Tools for Successful Risk Management of Your Next Underground Project

Abstract

Underground projects for civil infrastructure continue to become more complex. Engineers and contractors are increasingly being asked to design and construct projects that expand the operating envelope in terms of pipe diameters, project lengths, ground conditions and other new factors outside of prior constructed projects. When assessing the complexity of the project, all parties need tools to identify and assess project risks. Risk management should be part of the planning, design and bidding process. It should occur early in the project life cycle to maximize the ability to influence the project’s outcome. Frequently the focus of risk management is only on technical risks. Along with technical risks, financial, contractual and third-party risks also need to be assessed. The project team needs to assess who is the best party (e.g., owner, engineer, contractor or insurance provider) for assigning and then managing the risk. Early decisions in a project have the most ability to influence project objectives and cost at a lower investment. As the project progresses, decisions made later in the project life cycle have less ability to influence the final project cost while implementation becomes more expensive. Underground construction is inherently risky. The more risk which is passed onto a contractor through contract documents, the higher the contingency will be during contractor pricing and bidding. This paper will discuss the three major stages of risk management – 1. Risk Identification, 2. Risk Analysis, 3. Risk Management and Mitigation. For every risk, the potential impact of the risk needs to be studied. One can then assess the probability of the risk occurring, the impact of the risk and the urgency of the risk. The combination of these factors can provide a relative risk index for making comparisons between risk items. Techniques used for evaluating, quantifying and comparing risks will be presented. Specific examples will be shared from past risk management programs related to pipeline, trenchless and tunneling projects. When all things are considered, the project team needs to evaluate is the risk greater than the benefit that could be achieved by taking on this action.