Assessing and Managing the Potential Environmental Risks

of Construction Projects
S. Dione1; J. Y. Ruwanpura, A.M.ASCE2; and J. P. A. Hettiaratchi3

Abstract: Policy makers make key decisions regarding economic development, but engineers are central to the implementation of these
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policies. With the realization that economic development and environment are interlinked, engineers are well advised to ensure avoidance
of adverse impacts on society and environment by adopting better practices during the design and implementation of construction projects.
The objective of this paper is to present a project’s proponents and construction contractors with a framework to identify the environ-
mental risks early in a project’s life so that a proper plan could be developed to mitigate the impact of them. The paper also discusses
options currently available in Canada for environmental-type insurance and contractual liability indemnity clauses. A survey conducted
among construction companies to assess current risk-management practices in the construction industry show that although many com-
panies are concerned about the possible implications of environmental risks to their project, there still needs to be more emphasis on
identification and mitigation of these risks and the need to have a comprehensive framework to properly identify and develop an action
plan for environmental related risk issues. The current research trends to achieve these objectives are also outlined in the paper.
DOI: 10.1061/共ASCE兲1084-0680共2005兲10:4共260兲
CE Database subject headings: Construction; Environmental issues; Insurance; Liability; Canada.

Introduction mitigation of environmental risks associated with the construction

In light of current environmental regulations, proponents of
medium- to large-scale construction projects are required to exer-
cise an ever-increasing level of due diligence with respect to iden-
tifying potential environmental issues and associated risks. The
objective of this paper is to present a project’s proponents and
contractors with a framework with which potential environmental
risks can be identified early in a project’s life. The assumption is
that screening for requirements of an environmental assessment
process, under the applicable regulatory framework, has already
taken place and that a detailed assessment is not required. It is,
therefore, up to the project proponent or contractor to identify and
mitigate the potential environmental risks that the project may
pose to stakeholders or the environment. The paper also includes
a discussion of the currently available options for environmental-
type insurance and contractual liability indemnity clauses for
Canada. Results from a brief survey of construction companies to
assess current risk-management practices in the construction in-
dustry are presented. The survey is based on the identification and
1 tal risks.
Graduate Student, Dept. of Civil Engineering, Univ. of Calgary,
Calgary AB, Canada T2N 1N4.
2
PQS, Director and Assistant Professor, Project Management Special-
ization, Dept. of Civil Engineering, Univ. of Calgary, Calgary AB,
Canada T2N 1N4 共corresponding author兲. E-mail: janaka@ucalgary.ca
3
P.Eng, Professor, Dept. of Civil Engineering, Univ. of Calgary, Cal-
gary AB, Canada T2N 1N4. E-mail: jhettiar@ucalgary.ca
Note. Discussion open until April 1, 2006. Separate discussions must
be submitted for individual papers. To extend the closing date by one
month, a written request must be filed with the ASCE Managing Editor.
The manuscript for this paper was submitted for review and possible
publication on August 24, 2004; approved on December 30, 2004. This
paper is part of the Practice Periodical on Structural Design and Con-
struction, Vol. 10, No. 4, November 1, 2005. ©ASCE, ISSN 1084-0680/
2005/4-260–266/$25.00.
industry.
In the province of Alberta in Canada, it is the proponent’s
responsibility to identify the requirements needed to perform a
detailed environmental assessment of a proposed project. Assum-
ing that a project has been subject to this evaluation, and that an
environmental assessment is not required under the environmental
regulators, the proponent can then proceed with acquiring the
necessary permits to proceed with the project. However, the pro-
ponent needs to be aware that even though the regulatory regime
does not require an environmental assessment, there is a possibil-
ity that there may be environmental issues encountered that will
need to be addressed. It is in the best interest of the project to
understand what these issues might be and how to properly ad-
dress them, as early in the project’s life as possible.
