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Managing risk in large construction projects

DavidWBoss
SeniorVicePresident MarshConstruction,PowerandUtilitiesPracticeLondon
nd 22 March2007

Agenda

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RiskMatrixandRiskAnalysis Lessonslearntfromotherlargeprojects Constructionissuesfromariskperspective Securitypeopleandphysical Questions

RiskMatrixandRiskAnalysis
WhatisaRiskMatrix? aworkingdocument constantlyneedstobereferredto
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WhyisRiskAnalysisnecessary? StrategicRiskAssessment CriticalPathAnalysis Severityofriskmatrixexample Evaluateandquantifyrisktransferdecisions

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SeverityofRiskmatrixexample

Consequence Likelihood

Insignificant L L L M H

Minor L L M H H

Moderate M M H H E

Major H H E E E

Catastrophic H E E E E

1Rare 2Unlikely 3Possible 4Likely 5Almost certain

E H

ExtremeriskshouldbebroughttotheattentionofDirectorsandcontinuouslymonitored HighriskrequiresattentionofManagingDirector/CEOandGeneralManagers

Moderateriskappropriatelymonitoredbymiddlemanagement

Lowriskmonitoredatsupervisorylevel

Lessonslearntfromotherlargeprojects
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IgnoretheRiskMatrixandRiskAnalysisatyourperil Wembleystadium HeathrowT5 BrainstormbizarreRiskMatrixitemswhichmaybe totallyuninsurable Contingencyplanning Howtodealwiththemedia

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Constructionissuesfromarisk perspective
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Obviousrisks Fire,storm,flood,aircraft
Terrorism Fitnessforpurpose Pollution

Lessobviousrisks
Unforeseengroundconditions AdditionalIncreasedCostsofWorking Availabilityofalternativevenues

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Majorchallengesfacingmegaprojects ExamplesfrompreviousOlympicGames

Constructionissuesfromarisk perspectivemajorchallenges
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Risingcommoditypricese.g.steel Competitionforresourcesand/orsiteaccess/egress(e.g. London) 2012OlympicGames ThamesGatewayBridge PossibleMillenniumDomeconversion StratfordCity Crossrail Labourshortagesand/ordisputes Costand/ortimeoverruns Equipment/technologyfailure/unfitnessforpurpose Appetiteofcapitalprovidersfortypeofproject/financing structure

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Constructionissuesfromarisk perspectivepreviousOlympicGames
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Athens Flooratfencingvenue Liftsinathletesvillage Atlanta Ceilingcollapse Lighttowercollapse Wastedisposal Camerapositionsinmainstadium

Constructionissuesfromarisk perspectivepreviousOlympicGames
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Sydney Temporarygrandstandinswimmingvenue Airconditioninginathletesvillage SaltLake Temporarytentventilation Turin Mainstadiumpower Skivenuegeneratorpower Icevenueairconditioning

Securitypeopleandphysical
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People Contractorscreening Frauddetectionandprevention Costabuse Physical Securitydesign Sitesecurity Terroristexposure Blastassessmentandstructuralevaluation

Questions

Disclaimer
Theinformationcontainedinthispresentationprovidesonlyageneral overviewofsubjectscovered,isnotintendedtobetakenasadvice regardinganyindividualsituationandshouldnotberelieduponassuch. Insuredsshouldconsulttheirinsuranceandlegaladvisorsregarding specificcoverageissues. Copyright2007MarshLtdAllrightsreserved