Lead opportunity management for construction industry

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so just the contents will basically cover today so I'm going to go through you guys with the risk management overview after that so you guys can see this one coming better sorry guys so I'm going to give you guys an overview of what risk management's about why do we have project managers and why do we actually have a specialized field only looking at cross management and what we do and what value and contribution we can actually make and how that feeds into you ISO 31000 p.m. Bock which is your PMP for any project managers around you then we'll go into a case study so kind of lessons learned I'm going to use one of the projects that's it actually today that's one of the projects that's gone horribly wrong on time and and money still recorded as one of the worst projects ever done to date then we'll go to you back to basics with risk management process so what is a real risk when isn't a risk really a risk when it's actually caused when it's a consequence because it's very important to to make the distinction between because you're costing depends on it you're scheduling depends on it your company strategy and decision depends on it so we need to make sure that when we identify risks it's actually real risks so we'll go through that what's the definition then we'll look at quantitative risk analysis so basically qra consists out of two things we've got QC ra which is quantitative cost risk analysis which I say we usually build a Monte Carlo simulation in at risk which is a palisade software tool and then we've got Q SRA which is quality which is quantitative scheduled risk analysis and we usually do that in a primavera risk analysis so mainly using p6 schedules though we can also do a schedule risk analysis using Microsoft projects we'll just convert the Microsoft projects program into p6 imported and do a risk loading from there which I'll go into more detail and they some final thoughts on the day we'll will cover with you guys so just with regards to to an overview by press management so if you go and look at I don't know if any of you are familiar with ISO 31000 so as a 31,000 is basically it's the principles and the guidelines to risk management so a lot of people always know what iso 9001 is and what it stands for and it's quality etc but not a lot of people will know that risk management actually has its own standard and it's called ISO 31000 and I would really suggest that if you guys are in a position to to gain a copy of ISO 31000 that if you guys can get a copy it's it's very valuable it's something you can always refer back to it's a good reference point if you guys get stuck somewhere in a risk management process that guideline will definitely give you the answers to what you're looking for then with regards to what does ISO 31000 say what do they say what's the definition of a risk so basically they say it's the effect of uncertainty on objectives so of course you'll have an objective in mind and you'll say for example it would link probably to your company strategy so part of the strategies to you would maybe be we need to invest X amount of money and a new project but you're going to take us about five years and the objective of that would be because the business is growing more capitalisation it might be something the country needs if we look at them we do bureaucracy leap our station so it's more to do with the infrastructure local requirements for our economy itself so is that what will the effect be of uncertain things that we face in life every day on those objectives so what would pose a risk to us meeting those objectives and then as well the fifth can either be positive or a negative deviation from your from an objective so I'm not all risks are bad people usually think if you say risk they just see red lights and I think oh we're in trouble etc but actually the true definition of risk it's either positive or it's negative and it's actually known as it's either opportunity or it's a threat so an opportunity of course leans toward a positive event where threat leans towards a negative event and what happens there is that if we if we will assess risk service concepts of opportunity and threats then what we would do is we would try to increase the likelihood and the consequence of an opportunity so a lot of people say but there's not really a lot of opportunities or show me how do I identify an opportunity in a project for example now every we refer to a construction project so let's say we're construction phase ready with mobilized on site and we need to procure material so management makes a decision in the opportunity to say well apparently as the economists of the country say that there will be inflation next year so we decide to procure bulk material now we should know the consequences and the risk we face so we need to make sure we have a storage facility preservation is done etc but the procurement of bulk material will probably save us and we can do the calculation let's say it will save us 30 million rent worth of of expenditure on materials so the opportunity and that is that there could be a cost saving to the project so what we would do is we will say well what's the likelihood of us being able to procure this material this year like that and not next year in order to to hack into that opportunity of the cost saving of a few million then we'll say well that's very likely we can get the orders art place the orders you can have it on site before the end of the you have the invoices paid and the consequence of that is that we've had a 30 or 40 million rent saving on bulk material so we tend to miss opportunities and pride and there's actually quite a few opportunities that we can explore and that we can actually tap into and make sure that we do get that cost saving but then on the other side again then there's a lot of threats that that we need to establish what's the likelihood of that happening and then what would the consequence be now the consequence can be quite a few things it can have a financial impact it can have a delay in schedule on the project which will in turn probably also mean financial impact because time is money with down time standing time whatever we assess on-site and then as well as a consequence could be we could have an injury or a fatality on site if we lean more towards a safety point of view and from a product from a project point of view so if you guys can just keep the objectives of risk management in mind as we as risk managers we don't just look at the negative and the threats on projects etc we also