Depending on the project scope and schedule, the proponent or
contractor have two basic options for dealing with potential envi-
ronmental risks to the project:
1. Identify, assess, and mitigate risks early in the project’s life
to minimize impact to the project; or
2. Insure the project from known and/or unknown environmen-
Although the first option may be viewed as the safest alternative,
a project’s scope and schedule may not always make it the most
feasible.
Construction Project Phases
Most medium- to large-scale projects, especially those with com-
plicated engineering designs, financing and/or construction, can
be divided into distinct phases. Each phase represents an impor-
tant milestone towards the project’s completion. The typical
project phases and the scope of work are as follows.

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Pract. Period. Struct. Des. Constr. 2005.10:260-266.

 Initiation Phase: This phase starts with the recognition of a need
for the project. The proponent may develop a proposal including
details, such as
• What outcome the project might yield;
• Potential costs associated with the project;
• Economic justification for the project;
• How it could be pursued;
• Who should pursue it;
• Cost of the next project phase; and
• Securing of an agreement to pursue the idea through that
phase.
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Concept Phase: In this phase, the proponent begins the assembly
of basic data, such as
• The result, quantity, quality, size and location of the project;
• Nature of the project; and
• Design and operating policy.
This phase will outline the objectives and provide all the data
necessary for the initial scope of work to be written. Initial project
costs and schedule will be developed at this time. The concept
phase ends with the approval and funding of the subsequent fea-
sibility phase.
Feasibility Phase: During this phase, design guidelines will be
defined and project-specific design standards will be compiled.
Critical initial design drawings will be produced, including plot
plans, process flow, piping, and instrumentation and utility dia-
grams. At this time, the proponent may also develop the prelimi-
nary specifications of major equipment and obtain estimates for
prices and availability of equipment. Based on this information, a
preliminary schedule may also be produced in conjunction with a
revised cost estimate.
Planning Phase: This phase advances the work on all fronts,
including
• Design;
• Procurement planning;
• Construction planning;
• Definitive cost estimates;
• Execution plan and schedule; and
• Regulatory compliance terms.
The work done in this phase prepares a basis for making the final
decision to proceed with completion of design, procurement,
construction, and operation. In case business conditions have
changed, it affords the opportunity to confirm that the project
should indeed be carried to completion before expenditures accel-
erate with the placement of large orders for materials and equip-
ment and the start of construction.
Design/Implementation Phase: This phase covers all the over-
lapping phases of final design, procurement of equipment, con-
struction, and commissioning of the project. These include
completion of drawings, equipment specifications, standard speci-
fications, operating instructions, and solving design-related prob-
lems arising during construction and startup.
Each of these project phases allows the proponent the oppor-
tunity to reflect on the project details to date, understand the im-
plications of moving forward, and use the opportunity to make
changes as necessary. However, the key to a successful project is
proper and complete up-front, proactive planning. The key con-
tributors to budget and schedule overruns on large-scale projects
may include the following:
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Pract. Period. Struct. Des. Constr. 2005.10:260-266.
• Insufficient front-end planning;
• Underestimation of the project scope;
• Unrealistic project plan; and
• Inability to detect problems early.
The inability to control these potential issues could result in a
myriad of project problems, not the least of which are environ-
mental issues. Where, then, does the project proponent include
environmental planning within the scope of a nonenvironmental
project? That is, where does one allow for the investigation into
the possible environmental issues? In a construction project fol-
lowing the phases outlined previously, the most logical time to
investigate environmental risks is during the planning phase.
Construction planning, final cost estimates, and regulatory
compliance terms, which are finalized during the planning phase,
could be negatively influenced by the discovery of some unknown
environmental issue. Construction plans may need to be changed
to allow for the removal of contaminated soil or groundwater
共indirect risk兲, or to alter the construction techniques to minimize
noise or dust 共direct risk兲. Cost estimates may also need to be
revised to allow for the removal of a contaminant. These costs can
range from thousands to millions of dollars. Finally, regulatory
approval to proceed with the project may be delayed pending the
resolution of outstanding direct or indirect risks.
