Part 4: Risk Management in Construction

Construction Health & Safety Management

Simon Smith (University of Edinburgh)

& Philip Matyear (Balfour Beatty)

Introduction

• We have looked H&S legislation

– It must be remembered that legislation alone will not protect – it is

merely the ‘rules’

• We have considered the behavioural and cultural aspects of H&S

Management

• We have looked at practical aspects of health & safety on

construction sites

• We have considered specific areas where hazards occur

• This lecture will consider

– how H&S management is implemented at a site level

– the wider concept of engineering risk management

Health & Safety Hierarchy

H&S Legislation

H&S File

Method Statement

Operation Plan

Risk Assessment

General site safety

management

Fundamentaltopic: covered in

greaterdepth

Health & Safety Legislation

• As covered Part 4• For example:

– The Health & Safety at Work etc Act 1974– The Management of Health and Safety at Work Regulations

1999– The Provision and Use of Work Equipment Regulations 1998 – The Manual Handling Operations Regulations 1992 – The Construction (Head Protection) Regulations 1989 – Personal Protective Equipment at Work Regulations 1992 – Control of Substances Hazardous to Health Regulations 2002 – Construction (Design and Management) Regulations 2007

Health & Safety File

• To recap:– contains all H&S information about the

project for those that follow (i.e. clients & users)

– should contain information about the design & construction of every structure & element of the project

– responsibility lies with the CDM Co-ordinator who must »keep it up to date»deliver to client at end of project

The Method Statement

• A Method Statement defines the scope of the work to be performed in producing a significant section or phase of the project

• It is also produced as part of the Project Quality Plan– It is a statement about the desired level of quality

• As a definition of the work involved it allows assessments of the risks involved to be made

• Once prepared it should be passed to every person involved in that part of the project – whatever capacity they may have

Method Statements – areas covered

• A method statement is a large document and therefore cannot be prepared for all activities

• Work activities are therefore split into areas – usually geographic but also process areas

• The project manager is responsible for determining what method statements are required – he must find the right balance:– too broad a scope and detail will be lost– too narrow and the volume of paperwork will

dominate

Method Statements – examples

• On a road project we may have the following method statements:– One for each major structure (e.g. bridges)– One for a group of minor structures (e.g.

culverts)– Earthworks– Fencing– Site clearance– Drainage– Road surfacing– Traffic management– Safety fencing– Any other specialist subcontractor operations

Content of a method statement

• The operations concerned• A risk assessment of the operations• A listing of key drawings• The direction and sequence of work• The types of resources to be used• A basic layout or sketch• Delegated responsibility for the work• Any other specific aspects of the work

Operation Plans

• The next level in the H&S hierarchy• It is prepared for each discrete activity

of work• There may be a number of operation

plans for an area of work already covered by a method statement

• The operation plan is usually drawn up by the site engineer looking after the work

• A pro-form is usually used

Operation Plans – pro-formaActivity No. Activity Description

OP RefN.B. The activity number and location should be included on all allocation sheets

Material Requirements / Sequence of Work

Sequence of Work Material Description Quantity

Sketch Ref. Inspection and Test Plan Ref.

Required Output

Remarks

(e.g. access etc.)

Plant/Lab

Risk Assessment

Hazard Risk

Control Measures Required

Permits Required (Y/N)Permit to Dig Permit to Enter Other Permit to Pump Hot Work Permit (Specify)Permit to Work Permit to Load

Prepared By Approved By

Date Date

Ensure any applicable permits and sketches are appended to this sheet

Sequence of Work & Resources

Operation Plan

Principal HazardsRating (H/M/L)

OpportunityPersons Affected

Risk Assessments

• ‘Risk’ is a large part of any project– financial, technical & safety risk

• It is just one stage in the overall risk management strategy prepared for every project

• We shall look at the subject in greater depth in a moment

• Each method statement will have detailed risk assessments:

Risk assessment only useful if the info in it is well considered...

