Risk management process - what do you want?

[juw]

I'm involved in a project evaluating risk management processes and am trying to establish a good/best practice benchmark.
The question I have is simple, what do you want to see encapsulated into a risk management process within engneering/construction projects and businesses?

 

[DRC1]

Wow that is a broad scope. From a contractor's point of view, I generally do the following:
1. Have someone thoughly review the plans and specifications and construct the project step by step on paper. Details are reviewed with subcontractors so that they can fully understand the scope of thier work to forsee any potential problems.
2. Aspects of the performance of the work are considered. These include the relative safety of the plans and the needs to safely implement the work, the lead time of critical materials, effects and constraints of special requirements.
3. At this point if a project requires, preliminary engineering is done to determine requirements for items such as shoring, cran lifts, tempoaray supports, demolition methods. If the complexity of the work dictates, a schedule may be prepared. A schedule is only necessary if the work flow is complicted. For planning purposes, a schedule is generally not required.
4. The qualiy of the design is a very important factor. How well thought out is the design? Is the required work clearly shown on the plans? Does it seem the designer has a good grasp of the work? What has been the nature of the response to the questions posed by the bidders? Much of the finacial risk lies in the quality of the design.
5. The contract is read very carefully. Attention is paid to liquidated damages, insurance requirements, liability, responsibilies of the owner and the contractor payment terms, dispute resloution and changes in the work. Usually the insurance and liability, if not stadard, are dicussed with an agent.An important note is that contract usually require insurance to a particular dollar limit, but imdenity(liability) is usually without limit, so the contractor must be satisfied he has sufficent insurance for his risk.
6.The contractor has to look at all these intangibles assess what his worse and best case finish will be, look at his risk and decide how much margin he wants for the work and what the market is currently bearing. Unfortunately when all the math gets done, the final choice are generally very subjective based on the individuals invoved.
The two biggest things that can be done to limit risk is be sure the plans are well engineered and use standard contracts that are precived as fair, such as AIA or AGC.
To truley manage the risk, I would sugest going through the same process a contractor goes through to bid a project prior to it being advertised. This way many potential probles can be found and routed out.