explore the opportunities within it and and and what could the benefit be then we have risk and opportunity management so basically risk is seen in this sense as let's say call it a threat and then the opportunity as we just discussed so with regard to overall risk and opportunity management and the process and it will be applicable throughout the entire organization of the organization would have various levels so if we would for example start up top so we always have corporate and strategic and these decisions are made looking from a business strategy point of view so what's good for the business and what will make the business grow what will be financially beneficial to the business so those usually happen at the top from a from a corporate strategic point of view then in the next level we have the program level so that's when we decide to action the strategy so we've got a strategy in mind we know which way we're going to go so we've got this picture or sketch but now we need to go over into a program level to say well how we're going to put the strategy in action where are we going to start how we're going to start it and then the next level is basically the project where I like to specialize in and that is implementation of those actions actually going over so appointed a contractor mobilizing on-site we've got the budget we've got a baseline schedule and now we can we can actually start with a project in itself and then of course after that we've got operational so whatever we've built we've commissioned it and now we can just operate and then it will of course roll back to the top of which capitalization will happen and hopefully that would start showing profit which will then in turn roll back up into your corporate strategic side so like you can see the errors they keep on you moving in a circle so even though we haven't commissioned the project yet and we may be still in a construction later on the project level face the risks we face on a project level we will deal with those risk as much as we can on a project level but a lot of that would probably pose a threat to your strategic risk or to to the company those are the type of risks we were all up to corporate and strategic so for example if something drastically on the project is posing a threat to what the company had in mind strategically and let's say it would be a huge impact lock the project might be delayed for two years means two years worth of investment we're paying interest on that and for two years we won't be able to capitalize it when we thought we were going to and what impact does it have on possess cash flow life essay cash is king so it's basically rolls back up into corporate strategic going to tell the board members we are facing XY and Z just so that everybody is always so as this continuous circle of moving through through the business on all those levels from of you then you've got a project life-cycle so in the first phase we say well we identify for example they need we need to build extra boxes need to build let's say five more branches in the country for better service providing maybe a time as expanded like if we look at Madhu P at Alice rust I mean there was a small community and I mean within the last five to six years it's basically just boomed with infrastructure so well there's a need for four more for another bank maybe a episode in Alice rust so they identify the need then they bail over and there's a selection pre feasibility phase they need to go and look at that of course rolls over into doing a feasibility on the strategy and once they've decided which way they want to go and then of course the final one of actually implementing that in itself so basically what the risk explosion the information shows you so basically what it will say is we will do qualitative risk analysis and it will kind of roll over into points so yes we can do quantitative risk assessment at a pre feasibility stage and at an estimating stage but because the information we have at our disposal is quite little because now we don't have quite the design in mind yet we're not quite sure what budget we want to spin we're not quite sure what timeline we want to have a done buyer because the information is very little it's very difficult to always do a quantitative so we do qualitative we identify just the risks without any monetary value on it and just say well these are the risks we face and then you will see as we progress through the life cycle of the project that is beer definitely often this there's a penalty I think okay so with little information of course your risk exposure is very high the more the information becomes available or to our disposal the less the risk would be in the sense that it's not to say that the risk impact won't be major on your project it's just saying that the more info we have the better we get at being able to assess the risk to cost them and in order to put any treatment or mitigations in place to try and either prevent them or try and reduce the impact so if they do occur that we won't take the full risk to books for example on cost or schedule so we try to mitigate it down as well because not all risks we can we can fully mitigate so we try and put as many treatments and mitigations in place to try and lessen the blow if we can if we can put it that way so that's basically your your project lifecycle then with regards to a case study so there were quite a few case studies we can look at but I thought a very interesting one and that we can refer through through the entire masterclass is with regards to the Sydney Opera House I don't know if anybody really knows what the history is around the Sydney Opera House but basically what happened was that and the New South Wales State which is one of the second in Australia they decided well they saw this need from the music consortium that they need to build an opera house so what they wanted to do is basically they wanted a hole that had opera and they wanted a hole that route and have symphony concerts so they basically went to the multi-purpose Opera House so it's basically a two in one so they identified the need in 90 57 but the way they went about tendering it wasn't was a bit abnormal it's not really how we would tend to do to business so what they did is I kind of put it out as a competition to the market in Australia and they said kind of this is what we have in mind and they wanted architects to enter the competition basically saying how how the design would look how how they would picture the Sydney Opera House at looking they received about 233 entries of which a guy from Denmark jørn Utzon out of all the