Getting risk management right with DCWC

Andrew Loh, Director of Infrastructure at DCWC
Andrew Loh, Director of Infrastructure at Donald Cant Watts Corke.

Roads & Infrastructure speaks to Andrew Loh, Director of Infrastructure at Donald Cant Watts Corke (DCWC), about why risk management services are critical for projects of any scale.

Andrew Loh, Director of Infrastructure at Donald Cant Watts Corke (DCWC), has 15 years of experience in the construction industry – long enough to remember a time when construction drawings were often still meticulously drafted by hand.

“It was tedious work, but I wouldn’t trade that experience for the world,” he says. “Hand drafting helps you develop an intuition about how things are put together, a sense of what works well, and what sequencing of events works best to deliver a project on time and on budget.”

Loh is a senior lead for the infrastructure team at DCWC – a company that has been providing quantity surveying and project management services to governments, as well as private and public organisations since 1966.

“The Infrastructure team is a young and dynamic group,” Loh says. “We provide cost estimating services for major infrastructure sectors such as road, rail, maritime, water utilities and heavy industry. We also provide associated services such as risk management, scheduling, project control and advisory services such as constructability and escalation advice.”

Loh says he has been fortunate enough to work on infrastructure projects across multiple sectors, including the Port of Melbourne’s Port Capacity Project, the Victorian Government’s Level Crossing Removal Project, the North East Link Project and for the Water Utilities Alliance.

“I am grateful for this diverse range of experiences, as it has provided me with a handy mental toolkit to draw upon when dealing with any type of infrastructure project,” he says.

Loh’s broad experience has instilled in him the importance of effective risk management processes.

“Risk management is crucial for any project,” he says. “It is a method of more accurately determining the appropriate amount of contingency required for each project. This is achieved using probability and statistics, after a holistic assessment where key risks are detailed and measured.

“It lends a greater degree of accuracy compared to an arbitrary ‘gut feel’ allowance based on a percentage of the contract sum.”

A risk management fitness regime

“Risk management is a lot like exercise,” Loh says. “Two people can engage in it with two very different outcomes. What differentiates effective and ineffective exercise plans is the level of discipline – form, effort, frequency and attitude.”

Loh says risk management works the same way – the method, and the level of focus and commitment applied all play a part in determining how effectively risks are identified and mitigated.

He believes that for risk management to be successful in any infrastructure project, the responsibility for each risk should be allotted to the parties most suitable to manage it and, crucially, for each assigned party to be committed to addressing and mitigating that risk.

Loh says this requires all stakeholders to have a clear understanding of the risks, and how their respective actions contribute to successful risk assessment and mitigation.

“To achieve this common understanding, you need an experienced risk advisor – similar to how an experienced personal trainer can help tailor your fitness regime,” he says. “A good risk advisor will forge a common understanding of risk amongst all parties and from that, ensure commitment from each to effectively assess and mitigate risk.”

The six steps to risk management

Loh says the DCWC Infrastructure team have extensive experience in the facilitation and assessment of risk on complex, high-risk, high-value projects.

“We use Palisade’s @RISK software to calculate contingency allowances and provide a range of budgeted values for each component of a project,” he says. “We set up risk models – bespoke to each client – which @RISK uses to simulate probabilistic cost estimations.”

Loh says that all risk management processes follow the same six-stage process: establish context, risk identification, risk analysis and evaluation, risk modelling, quantitative risk assessment, and @RISK outputs.

Loh says the ultimate aim is to answer two questions: “how much contingency is required for the project?” And “how volatile is the price in terms of possible uncertainties and contingent risks in the project?”.

“We use this collaborative risk management process to enable clients to accurately determine the appropriate level of risk contingency and set strategies in place to minimise the likelihood of project budgets being exceeded,” he says.

Sharing the burden

In Loh’s experience, risk management is most effective when all parties share critical risks which may result in cost overruns.

“An example of this working well is my recent experience on a major road infrastructure project,” he says. “Client and contractor shared the potential consequences of any major risks, such as inground contamination and relocation of existing utility services. Site surveys and geotechnical studies helped estimate these risks, and they were accounted for within the contingency.

“Any additional cost encountered during construction was shared between all parties, as were any cost savings if risks were overestimated. This way neither party bore the full consequence of these risks, leading to a more collaborative working relationship.

“My advice is always to be transparent with clients. I think most clients would be open to sharing these risks to a reasonable extent in order to attain a successful outcome.”

As for the ongoing success of DCWC’s Infrastructure service, Loh says that patience, partnership and true collaboration are key.

“These are not buzz words for us, it’s a code we live by each day,” he says. “True collaboration only comes with total client understanding, which in turn drives client commitment.

“Client education and communication are key parts of our process, and we take the time to keep our clients in the know every step of the way. At DCWC Infrastructure, we believe that guiding the client through the risk assessment and mitigation journey is equally as important as the final outcome.”

This article was originally published in the July edition of our magazine. To read the magazine, click here.

 


 

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