Stakeholders who understand the regulatory regime can very
easily delay the approval process if their concerns have not been
satisfactorily addressed. Many proponents and contractors dis-
count the potential environmental risks associated with their
projects, whereas others may consider these issues only when it is
too late in the project’s schedule to turn back. To understand
better the methodologies required to detect potential environmen-
tal risks, one must first understand the type of risk that the project
may be exposed to.
Direct Environmental Risks
Direct environmental risks arise from issues that emanate from
the project or aspects of it. An analysis should be undertaken so
that environmental issues specific to the project are understood,
and the associated risks mitigated if possible. Many project teams
will hold brainstorming sessions, which can bring to the table
those environmental issues that may pose a risk to the project. It
is imperative that team members understand the project to under-
stand adequately the risks involved. Table 1 lists some typical
risks that are associated with medium- to large-scale construction
projects.
Referring to Table 1 and the left-hand portion of Fig. 1 共direct
risks兲, each issue can be taken through the process of determining
its potential risk to the project. For example, if it is known that
one or more phases of the project may create excessive dust, it
should be looked at in greater detail. Is there a receptor that may
be affected by excessive dust? Is there a pathway that could in-
troduce the dust to the receptor? If the project is undertaken in an
urban center with a dense population, there is definitely a poten-
tial receptor present. Consequently, many proponents would con-
clude that there is a potential risk to the project that is associated
with the creation of excessive dust.
The determination of whether the issue poses a risk is consid-
ered risk identification. If there is no risk that the particular issue
will affect the public, wildlife, or the environment, then the
project team can move on to the next potential issue or move the
project along to the next phase. However, if it has been deter-
mined that a potential risk exists, the proponent must apply some
 Table 1. Typical Direct Environmental Risks of Construction Projects
共Chen et al. 2000兲
Issue Source Receptor Possible mitigation
Dust Excavation Public Wet excavating
Drilling Wildlife Wet drilling
Blasting Environment Chemical breaking
Transportation Covered loads, wet loads
of aggregates
Vehicle traffic Dust suppression on roads,
restricted routes and hours,
cleaning equipment
Concrete Precast goods
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mixing
Demolition Static crushing
Noise Demolition Public Static crushing
Various Wildlife Hydraulic or electric
equipment/ alternatives, restricted hours,
machinery noise barriers, prefabricated
Fig. 1. Environmental risk management flowchart
materials import
Odors Solvents, Public Solvent-free materials,
paints Wildlife powder coating, the best available technology to eliminate levels that would
prefinished materials occur in a business-as-usual case. For example, if the contractor
Welders Bolt or pressure connections declares that he or she will replace diesel-engine powered
Equipment Properly tuned engines, equipment with electric motor driven equipment 共wherever
exhaust electric motors, newer possible兲, stakeholders may be willing to accept a noise level that
equipment, emission controls will be considerably less than if the contractor had used the diesel
Asphalts/tars Reduced transport distance, engines.
in-place mixing These are, of course, only a couple of relatively simple ex-
Light Area work Public Restricted work hours, amples of direct environmental risks. Direct risks will be specific
lights spot lights rather than to each project, its stakeholders, and its location.
flood lamps
Equipment Wildlife
lights Indirect Environmental Risks
Waste Solid Public Reuse, “made to fit” rather
than off the shelf generic Indirect environmental risks are those that may be influenced by
Wildlife the project but are not necessarily a direct result of the project.
Liquid Environment Recovery/recycle, powder For example, the construction of a roadway or the excavation of
coating, water diversion soil for footings or a foundation may result in the release or
from work-site exposure of previously contaminated materials. These materials
Gas Vapor recovery were not caused by the project, but their influence to impact a
receptor 共public, wildlife or environment兲 may be a consequence
of the project. Proponents need to understand the potential indi-
form of risk management. This management can take one of two rect environmental risks that they may be liable for during the
forms: implementation phase of their project. To do so, indirect risks
1. Eliminating the risk completely, so that there is no potential should also be identified during the planning phase. In most cases,
of negatively affecting stakeholders or the costs of indirect environmental risks will be minimal in com-
2. Eliminating the risk partially, to a level that is acceptable to parison to the budgets of most medium- to large-scale projects.
