Guidelines for Improved Risk Management on Tunnels and Underground Structures in the United States of America

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1 Guidelines for Improved Risk Management on Tunnels and Underground Structures in the United States of America Presented by: Joe O Carroll November 29, 2017

2 A code of practice is a set of written rules which explains how people working in a particular profession should behave. 01/12/2017 Risk Management in Underground Construction

3 Lane Cove Tunnel, Sydney. Australia Heathrow Airport, London UK In late 90 s and early-mid 2000 s Tunneling Insurance industry was taking a big hit with these and other similar catastrophic failures. Something was needed. Risk Management in Underground Construction 2017 Nicholl Highway, Singapore

KPMG Global Construction Survey 2013 Having invested heavily in risk management over the past decade, most engineering and construction executives believe that this expenditure has paid off, with

4 KPMG Global Construction Survey 2013 Having invested heavily in risk management over the past decade, most engineering and construction executives believe that this expenditure has paid off, with only seven (7) percent claiming that their practices and controls are not working effectively. Despite this confidence, more than three-quarters of respondents admit to the presence of underperforming projects, with the prime causes being delays, poor estimating processes, and failed risk management processes Risk Management in Underground Construction

Failed risk management processes Systemic failure of design, construction and risk management was responsible for the São Paulo tunnel collapse that killed seven people in January 2007.

5 Failed risk management processes Systemic failure of design, construction and risk management was responsible for the São Paulo tunnel collapse that killed seven people in January All parties had knowledge of risk assessment. But in this case it was never applied São Paulo Instituto de Pesquisas Tecnológicas (IPT) professor André Assis. New Civil Engineer June 2009 Risk Management in Underground Construction

6 By show of hands.. HOW MANY OF YOU ARE AWARE OF AND HAVE IMPLEMENTED The ITIG CODE OF PRACTICE ON A PROJECT? Contributors to the ITIG COP 2006 Version: Swiss RE Zurich Allianz Munich RE Assicurazioni Generali nd Edition Mellor Associates ARUP SCOR Munich RE. 01/12/2017 Risk Management in Underground Construction

7 2. Compliance with the Code Contract Insurers will reserve the right to enter and inspect any Tunnel Works insured under a contract..the purpose of the inspection is to assess compliance with the Code. Contract Insures may add a provision to their Policy to ensure the provisions and guidelines of the code are followed. 01/12/2017 Risk Management in Underground Construction

8 International standards Neither the 2006 or 2012 versions were ever officially adopted by the American Underground Construction Association 01/12/2017 Risk Management in Underground Construction

9 By show of hands.. HOW MANY OF YOU ARE AWARE OF THIS UCA PUBLICATION? 01/12/2017 Risk Management in Underground Construction

10 By show of hands.. HOW MANY OF YOU ARE AWARE OF THIS 2015 UCA PUBLICATION? PLEASE KEEP YOUR HANDS RAISED IF YOU HAVE ADOPTED ITS RECOMMENDED GUIDELINES ON A PROJECT IN THE PAST 2 YEARS? 01/12/2017 Risk Management in Underground Construction

11 While the ITIG COP was primarily written by the Insurance Industry the GIRM reflects the consensus of a wide variety of Industry experts and other professionals involved in the tunnel and underground construction industry in the USA. The words shall and must do not appear in the US Guidelines. 01/12/2017 Risk Management in Underground Construction

Current Best Practice in the US Objective establish as the industry standard Received rigorous industry review carried out prior to publication Published by UCA of SME and available online - free!

12 Current Best Practice in the US Objective establish as the industry standard Received rigorous industry review carried out prior to publication Published by UCA of SME and available online - free! Guidelines emphasize: Systematic risk management as part of mainstream practice on all projects Responsibility for risk management should be explicit The importance of experience in risk management appointment of a risk manager (Owner, Engineer and Contractor) Owner s, designer s, contractor s and insurers responsibilities Risk registers should be living document 01/12/2017 Mott MacDonald Opening opportunities Sustainability Goes Underground 12 Risk Management in Underground Construction 2017

13 The Client shall have demonstrable technical and contract management competence appropriate to the type, scope and extent of the project to be planned, designed and procured for construction in:. Project Development Stage Studies Design Stage Construction Procurement Stages and Contract Construction Stage and Management The Client is defined as the final owner of Tunnel Works and purchaser of goods and services. 01/12/2017 Risk Management in Underground Construction

14 Likewise the GIRM has similar guidelines on necessary competence in each phase of a project for an Owner but also states that : The Designer should have demonstrable technical and management competence appropriate to the type, scope and stage of a project for which it is being contracted to perform design services; and The Contractor should have demonstrable technical and management competence appropriate to the type, scope and phase of a project for which it is being contracted to execute. 01/12/2017 Risk Management in Underground Construction

