Piling Canada

What is Risk?

Underground Investigation and Risk Management Part 1

When embarking on a project in any capacity (owner, contractor or designer) what are the most important issues that keep you up at night? The answer is cost, scheduling, performance and safety. These items, directly or indirectly, are tied to money.

When the construction cost goes beyond the original estimate, parties involved in the project face financial loss. This could extend to the point that the owner of the project does not get the minimum expected return on the investment. A project that goes beyond the planned schedule naturally translates to financial impact for the project either as higher construction costs (more time on site) or delayed returned profit (delayed completion of the project). Any issue with the performance of the project (e.g. the building cracks) also results in financial loss either in the form of lawsuits/claims or costly post construction repairs and sometimes liquidated damages.

What about safety? Safety and the subjects related to protection of life have their own special place and should be addressed first without the burden of finances. That being said, the financial losses resulting from safety issues cannot be over-emphasized.

Any construction project has a target for cost, schedule, safety and performance. Companies try to achieve these targets through proper design and construction planning. However, absolute confidence in engineering design and construction planning is unattainable. There will always be a risk of deviation from the objectives.

So, what is risk? People use the word “risk” with different meanings in mind. A clear and universal definition of risk is required so all team members can communicate and assess what is best for the project consistently. For engineering purposes, risk is not simply any unfavourable phenomenon (threat) that could occur. There are two angles on this definition by the International Organization for Standardization (ISO). First, the risk is tied to the effect of the threat, not only the presence of it. Risk is a factor of hazards and consequences. Hazards are defined as a probability of a threat against an element of a project. The consequence of the threat depends on the vulnerability of the element at risk and the value (or utility) of the element. A simple formula would be:

Risk = Hazard × Consequences
Risk = Hazard × Vulnerability × Value

Therefore, a threat which could potentially cause $1 million in damages with the probability of one per cent is less risky than another threat which could potentially cause $100,000 in damages with the probability of 50 per cent.

Understanding this definition of risk is essential. Sometimes, a threat can seem more significant than it is, other times it’s grossly underestimated. The technical definition of the risk, as noted above, helps to better understand and prioritize plans. The ISO definition of risk also touches on the source of the risk. Uncertainties are the source of the risk.

Uncertainties which lead to risk could be caused by natural variation, lack of understanding, and insufficient or inaccurate data. There are several types of risk to a cost-effective and trouble-free project including geotechnical/
environmental risk, inadequate design, poor planning, poor construction practices, third party relations and other subsurface risks (e.g. utilities). This article focuses mostly on the geotechnical risk, as one of the most significant types.

The geotechnical uncertainties which are the source of geotechnical risk can be categorized into: natural complexity and heterogeneity of the geological environment; testing uncertainty; estimation uncertainty; and approximation of engineering models to the physical world. In short, the physical world underground is often variable, unpredictable and has complex behaviour.

Uncertainties are part of life and cannot ever be eliminated entirely. How then, do organizations live with risk? Risk management is how – it is the variety of actions that an organization or company intentionally undertakes to better understand and reduce the effect of risk (ISO definition). The goal of risk management is to quantify uncertainties and to learn how to manage them consistently. These actions can always help to reduce, but not eliminate risk. Risk management does not fundamentally remove uncertainty, and also does not alleviate the need for sound judgment in dealing with the problem at hand. Unfortunately, some organizations think that by having a risk management plan along with protocol, they can retain anyone to do the project’s work. Hiring poor engineers, and not actively seeking good contractors, is a significant source of risk on its own.

Of course, the project always starts with a geotechnical investigation (or should). Doing that right is the best first step to managing risk. Piling Canada

Masoud Manzari is a senior geotechnical and hydrogeological engineer with over 23 years of experience and has been involved in a wide range of civil engineering projects, specifically for structures built on challenging soil sites. Mark Tigchelaar is president and founder of GeoSolv Design/Build Inc. Tigchelaar is a licensed engineer in both Ontario and Alberta, is the chair of the Industry Advisory Board of York University and is the past chair of the Canadian Geotechnical Society-Southern Ontario section.

Category: Safety

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