stakeholders. Well-planned projects that have accounted for potential risks
As an example of completely eliminating a potential risk, if the can greatly reduce the chance of budget and schedule overruns.
project team had identified excessive construction lighting as an Conversely, projects that do not account for potential environ-
issue that could potentially affect stakeholders, they may opt to mental issues are more prone to delays and extraordinary costs. It
work only during suitable daylight hours. This choice may mean is therefore recommended that project proponents take a more
sacrificing a shorter schedule, based on the time of year and lo- proactive approach and perform assessments of the potential in-
cation of the project. However, the improved stakeholder rela- direct environmental risks that may impact their project, so that
tions, and subsequent acceptance and ease of regulatory permits, upfront planning may reduce potential catastrophes.
may offset any construction delays. The reader should reference the right-hand side 共indirect risks兲
If we use noise as an example of an issue that could impact of Fig. 1 while reviewing the following section.
stakeholders, it can be seen that option number two would be the To determine if a potential indirect environmental risk is asso-
only reasonable risk management solution. It would be all but ciated with the project, a thorough assessment of the project lands
impossible to eliminate elevated noise levels caused by drilling, and surrounding area should be undertaken. In Alberta, Canada,
excavating, blasting, or demolition equipment. However, stake- this process is known as a Phase 1 Environmental Site Assessment
holder input may reveal that they are willing to accept elevated 共Phase 1 ESA兲, and it should follow the guidelines set out by the
noise levels if it has been demonstrated that the project is using Standard Council of Canada document Z768-01 共Alberta Envi-

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 ronment 2001兲. It is highly recommended that the project propo-
nent enlist the services of an independent third-party environmen-
tal consulting firm that has had previous experience dealing with
large projects.
During Phase 1, the investigator will perform a desktop re-
view, a site visit, and personal interviews. The desktop review has
three purposes:
1. To obtain information about current and historical land uses
and activities;
2. To identify potential sources of contamination; and
3. To establish the framework for subsequent site investigations
if necessary.
The desktop review typically involves the review of available
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records 共regulatory, landowner, and so on兲 pertaining to the site
and interpretation of aerial photographs and maps. This review is
usually followed by a site visit, which verifies the information
gathered during the desktop review. Typical components of the
site visit include a review of the surrounding land use, topography
and vegetation; location of surface water bodies, water wells, and
so on; potential sources of leaks, spills, or releases; visual evi-
dence of on-site and off-site contamination in addition to equip-
ment; and infrastructure or underground utilities that may be af-
fected during a subsurface investigation. The site visit includes, or
is followed by, interviews with present and past landowners of the
site and the adjacent properties of the project area.
The outcome of Phase 1 will allow the proponent to determine
whether there is a potential indirect environmental risk associated
with his project. In the simplest of cases, where there is no po-
tential 共or it is very unlikely兲 for an indirect environmental risk,
the proponent can move to the next phase of the project. How-
ever, where there is the potential for environmental risk, the pro-
ponent should do further investigation before making any critical
decisions. Results of the Phase 1 ESA would naturally lead to the
implementation of a Phase 2 Environmental Site Assessment
共Phase 2 ESA兲.
The purpose of the Phase 2 ESA is to determine the presence
and extent of any contamination suspected as a result of the Phase
1 ESA. This investigation is typically intrusive, requiring soil
and/or groundwater samples to be obtained and analyzed for sus-
pected contaminants at an accredited environmental laboratory. If
the suspected contamination is verified to be present during the
Phase 2 ESA, the proponent will be required to manage the po-
tential environmental risk. Investigators can usually determine an
estimated volume of impacted materials, the endpoints of con-
tamination on the site, and the likelihood of further impacts from
migration of contaminants. From this information, estimates for
various remediation or risk alternatives can be developed.
