TRINE VEICHERTS RISK MANAGEMENT IN ROAD PLANNING AND CONSTRUCTION
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1 PIARC INTERNATIONAL WORKSHOP ON RISK AND EMERGENCY MANAGEMENT FOR ROADS MERIDA, MEXICO OCTOBER 2013 TRINE VEICHERTS RISK MANAGEMENT IN ROAD PLANNING AND CONSTRUCTION
2 DENMARK
3 THE DANISH ROAD DIRECTORATE We are responsible for the state-owned roads. We promote an integrated road and transport system. With special consideration to our environment, we are working towards a safe, secure and easy journey on the roads for people as well as for goods.
4 THE DANISH ROAD DIRECTORATE PLANS, CONSTRUCTS, OPERATES AND MAINTAINS THE STATE ROAD NETWORK km state road network 5 % of the entire road network in Denmark 45 % of the entire road traffic in Denmark
5 WHY RISK MANAGEMENT We take risks very seriously and believe we can save money and time through RM! (And it is a requirement by law) Objectives: Identify, assess, manage and mitigate significant risks and uncertainties Increase awareness and attention given to uncertainty and risk in cost estimating and in project management Systematic registration and documentation of economic project risk development in hazard log Manage economic project risk in all projects consistently Build experience for future risk analyses
6 ISO RISK MANAGEMENT PRINCIPLES AND GUIDELINES
7 ROAD DIRECTORATE S PHASE MODEL Planning Construction Feasibility studies EIA, cost estimate Project for Surveying Project for Construction Construction works Finshing works DECISION Construction Act Contracting
8 NEW PRINCIPLES OF BUDGETING In 2007 it was decided to introduce new budgeting principles for construction projects. It was further decided that the principles first should be tested on the transport ministry area (road & rail) The key principles are: Strenghtening the internal quality assurance of the estimated construction cost budget New external quality assurance of the estimated construction cost budget (by an external consultant engaged by the Ministry of Transport Department). A new change log A new risk management regime. DTU lecture - 3. november 2011
9 ESTIMATE CONSTRUCTION ACT (LAW) + Roads (Known elements + experience-based cost increases) + Bridges and buildings (Known elements + experience-based cost increases) + Other contracts (Known elements + experience-based cost increases) + Other construction costs (Known elements + experience-based cost increases) Contracts total + Land acqusition Construction cost total + Management and administration Base estimate + Project reserve A (Correction supplement A - 10 %) Project Budget/Appropriation + Project reserve B (Correction supplement B - 20 %, The central reserve ) Total Budget/Appropriation
10 REGISTRATION OF BUDGET CHANGES AND MANAGEMENT OF CONTINGENCIES Current cost estimate/ bugdet (Present) Change log Certain/known budget changes (Past) Risk log Uncertain/potential budget changes (Future)
11 MANAGEMENT TOOL IN ALL PROJECT PHASES Phases 1-2 (PLANNING): Together with EIA and cost estimate political decision basis and subject to required external check Identification, registration and assessment of significant economic risks and uncertainties Identification of economic differences between alternative solutions Possible re-design of project and changes in cost estimate Phases 3-6 (CONSTRUCTION): Practical management tool / One-pagers Early warnings
12 PM IN PROJECT OFFICES Management of risk,risk workshops and state reports PM updates with project controller Coordinating to change log Emergency risk workshops
13 IDENTIFICATION Systematic approach Workshops Brainstorming Check lists / Defaults 10 PROJECT MILESTONES FOR RISK ANALYSIS - OR EVERY YEAR!