entries he he won they liked his concept and his idea the best and they actually appointed him as as the architect at that time Kenya was the premier in Australia and with strong opposition from from his fellow members they kindly criticized the project they said firstly it wasn't done 100% right that's not really how we be we don't do it through competitions and what was the assessment criteria you used to decide which architect you were going to use for example and basically because it was getting so much pushback from the other members he basically made that his tech project he thought well all eyes on me big stress now so now I need to run this now I've never really heard of a premier or a president of a country actually taking a project under his arm and just running with it because they don't really have time to do those type of things no way do they really make mention if he if he made use of an EPC M or owners team so you kind of try to run this project on your own do the interfacing with the architects they actually appointed Arup as the engineers back in the day and just try to prove everybody wrong that he could fly this project now that we must understand is is a risk in itself is when you don't think you need help or if you don't if or if you think that you understand when strapped but it's not really a Forte or your environment so it's very important to always have that project team that will consult you that will advise you so this guy just decided to run with this project on his own then they said well they were aiming to open the Sydney Opera House and have it done by January 1963 and it will have a total cost of seven million Australian dollars now when they went out to market with this competition saying they needed architects to enter they never really gave the architects like a design or concept that they had in mind all they told them is it must be a multi-purpose Opera House that's all they said and they never spoke to any costs so they didn't tell in your architect look if you enter you can have all the great ideas in the world however you kept at X amount so it was kind of an open checkbook and these guys of course could design anything that they that they felt like designing because there was no budget then after they they've appointed the architect they put a date to it and then they said well it's only seven million Australian dollars which in 1963 was was quite a lot of money then what happened is in all of this design engineering phase mobilizing on-site and construction starting of the Sydney Opera House the premier actually Cahill he actually felt very ill and the other risk that that he exposed himself to you is when he when he when he felt very ill he never asked people again for help you were still trying to run it on on the sidelines now we all known for the project environment things change on a daily basis so even though if you object for two or three days it has a huge impact decisions are made contractors commercial a lot of things happen in a day still this guy didn't ask for any help he was going to try and fly this project on his own so by March 1959 the construction begins before plans are finalized now I have to say in the last eight years working on construction projects I've never worked on a on a project in the country or in Africa that had more than a 30% model review done from engineering point of view which is quite a huge risk because and sometimes it's very simple or the easier for me to explain it to people is basically saying well if you had to draw me a picture let's for example use this one you can choose which 30% you want to draw of it so you can draw a little pieces yo you can just draw the 30% of the picture here etcetera or however you want to engineer it so at 30% model review these guys usually feel from engineering and and the client on the contractor side that they need to get this project up and running they usually already behind on time and budget is already under pressure from and it's being constrained and of course there's a lot of pressure from the company from corporate and strategy saying guys are taking longer than what you stated so we've got to fly this job 30% model reviews done first engineering drawings are issued and of course the contractor will start procuring and they'll start the construction on site the problem is by the time they get to a 70% model review they go well actually if we want to do this then we've got to change something that we've started already and it happens time and time again on construction that when the engineering starts changing we start issuing revisions red lines are being done in the field the amount of Bagration it it causes within a project construction environment is actually to a point sometimes devastating as your compensation event so it will cost you time or question money of which the contractor will probably be B be liable to and we actually then we've started the project wrong in that sense and that's one of the things the Sydney Opera House did as well they started construction before the plans were finalized before they saw the entire picture of what the Sydney Opera House should look so basically in 1961 only two years after they started the project was already behind with 47 weeks so in two years you've lost in you basically but more than a year which is quite shocking statistics if you think that they have overrun on schedule basically 100% already so and there was various reason wasn't just only this I am assigned to design and not being finalized so they have a lot of inclement weather they don't know how to do some of the storm water drain which says that from a project risk point of view is that they really do a proper risk assessment and a risk register before they started this project saying well is it a greenfield site is it a brownfield site what's the weather in tropical monsoon weather does it rain a lot is a very hot day certain time of the year did they do a proper site location assessment but not a lot of people do that not a lot of people think it can be done but what they do tend to do is they can ask project risk managers and we do go out to sites sometimes in Africa if it's a very remote location there are various risks you face as well now of course the client will stick to its guns and you'll say well I want to build it there from our high water but we just need to know that what we face while we in construction and operation phase but unfortunately they don't always involve us at that point in time they usually get us involved for when the schedules already 2 years behind and the budget going out the window and there's no