When considering risk on projects, the industry needs to start thinking about setting up projects for success rather than planning on managing failure, says Tim Chapman.
Traditionally in construction, we worry about projects not coming in on budget and on time – both achievements still occur all too infrequently. But actually, we need to think much more broadly about what success means and ensure that not only should projects come in on time and on budget, but they should also fully do what they were meant to do in the first place.
They should contribute towards wider goals, such as steps towards mitigating climate change and making the communities into which they are inserted happier and healthier. This is all part of a major initiative being driven by the Construction Innovation Hub (CIH) called the Value Toolkit as part of the government’s levelling up agenda and the Project Speed drivers of “better, faster, greener”.
Managing risks better is a major part of setting up projects for success. All too often projects fail and projects teams fall into bickering, distracting them from heading off further problems and preventing from them from collaborating to spot and manage new challenges to successful delivery. We all know the industry needs to change its processes, yet somehow, we never quite do.
As part of the CIH project we analysed risk management processes, to see how they should be improved. We found that standard risk management approaches all too often: -
- Fail to engage or involve the senior project leadership who are best placed to horizon scan and detect new risks and indeed fresh opportunities.
- Are usually too fixated on technical risks rather than the full panoply of issues that could derail the project.
- Fail to recognise the much more complex “messy” (complex interdependent systems) and “wicked” (high behavioural complexity) risks that are not amenable to management by simple risk contingency (and hence why the concept of the “risk pot” is often inappropriate).
- Are often laissez-faire and don’t interrogate how to get on top of the more dynamic risks quickly enough, so they can be actively mitigated.
- Use too simple a risk currency of money (and sometimes time) which doesn’t address the severity of many situations where failure can be measured in much more complex ways.
The CIH work addresses these risks in a variety of ways, by:
- Ensuring that the client follows their own parallel stages through a project to do the right things at the right time, not least choosing how to deploy their team for maximal effect by delivery model and selecting the best commercial strategy before they start the procurement transaction.
- Being very clear about the outcomes and values they need to achieve from the start, in parallel with defining the project solution, to ensure that they don’t need to refine the solution too late when those changes will bring huge delivery challenges.
- Managing the full range of risks far more rationally in delivery – this is the subject of this separate major strand of the CIH work as it is recognised to be so crucial for success and in attaining all the values sought by the Value Toolkit.
It is perplexing that we know so much more about ways to manage and mitigate risks, yet in so many projects we continue to hope that risks are simple things amenable to very simple management processes and up being constantly surprised and disappointed. A key element of the CIH work is elevating risk management to a much higher plane so it can be tackled more knowledgeably for better outcomes.
Tim Chapman is a director and net zero carbon infrastructure leader at Arup.