The proponent must evaluate the data obtained from the Phase
2 ESA and determine the potential environmental risks. If there is
no contamination, there is no risk, and the project can move to the
next phase. There is also the possibility of discovering contami-
nation that does not pose a potential risk, and again the project
can move to the next phase. If there is contamination present at
levels that could potentially cause harm to a receptor, however,
the proponent must manage the risks accordingly.
Managing environmental risk is a process in which the project
proponent must work together with the regulator and, where ap-
propriate, the stakeholders. Two options available for dealing with
the risk from contaminated sites are the following.
Eliminate the risk: Probably the best method for reducing future
risk is to completely eliminate any contamination that is currently
in place. However, this option may also be the most expensive.
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Key factors in determining the feasibility of complete elimination
include
1. Logistics of treatment or disposal options
• Equipment access;
• Weather contingencies;
• Location of existing infrastructure and surface improve-
ments 共i.e., roads, buildings, city storm water or sewage
lines, etc.兲; and
• Geological, hydrological and/or hydrogeological factors.
2. Feasibility of treatment or disposal options
• Location of waste disposal site relative to project site
共transportation costs兲;
• Fees associated with final disposal of material 共landfill,
land treatment, incineration, etc.兲;
• Area available for treating materials on site 共only applies to
contaminants that can be biologically, thermally or chemi-
cally treated兲;
• Timeframe available for treatment of contaminated materi-
als; and
• Availability and cost of suitable materials to backfill the
excavation in the case of off-site disposal.
This option will have to be evaluated together with the data col-
lected from the project site. There is no template that works for all
contaminated sites. Costs for removing contamination can range
from a few thousand dollars to hundreds of millions of dollars,
depending on the extent and type of contamination present.
Reduce the risk to an acceptable level: The proponent or con-
tractor could take a risk-based approach in dealing with a con-
taminated site. The risk can be reduced to a level that is accept-
able to both the proponent and the regulator. This can be achieved
by managing one or more of the three components of risk:
1. The source of contamination;
2. The receptor of the contamination; and
3. The pathway that introduces the contamination to the recep-
tor. Looking at this option in more detail, the following op-
tions may be available to the proponent or contractor:
• Manage the contamination source;
• Remove all the material;
• Remove the most heavily impacted material only;
• Treat the impacted material in situ 共if feasible兲;
• Leave all impacted material in place;
• Manage the receptor of the contamination;
• Remove the receptor 共e.g., replace a domestic water well
with another alternative兲;
• Treat the receptor 共e.g., chemically treat a water body兲;
• Restrict access to a receptor site;
• Do nothing with the receptor;
• Manage the pathway;
• Install a physical or chemical barrier around the contami-
nation to keep it in place 共e.g., bentonite slurry wall, bell-
holes, or pumping culverts兲; and
• Remove the pathway 共e.g., ditches, culverts, water bodies,
geologically permeable materials, and so on兲.
Another way of reducing the risk associated with contamina-
tion is to determine the contaminant level that is acceptable from
a receptor standpoint. That is, reduce levels at the source so that
once the contaminant reaches the receptor, it has been reduced to
acceptable levels. For example, a site contaminated with high
levels of salt 共e.g., road salt storage yard兲 may have heavy chlo-
ride ion impacts within the site boundaries. However, because of
water flushing of the ion in the soil matrix as the ion travels
toward the receptor, those levels may be drastically reduced over
 a short distance. In this case, the most heavily impacted material
could be removed, leaving the rest of the contamination with the
expectation that it would be reduced to acceptable levels by the
time it reached the receptor.
The simplest of cases will involve no indirect risks at all, and
will be most common when projects are implemented at sites
where very little or no development or activity has taken place in
the past. On the other end of the scale, projects that occur on or
adjacent to existing industrial or commercial properties face the
greatest potential of encountering indirect environmental issues.
