Risk Management Of District Cooling Plant Construction Essay

Risk, which could be defined as a hazard posed for an event or an activity, is inherent in all activities and functions of any organisation. The consequences which would arise from an organisation’s exposure to risk could include financial loss, disruption in operations, failure to meet the expectations of stakeholders and customers, legal concerns, political and competitive failure and so forth. Therefore it is highly necessary to implement management procedures, policies and practices that would minimise the organisation’s exposure to risk.

Tabreed DM.02, Al Rigga is project for a district cooling plant to be constructed by SNC-Lavalin Gulf Contractors LLC. Any failure at any phase of the project could reflect on the reputation of the organisation as a whole. Thereby, making risk management highly essential at all phases of the project.

The risk management plan for the project “Tabreed DM.02, Al Rigga” is detailed in the document, which adheres to the risk management policy of SNC-Lavalin, followed by SNC-Lavalin Gulf Contractors LLC.. The risks identified are those that relate to the construction phase of the district cooling plant as SNC-Lavalin Gulf Contractors LLC., has a sector dedicated to the construction of the district cooling plants in the region.

The document discusses the benefits of incorporating risk management in order to achieve the corporate objectives. For the purpose of the document, the Australian/New Zealand Standards AS/NZ 4360:2004 was used in establishing the risk management framework.

The risk management processes for the district cooling plants are documented as common document for all cooling plants in the region considering the similarity of the construction and areas of construction. For the project “Tabreed DM.02, Al Rigga”, the common set of risks was identified along with a few variances in relation to the construction of the cooling plant in one of the busiest areas of Dubai. The risk implementation is followed by the monitoring and review sessions in order to achieve maximum effectiveness and allow successful implementation of the project.

All information in the document has been obtained through the corporate handbook, interview with the management and corporate website.

Introduction

SNC-Lavalin Gulf Contractors LLC., is a part of the global network of the Canada based engineering and construction organisation, SNC-Lavalin. SNC-Lavalin operates in about 35 countries worldwide and would have projects in about 100 countries all over the globe. SNC-Lavalin Gulf Contractors LLC., operates in the United Arab Emirates with its head office in Abu Dhabi. In 2004, SNC-Lavalin Gulf Contractors LLC., expanded its expertise in district cooling technology by entering into a partnership with international and local service providers forming a joint venture i.e. National Central Cooling Co. TABREED. SNC-Lavalin Gulf Contractors LLC., take responsibility mainly in the construction of the district cooling plant, either directly or through outsourcing.

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About the project “Tabreed DM.02 Cooling Plant, Al Rigga”

The project for which the risk management plan is to be documented is a district cooling plant to be constructed by SNC-Lavalin Gulf Contractors LLC., for its client – Dubai Metro. The cooling plant would be constructed at Union Square, Al Rigga, Deira and is named as “Tabreed DM.02 Cooling Plant”. The project would hereafter be termed as per the naming of the contractors as “Tabreed DM.02, Al Rigga”.

The contract for the construction was awarded to SNC-Lavalin Gulf Contractors LLC. SNC-Lavalin Gulf Contractors LLC., is one of the global branches of SNC-Lavalin, which is one among the giants in the construction and engineering sector in the world.

Cooling plants are one of the recent environment-friendly engineering developments. The cooling plants provide savings in power consumption in providing air conditioning and chilled water supply. Tabreed DM.02 Cooling Plant is a district cooling plant which would provide air conditioning and chilled water supply to three stations of the Dubai Metro namely Al Rigga Station, Union Square and Reef Mall Station. The total cost for construction of the project is estimated to be about AED 33.4 million which covers about 2637 square metres of land.

The cooling plant would consist of four chillers, of which two would be operational and two would be standby as per client requirements. The plant would have a capacity of 500 RT (Refrigerant Tonne) which would be required for the chilled water supply for the three stations. Tabreed DM.02 would be constructed with two levels of basement considering the height restrictions.

SNC-Lavalin Gulf Contractors LLC., have a sector which deals only with the construction of the district cooling plants in and around the United Arab Emirates and Gulf Countries. Therefore, the risk management policy, processes and approaches are created to be suited for all types of district cooling plants that would be constructed, and so does not differ from project to project unless in case of major differences in sites.

Purpose

The Risk Management Plan presented in the document describes the methodology used for identifying, analysing, estimating, evaluating and ultimately treating the risks for the Project “Tabreed DM.02 Cooling Plant, Al Rigga”. The document would define the roles and responsibilities which would assist the project management team in effective risk management of the project. The risks that would arise in the course of the construction of the project are identified and analysed using the risk management processes. Treatment plans are evaluated for a few of the risks and the risk management implementations are discussed in the document for the project – “Tabreed DM.02 Cooling Plant, Al Rigga”.

