week 5

• Managing health and safety (SWMS)

  • Work health and safety management plan, safe work method statements.
• 1. Before we attempt to manage risks, we must
  2. identification and analysis of the various types of risk
  3. 2) evaluate how each type of risk can be managed
  4. 3) mitigate the potential impact
• Perception of risk


  What constitutes a risk in the first place and the reaction of a particular party to it, informed by past experiences and influenced by organisational value systems
• A contractor in a competitive tendering situation may feel that it is being asked to assume risks over which it has no control
• The principal (client) may consider that those risks have been allocated to the party best able to manage them.

  • The principal is generally concerned that the project will be:
  • – feasible, (will “stack up” financially);
  • – able to proceed, (obtained requisite site, planning and other approvals);
  • – able to be completed within budget and on time;
  • – able to satisfy end-user requirements;
  • – fit for purpose, (meeting design, construction and performance criteria).
• The financiers' perception of risk is being driven by the nature of the financing itself and the focus on completion risk, may seek to allocate maximum risk to the contractor for the good of cash flow
• Key areas of risk for a contractor:

  • Some of the contractors’ key concerns can include:

  • –  contractual;
  • –  damage to persons, property or works;
  • –  to complete in accordance with itsprogramme;
  • –  site conditions (e.g., latent conditions);
  • –  design;
  • –  construction performance;
  • –  cost escalation;
  • –  site access
  • –  raw materials, supplies and resourcerisk;
  • –  inclement weather;
  • –  industrial relations;
  • –  compliance with legislative requirements;
  • –  health and safety risk;
  • –  Insolvency.
• Key areas of risk for a financier:

  • The financier of the project will have other key areas of risk. Risks considered in project financing include:

  • –  The risk that the project will not be completed on time or at the anticipated cost translates into the risk that insufficient cash flow will be generated such that it may trigger default under the particular or a broader funding facility.
  • –  security of tenure and political risk;
  • –  market risk;
  • –  financial risk;
  • –  force majeure risk.
• Risk assessment


  Conducting an effective and accurate assessment of risk (analysis and evaluation)
• Risk analysis


  1. Identifying and understanding each the risk

  2. Consideration of the sources of each risk

  3. Consideration of the positive and negative consequences

  4. Consideration of the likelihood that the consequences may occur
• Risk evaluation


  Making decisions, based on the outcomes of risk analysis, about which risks need treatment and treatment priorities
• Risk mitigation


  1. Identifying the range of options for treating risks

  2. Assessing those options

  3. Preparation and implementation of treatment plans
• Risk assessment:

  • There are two features that characterise risks:– the probability (likelihood) by which they can happen;– their impact (consequence) on the project, if they do materialise.

  
• Risk treatment: (to mitigate identified adverse risk impacts)

  • Treatment options for risks having positive and negative outcomes can be similar although the interpretation and implications are different. Often the consequences of both positive and negative outcomes can be dealt with by way of risk sharing and a “pain/gain” model commonly seen in forms of alliance and relationship contracting.
  • Where dealing with negative outcomes from risks identified and having to treat those risks in the context of a more traditional contract structure, risk mitigation is called into play.
• Risk mitigation options:


  • Is the process of finding solutions to counter risks. The opportunities formitigating risks include:– risk elimination (e.g., not proceeding or proceeding on a different basis);– risk reduction (e.g., by undertaking further investigations/due diligence);– risk transference (e.g., by legal, contractual and insurance);– risk retention (e.g., self-insurance, bearing a large deductible,internal management of risk).
• mitigation strategies, particularly risk transference


  • are given effect contractually via the use of such means as contractual exclusions, limitations of liability, indemnity clauses, risk transference, guarantees, performance bonds and insertion of a risk premium.
• Risk allocation


  Principles of allocating obligations and/or risks to a party
• Principles of allocating obligations and/or risks to a party

  • The risk is within the party's control
  • The party can transfer the risk, e.g., through insurance, and it is most economically beneficial to deal with the risk in this fashion
  • The greater economic benefit of controlling the risk lies with the party in question
  • To place the risk upon the party in question is in the interests of efficiency, including planning, incentive and innovation efficiency
  • If the risk eventuates, the loss falls on that party in the first instance and it is not practicable, or there is no reason under the above principles, to cause expense and uncertainty by attempting to transfer the loss to another
• Risk allocation


