There are an enormous number of published articles about how to conduct a Risk Workshop and to prepare a Risk Register with the best source of information concerning this topic included in a publication entitled Guidelines for Improved Risk Management (GIRM) by Joe O’Carroll and Bob Goodfellow (SME, 2015). Given below are the goals and objective of the GIRM as reproduced from that publication:
1. GOALS AND OBJECTIVE OF THIS GIRM
1.1 The objective of this Guidelines for Improved Risk Management (GIRM) is to promote and achieve improved practices for the mitigation and management of risks (and to maximize opportunities) associated with the design and construction of tunnels, caverns, shafts, and other underground structures, including the renovation of existing underground structures, referred to hereafter as projects. It sets out guidelines for the identification of risks; their allocation between the parties to a contract and Project Insurers; and the management and control of risks through the use of risk assessments, risk registers, and risk management processes.
1.2 It is a goal of this GIRM to promote systematic risk management as part of the mainstream practice of all projects.
1.3 The scope of this GIRM applies to the project planning, design, procurement, and construction phases of projects, wherever these may be carried out geographically within the USA.
There is nothing wrong with the Owner, its design representatives and associated Consultants identifying potential risks during the design process, but lately recommendations are being promoted whereby some form of Risk Register should be included as a Contract Document. Although the author of this article is not aware of a tunneling project where that has actually happened, it is the purpose of this paper to point out potential problems with that recommendation and to make a strong argument that the current approach to allocating and managing risks via the Contract Document itself should not be modified. Current and well established contracting practices for tunneling projects were elaborated in a publication entitled Recommended Contract Practices for Underground Projects (SME, 2008) and that publication is based upon decades of experience and the actual outcomes from thousands of projects. In addition, various claims and disputes have resulted in hundreds of DRB opinions and legal rulings that have established precedents for dealing with disagreements that develop between Owners and Contractors for issues that in many ways are unique to the special requirements for constructing below-ground structures. In general, and as described in the Contract Practices document referenced above, the contract package for a tunneling project consists of five parts: the General Conditions, the Plans, the Specifications, the GBR, and the GDR and the author of this paper believes that it would be highly problematic to layer a Risk Register on top of that package. In general, the Contract Package itself is the best method for allocating and managing the risks for any given tunneling project and the primary objective of this paper is to explain how that can and should be accomplished.
The “Risks” Associated with Tunnel Design
The risk profile for an underground structure is radically different as compared to an above-ground project. For an above-ground project only 10% or so of the building comes into contact with the ground and, more often than not, the local building contractors know as much or more about the ground than does the designer. In addition, about 90% or so of the project consists of producing the finished building as compared to dealing with any of the “temporary” facilities required to produce that building.
Exactly the opposite is true for a tunnel. For a tunneling project literally 100% of the temporary structures come into contact with the ground and a majority of the cost, the schedule, and the risks associated with constructing that project are related to the provision of temporary facilities. In order to build a finished tunnel structure, the Contractor must first create the underground space inside of which the finished facility can be constructed and it is the construction work associated with those temporary facilities that exposes the contractor to most of the major project risks.
In order to “design” the temporary facilities for a tunneling project the project Designer must provide answers to each of the three questions given below:
- What is the best way to excavate the ground from within the tunnel envelope?
- What is the best way to control the ground during the process of excavation so that tunnel is safe for the workers and stable with respect to potential third party impacts?
- What is the best method for supporting the ground as the tunnel advances in a manner that is also safe and stable?
It is not possible within the context of this paper to discuss all of the tunneling methods and ground improvement procedures that can be utilized in order to answer the above three questions, but it is during the process of accomplishing that task that the Owner will conduct its Risk Workshop and prepare its Risk Register to produce a list of risks that the Owner believes needs to be addressed in the Contract Document. Having accomplished the above, it is now possible to discuss all of the ways that the Owner has at its disposal to make certain that those risks are adequately allocated in the Contract Document.
For instance, it is one of the most enduring truths that tunneling projects must begin with the completion of a comprehensive subsurface investigation. Almost all of the significant project risks associated with tunneling are related to one’s knowledge of the existing ground condition and the only way to obtain that knowledge is to investigate the ground; the results of which investigation provides the basis for answering each of the above three questions. Hence, it is the opinion of the author of this paper that the single most important document for identifying risks for a tunneling project is a reliable and comprehensive Geotechnical Data Report.