15 The Client shall make sure that provision is made for the appointment of an identified individual or individuals who are suitably qualified and experienced and hence competent in risk management practices. These individuals will be responsible for execution of the risk management process, including the identification, collection, collation, and coordination of hazards and associated risks, and the development and preparation of risk assessments and risk registers for each and all stages of a tunnel works consistent with the requirements of this Code. 01/12/2017 Risk Management in Underground Construction

16 Similar language however GIRM goes one step further Under roles and responsibilities The Owner should make sure that provision is made for the appointment of an identified individual [Risk Manager] or individuals who are suitably qualified and experienced and hence competent in risk management practices.. The Designer should make sure provision is made [Risk Manager] ditto The Contractor should make sure provision is made [Risk Manager]..ditto 01/12/2017 Risk Management in Underground Construction

17 And the biggest difference.. The Insurer should have, or engage in an advisory role, a person with demonstrable technical and management competence..the person should have knowledge and experience of the design and construction processes and methodologies being employed on the project. Project Insurers should actively encourage compliance with the GIRM to minimize risk of physical loss or damage and associated delays. It follows that insurance policies covering tunnel and underground construction projects should benefit from the provisions set forth in this GIRM. Project Insurers should, in agreement with the Insured, add specific provisions, endorsements, and incentives to their Policy in recognition of the intent of the Parties to comply with this GIRM. 01/12/2017 Risk Management in Underground Construction

18 Both the ITIG COP and US GIRM promote the use of Risk Registers and Risk Assessments Risk Register should be a single consolidated location for all foreseeable project risk Owner, Designer, Contractor should use the same risk register Forward-looking document used by all to consider upcoming hazards Easy to monitor and update Can be both qualitative and quantitative Allows logical contingency funds to be set Allows logical probable maximum loss (PML) to be set 01/12/2017 Risk Management in Underground Construction

19 GIRM recommendations for improvements to current practices Contract documents should include full disclosure of risks identified in the planning and design phases of a project that still have a bearing on the project. Contract documentation should clearly demonstrate how the parties to the contract are to implement the provisions of this GIRM. Enhanced guidelines for issuance of GBRs, particularly for design-build projects Risk management should be included as a weighted component of the evaluation criteria Addition of a Risk Allocation Report Inclusion of Early Warning Notices 01/12/2017 Risk Management in Underground Construction

20 Risk Allocation Report Purpose: Clarify how risks are considered in contract document Narrative support to risk register References contract clauses Explains how risks are allocated States mitigation action necessary Considers all sources of potential conflict 01/12/2017 Risk Management in Underground Construction

21 Writing a Risk Allocation Report Written at 90% design stage Should contain no new information Most risks require a single simple reference Some risks need a more detailed narrative Writing report is similar to claim analysis In depth analysis of each major risk issue Narrative description of that issue 01/12/2017 Risk Management in Underground Construction

22 Writing a Risk Allocation Report (cont.) Does not supersede any other contract document Helps to promote a well thought out design and construction approach Subject of discussion during procurement Pre-advertisement workshop Pre-bid meeting Assists with administration of contract during construction 01/12/2017 Mott MacDonald Opening opportunities Sustainability Goes Underground 22

23 Early Warning Notices Owner or Contractor should give an early warning notice as soon as either becomes aware of anything that may impact safety, involve contract price, delay completion, impair performance of the works or impede meeting key dates. Follow up with: Risk reduction meetings Update project risk register Risk management/mitigation reporting 01/12/2017 Mott MacDonald Opening opportunities Sustainability Goes Underground 23

24 In Closing If all Parties (Owner, Designer, Contractor and Insurer) follow these Guidelines the authors of the GIRM believe the outcome will be: (i) A reduction in adversarial relationships (ii) A better understanding of risks and opportunities (iii) Minimization and better management of risks, and (iv) Greater confidence in delivering a successful project Questions for future discussion Does the GIRM provide an effective means of achieving a fair playing field? How can we get greater industry acceptance? Is this collaborative industry approach to risk management sufficient? Are we that good at managing risk that we don t need to set industry standards in the US? Do these US Guidelines need more teeth for enforcement? 01/12/2017 Risk Management in Underground Construction

THANK YOU Available on line for free at: ://www.smenet.

25 THANK YOU Available on line for free at: :// 01/12/2017 Risk Management in Underground Construction

Risk Management for Tunnel Planning, Design and Construction

ALDEA SERVICES Risk Management for Tunnel Planning, Design and Construction Robert J F Goodfellow, P.E. Senior Vice President August 14, 2017 UNIVERSAL LAWS OF TUNNELING Major Tunnel Project? DON T TAKE