  Risks are not always allocated to the party best able to manage them and there is not always the ability to insist upon an appropriate risk premium in exchange for having taken on that risk
• Ensuring risk factors are costed in appropriately

  1. Accurate identification of risks

  2. Appropriate assessment of likelihood and consequences
• Contractors' "base case" estimates

  • Constituent parts being broken down and subject to percentage-based optimistic and pessimistic outcomes
  • Can often be the basis to arrive at an overall risk premium in arriving at a final bid price
• Risk allocation


  Having identified the key risks likely to be faced by the participants in a major project, it is important to differentiate between risks that are and are not within the respective parties' control
• Decision on whether a party should bear a risk


  Should ideally be based on whether that risk is within the party's control
• A party being required to assume a risk over which it has no control or for which it is not adequately compensated or motivated to assume that risk lies at the heart of many of the disputes which arise out of construction projects
• It is necessary to accurately assess which risks do or do not fall within a party's control
• risk register

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• RISK MANAGEMENT EXAMPLE

  
• Integrated management systems (act-plan-do-check)


  • An integrated management system (‘IMS’) is a system that integrates all of a business’ policies, processes and procedures into one unified management framework.
  • include an organisation’s:
  • Compliance Management System;
  • Finance management System
  • Quality Management System;
  • Environmental Management System;
  • Occupational Health and Safety Management System.
  • An organizations' IMS is the single source of truth for its risk management framework to assess and manage project risk.

  
• Work health and safety management plan (PCBU)

  • the names, positions and health and safety responsibilities
  • –  the arrangements in place, between any persons conducting a business or undertaking at the workplace where the construction project is being undertaken, for consultation, cooperation and the coordination of activities in relation to compliance with their duties
  • –  the arrangements in place for managing any work health and safety incidents that occur
• WHS management plan continued (SWMS)


  • any site-specific health and safety rules, and the arrangements for ensuring that all persons at the workplace are informed of these rules
  • the arrangements for the collection and any assessment, monitoring and review of safe work method statements at the workplace.
• WHS management plan continued (SWMS)


  • The plan must be written so it is easy to understand, signed and dated by the principal contractor. It must be available for the length of the project. If a notifiable incident occurs in connection with the construction project, the person must keep the WHS management plan for at least two years after the incident occurs.
  • The principal contractor must sign and date safe work method statements that have been received and keep them with the plan, as well as monitor their implementation.
• SWMS (step-by-step procedures on how to perform the work safely and how to manage any associated risks)


  • you must prepare a Safe Work Method Statement (SWMS) for all high-risk construction work before any work can begin.
  • The builder is responsible for preparing a SWMS for its employees and the subcontractor for their workers. A copy of the SWMS must be given to the principal contractor before work begins. The principal contractor is also responsible for taking all reasonable steps to obtain safe work method statements from their subcontractors.
• What to include in a Safe work method statements (SWMS)?

  What does it include?– A Safe Work Method Statement must:

  • Identify high-risk construction activities

  • Identify related hazards and risks to health and safety

  • Describe what control measures to implement and explain how to monitor and review them.
• Purpose of (SWMS)

  • The primary purpose of a SWMS is to help supervisors, workers and any other persons at the workplace to understand the requirements that have been established to carry out the high-risk construction work in a safe and healthy manner.
  • The SWMS:– sets out the work activities in logical sequences– identifies hazards– describes control measures.
  • The description of simple or complex activities should not be so broad to allow for full analysis of each part of the activity for hazards and potential incidents.
• AIM of SWMS (carrying out high-risk construction work)

  -describe the activity or task to be undertaken

  -identify the resources, manpower and skills associated with the task ---assess and select control measures (as appropriate)

  systematically plan the activity so it can be completed efficiently and effectively.
• WHS management plan prepared by the principal contractor must:

  • identify the work that is high risk construction work
  • specify hazards relating to the high risk construction work andrisks to health and safety associated with those hazards
  • describe the measures to be implemented to control the risks
  • describe how the control measures are to be implemented, monitored and reviewed.
• SWMS EXAMPLAR 1


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• SWMS EXAMPLAR 2


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• Analysis of risk


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• Hierarchy of controls


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