Scope

The scope of the document pertains to the “Tabreed DM.02 Cooling Plant, Al Rigga” Project and its risk management processes and plan. The methodology used in the risk management is in accordance to the Australian – New Zealand Standards 4360:2004. The risks identified in the document concentrates primarily on the risks pertaining to the construction of the cooling plant rather than all external and internal risks of the organisation. The risk management document would be used as reference through out all the phases of the project. The plan would be a deliverable along with the project management plan for the construction of the district cooling plant.

The scope of the document would not include the risks relating to the organisation or the any other risks outside the construction phase as the contractors, SNC-Lavalin Gulf Contractors LLC., concentrate only on the construction of the cooling plant. The risks detailed in the document would encompass the engineering concerns of construction as well as the health, safety and environmental issues in the project.

Glossary of Terms

All terms used in the document are as per the Australian/New Zealand Standards AS/NZ 4360:2004. However few terms used in the document within the organisation are as follows:

Terms

Definition/Description

Hazard

Equivalent of risk

Impact

Equivalent of consequence

PPE

Personal Protection Equipment

Probability

Equivalent of likelihood

Project Risk Database

Compilation of all the risks encountered in similar projects and those applicable to the current project

QA/QC and HSE

Quality Assurance/Quality Control and Health, Safety and Environment. The department that primarily operates the risk management processes within the sector of district cooling plants in SNC-Lavalin Gulf Contractors LLC..

SNC-Lavalin Gulf Contractors LLC.

Abbreviation for SNC-Lavalin Gulf Contractors LLC.

Tabreed DM.02, Al Rigga

Project documented

Risk Management Plan

Risk Management is a practical, structured approach in creating a systematic procedure to identify, analyse, evaluate, control and monitor risk, thereby reducing and maintaining risks within a level tolerable to the organisation’s risk appetite. For the project, Tabreed DM.02, Al Rigga, these risk management processes are employed during all the phases of the project in order to minimise the exposure to risk especially during the implementation i.e. the construction of the project where most risks are prone to arise.

As applicable to all projects at SNC-Lavalin, an effective implementation of risk management plan in the project – Tabreed DM.02, Al Rigga would increase the probability of successful implementation of the project as a whole. For Tabreed DM.02, Al Rigga, it would assist in achieving the triple constraints of quality, cost and time. It would play a major role in making decisions on funding priorities would also serve as a basis for identifying alternatives of the performance goals.

An effective risk management plan would allow high adherence to the strict timelines of the project, which would inturn enhance the reputation of the organisation to meet project deadlines. The advantages of risk management would be creating value, providing lesser uncertainty, reducing capital cost, creating reliability of shareholders and assisting in successful accomplishment of objectives.

Objectives of Risk Management Plan

The aims of SNC-Lavalin for introducing the risk management plan are mainly to set up a systematic process that would integrate the risks and control measures already implemented by the organisation, to provide an assurance to all stakeholders of the organisation’s knowledge of its exposure to risk and implementation of steps to mitigate and manage the risks. It would also ensure that the organisation would consider risk management as a business tool which would allow focus on all areas which require management of risk.

For SNC-Lavalin Gulf Contractors LLC., the main objectives of managing risks would be to:

provide maximum safety to its employees at all levels

avoid any penalties for legal or regulatory non-compliance

prevent loss in relation to company assets

retain the reputation of the company

decrease costs related to occurrence of unfavourable events

allow efficient allocation and utilisation of resource

creates accountability for all activities

promotes creativity in management practice

Risk Management Policy

SNC-Lavalin Gulf Contractors LLC., is guided by the corporate approach on safety of the parent organisation, SNC Lavalin, in order to match corporate standards around the globe. Safety is embedded as a core value in the “WE CARE” Policy (See Appendix 1) in order to carry out its mandate to protect people, properties, the environment and sustainable development of the communities while maintaining work quality in pursuing its business objectives. The policy provides the guiding principles for SNC-Lavalin Gulf Contractors in achieving the Zero Harm goal.

The Zero Harm objective has the ideal goal setting which would eliminate all dangers of health, safety and physical well-being of the employees, through zero fatalities, zero occurrence of serious occupational health-related illness in employees and zero environmental citations from authorities.

Risk management is key tool in business decision making which would allow the controlling, elimination or minimisation of all potential forms of loss. Implementation of risk management within the business processes would be able to provide protection to all its employees, customers, stakeholders, environment, assets, earnings, intellectual property as well as the organisation’s reputation which would maximise efficiency and effectiveness. Risk management procedures would need to be created, effectively implemented, maintained and constantly improved to match with the goals of the risk management plan. Continual identification, analysis and evaluation of risks are highly essential in order to make judicious decisions of risks.