contingency left then usually they call in the risk manager and they say well will tell us what we're doing wrong and where we going wrong and that's kind of part of a sad story so they couldn't identify this because a proper assessment wasn't done above in Sydney the location where they wanted to build upper-half etc so they faced quite a few obstacles and constraints in starting and continuing with with the construction of the Opera House then in 1962 there was controversy so you had your architect and you had your engineer and then all of a sudden they say the cells which is the roof which is quite magnificent today it had to change and the reason behind that was that it was for structural reasons it wasn't going to be fit for purpose what we're going to be safe for use so we needed to change the sails from a structural point of view it actually took them so after five years they come up with all of a sudden we need to change the cells and roof needs to look different etc after later took them another three years to actually design the roof so it took them eight years just to design detail the sails the roofing itself which poses a question that these guys maybe really know what they were doing then in 1963 construction of the roof started then of course in the press in Australia the Opera House becomes a joke cattle is under more pressure than ever the premiere saying it doesn't know what he's doing he's overspending is over running it's the worst project ever done in Australia they stated and currently unfortunately one of the ways done in the world and it just became a national and international joke then they decided in 1964 that they were going to demobilize and cancel the contract their head with with the architects they said well you've basically designed it for the last seven to eight years you won the competition but mr. architect win will no longer require your services and we will bring in four new architects a panel of four Australian architects were brought in now I've worked on two projects recently where they actually changed the engineering house halfway through construction which I don't think if we think of doing it and I understand the frustration sometimes from me from from a contracted client point of view with the engineer is that if there's a lot of revisions there's a lot of vibration on site it's hampering progress it's hampering the construction of whatever we need to build but sometimes they make a decision and they say okay don't want to make use of this engineer he's been here for three four years and we want to bring in a new engineer now let's just think about that for a second so firstly the risk we now face is that we will not be able to hold that engineer liable anymore because as soon as another engineer touches use engineering or his design is going to say well if it fails in a few years I'm not going to take responsibility because I don't know what the new engineer did and that's quite in that it's a fair statement because if if I would start building a house and all that needs is the roof from the chimney and they said well we don't want you to continue building the house we're going to get somebody else and then for some reason five years down the line that structural that house fails and they come back to me I'm going to say but I'm not the last guy we worked on your house so I don't know when they put on the roof if they've put the walls or the integrity of the walls at risk so I'm not going to take liability the same thing if you replace engineers on a project if you crime hold the first engineer liable or accountable for anything then thereafter that becomes with the new engineer now a lot of people will of course debates and argue about that saying well the design engineer needs to sign off on it they need to stay liable etc but I can't really see any engineering house just saying well okay you're checking us off the job it's fine we'll come back in five years time when you've finished constructing your project and then we'll sign off as the design engineer it's not it's not that some it's not that easy and they won't always agree to that because they are exposing themselves to a whole lot of risks in as well so they change the engineers of course the new engineers architects they would want to do a validation I want to say well what of all the plans look like what's been issued to whatever we constructed they'll do their own little validation and then only will they will then carry on now they say these validation depends on the size of the project usually takes four to twelve months so you can just smack that onto your schedule because that engineer probably won't continue issuing any drawings unless he's done his validation he feels comfortable with where they're at and where he needed to continue from so they brought in four new architects and they said well we want you to finish this job for us in 1967 they make major interior design changes major ones so architects came in said well we cash-strapped we've overshot the delivery date already because in 1967 they were supposed to have been done by then in January and they say well we are going to change the interior it's not going to it's not going to serve the purpose for what it was initially intended so it was supposed to be a multi-purpose operand concert hall and not just become solely a concert hall so no opera just a concert hall so firstly they've overrun on money they've overrun on schedule and now they have to go back to the Australian population and say well we're also not going to give you what we initially promised we we're going to give you we're going to give you a list we're going to drop the standard just in order to finish it at that stage they had to write off about five million dollars Australian dollars worth of machinery which was redundant thing they weren't going to use it procured it and now they physically just have to write that cost off now from a rest point of view in corporate that means it is imprudent spending it's wasteful expenditure now from corporate governance point of view it's not that easy to let it go so if I can finally refer to quickly to King III if you guys want to make a night if I'm going to go and read up on King three it's very important what King three says King three says that if you either trade on the JSU or you work of taxpayers money or you work with investors money you will prove that you do apply risk management you will prove that you do have the interest of your shareholders at heart and that you are managing and mitigating any risk that they might face from investing into your project or into into whatever project