14 RISK WORKSHOPS 7-12 participants, 3-7 working hours Project manager Project owner Designers Supervision The devil s advocate Project controller Specialists in e.g. environment / land use / noise Other actors / authorities Risk manager
15 SYSTEMATIC IDENTIFICATION PROCESS Project / geometry Market conditions Soil / Geotechnical Nature / Environment Approvals / permits
16 GENERISK RISIKOKATEGORI NR GENERISK RISIKOTITEL FASE 1 FASE 2 FASE 3 FASE 4 FASE 5 A. Projekt/geometri 1 Ændring af linjeføring/projektomfang ifm VVM 2 Mængderegulering og tillægsarbejder 3 Geometri / bygværksudformning giver uforudset udgift og/eller forsinkelse 4 Fejl og mangler i datagrundlag, projekterings- og/eller udbudsgrundlag 5 Eksisterende forhold er anderledes end ventet 6 Ændring i afvandingsprojekt 7 Ledningsarbejder giver uforudset udgift og/eller forsinkelse 8 Øvrige projektspecifikke forhold vedr. geometri B. Jordbund og jordlogistik 9 Geotekniske forhold giver uforudsete problemer med fundering 10 Ringere kvalitet af råjord end ventet 11 Mere blødbund end forudsat 12 Jordbalance/ Jordlogistik 13 Uplanlagte udgifter til arkæologi og kulturarvsfund 14 Forhindringer i jorden 15 Ekstremt vejrlig C. Miljø og natur, miljømyndigheder 16 Natura 2000 områder, habitatområder, bilag IV arter mv. 17 Drikkevandsinteresser og -ressourcer i området 18 Problemer med grundvand giver uforudset udgift og/eller forsinkelse 19 Ikke planlagt støjbekæmpning 20 Projektændringer pga klimatilpasning 21 Uventet stor forekomst af forurenet jord (enkeltfund, forureningsgrad) 22 Okkerforurening 23 Andre, projektspecifikke miljøforhold D. Øvrige myndigheder og påbud 24 Politiske ønsker/krav giver ekstra udgifter og/eller forsinkelse 25 Kommunale ønsker/krav giver ekstra udgifter og/eller forsinkelse 26 Ændrede lov- og vejregler giver ekstra udgifter og/eller forsinkelse 27 Andre påbud, øvrige myndigheder (EU, Politi, Søfartsstyrelsen eller andre) E. Marked og konjunkturer 28 Usikkerhed på entreprenørmarkedet (Udbudsform, -strategi og udbudstakt mv.) 29 Usikkerhed på arealerhvervelse 30 Entreprenørens konkurs 31 Claims (tvister og forlig) F. Øvrige, væsentlige forhold 32 Grænseflader internt og eksternt (Bane DK, særlige naboer, entreprisegrænser) 33 Øgede udgifter til færdselsregulerende foranstaltninger 34 Skader på veje og ejendomme (tredjepart) 35 Skader på eksisterende konstruktioner 36 Stram tidsplan, særlige tidskritiske operationer 37 Større ulykke med personskade G. Eventuelle øvrige, særlige forhold 38 Tolerance svigt (kun relevant i visse projekter) 39 Svigt af kritisk udstyr 40 Hærværk/tyveri/sabotage 41 Æstetik/ visuelle udtryk giver anledning til ændringer 42 Nye krav fra Arbejdstilsynet 43 Særlige forhold vedr. beredskab og redningsveje 44 Andre projektspecifikke forhold (fx fast forbindelse samt større tunnel eller bro) 45 Ekstraordinær prisudvikling - udover alm. prisregulering, særlige forhold DEFAULTS
17 RISK MATRIX Very likely Likely Possible Unlikely Very unlikely Insignificant Low Moderate Significant Disastrous Low Moderate High
18 FREQUENCY CLASSES Frequency class Descriptive P 1 Very unlikely Rare hazards 0-9% 2 Unlikely Occurs in every 5-10 projects 10-19% 3 Possible Occurs in less than half of projects 20-39% 4 Likely Fifty-fifty incidents 40-59% 5 Very likely Occurs in most or all projects 60-99% Uncertainty Will definately occur with a certain +/- variation (loss/opportunity) 100%
19 CONSEQUENCE CLASSES Consequence class Descriptive 1 billion DKK Project 1 Insignificant < 1 % or no impact on construction cost < 10 mill. DKK 2 Low 1-3% impact on construction cost mill. DKK 3 Moderate 3-10% impact on construction cost mill. DKK 4 Large 10-25% impact on construction cost mill. DKK 5 Disastrous > 25% impact on construction cost > 250 mill. DKK 1 mill. DKK 12 mill JPY EUR
20 FOLLOW-UP Project level Follow up on risk mitigation actions Monitoring and control Update Risk register Portfolio level Empirical data collection Trends Early warnings Learning
21 USING THE RISK DATABASE TOOL
22
23 RISK MANAGEMENT REPORT Risk Matrix Risks ranked/prioritized S-curve
24 THE ONE PAGER Provides an overview for the management of the current status of each project concerning: Master data (Construction Law, Appropriation, Purpose, Opening year) Status from the Project Manager Timeline with milestones Project budget vs. Appropriation Shadow Appropriation (the estimated future appropriation in the future price index) Current vs. Initial annual budget Risk matrix and Top 10 risks
25 ACCOMPLISMENTS AND LESSONSLEARNED In general we are satisfied. The change log has been implemented. The risk management system has been implemented. The One pager have been implemented A larger organisational focus on budgeting have resulted in more qualified budget estimates. We have over the past years experienced large savings due to the market situation (the financial crisis have resulted in price cuts from the contractors). The projects are generally finished in the appointed year (often before)
26 CONTINUOUS SYSTEM DEVELOPMENT Collection of past experience on project portfolio (milestones, feed-back, move forward certain activities) More stringency and precision in identification process (Cause Consequense development of defaults ) Possibilities in calculations (correlations, software tools) Development of workshop process Better daily use and PM ownership
27 MUCHAS GRACIAS
IDA RISK INTERNATIONAL CONFERENCE COPENHAGEN JUNE 6 2013
IDA RISK INTERNATIONAL CONFERENCE COPENHAGEN JUNE 6 2013 JENS J. HOLMBOE & TRINE H. VEICHERTS LEARNINGS AFTER 5 YEARS OF FOCUSED RISK MANAGEMENT IN ROAD PLANNING AND CONSTRUCTION THE DANISH ROAD DIRECTORATE
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