Risk & Value Engineering

Risk Management

Risk awareness and consequential mitigation measures must be carried through from the initial examination of contract documents, throughout the construction period, to proposals for continuing operations and maintenance. It is essential that mitigation measures are based on a comprehensive understanding of the requirements and a detailed knowledge of the state of health of a project as it progresses. Initially this information is provided by our Contract Management work, subsequently it is an output of our Programme Management and the continuous monitoring and progress reporting that it installs.

Integrated into the commercial management function is our role as facilitator, ensuring that each discipline is made aware of the actions of each of the others. From initial Risk Workshops designed to identify the concerns of each department to instigation of inter-departmental liaisons. Our established, commercial management principles ensure that project personnel and back office support are integrated into a single team and do not act in carefully protected silos.

Identified risks need to be formally registered, evaluated both for impact and cost of mitigation and then assigned to a specific person for each risk. The risk manager of each risk should ideally be someone who is both technically able to manage the risk and with the authority to ensure mitigating action is undertaken.

The evaluation process needs to accommodate the impact the risk will have on all elements of the project. Mitigation measures should be undertaken to reduce the probability factor to, ‘As Low As Reasonably Possible’ (ALARP). The fact that the cost of totally eliminating a possible risk might be prohibitive cannot be allowed to influence decision making on risks that can be significantly reduced by alternative solutions, even where this involves additional costs. The reverberations of avoidable risks maturing can cause delay, additional cost and in extreme case loss of confidence by the project team.

McMillan Associates has been associated with programmes where the introduction of an Opportunities Review and Value Engineering has resulted in enhanced performance and higher profitability.

Value Engineering

In parallel with our risk review processes runs our Opportunities programme. Through the detailed examination of possible risks an equal number of opportunities are uncovered.  These can be cost saving initiatives, proposals for a more efficient installation programme or the possibility of introducing a better end result for a known cost.

Each of the opportunities is assessed through value engineering. Cost of introducing alternatives and the effect on programme are examined in detail, as is the impact on other elements of the project. As with risks, it is necessary that opportunities are given an ownership to ensure that they do not slip off the radar.

Once an opportunity is uncovered it requires examination both for feasibility and for impact. The assessment must draw on those able to provide a technical opinion as well as those who will be charged with its installation. This applies to all opportunities and in most cases the introduction of a fully remitted value engineering programme results in lower cost and higher output, simply because time has been given to considering alternatives.

The Value Engineering process can either be developed in order to meet the specific necessities of a project or it can be as a result of the adoption of one of the many standard Value Engineering processes now in operation.