or initiative you have and you needed money for that to fund it in King 3 it will also tell you that you need to comply to corporate governance which means if you would write off something like five million dollars worth of machinery it was wasteful expenditure you will have to prove why did you just write it off because not any investor bank is going to say well like a family and down the drain what they usually do is they usually could back charge that that business or that company and say well we're not going to pay for it goes back on to your bottom line whatever profit you make for the show if you make any you are going to give us that five million dollars back because we we're not going to going to take that that knock of the money so it's very important if you guys can can go and study up on King 3 and what it says especially around corporate governance and and what we are compelled to do from a rest and point of view so risk management not always just on projects or insurance or banking we are actually legally bound to certain things that we need to deliver and if we need to ensure that we reappear - then as well the whole seating design in the interior of the hall changed so it was totally totally scrapped and it was changed to a lower standard saying well we know what it was initially attended for but for project saving and timing we're just going to downgrade a lot of the things so basically what it boiled down to so the Sydney Opera House it took them in total 14 years to complete the Sydney Opera House and they went from a 7 million Australian dollar to 102 million expenditure so I mean so thousand times that they've overspent Plus on what the initial budget was which is which is a lot of money if you take that they still don't have to the stake thus ending Opera House is still not a multi-purpose concert hall like they intended it to be it still doesn't have the interior they pictured it to have and it's still not designed than what they initially had the idea when they started construction in 1963 then in 2002 they actually tried to they are actually still trying to get the Sydney Opera House to the original idea that they have to make it look like the first picture they had back in the day and disturb the purpose the multi-purpose they wanted it to sue so they actually went and they invested over an above 102 another 45 million Australian dollars to start trying to get it to what it should look like so even with the investment of 45 million they still don't have the Sydney Opera House to what it was initially designed for tainment so let's look at what what were the lessons learned from from this case study and I think a lot of projects usually go wrong on some of the exact same things then then the send you know everybody will always quote lessons learned but the question is do we always take into account lessons learned when we kick off a new project or do we start from lessons learned when we start assessing starting to make sure is budget going to be enough is it a realistic schedule or are we just hearing in the wrong direction already so the original budget was a political budget or not a real budget so what that means is Parliament went to act the premier and said it was a competition they didn't even give a costing to the guys so they thought they knew what the budget would be without any input from a construction planning and engineering point of view they thought they knew what the budget would be and that was it and then designs like we discuss in a bit more detail earlier it was not completed before the construction was started and then as well major design changes took place halfway through the project where they change the sails on the roof so after five years they change it took them another three years so if you tell somebody took you eight years just to design and construct a roof if we can put it that way it's going to sound quite quite silly which which it actually is and then the design technology and computer power required back in the day for example to do the sails on the roof we must understand that what they intended the Sydney Opera has to be in nineteen in the 1960s it was a very advanced building for its time so they don't have the equipment we probably have to the state they didn't have the technology they couldn't design it in the computer software we have so that when we do a project and it's good to think of all these great ideas and how we would like to achieve it but I think we need to establish how possible is it is it is it a pie in the sky and we would love to get there or is it in reality it's really tangible in its and if we can actually apply it because a lot of the time we've got this Airy fairy and it's in the sky and we're going to do it and then we make the mistake and we baseline our schedule to it and we cost to it and we don't even know how realistic it is and it's not even always technology and computer we can add simple things like resources in the country we look at welders in South Africa these days how many skilled welders do you get these days and with various major and mega projects running in the country there's only a handful which means there won't even be enough to service all of those markets so if we say well we're going to world X amount of inches and our defects are going to be less than 2% etc because we think that out of the let's say 10,000 skilled welders we have in our country that we are going to get 5,000 of them then the question remains from a risk point of view I'll sure we're going to get 5,000 of those guys so how realistic is your schedule and your costing done - what we know in this point in time and what we have to our disposal then they had the meddling in the building design and the construction people went experts we had a government wanting to build it no construction background didn't really make use of an owner's team or EPC MT and then of course in the building design after seven to eight years they filed the original architect and brought before new architects in which caused total Bagration validation from scratch they had their own ideas trying to implement their own way and that also just derailed the whole the whole project even further and then the costs were greatly increased by labor intensive building methodologies now what that means is that they don't have the equipment they had back in the day as well at the head so it was more labor intense construction then what it probably would be today so we've got a lot of machinery got a lot of things doing stuff for us which doesn't always make it that labor intense for people to physically do the work of course