Analysis & Management of Risk
in
Construction Projects
(BUIL0039)
Risk Management
“No construction project is risk free.
Risk can be managed, minimised,
shared, transferred, or accepted.
It cannot be ignored.“
Risk management - The commercial imperative
… Sir Michael Latham 1994
Learning Objective
Outline of the module.
Principle of risk analysis.
Principle of risk management.
Application to civil engineering
construction projects.
Aims of the Course
To introduce a range of models for the
analysis and management of risk.
To use economic and management
principles to develop an understanding of
risk and uncertainty.
To develop a conceptual framework for
rational decision-making in the uncertain
environment of the construction industry.
To develop skills in analysis and decision-
making in the context of above.
Outcomes
Be able to evaluate design and implement
appropriate risk management procedures in the
construction industry.
Be able to conduct a critical appraisal of
probabilistic financial and management
information.
Be able to deploy a range of methods or risk
analysis as appropriate.
Be able to evaluate risk associated with planing
design, construction, health and safety and
environmental impact.
Be able to reflect on and appraise leading edge
practice and the available literature in this field.
Contents
Risks and uncertainties in projects
Understanding probabilities
Risk attitude
Risk at various stages of a project
Contractual risk
Measuring risk exposure
Risk in the content of health and safety
Environmental considerations
International projects
Case study
Good practice
Lecture Programme
Week Topics
1 Introduction and overview;
Characteristics of civil engineering projects
2 Risk identification;
Risk and uncertainties in construction projects
3 Risk assessment; Risk measurement and attitude;
Risk assessment techniques
4 Risk analysis, quantification and evaluation;
Applications of the analytical results
5 Quantitative risk analysis and evaluation;
Applications of probability
6 Risks in construction project,;
Risk at various stages of a project
7 Risk control and management;
Residual risk; Case studies
8 Roles in risk management;
Health and safety in construction; Risk analysis and management in international projects
9 Risk analysis and management with environmental impact;
Risk assessment of contaminated land; Case study
10 Risk assessment of existing civil infrastructure;
Structural reliability and optimised maintenance.
11 Revision and/or students presentation
References
Risk Analysis in Project Management: An
Introduction, J. Raftery, E & F N Spon
(Chapman and Hall), London, 1993.
Risk Management and Construction,
Flanagan and Norman, Blackwell Scientific,
1999.
Risk Management and Procurement in
Construction, J. Uff, (ed), King’s College,
London, 1995.
Appraisal, Risk and Uncertainty, N Smith,
Thomas Telford, 2003.
Course Assessment
Assignment 1:
ONE piece of work testing analytical
understanding of risk
Weighting 50%
Minimum pass mark 50%
Assignment 2:
Timed
Weighting 50%
Minimum pass mark 50%
How to Contact
Hua-Peng CHEN, BEng, MSc, PhD, CEng, FICE
Professor of Civil Engineering
Senior Civil Engineering Consultant of Southern
Testing (UK)
Office: P350 Pembroke Building
Phone: 01634 883031
Email: h.chen@greenwich.ac.uk
Consultation time: appointment by email
Civil Engineering Construction Projects
Road
Road
Telecommunication Tunnel
Civil Engineering Projects
Buildings
Bridges and roads
Rail
Tunnels
Airports
Dams
Water treatment
Pipes
London's new City Hall
- 'glass egg'
London's Millennium Bridge
M8 Motorway Bridge Strengthening -
Structural
Rail Maintenance & Renewal -
Transport
Jubilee Line Underground London -
Transport Tunnelling
Chek Lap Kok Airport, Hong Kong –
Transport, Environmental
Three Gorges Dam, China
- Water
Hendon Sewage Treatment Works
- Environmental
THE PROJECT LIFE CYCLE
Identification
Demolition of need
RISKS
•ENVIRONMENT
•HEALTH & SAFETY
•FINANCE Planning
Operate & RISKS
•QUALITY Maintain
Construction Design
Hazard & Risk Management
Identification of hazards
Elimination and control of risks
Avoiding accidents and injuries
Avoiding occupational ill health
It is also about:
Avoiding abortive work
Avoiding financial loss
Professional responsibilities
Complying with statutory obligations
Avoiding fines and prison sentences
Manage Human Resource
Manage Construction Plant
Manage Materials
Hazard & Risk Management
“Designers create many of the risks,
Contractors can mostly only manage the
risks, while the workers have to endure
them.
Clients must learn more about their
responsibilities and think about the risks.
Construction professionals are involved at
all stages. We need to work together to
ensure consistently high standards.”
John Barber MA LLB CEng FICE MHKIE FCIArb
Barrister to ICE
Characteristics of Construction Industry
National Importance:
Difficult to define (DIY etc)
Annual turnover varies widely
About £80,000m to £100,000m per year
Employs about 6 to 8% of national
workforce
Major Health & Safety and Environment
issues
Projects
Mostly unique
Long duration
Outside
Price often fixed by competitive tender
Companies
Clients - Government, Industrial,
Commercial
Designers - Consultant Engineers & Architects
Contractors - Civil Engineering, Building, General
Specialists - Earthworks, Demolition, Steelwork
Size - 90% employ less than 20 people
Small firms carry out approx. 30% work
Large firms usually multi-disciplinary
Materials - Manufacture, Supplier
Project Management - Quantity surveying etc.
The UK Construction Industry is
rapidly moving towards :-
Design & Build ( & Operate ) Contracts
Use of specialist sub-contractors
Main Contractor acting in a management
role
‘Fast Track’ construction
Risk in Construction courses have to
reflect this changing model.
History of a Project
Construction is the last phase of a series of
interrelated activities
1 Idea - the establishment of a need
2 Feasibility study
Market forecast
Investigations of various possibilities
Planning
3 Comparison of alternatives – economic
appraisal
Contract Methods (1)
4 Recommendation of specific project
5 Site Investigation
6 Detailed Design
7 Contract preparation - Conditions
- Roles & Responsibilities
- Risk Allocation
8 Invitations to Tender
9 Approval of Tender
10 Construction
Alternative Contract Methods
4 Recommendation of specific project
5 Site Investigation
6 Detailed Design
7 Contract preparation - Conditions
Design & - Roles & Responsibilities
Construct - Risk Allocation
8 Invitations to Tender Alternative
Design
9 Approval of Tender
10 Construction
Pre Construction Phase
1 Contractor receives invitation to tender
2 Preparation of tender
- Site location, access etc
- Ground Conditions
- Method of working - plant, labour
& materials
- RISK ASSESSMENT
3 Obtain costs from suppliers
4 Additional costs - Overheads,
supervision and financing
5 Submit tender to Client or Engineer
Construction Phase
6 Detailed programme of work
7 Health & Safety and Environment plan
8 Construction
- site accommodation, services, hoardings etc
- site clearance, bulk excavation
- excavate and construct foundations
- construct frame / walls
- cladding, roof, weatherproof
- internal finishes, external services
Design & Build Management
Client
Contractor
(Tender)
Design Consultant Sub Contractor
( Drawings & Specification) (Price & Programme)
Contractor
(Site Management)
Sub Contactor
(Construction)
Clients of Construction Industry
A simplified view
of the people
involved in the
traditional
approach to
contracting for a
commercial
building
The process and
the people
Cash Flow Sequence of Project
Risk on Construction Project
Consequences of Risk
