Presentation on 2 April 2014 at Construction Risk Summit in Melbourne

1. Conducting Risk Management
on Major Projects
Bronwyn Friday
Group General Manager, Enterprise Risk Management
2 April14
Pitfalls and Benefits?

2. › Who we are
› 6,5000+ people on 100+ projects
› delivering contracting, engineering and services
solutions
› Revenue
› $4.75 billion
› Regions
› Australia
› New Zealand
› South East Asia
› Middle East
Who is John Holland
Work in hand
Approx. $5.56bn

3. Why do Risk Management on Major Projects
 Achieve objectives successfully
 Protecting Balance Sheet
 All stakeholders focus what is critical
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4. Risk Management Changes

5. 5
What has changed in the Construction Industry
› Physical work has not changed a great
deal
› New systems and process have been
introduced
› Risk Modelling
› BIM – modelling of building information
› Stakeholder expectations have changed
› They expect more certainty!!!

6. 6
What has changed at John Holland
› Some project objectives not fully achieved
› Senior Management and Leighton Holding’s governance
requirements
› Clients requiring more advance risk management
› Varying Delivery models
› More complex risk sharing setups
› New concepts like BIM

7. What is Risk Management at John Holland
 Strategic & Business Planning
 Prospect Analysis
 Approval Processes
 Contract Reviews
 Safety, Quality & Environmental (SQE)
Risk Management
 Qualitative Risk Rating
 Quantitative Risk Costing
› Including Risk Modelling
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8. Risk Management & Tools
Benefits

9. 9
Benefits of Risk Management
› Focus the team on the objectives of the projects
› 80/20 rule, focus on top 20% to deliver 80% of your success
› Early identification and understanding of Key Risks
› Alignment on the Key Risks
› Pro-active management of them
› Resources focused on these risks
› Finally, know the Residual Uncertainty related to a project
for your business

10. Use of Probabilistic Cost Risk Modelling
› Used in our large valued,
complex tenders / projects
› Models both
› Discrete Risks
› Uncertainty
› Estimate Uncertainty
› Design Development Scope
Growth

11. What does the cost modelling give you?
› Confidence level of
delivering a project within
a budgeted amount
› What risk events to focus
on to achieve success
› Portfolio protection
› Overall portfolio risk profile
› Project’s impact on the
business
Mean $9,119,415
Std Dev $1,455,996
P5 $6,768,486
P10 $7,234,656
P25 $8,068,267
P50 $9,096,837
P75 $10,117,001
P90 $11,009,943
P95 $11,564,512
Percentiles

12. Use of Probabilistic Time Risk Modelling
(SRA)
› Schedule Risk Analysis
› Used across are wider
range of tenders and
projects
› Models both
› Discrete Time Risks
› Duration Uncertainty

13. What does the time modelling give you?
› Confidence level of delivering a project within a specific
timeframe
› Stress tests the schedule
› Drives better methodologies
› Understand of the likely delays and resulting costs

14. Risk Modelling
Pitfalls

15. 15
What are some of the pitfalls?
› Time
› In Tender there is so little time to get the core stuff
complete
› Risk Management is seen as a distraction
When risk management is done the right way, it will drive the
Tender Team to focus on the key issues and not get lost in
the detail that has low impact.
Do not let risk management become a compliance task!!!

16. 16
What are some of the pitfalls?
› Data
› The risk process gets lost in all the data
› 80 / 20 is not used so everything is managed
› Management never focuses on the key risks
Do normal business practices already manage these risks?
Always question whether the risk could stop you achieving
your objectives?

17. What are some of the pitfalls?
› Tool Selection
› Using advanced resource rich
risk modelling tools when they
are not needed
 If a simple risk tool can achieve the
desired outcomes, then use it!
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18. 18
What are some of the pitfalls
› Decision Makers
› Risk Management processes are not involved with
Decision Making processes
› Risk information not being used
› Decision makers do not understand the outputs
› Ignoring the information; or
› Not questioning the logic to find out if it is sound
Get the risk information to decision makers and make
sure they understand it. Coach them if they do not.

19. Make the most of
Risk Management

20. 20
John Holland has revised its Risk Management
processes
› Stronger approval processes
› Stricter commercial / contract reviews
› More detailed Risk Management
› Risk Modelling
› Peer Reviews

21. 21
 Understand what the Decision
Makers want
 Match your risk tool to the profile of
the project and output required
 Remember it is about 80/20 and stay
focus on the Key Risks
 Do it early and get the benefits
How do you make the most of Risk Management

22. Questions
?
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