labor comes at a cost it's longer hours it's a longer duration so if it's longer on the schedule it means that we'll have a higher cost or expense to it so what they never did is they never did a risk analysis I never looked at any risk management never asked if there were any opportunities were there any threats and if it would happen that what what could they do at that point in time to make sure that the risk doesn't happen or they face the least impact of it so because they didn't have the whole risk management identification and process and risk management assistance in place they don't do the following things which there's many more that we could probably list but just from a high-level point of view so firstly they don't calculate and risk contingency people always say oh but we've got a budget square bit of contingency has got a bit of growth nothing scope creep or something but the question is it's not a risk contingency which means to me and this is the terminology I use is it's a p0 cost it has no contingency for if anything goes wrong down the line it also doesn't have any contingency if I need to mitigate something if I need to pay for a mitigation for example how do we pay for a mitigation so for example I work on the oil and gas project at the moment so we need to have manual and controlled or mainly motorized valves installed here's no triose valves you can't buy them off the shelf they are costing items so they are specifically made for this project nowhere locally can they be made they are actually made in Italy so we place the order in Italy and actually believe it or not it took it 40 weeks experts just to get a job without placing the order going through the whole commercial three quote assessment placing the order and then actually installing them on-site it took them 40 weeks to fabricate those valves and ship them into South Africa now if you have risk contingency you could do a few things you can buy out a production line so you can go to the guys in Italy and say look we pressed for time we don't have 40 weeks we actually only have 36 weeks on our schedule if we must still the valves etc so can we buy up the production line they'll probably say yes they'll say yeah will cost you let's say 10 million rand if you want to buy it out and then we might say well we don't really have shipping time to put it on on on the sea so what we want to do is we want to aerate the valves in so it might change a ten-week lead time of transport to a 2-week if we fly them in but of course that also comes at at quite a higher cost so if you had make provision for us contingency it won't impact your project budget you will do a drawdown from your risk contingency budget that bucket and it will pay for the mitigation there up but at least it won't impact schedule now when you do contingency a no-go but more into detail but just high level is that you need to do two things or your project risk manager needs to do two things so what I use is if we sit around the boardroom table me and the construction team they will usually say well we've got two options you can either fly them in by the production line or we're going to over run for weeks on schedule and I'll say okay Charlene so what's going to be the cheapest and what's going to be the quickest and I'll say well let's do a calculation if we fly them in and we buy our two production line for example it's going to cost us 30 million but of course we'll go and do the exact calculation just giving an example now however for every week that we overrun this project we will pay the contractor these peas and Jesus and he's downtown because nine is waiting for us because we maybe as the client would supply the vows it will be a free issue item secondly for every week we overrun and the client can't operate this facility he is losing five million wreden revenue so for four weeks the clients going to lose 20 million rent and your contractor is going to charge you two and a half million rand a week so basically it boils down to 30 million ready to buy the production line fly in your valves is going to cost you 20 million so we would rather pay for the mitigation then face the schedule slippage however if it would cost us 50 million to buy out a production line and find the valves we will rather just over run for weeks on a schedule because cost wise it makes sense and that is the benefit in good proper project risk management because the first thing if you would ask a guy what will you do you will just say we're not going to over run schedule we all throw as much money at it as we can you know no it's not only South Africa has power failures Italy might have a power failure their little plant comes to dead hold for two three days and their your contingency is already shot out the window even if you've paid for it it's not a guarantee that you will then still meet your day plus now your valves get on-site and you think it's all great and this another discipline overruns and it poses a threat to schedule so sometimes to overrun those four weeks has a bit more educating just to throw money at the entire time so very important from project risk management if we know what we face we can know what decision to make an informed decision that's a very important word big boys the Xcode guys there you like those big words they like colors like a nuke map I'll show you and I like big word you'll tell them you can make an informed decision to where you want to go and what you want to do cost wise and schedule wise and that's what we mainly do from a project risk management point of view as we equipped them with that we give them the scenarios we're given the costing we tell them this is what it is you choose is at the end of the day those are the guys you want to choose you don't want to be held accountable and liable and say oh but you got insight you made the decisions or the contracts or the client you want to say well from a shareholder investor corporate strategy point of view you guys decided we were going to go this way both ways we'll have threats both ways we'll have opportunities but it's how well we assess it that at least when we do make a decision and it might be the wrong decision then all of a sudden we have the auditors or prudence your corporate governance but if we can prove to them that we did the assessments and we decided and sometimes the decision might not always be the right decision for various other reasons at least they will know that we did as much as we could and we made the best decision at that point in time that we had to our disposal but at least also when we all make a decision then we all know which