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Environmental Insurance
Whether or not the project scope entails detailed environmental
assessment work to uncover indirect or direct environmental
risks, it is in the contractor’s and proponent’s best interests to
obtain some form of environmental insurance. Environmental li-
ability insurance comes in many forms and can protect all parties
involved from incurring extraordinary costs that may arise from
unknown, or unaccounted for, environmental risks. The following
outlines some of the more common types of environmental insur-
ance, and the benefits they may provide:
• Pollution liability insurance covers the insured against third
party claims such as clean-up expenses that may occur as a
result of the insured’s work. This insurance can cover onsite
and offsite cleanup costs and claims for cleanup, bodily injury,
and property damage, including legal defense costs, related to
preexisting known and unknown pollution conditions and fu-
ture pollution conditions.
• Environmental errors and omissions liability insurance is typi-
cally used by consulting or engineering firms to protect them-
selves from liability arising from work or recommendations
made by the insured.
• Environmental remediation insurance covers the insured
against liability claims arising from pollution generated on
and/or migrating off property. This type of insurance usually
covers investigation and remediation costs.
• Stop loss (cost overrun) coverage is normally used when there
is known contamination before the insurance policy comes
into effect. This type of insurance involves a substantial de-
ductible that typically covers the costs of remediation plus any
cost overruns. At this point 共the Stop Loss amount兲, the insur-
ance covers the remainder of costs.
• Spill liability provides coverage for bodily injury, property
damage, and cleanup costs resulting from an incident during
transportation by a carrier of the named insured’s product or
waste 共McCaffery 1997兲.
The coverage and the premiums for the above insurances are
dependent on many factors, applications and the type of the
project. Applicants are required to submit their case to insurance
underwriters to evaluate the project before the insurance under-
writers determine the premiums. For example, the availability of
certain hazardous materials on site may increase the risk and
thereby the premiums. In Canada, the premiums also depend on
the province. A rule of thumb premium amount for Environmental
errors and omissions liability insurance is about $3.00 per $1,000
coverage in Canadian dollars. Pollution liability insurance pre-
miums may vary—from $3,000–$10,000 for a coverage of
one million Canadian dollars depending on the nature of the
coverage and the contents of the materials involved. All the other
insurance types identified above are specific to a project and the
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premiums cannot be determined without investigating the con-
tents of coverage.
The following simple case studies provide further justification
for purchasing some form of environmental insurance:
• Soon after the development of a subdivision, small sinkholes
began to appear around people’s homes. The sinkhole also
produced some unspecified debris. Fearing that the debris
could also be under their homes, the owners brought a lawsuit
against the contractor. Because the contractor could not iden-
tify the owner of the debris, they were forced to clean it up at
a cost exceeding $1 million.
• A contractor in a residential area was overseeing the installa-
tion of a sewage system. The subcontractor responsible did not
properly tie the sewage line in, resulting in the contamination
of groundwater and nearby domestic water wells. The contrac-
tor was forced to pay over $425,000 in legal, property damage,
and bodily injury claims.
• During fill operations for a subdivision project, a contractor
unknowingly spread hydrocarbon-contaminated soils across
the project site. As the contractor was found guilty of exacer-
bating the clean-up effort, he was forced to pay $250,000 in
remedial and legal costs.
Though some contractors or proponents may view environmental
insurance as a good way to finance a loss, it is always best to
manage the exposure before loss. A highly publicized environ-
mental disaster can have a catastrophic impact on an organiza-
tion’s reputation. While the insurance may eventually pay for the
loss, provided proper limits of insurance were purchased, nothing
will pay for the loss of an organization’s reputation 共Slivka 2002兲.
Risk Transfer
Contractors and proponents can also reduce their exposure to en-
vironmental risk through risk transfer. This is usually in the form
of indemnification clauses within contractual agreements 共Slivka
1998兲. The contractor must negotiate indemnification language
into the contract that prevents the contractor from being held
liable for preexisting contamination. However, it is essential to
have a copy of an environmental assessment identifying existing
contamination to create this clause. To further protect a contractor
from identifying or discovering previously unidentified contami-
nation, a change in Conditions Clause could be used 共Slivka
2003兲. This contractual clause will enable the contractor to make
appropriate contract modifications in the event that contamination
is discovered at a later date.
