Collapse of excavations» Dropped objects » Poor environmental management» Abnormal inflation» Abnormal weather conditions


Definitions cont.

Risk“The combination of the probability of an

abnormal event or failure and the consequence(s) of that event or failure to a system’s operators, users or its environment”– Risk involves two aspects:

» Probability of a hazard taking place, and» The severity of the harm that occurs

– Low probability, high severity = high risk– High probability, low severity = intermediate risk– Low probability, low severity = low risk


Definitions cont.

Risk Management“The systematic application of management

policies, procedures and practises to the tasks of identifying, analysing, evaluating, responding and monitoring risk”

»Five stages:


Risk Identification• The stage where all potential hazards in a

project are identified• Three main methods of identification

– Individual Consultation» interviews with project personnel» lengthy & time consuming

– Group discussions» formal brainstorming» requires motivation & teamwork

– HAZOP» HAZard and OPerability studies» Formal questioning of processes, e.g design


Risk Estimation

• Potential hazards have been identified• Now need to assess:

– Probability of occurrence– Severity if occurs

• Can be done in two main ways:– Qualitatively

» in a linguistic manner»usually done first; high probability/severity

cases then may be examined:– Quantitatively

» in a numerical manner


Risk Estimation cont

Qualitative Techniques– Fuzzy set analysis

»expresses the likelihood and consequences of a risk in readily understood language terms.

– Interviewing and Brainstorming » is an extension of two of the techniques

employed in the identification stage.

– Personal and Corporate Experience » if it exists should be exploited.

– Engineering Judgment



Quantitative Techniques– Expected Monetary Value (EMV)

» i.e. putting a financial value to the expected result of a risk.

– Expected Net Present Value (ENPV) » is an extension of EMV by calculating the net

present value of a probability state.

– Decision Analysis » looks at possible outcomes and determining

optimal choices



Quantitative Techniques cont– Sensitivity Analysis

»tests how sensitive an event outcome is to slight changes on the input variables.

– Delphi peer groups »attempts to put quantitative values to results

obtained in a manner similar to discussion groups and brainstorming.

– Simulation »creates a probable life history of an event and

thus allows its outcome to be predicted.


Risk Evaluation

• 3rd part of Risk Assessment• Need to combine the severity and

probability of the identified hazards• Can be done using a risk matrix:

Category of Occurence

Frequency of

OccurenceConsequences

/ year Catastrophic Major Severe MinorFrequent >1 H H H IProbable 1 to 10-1 H H I LOccasional 10-1 to 10-2 H H L LRemote 10-2 to 10-4 H H L LImprobable 10-4 to 10-6 H I L TI ncredible < 10-6 I I T T


Practical Risk Assessment Procedure

1. Identify the principal hazards that will be present in the operation.

2. Assign a number 1 to 5 for both Consequences of Hazard and Probability of Occurrence. • The Risk (i.e. the product of Consequence x

Probability), indicates the level of action.

3. Identify persons affected by the risk4. Respond to the risk 5. Monitor and update as necessary.


Risk Response

• If risks are identified as being intolerable how can these be dealt with?

• There are four main methods of responding to such risks:– Risk Avoidance– Risk Transfer– Risk Retention– Risk Reduction


Risk Response

Risk Avoidance• Managing or developing a situation in

which the identified risks do not occur, e.g:– not proceeding with the project– tendering at a very high bid– placing conditions on a bid– changing design


Risk Response cont

Risk Transfer• Via Subcontractors

– a third party undertakes the high risk portion of the work and the responsibility that goes with it

• Via Insurance– A pre-determined insurance premium is often

better than unexpected costs due to risk– may be done using a captive insurance company– involves excesses– some risks may result in premiums higher than

the probable financial loss


Risk Response cont

Risk Retention• Some risks may be better managed internally• High frequency/low severity or very low

frequency/high severity risks may be best retained

Risk Reduction• The most usual way in which to manage

common risks is to reduce either the severity, the chance of occurrence or both. E.g:– early warning systems– improved maintenance– better housekeeping


Risk Response cont

• The choice of method used to respond to risk will largely depend on company policy

• Using the risk matrix model, a typical company scenario may be:

Category of Occurence Consequences

Catastrophic Major Severe Minor

Frequent Transfer Transfer Retain Avoid

Probable Reduce Transfer Retain Avoid

Occasional Reduce Transfer Transfer Retain

Remote Reduce Transfer Transfer Retain

Improbable Avoid Transfer Transfer Retain

I ncredible Avoid Transfer Transfer Retain


Risk Monitoring• The final stage of risk management• Risk situation will continue to change

throughout the life of the project– New hazards will become present– Existing hazards will stop or change

• The management must be continually monitored, reviewed and improved

• Existing risks may be managed differently

»therefore• Risk monitoring completes cycle back to

risk identification

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Documents

construction engineering

management regulations

management of health

work slide

work regulations

lease risk management

end of project slide

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