direction we're going because we don't always know where we're going then let's prioritize the risks so sometimes I'll get a risk register and then the top risk would for example be people will say weather conditions we're going to stand on site biggest research project we'll face because it will have a scheduled impact okay and then yeah down at Number ten they might be a risk clock we don't know if we have enough budget to finish this project or the engineering zai need 20% model review and then I'm saying why do we think that rain or wind or any of that poses a bigger threat to custom schedule then we're not even know if we have enough budget or how the whole engineering design is going to look so very important if you like the way your smiling tells me you kind of making sense of what I'm saying is that it's very important to prioritize your risks and rank them and we'll talk about in QRA from a quantitative point of view how do we rank risks so that it at least makes sense from a cost and a scheduled point of view and then we financially plan for risk events so when we have a risk contingency at the top that we've calculated we can make the decision either if the risk happens we'll stomach it because it's going to cost us X amount and it's cheaper than mitigating it or we'll do a drawdown from the risk contingency and we'll we'll pay for mitigation then we actually develop mitigation or treatment plans for the risk so after we've prioritized then we will look at the priority runs of course and we'll say well if this would happen down the line because remember it's uncertainty so I'm going to say it's going to happen we're just trying to equip ourselves so when it does happen we know what we're doing and what we which way we going how we're going to deal with it and very important who's going to make the decision at that point in time and lose the risk going and who's going to deal with it because we don't want to run around at the last moment thinking or who's going to look at it and who's going to do what we need to know everything before it happens because if it happens it's no longer the risk to issue it's materialized you're going to you're going to have an impact the scary thing is you don't always know to what extent so develop mitigation treatment plans very important and it needs to talk funny enough if you guys don't know the mitigation and a treatment you never met again or treat the risk you treat a mitigate the cause because the rest will have multiple causes and you need to mitigate the causes in order to bring the likelihood or the impact of the rest on you know mitigated risk the risk will be the risk you need to mitigate what is causing that risk to happen what's going to cause for that risk to materialize and that's why if you have five causes to a risk you should actually have five or more treatments mitigations in place now sometimes you can have more than one treatment or mitigation idea if some of one of the causes but you can never have less mitigations and treatments than what the causes are because it means you haven't addressed all the causes maybe in that point in time you're not quite sure how to address that cause which is fine but then you should know that you can never mitigate it away if you haven't identified other mitigations to other causes that's very important and if we can remember that we are already winning in the sense that we will know what exactly to do and what we need to treat not the rest the pause and then of course focus on improving performance by focusing on high-priority risks so that priority risk so usually the one that's going to cost you the most time or money so if we prioritize them and we know what to do to make them not happen or if it's opportunity to exploit it to get the benefit from the opportunity then then we're also in a better situation than when we don't know and then what I mentioned earlier assigned risk accountability a lot of people always think the project risk manager owns the risk now if that was the case which I'm sure I would accept if I got the project directors salary which I don't so it's not a project risk managers job to mitigate the risk we play a very important role play a very crucial role and we are sometimes also seen as that project managers right-hand men because we're the one guy inside to go to all the meetings and we the one guy on-site but from the p.m. that interface with every discipline we set with the engineers so through the material controllers we sew to the procurement guys who sit with the commercials we said with a construction guys finding out what's wrong what's happening once we sit with a cost engineers we sift through the planners and schedule we're the same than the PM in the sense that that integration is very important because of our DSA's engineering risk or procurement risk I don't know what's affecting the whole project or the whole site it has to be the entire picture you got to see it has to be those whole integration that's why we have integration schedules as well because it's the integration because usually where the integration is where the risk comes in might be to contractors it might be to disciplines needing access from the other one and that's where the risk starts happening so it's a very it's an integration session you have with all these disciplines on site so to assign accountability for the risks we've always said the PD that needs to to be the risk owner which is hundred percent right in a sense that it's easiest project is easy is deliverable and ultimately if it doesn't happen he'll be held accountable unless he holds somebody else in turn accountable so you'll have some people who say well the risk owner should just be the PD and I'll say well for the PD to mitigate let's say 50 and interest it's quite a heavy job but then I would assign mitigation owners specific people and people get this wrong I think if you are accountable for a risk it means that if that risk happens then you're going to be fine are you just going to lose your job we were very scared that's like a hot potatoes like if you want to give somebody a risk I've seen a risk workshop god no no not me not me earth and I call it I actually call it the project salute it looks like this goes well well I thought it was that guy and you thought it was me and then it's just everything's just on the floor again accountability is not about who's going to get the hiding when the risk happens because you can be accountable and you can drive mitigations day-in day-out have your finger on the pulse the risk maps will happen it will probably have less of an impact or it could have a big