World Risk Day 2013 saw risk management experts come together to share best practices. Active Risk, as World Risk Day’s Founding Supporter, is bringing you a series of condensed lessons from the day to help you better manage risk on your own projects.
On World Risk Day Rob Halstead, Head of Risk Management at Crossrail, spoke on “Collaborating with the Supply Chain to manage Project Risk”.
Crossrail is among the most significant projects ever undertaken in the UK, and is currently Europe’s largest infrastructure project. By 2018/19, Crossrail will deliver a high frequency, high capacity rail service linking 37 stations, using 21 km of new twin-bore tunnels under the historic centre of London. Around 200 million passengers will travel on Crossrail each year and the route will provide a 10% increase to London’s rail capacity.
Crossrail is configured as a ‘lean client’ and so the success of the whole project is reliant on the performance of its supply chain. Crossrail must collaborate effectively; collectively identify risks; and work flexibly to mitigate them. In total there are over 60 delivery projects and over 130 separate major contracts.
10 ideas from Crossrail to improve risk management collaboration with your supply chain:
- Collaboration on risk management is built in at the contract stage. Crossrail is using a ‘NEC3 contract’ which fosters “a spirit of mutual trust and co-operation”. The contract states that every contractor must develop a risk management plan which references back to Crossrail’s own risk management principles to ensure a consistent approach.
- Crossrail is engaging contractors directly into its own debate about risk to develop a shared understanding on risks and uncertainties. There is a regular discussion on risk with Crossrail’s project managers. Contractors are also engaged with Crossrail’s own cost and schedule risk assessments.
- Contractors must nominate a suitably qualified Risk Manager and develop a register of significant risks, known as the contractor risk log.
- Contractors use Crossrail’s risk management software package, Active Risk Manager (ARM). Currently 28 contract teams and 14 of the project’s key contractors use ARM to share information.
- The Crossrail construction projects must work around existing transport infrastructure and ultimately connect with it. Crossrail has set up shared risk registers on interface risks with UK rail industry partners London Underground and Network Rail.
- A risk profile is created for each project and risks are allocated between the parties, ensuring that the right people are managing the right risks.
- Actions are taken early to mitigate their impact. On a project like Crossrail, which has national significance, there is no way of transferring project delay risk, so there is a real interest for all parties to help each other to manage the risks. Managing risk is a win-win for both client and contractors.
- Using one risk system and database means that Crossrail can see all the risks and also when they were updated and actioned. This is an indicator of how proactive a contractor is at managing risks.
- Risk exposure levels are checked regularly to see if the mitigation actions are actually making the planned difference.
- Assessments of contractors, including contractor capability and metrics, are shared regularly across the supply chain. This enables contractors to see where they stand in comparison to others firms. Results are also shared with other infrastructure clients and UK Government. This provides a real business incentive for contractors to step up their game on risk management to world class standards.