Practical Risk Management for EPC / Design-Build Projects. Walter A. Salmon
Читать онлайн книгу.
my definition of what Project Risk Management is in regard to a Contractor undertaking a lump-sum Engineering, Procurement and Construction (EPC) Project, since it is the driver of the observations and advice that follow within this book.
Project Risk Management is the systematic process of:
1 proactively identifying the major potential hazards/risks for the Project as early as possible (and revisiting/redoing that exercise regularly throughout the entire duration of the Project);
2 properly analysing and assessing each of the identified hazards/risks in turn, so that sound commercial decisions can be reached as to what the most appropriate response to each should be;
3 putting in place adequate mitigation measures where necessary to counter those hazards/risks; and
4 regularly monitoring the effectiveness of employing the hazard/risk mitigation measures and making appropriate modifications if later those measures are found to be ineffective.
3.2 Construction Project Hazards Abound
The sheer number of hazards that Construction Projects are surrounded by is enormous, and they exist in many different forms; for overseas Projects the list of hazards is much longer than for home-based Projects. Many of those hazards simply cannot be avoided – they are just part of the territory – and so the Contractor has to develop plans for ensuring that such hazards are not allowed to transform into regrettable events. For example, where work is taking place in confined spaces (such as inside tanks) it is essential that somebody is deputed to stay close by outside and is provided with appropriate rescue means/equipment in case the worker inside gets into difficulties. The following are just a few more limited examples of where Project hazards can be found.
1 Some hazards may threaten the Project's progress, such as delays in the engineering work, delays in the procurement work for key equipment and materials, construction delays, commissioning delays, and start-up delays. Hazards having such effects include, but are certainly not limited to, the following:an inadequate and/or inexperienced Design Team;a dramatic change in the economy leading to increased demand for products and consequent higher costs (requiring extra time to shop around for better prices);importation and transportation delays owing to bad management of the logistics support activities;inadequate or poor-quality labour resources (particularly in respect of local Subcontractors); andpoor quality control of construction work (leading to long lists of ‘Punch Items’ and the consequent late redoing of critical work).
2 In countries where the political landscape is unstable, there may be the potential for additional significant hazards:an armed attack on the accommodation camp or the worksite, thereby putting the security of personnel at grave risk;importation of materials, goods, and equipment becoming a major problem, due to problems with trade tariffs or arguments over import duties payable, or even due to the lack of newly-required ‘support’ documentation (especially when dealing with governmental authorities);the local communities blockading the worksite if they feel aggrieved at the perceived high numbers of foreign workers while the locals themselves do not have jobs; andcurrency exchange rates unexpectedly and dramatically moving in the wrong direction (from the Contractor's perspective).
3 There will be everyday hazards that impact the safety of the on-Site construction workers, such as working at height, operating heavy equipment, lifting heavy loads, working in deep trenches or in confined locations, pressure testing of pipework and equipment, energising high voltage electrical equipment, etc. There could also be hazards that will impact the environment, such as spillages of toxic materials, chemical leakage into water systems, etc. These all fall under the domain of a Contractor's Health, Safety, and Environmental (HSE) Management Department, in many of which very sophisticated procedures and routines are employed nowadays. Top priority must always be given to safeguarding individuals from harm, while at the same time protecting the environment. Thus, since these standard day-to-day risks should already be competently managed by the Contractor's designated HSE personnel, those risks are not the direct focus of this book.
The hazard situation for construction Projects will also be subject to change over time. Items that were previously discounted as being of no significance may therefore become elevated to a critical status later. On the other hand, items viewed as being potentially dangerous to people or the Project may not materialise into actual problems. For this reason, it is essential for key personnel to be designated as part of a specialised team (the Risk Assessment Team) made responsible for continuously monitoring the changing risk situation, re-assessing the hazards as the Project progresses, and putting in place effective mechanisms for mitigating the principal perceived risks wherever possible. Brady envisages that the activities of the Risk Assessment Team will include subsequently reviewing the risks after commencement of the implementation work to aid adjusting the controls (i.e. the mitigation measures for the risks) in the light of the knowledge gained.1
3.3 Importance of Project Risk Management
Even as late as the First Quarter of 2019, those in the Oil and Gas Industry were still facing a tough time getting new work, primarily owing to the lower price of oil that had struck home in 2015. The impact of this fall in price was that profit margins had to be tightened dramatically in order for a bidder to stand a chance of being awarded a new Project from amongst the considerably fewer new ones coming on stream. The contrast between the abundance of mega Projects that existed in 2007 and the dearth of such Projects at the date of completing this book is very evident to those old hands still working in the Middle East since that time. The significant drop in the numbers of expatriates working there compared with years ago is felt everywhere; many of the old haunts that were previously full to overflowing are now quite desolate. However, this situation has perhaps given time for some sober reflection, since it is also widely known that the mega Projects that arose as a result of the previous high oil prices (which reached around USD 120 per barrel in 2014) were not very successful, if not outright failures.2
In fact, there are two very sobering key factors emerging from the latter referenced document:
1 78% of mega Projects failed in terms of costs and schedule, while two-thirds fell short of production-attainment goals, and
2 half did not achieve at least 50% of the targeted production expected for the first 24 months of their operational lives.
Both of those factors are a clear indication that there has been a failure to manage the risks of mega Projects properly, and that Contractors must start to focus seriously on quality Project Risk Management if their thinner profits are not going to be eroded still further. It is a fact that all construction Projects have objectives at strategic, tactical, and operational levels.3 For most lump-sum EPC Projects, the responsibility for successfully handling all of those objectives falls to the EPC Contractor (who will also be burdened with severe penalties if any of the primary objectives are not achieved). Anything that could make achieving those objectives uncertain must therefore be considered to be a potential hazard that presents a risk, and which therefore needs to be countered as effectively as possible by the Contractor.
3.4 Corporate Risks Versus Project Risks
When dealing with risks for construction companies, there are two levels of risks to manage:
1 The Corporate RisksThese are the risks related to running the day-to-day business of the Contractor and they are the direct responsibility of the Corporate Management Team (under the auspices of the Board of Directors responsible for managing the company's business). Collectively, these risks extend to taking responsibility for ensuring that all the commercial and contractual provisions included in the proposed contracts for the Projects to be taken on are sound in all respects, particularly in regard to indemnities and liabilities. Those risks are extensive, but they are also