impact or something totally out of your control which you will know which a project team will know well no your countable for anything you do know I mean I know what you know right and you can only mitigate to a certain extent and what's what you're capable of within that environment so what risk accountability is all about it's just saying that I know about this risk and I'm the lead for procurement for example and I know we need to look at if inflation goes up we'll buy bulk so there's opportunity and price saving I know there's long lead items we need to procure this thing straight away I know that fiber optic cable from electrical point of view it gets damaged to light that's quite expensive take some time to get you as well so I need to order enough spare cable so I can have it in stock so not when we run out we go oh we've got to order we need to have all those things in place and usually the procurement card will then be well it's my department I know what's going on I'll try and manage it if I don't know what to do or get stuck or escalator to the PM or the PD and they will assist him in trying to to manage the risk and as soon as you take ten risks and there's 12 people around the table and each guy takes one then you actually also start mitigating it because you're not looking at a whole rest great gesture you are just looking at one little thing and all you need to ensure every day is whatever you do in your operations or in your in your daily work that that risk you just keep on remembering in the back of your head that's the risk we need to look at a few things etc so risk accountability is very important it's who do we go to and ask the questions so are we going to buy it are we going to cost saving are we going to schedule over run so you can specifically walk to a guy specific person on ask him for that type of info in detail and then from a risk point of view when when we look at threats and we'll go into a bit more detail around how we treat opportunities and how we treat threats is we can either accept and live with it as I will nothing much we can really do about strikes in the country because who we actually term it in construction out and it's it's a seasonal strike we pull it so kind of sort you from May June July August and then we're not ok we'll be safe again until January then everybody goes on holiday season everybody's happy and it's Christmas and then by May they news on that case and everything it is just something you want always may be transferred to the contract or accepted as a contractor it's going to happen it is what do we do - pull back schedule once it's happened and what the impacts been so if it's two weeks or two months worth of strikes what do we do then to recover on the schedule so those are the things we have to accept and live with there's nothing we can do especially if it's a if it's a legal strike which quite fascinates me in terms that you can actually just apply and it's legal so those are the type of risks that we will just accept and live with it and we'll deal with them as they come along or we can manage them so we put somebody in charge saying ok you're accountable for this risk you need to keep it updated you need to know what's going on you need to everybody informed we need to keep your finger on the pulse so we know what we're going to do and how we're going to do it so we can manage that dead environment and those risks then what clients really like to do is just transfer to the contractor you know so just whatever it's not our problem it's a tease problem now from a risk point of view it's a very interesting thought and concept an idea but at the end of the day you can transfer a lot of risk onto the contractor but it boils down to if those are materialized whether you try to mitigate it or not let's just Park that aside for now you still won't get your project on the date that you thought you were going to get it stolen going to capitalize on that investment because it's still going to overrun so at the end of the day you as a client will still feel the impact of maybe not to a very large extent maybe not always financially because you're just going to say the contract is risky is going to pay for it but you might have reputational damage because you might have promised investors or the country you'll have those up and running by the state so they have reputational loss if you won't be able to capitalize capitalization you can't come back from the contractor complain back and said mr. contractor you'll finish it at your cost would you running late I'm paying for it which is fine okay that's all the contractor forever meant you delayed I'm going to I'm going to charge you my capitalization costs at the end of the day we can't just drunk so but it's also capped so if it's if it's capped at the contract value of which it's usually 10% for example but a month in over running capitalization they might lose more in revenue than what they could on a performance or a retention guarantee so they can pull the performance bond whatever attention they had but still in commercials it's it's kept at a certain value and that's also what we usually do from a risk point of view is look at what is the exposure that that the client and the contractor how did they protect themselves in in a contract environment because that's very true there are certain things that they have to their disposal but it's also I need to a certain extent and in what contract it is whether it's FIDIC NEC so it's not just that easy to always think if you're the client on the client side just to transfer it you're going to be fine so sometimes it's better to you have that negotiation and discussion around what do we transfer what do we accept what do we love with and then of course why do we try and avoid so also isn't avoid the same then accept no no it's not so if we could for example have two areas where we can built the project so one might be better from operations point of view but it's going to be very difficult with a community there to construct it where the other one it's bit more difficult from operation point of view but we won't face that many risks from a construction site so what the client might say is well I want to avoid any animation within a community any lease agreements any disruption to my construction of the site so I'll rather avoid that and rather construct it you so they also know is where we can try and avoid risks but the important thing is we'll only know how to treat and mitigate it if we know what the risks are so we don't do a proper risk assessment we just thought I know what we need to need to do or put in place