Risk Management• Risks are ever present • The management of risk is an area of

significant expansion over the last decade. • Within the construction and process

industries the consequences of an accident can be significant (e.g.Piper Alpha)

• Detailed management of risks are routinely carried out, conducted at all stages of a project life cycle

• We will look at:– Define risk concepts– Introduce the Risk Management Procedure

Engineering: Small Risks

Large Physical Hazards - Piper Alpha (before & after)

Large Consequences: Hatfield, Ladbroke Grove, Potters Bar & Greyrigg Rail Accidents

Hatfield, 17 October 2000, 4 killed

Ladbroke Grove, 5 October 1999, 31 killed

Grayrigg, 23 February 2007, 1 killed

Potters Bar, 10 May 2002, 7 killed

Some Definitions

Harm“Physical injury or damage to health,

property or the environment”BS8444: Part 3: 1996

» In all aspects of project management, we want to minimise, if not eliminate any kind of harm

»Harm may be, for example: Employee injury or death Financial effects Environmental accident

Definitions cont.

HazardA source of potential harm or a situation with potential for

harm in terms of human injury, damage to property, damage to the environment, or combination thereof

– In project management terms, we need to control financial hazards as well as physical ones

– Examples may be:» Falls from heights» Collapse of excavations» Dropped objects » Poor environmental management» Abnormal inflation» Abnormal weather conditions

Non-physical hazards• Inflation• Supplier changes• Supplier collapses• Reduction in supplies• Cultural

misunderstandings• Corruption• Interest rate changes• Market condition

changes• Changes in labour

supply

• Skills shortage• Design changes• Changes in

legislation• Security threats• Political

changes/instability• Demand changes• Public opinion• …• …

Definitions cont.

RiskThe combination of the probability of an

abnormal event or failure and the consequence(s) of that event or failure to a system’s operators, users or its environment– Risk always involves two aspects:

» Probability of a hazard taking place, and» The severity of the harm that occurs

– Low probability, high severity = high risk– High probability, low severity = intermediate risk– Low probability, low severity = low risk

Definitions cont.

Risk ManagementThe systematic application of management

policies, procedures and practises to the tasks of identifying, analysing, evaluating, responding and monitoring risk

»Five stages:

Baker, Ponniah, Smith, 1999Survey of Risk Management in Major UK Companies,Journal of Professional Issues in Engineering Education & Practice,

Hazard Identification

Hazard Identification• The stage where all potential hazards in a project

are identified• To me the most important part of any risk

management process• Because non-identified hazards cannot have their

risk assessed– “There are known knowns. These are things we

know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. These are things we do not know we don’t know”

– Donald Rumsfeld, 12 Feb 2002(relating to the increasingly unstable situation in post-invasion Afghanistan

Hazard Identification

• Possible methods of identification– Individual Consultation

» interviews with project personnel» lengthy & time consuming

– Group discussions»formal brainstorming»requires motivation & teamwork

– HAZOP»HAZard and OPerability studies»Formal questioning of processes, e.g design

Risk Estimation

• Potential hazards have been identified• Now need to assess:

– Probability of occurrence– Severity if occurs

• Can be done in two main ways:– Qualitatively

» in a linguistic manner»usually done first; high probability/severity

cases then may be examined:– Quantitatively

» in a numerical manner

Risk Estimation cont

Qualitative Techniques– Fuzzy set analysis

»Understands that likelihood and consequences may not be definite, but rather will belong to a ‘fuzzy set’ which has degrees of membership

»expresses the outcome in readily understood language terms

»For example – ‘very likely risk with severe impact’

Risk Estimation cont

Qualitative Techniques– Interviewing and Brainstorming

» is an extension of two of the techniques employed in the identification stage.

– Personal and Corporate Experience » if it exists should be exploited.

– Judgment»We are all professionals and able to form valid

judgements

Risk Estimation cont

Quantitative Techniques– Expected Monetary Value (EMV)

» i.e. putting a financial value to the expected result of a risk.

»Allows a quantification of a risk outcome– Expected Net Present Value (ENPV)

»Also used for appraising the financial nature of long term projects

»an extension of EMV by calculating the present value of a probability state

– Decision Analysis » looks at possible outcomes and determining

optimal choicesmore...