The Contract Document
Based upon information provided in the GDR about the existing ground condition and knowing the size, shape, depth and alignment of the required underground openings, the Owner and its Designers can prepare the plans and specifications and the Geotechnical Baseline Report (GBR) that will inform the Contractor about what needs to be accomplished in order to build those openings. When this process is complete, the Owner and its Designers must ask themselves one additional question:
If the Contractor does everything as described in the plans, the specifications, and the GBR will the temporary facilities be completed so as to provide the safe and stable openings that are needed to install the finished facilities?
If the answer to this question is yes, then the Owner has accomplished that which is required to avoid and/or to mitigate all of the risks that were identified during the Risk Workshop. In the language of the GIRM it is at this point in project design where the project risks have been reduced to As Low As Reasonably Practical (ALARP) and where the design team is left to deal only with what the GIRM refers to as Residual Risks. To summarize the above, the Owner started with a project layout and a comprehensive subsurface investigation and is now tasked with producing a Contract Document that must focus only on the allocation and management of “Residual Risks”; all in all, a significant accomplishment.
The contractual mechanisms for dealing with Residual Risks are the General Conditions, the Plans and Specifications, and the GBR whereby the Residual Risks can be allocated between the Owner and the Contractor. For instance, given below is a listing of various clauses from a typical tunneling contract that are used to allocate Residual Risks:
- Site Conditions and Underground Utilities
- Contractor Submittals
- Project Schedule and Owner’s Estimate
- Contingency Allowances
- The Differing Site Conditions Clause
- Liquidated Damages
- Insurance and Bonds
- Measurement and Payment
- Laws and Regulations
- Contract Interfaces
- Contractor’s Safety Program
- Third Party Interactions
- Community Impact Requirements
- Environmental Responsibilities
and the owner is free to utilize the above clauses as it sees fit in order to establish various risk allocations between itself and the Contractor.
One final opportunity that the Owner has to begin “managing risk” prior to contract award is the Procurement Process and given below is a listing of procurement issues that must also be addressed by the Owner:
- Contractor Prequalification
- Pre-bid Conference
- Adequate Time to Bid
- Escrow Documents
- Dispute Review Board
- Having accomplished all of the above the project is put out to bid and a Contractor selected to do the work at which time the Owner and the Contractor become involved with the role of “managing” risk.
For many tunneling projects the Owner will hire a Construction Manager (CM) to assist with the extremely important function of managing risk during actual construction which, in general, begins with the Contractor preparing a large number of submittals that explain in detail how the Contractor intends to deal with all of the project requirements established by the Contract Document. When you think about what is intended and what is accomplished as a result of project submittals it can be characterized as a form of “Risk Workshop” after award. Contractor submittals force the Contractor to explain how he intends to build the project and provides the Owner and the CM with the opportunity to interrogate the Contractor about his intended construction procedures. This process, in and of itself, is a very important part of risk management for a tunneling project. Other contractual opportunities that the Owner has for managing risk during construction include schedule updates, the results of instrumentation and monitoring, and quality control/quality assurance. In fact, the entire CM function for a tunneling project represents one of the keys to success for Risk Management especially if disagreements develop between the Owner and the Contractor.
It is totally unrealistic for an Owner to assume that a tunneling project can be constructed without some level of disagreement about various contract requirements. Hopefully, those disagreements can be handled in the field but sometimes a dispute resolution procedure is required and the tunneling industry has been highly successful using Dispute Review Boards for that purpose. If the DRB process is not successful then litigation ensues and it is safe to say that if that happens, then the contractual procedures for risk identification, avoidance, mitigation, allocation, and management have failed. It is beyond the scope of this paper to discuss the process of construction litigation but suffice it to say that litigation is the very reason why industry professionals have tried so hard over the years to establish a valid and reliable method for Risk Management.
In concluding this paper, the original objective of this paper is revisited which was to discuss whether or not the Risk Register as prepared by the Owner and its Designers should be included as a contact document and the answer to that question is, based on this paper, NO. The Risk Workshop and Risk Register procedure is a valid method for helping to identify, avoid and/or to mitigate risks during design but only the Contract Document can be used to allocate “Residual Risks” to the Contractor. After award and as discussed above, the Owner has at its disposal additional opportunities to manage those Residual Risks with the ultimate goal of avoiding litigation. It is also important to note in this regard that none of the decades of contract resolution procedures and legal precedents that are now in place address how the presence of a Risk Register would relate to the other five parts of a Contract Document for a tunnel. In the final analysis, however, let’s do all that we can to streamline and improve the process of Risk Management short of undermining the primary goal of the Contract Document itself which is to allocate risks between the Owner and the Contractor and to facilitate the management of those risks during construction.
Dr. Gary S. Brierley is President of Doctor Mole, Inc.