As contractors face potential liability as a result of subcontrac-
tor actions, they should also give attention to contractually con-
trolling this liability. Many prime contractors will carry some
form of environmental insurance, but there are usually little re-
quirements for their subcontractors to do the same.
Construction Industry Survey Results
To better understand the environmental risk-management mea-
sures actually employed by industry in western Canada, a brief
survey was conducted. A questionnaire was developed and dis-
tributed to 15 construction companies operating in Western
Canada. Follow-up telephone calls were made, and ten companies
provided responses. This section outlines the questions that were
asked in the survey and summarizes the answers given by the
various companies.
 Of the ten companies that provided responses, there was a
wide range of both size and services provided. Companies ranged
from having approximately ten employees for a local excavation
company to thousands of employees for larger national compa-
nies. Services included excavation, road construction, residential
construction, commercial and industrial construction, and project
management and engineering services. Company representatives
included project managers, safety professionals, general manag-
ers, and engineers. The following questions were asked of each
company representative.
Does your organization have a dedicated risk management
group? Only 30% of respondents indicated that they have a dedi-
cated in-house risk management group. Surprisingly, two of the
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three companies with in-house risk management are smaller, local
companies. Others indicated that they do not have an in-house
risk management group, and that this work is usually carried out
as part of the project team, or the services of a third party con-
sultant is used when necessary.
Do you consider the potential environmental risks or issues
that could occur during a project? As expected, 100% of the
respondents indicated that environmental risks are considered as
part of the project.
Do you use a guiding document when determining severity of
risk? Respondents were split 50/ 50 on this response, as half of
them indicated that they do use a guiding document to rate the
severity of an identified risk, whereas the other half indicated that
they do not. Guiding documents varied from internally prepared
documents to consultant-supplied guidelines.
Is there a particular magnitude of project where these risks
would normally be considered (i.e. would you consider environ-
mental risks only for projects such as those with large capital
budgets)? Ninety percent 共90%兲 of companies indicated that they
do not have a predetermined project scope for initiating risk iden-
tification. Respondents stated that any project could be subjected
to risk identification provided sufficient reason to warrant review.
There was one company that reviewed potential environmental
issues only when the project’s capital budget exceeded $250k.
Are project schedules prepared so that contingency is in-
cluded? Sixty percent 共60%兲 of respondents stated that project
schedules did contain contingency for unaccounted environmental
risks. Others indicated that the subcontractors have the responsi-
bility to adjust their schedules accordingly.
Are stakeholder risks included in this process of risk identifi-
cation? Although 20% of companies indicated that they do not
consider potential risks to stakeholders, 80% of respondents
stated that they do consider such risks.
At what point in the project schedule would you consider these
environmental/stakeholder risks? One company indicated that en-
vironmental issues are only considered when they are encoun-
tered. In other words, there was no up-front planning involved to
mitigate potential issues. Conversely, the other 90% of companies
indicated that potential environmental and stakeholder risks were
considered during the preproject planning phase.
Have you experienced impacts (financial or schedule-related)
from unknown or unforeseen environmental issues that arose dur-
ing a particular project? Although 20% of companies have not
experienced budget or schedule overruns from unforeseen envi-
ronmental issues, 80% of respondents have dealt with them first-
hand. Most of the eight companies that have dealt with overruns
have experienced these issues on more than one project and with
varying degrees of impact.
What was the approximate cost or delay as percentage of the
overall project budget or schedule? Thirty percent 共30%兲 of re-
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Pract. Period. Struct. Des. Constr. 2005.10:260-266.
spondents were unable to provide any kind of figure for this ques-
tion. However, 30% also stated that impacts had generally been
less than 1% of the overall project budget or schedule. Likewise,
another 30% indicated that costs or delays to their projects had
been between 1 and 10%. One respondent stated that unforeseen
environmental issues had impacted their project budget by 10–
20%, although the exact figure had not been determined.