The risk management policy at SNC-Lavalin focuses mainly on the prevention and control of the occurrence of incidents that could result in personal injury, loss of life, damage to assets and properties, or any incident that may pose a threat to the environment.

Although managers at all SNC-Lavalin offices have risk management as a core responsibility, all employees are to assume individual responsibility in executing risk management by reducing the likelihood and consequence of any losses or accidents. The managerial activities in implementing risk management include:

training for staff in project or organisational risk management

conducting surveys to facilitate identification of risks

constant review of existing policies and procedures

scheduling improvements in existing controls for the project or any of the business unit

maintaining up-to-date information of the latest technological developments on systems, tools and process guidelines

reporting to the higher management board on compliance and improvements of risks

SNC-Lavalin Gulf Contractors LLC., as well as all subcontractors are to strictly follow the procedures relating to risk management in order to conform to the highest standards of safety in all processes of the project and organisation.

The risk management processes for the document of the project “Tabreed DM.02, Al Rigga” would be in accordance with the Australian/New Zealand Standards AS/NZS 4360:2004.

Project organisation

Tabreed DM.02, Al Rigga is a project that would be handled by the sector for construction of cooling plants in SNC-Lavalin Gulf Contractors LLC. The highest responsibility is with the general manager of the sector. All the responsibility allocation is distributed as per the organisational hierarchy as shown in Figure 2.

Figure – Project organisation structure

Each cooling plant project is handled by a project manager, who would have overall authority in decision making processes related to the project. The project manager would report to the project director on the status and any issues of the project. For any further management involvement with reference to the project, the general manager who is the management’s representative would have the final authority. The risk management plan is created and monitored by the QA/QC and HSE Coordinators throughout the phases of the project, the present being “Tabreed DM.02, Al Rigga”

Roles and Responsibilities

General Manager (Top Management Appointee)

Provide coordination with the government interfaces and policy

Timely issue of permits

Monitor project security and compliance to policies

Support corporate values and policies by implementing applicable risk management programs

Managing contracts and agreement to varying policies of subcontractors

Maintaining information pertaining to corporate risk and controls

Lead the development of dynamic safety culture based on SNC-Lavalin’s core values

Ensuring all risk management procedures are conformed by all employees and subcontractors of SNC-Lavalin Gulf Contractors LLC.

Verification and approval of risk assessments and update on risk management plan

Constant review and update of the risk management plan

Reporting to the board of directors and parent company, for any risk management updates

Accountable for any failure in risk management processes to the board of directors and parent company

Project Director

Coordination and regular updating of the project risk registers and treatment plans, leading to a compilation of a master risk management plan

Continuous review and updating of the risk management plan, including risk identification and analysis processes

Reporting to the general manager on constant intervals regarding updates on the existing policies and procedures of risk management

Communicate all risk management standards and processes to all SNC-Lavalin Gulf Contractors LLC. personnel

Provide overall direction and support for the implementation of SNC-Lavalin’s Risk Management Policies and Management Systems

Attend project review meetings

Ensuring sufficient resources to support approved SNC-Lavalin initiatives

Lead the development of dynamic safety culture based on SNC-Lavalin’s core values

Selection of contractors and compliance to the SNC-Lavalin Gulf Contractors LLC. practices of risk management

Accountability for overall project performance in compliance with risk management initiatives

Participate in risk assessments

Review the risk assessment, elimination and control process results

Provide documentation of updates on risk management plan

Investigation of serious incidents

Workplace inspections

Accountable for failure of compliance or awareness of risk management processes among the project teams

Project Manager

Ensure that SNC-Lavalin Gulf Contractors LLC. operations comply with legislative requirements and best standards within the industry, and in reference to the standards of the parent company

Reporting to the project director on constant intervals regarding updates on the existing policies and procedures of risk management, and any issues arising from risk management

Communicate all risk management standards and processes to all SNC-Lavalin Gulf Contractors LLC. personnel

Ensure that all contractors and consultants are informed of procedures, safety policies and safe construction methods prior to commencing a project

Investigate on serious incidents

Participate in workplace inspections

Provide updates on the risk management procedures

Review proposals for practical and effective risk management initiatives

Accountable for any failure in project, arising from lack of risk management compliance

Site Manager (the resident engineer would also comply with these responsibilities)

Ensure that all the risk management policies and procedures are implemented through all the phases of the project

Accountable for the overall direction and support of the implementation of the risk management processes

Accountable for ensuring engineering specifications and method statements being critically reviewed in conformance to SNC-Lavalin Gulf Contractors LLC. policies

Encourage the proactive involvement of all personnel in managing the risk management program

Ensure that project supervisors take an active role in promoting and enforcing health and safety protection

Enforce HSE procedures and practices

Investigate injuries/illnesses, near misses and environmental incidents and communicates the lessons learned throughout SNC-Lavalin Gulf Contractors LLC.