Risk Estimation cont

Quantitative Techniques cont– Sensitivity Analysis

»tests how sensitive an event outcome is to slight changes on the input variables.

– Delphi peer groups »a Delphi group will pool the knowledge &

experience of a number of experts»attempts to put quantitative values to results

obtained in a manner similar to discussion groups and brainstorming.

– Simulation »creates a probable life history of an event and

thus allows its outcome to be predicted.

BS8444-3: 1996 – Estimation methods

BS8444-3: 1996 – Additional estimation methods

Risk Evaluation

• 3rd part of Risk Assessment• Need to combine the severity and

probability of the identified hazards• Allows tolerability decisions to be made• Can be done using a risk matrix:

Category of Occurence

Frequency of

OccurenceConsequences

/ year Catastrophic Major Severe MinorFrequent >1 H H H IProbable 1 to 10-1 H H I LOccasional 10-1 to 10-2 H H L LRemote 10-2 to 10-4 H H L LImprobable 10-4 to 10-6 H I L TI ncredible < 10-6 I I T T

Risk Evaluation – BS8444-3: 1996

Practical Risk Assessment Procedure

1. Identify the principal hazards that will be present in the operation.

2. Assign a number 1 to 5 for both Consequences of Hazard and Probability of Occurrence. • The Risk (i.e. the product of Consequence and

Probability), indicates the level of action.

3. Identify persons affected by the risk4. Respond to the risk 5. Monitor and update as necessary.

Risk Response

• If risks are identified as being intolerable how can these be dealt with?

• There are four main methods of responding to such risks:

1. Risk Avoidance2. Risk Transfer3. Risk Retention4. Risk Reduction

• British standards and other textbooks offer the least guidance on this stage

• Because responses must be designed to fit the situation

Risk Response

1. Risk Avoidance• Managing or developing a situation in

which the identified risks do not occur, e.g:– not proceeding with the project– tendering at a very high bid– placing conditions on a bid– changing design– choosing different currency– ... ?

Risk Response cont

2. Risk Transfer• Via Subcontractors

– a third party undertakes the high risk portion of the work and the responsibility that goes with it

• Via Insurance– A pre-determined insurance premium is often

better than unexpected costs due to risk– may be done using a captive insurance company– involves excesses– some risks may result in premiums higher than

the probable financial loss

Risk Response cont

3. Risk Retention• Some risks may be better managed internally• High frequency/low severity or very low

frequency/high severity risks may be best retained

4. Risk Reduction• The most usual way in which to manage

common risks is to reduce either the severity, the chance of occurrence or both. E.g:– early warning systems

» Reduces probability of hazard happening– improved maintenance

» Reduces probability of failure– physical mitigations

» May reduce both probability or severity

Risk Response cont

• The choice of method used to respond to risk will largely depend on company policy

• Using the risk matrix model, a typical project scenario may be:

Category of Occurence Consequences

Catastrophic Major Severe Minor

Frequent Transfer Transfer Retain Avoid

Probable Reduce Transfer Retain Avoid

Occasional Reduce Transfer Transfer Retain

Remote Reduce Transfer Transfer Retain

Improbable Avoid Transfer Transfer Retain

I ncredible Avoid Transfer Transfer Retain

EXAMPLE ONLY

Risk Monitoring

• The final stage of risk management• Risk situation will continue to change

throughout the life of the project– New hazards will become present– Existing hazards will stop or change

• The management must be continually monitored, reviewed and improved

• Existing risks may be managed differently

»therefore• Risk monitoring completes cycle back to

risk identification

Risk Monitoring• Risk situation

will continue to change throughout the life of the project– New hazards

will become present

– Existing hazards will stop or change

Remove mitigations

NODoes

existing hazard

still exist?

Has the probability

of occurrence increased?

(Re)Assess Risk

Has the severity of potential

harm increased?

Have new hazards arisen?

Do nothing

Do nothing

YES

YES

YES

NONO