Is there a system for tracking and closing project risks? This
question was directed towards finding out if companies were
using databases or similar products to track identified environ-
mental issues until they had been satisfactorily managed. Forty
percent 共40%兲 of companies indicated that they do have such a
system in place, while the other 60% stated that they do not.
Where a tracking system has not been developed, company rep-
resentatives indicated that individuals responsible for a particular
issue would track its mitigation progress using their own meth-
ods. These methods varied from a spreadsheet, Gantt chart, or
notepad depending on the individual and magnitude of the issue
or project.
Are risks assigned to specific people in your organization?
Depending on the type of issue encountered, 70% of respondents
indicated that identified issues are assigned to one or more indi-
viduals for management. The other 30% indicated that the project
team, as a whole, would manage any issue that might arise. Two
of the respondents indicated that issues could be managed better
as a team, rather than an individual.
Do you carry environmental insurance as a risk-management
tool? Fifty percent 共50%兲 of respondents were unsure whether
their company carried a form of environmental or pollution-
liability insurance. In most cases, this uncertainty was because
insurance was handled by a separate legal, joint-venture, or ac-
counting department and such matters were not discussed by the
project teams. Three of the respondents indicated that they do
carry environmental insurance of some form, but were unable to
provide details as to type of insurance carried. Two companies
stated that subcontractors who were physically performing the
work carried environmental insurance.
In summary, the following has been determined from the con-
struction industry survey:
• Most companies do not have a dedicated risk management
group in-house;
• The majority of companies surveyed consider environmental
and stakeholder risks;
• Most companies consider these risks during the planning
phase of a project;
• Most have experienced cost and schedule overruns from un-
foreseen environmental issues;
• There have been varying degrees of impact to the original
budget and schedule;
• Risks are usually assigned to one person individual to mitigate
potential impacts;
• Only half of the companies have a system to rate the severity
of potential impacts to the project;
• Almost half of the respondents do not have a contingency built
into their project budget or schedules;
• Over half of the companies do not have a formal system in
place for tracking identified issues and management options;
and
• Most of the companies do not carry, or do not know if they
carry, any form of environmental insurance.
 Conclusions
This study shows that there is a need for the development and
implementation of an environmental risk-management frame-
work. This paper outlines some of the measures that need to be
considered before implementation of a construction-type project.
Results of the survey indicated that while many companies are
concerned about the possible implications of environmental risks
to their project, there still needs to be more emphasis on identifi-
cation and mitigation of these risks. There are few widely ac-
cepted guidance documents or frameworks currently in place
for use by individuals or companies wishing to use information.
Downloaded from ascelibrary.org by CLEMSON UNIVERSITY on 06/02/14. Copyright ASCE. For personal use only; all rights reserved.
Many companies have developed their own methods for de-
termining and mitigating environmental risks; nonetheless, sur-
vey results indicated that project managers are still looking for
a better methodology to quantity the impacts to the project’s bot-
tom line.
It is therefore recommended that further research be conducted
toward the development of a universal environmental risk man-
agement framework. This research would best be conducted
through extensive industry surveys to determine the needs of both
the construction industry and the regulators involved. Some of the
current initiates of the writers in this regard are:
1. Development and validation of a comprehensive project risk
management framework and a user-friendly computer tool to
encapsulate environmental and sustainable development is-
sues, its impacts on the project and to develop practical ac-
tion plans to mitigate impacts.
2. Development and validation of a computerized waste man-
266 / PRACTICE PERIODICAL ON STRUCTURAL DESIGN AND CONSTRUCTION © ASCE / NOVEMBER 2005
Pract. Period. Struct. Des. Constr. 2005.10:260-266.
agement model as an essential deliverable that the contrac-
tors need to submit for approval before construction begins
to optimize the resource requirements, waste minimization
strategies, innovative construction practices, and to predict
“life cycle costs and benefits.”
3. Development of a mandatory contracting strategy that evalu-
ates environmental needs as a new dimension in selecting
successful designers and constructors considering sustainable
design and construction practices.
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