Ensure that Job Planning and Safety Analyses are completed and reviewed before tasks are begun

Accountable for provision of adequate resources, facilities and initiatives to effectively implement risk management

QA/QC and HSE Coordinators

Conduct scheduled and unscheduled inspection of work areas

Coordinate audits to eliminate conditions and work practices that are hazardous to the job

Coordinate the thorough investigation of all incidents

Review and monitor emergency Key Elements

Encourage hazard identification and reporting by all site personnel

Maintain a current knowledge of UAE federal standards and other applicable international standards or industry practices and communicate to the site manager and personnel

Deliver internal training

Attend in the site progress meeting

Participate in any investigations relating any risk issues

Monitor project risk policies and procedures, paying particular attention to potentially hazardous operations and emphasizing proactive solutions

Coordinate contractor activities in reference to complying with the risk management policies

Initiate and implement programs for the accomplishment of project risk management objectives including site emergency response plans

Assist employees with all risk issues

Maintain project risk recordkeeping system

Recommend safety disciplinary actions to the Site Manager for deliberate safety violations committed by individuals

Establish site emergency response plan, organize emergency response team and conduct training and exercise for emergency response

Display and maintains materials on site bulletin boards as required

Ensure that Job Planning and Safety Analyses are completed and reviewed before tasks begin

Conduct safety induction and site orientation to new site employees including contractors, visitors, suppliers, etc. before mobilization to ensure that they understand and have agreed to comply with HSE policies

Report all hazards to the site manager and project manager

Communication Framework

SNC-Lavalin operates a formally documented risk management system designed to clearly define policies, responsibilities, accountabilities and operational practices. This together with performance parameters to measure the effectiveness of the management system in operation will direct the control applied to the implementation and maintenance of the company’s risk management policy throughout the organisation

The System has four levels:

The policy manual, to clearly define company policy and its operating policies

Risk management operating procedures written as appropriate to the function to clearly define responsibilities, accountabilities and controls applied in the risk management system

Work instructions, comprising of specifications, checklists, externally sourced standards, technical directives, or government legislation.

Forms, templates and reports necessary for effective communication, and constitute the records generated by risk management system planning, implementation and maintenance of the risk management system.

Figure – Documentation process model

The risk management program would be communicated to all employees within SNC-Lavalin displaying it in offices and strategic places. The involvement of all employees in the systems management ensures that they are involved in the development and review of policies, procedure changes related to the project risk matters by seeking feedback related to the same.

External communication covers the following:

Local authorities (Government, Municipal authority)

Suppliers

Interested parties

Corporate head office

Risk Management Framework

The processes used in the risk management of “Tabreed DM.02, Al Rigga” are in accordance to the AS/NZ 4360:2004 standards as illustrated in Figure 4.

Figure – Framework for developing risk management program

Communication during the project

Communication processes would include developing documentation of risks applicable to the project in accordance to the standards to identify the risks, assess the likelihood and consequence of the identified risks, estimate the risk level, evaluate the risks and treat the risks accordingly.

In order to establish criteria for evaluating risks, it would be essential to document the criteria for establishing the likelihood and consequence for the project. This would be based on the risk appetite and tolerance of the organisation. After the evaluation, the risks that are unacceptable to the organisation would be considered for creating treatment plan. Monitoring the risk in external situations, would allow further changes to the existing controls, if necessary. A periodical review and update on the risk register would allow for changes in the risks identified.

The risk management plan for the district cooling plant is documented on common stance considering the similarity of locations all around the country. However, changes would be included depending on the variance of the area from the standard description.

Internally, the risk management team, which is the QA/QC and HSE coordinators in the documented “Tabreed DM.02, Al Rigga” project, are scheduled for meetings which have to meet on a monthly basis in reference to the project requirements, or as relevant to the demands of the project.

Training

Success of the project would depend on the effective implementation of risk management through out all the phases of the project, which requires risk management training to be provided to staff, contractors and managers. The skills qualifications of all personnel within the organization are essential to achieving business quality and corporate objectives. Competence of the organization and people in identifying and managing risk requires a systematic focus on behaviours, risk perceptions and skills.

Training material would encompass risk management policies, application of tools of risk management, assistance in identifying and analysis the risks which the project and the organisation is exposed to, providing the profiling of risk and reporting of assurance.

On recruitment, SNC-Lavalin Gulf Contractors LLC., provides induction training to all new employees in risk management involving safety measures, code of conduct and fraud awareness. On-site training is provided to all employees, site visitors, and vendors as a prerequisite to site deployment. Except for visitors and vendors, all site workers shall be assigned a SNC-Lavalin Gulf Contractors LLC. number identification in the form of helmet decal sticker signifying a worker had passed the orientation program. A regular refresher course is provided to all employees in risk management awareness on updating the risk register or every two years.

Monitoring and Review

The risk management system operated by SNC-Lavalin Gulf Contractors LLC., is subject to documented procedure and systematic program of Internal Audits. The audit procedure will direct responsibilities and controls to be applied to planning, preparing, conducting, reporting and follow-up of the risk audits. The audit program, including the schedule will be based on the results of risk assessments of the company’s activities, and the results of the previous audits. The audit procedure will cover the scope, frequency, methodologies and competencies, as well as the responsibilities and requirements for conducting the audits and reporting results.

The project risk registers would formally be reviewed and updated every six months, but more regular reviews and updates are conducted in reference to any significant changes in activities. With the district cooling plant projects, the common risk register would be modified after evaluation of the work site and in reference to any changes in the work activities and areas.

The audits will be conducted by suitably qualified personnel and by independent of those having direct responsibility for the activity being examined.

The reviews would consist of a summary risk register which would provide the overall rating to identify all levels of risks mainly the high and the medium risks across the projects. It would also include a report of the implementation of the risk treatment plans made for the previous audits and its effectiveness in the management of risks in either reducing the risk, decrease in costs associated to risk management and the progress made in the controls of risk.

The internal audits will determine whether or not the risk management system conforms to planned arrangements and has been properly implemented and maintained. Where non-compliance or opportunities to improve systems or practice are identified, appropriate corrective or preventive actions or controlled changes will be implemented. All such actions will be assigned, time limited and upon completion, reviewed for effectiveness. Where considered necessary subject to audit results obtained, the frequencies assigned on the audit program will be updated.

Figure – Internal Risk Audit Considerations

The results of the audits will be recorded, maintained and subject to further review as an integral part of the risk management review meetings, thus assuring the effectiveness of the audit program in achieving desired goals. The performance of SNC-Lavalin Gulf Contractors LLC., risk management system and its suitability and effectiveness to satisfy the requirements of the zero harm corporate risk management policy would be reviewed every six months.

Meetings

Meetings are held at various levels in order to ensure that the project adheres to the organisation’s standards of safety, to create an awareness of SNC Risk Management Policy and to ensure that it is implemented in the project risk management process.

Meeting

Who are involved?

How often?

Project Executive Meeting

(Overall review on the internal audits, changes in the existing risk management plan, any serious non-compliance issues)

General Manager, Project Director, Project Manager

Once in two months or as required by the project or in emergency situations.

Project status meeting

(Up-to-date information on the status of the project as well as review on conformance to the risk management procedure)

Project Director, Project Manager, Site Manager, QA/QC and HSE Coordinators

Weekly and in emergency situations

Toolbox Talks

( Priorityissues, new instructions, lessons learned, or any job-related information that matters to the safety, health and welfare of employees, and the work environment)

Contractor, SNC-Lavalin Gulf Contractors LLC., QA/QC Coordinators, SNC-Lavalin Gulf Contractors LLC., Personnel

Weekly at the beginning of the work week

Pre-job task instruction

(the risks analysed are discussed herein in order for the crew to be aware of the proper job steps, the hazards associated with each job step (or activity) and the appropriate control measures to eliminate or reduce the impact or the probability of the hazards)

QA/QC and HSE Coordinators,

SNC-Lavalin Gulf Contractors LLC., personnel on site

Daily, before commencement of the activity

Records are subject to systematic review and analysis as an integral part of SNC-Lavalin Gulf Contractors LLC. Internal Audit Plan, identify any apparent trends, prove the effectiveness of their application and identify the opportunities for continual improvement. The disposal of records at the end of their retention period will be carried out under controlled conditions designed to protect the status of any confidential or exclusive information. During project closure and demobilization, obsolete and yet classified documents exclusive to the particular project shall be shredded and recycled. Other document files shall be labelled and delivered to designated store for safekeeping. Clients would be provided access to records pertinent to the contract regulations.

Risk identification

Risk identification refers to the identification of potential risks exposed in a project. The deliverable of the risk identification process is the project risk register – which involves the risks that could affect the ability of a project to attain its objectives. The process in which