How to Effectively Navigate Your Project Around (Or Through) Risks
Liability under environmental, health, and safety laws is a potential risk no matter your industry – from aerospace to chemical manufacturing, ports and transportation services to U.S. armed forces, developers and attorneys to federal, state and local governments.
For example, when drilling for a development project in an industrial area, you may encounter contamination. When renovating buildings, you may encounter asbestos or lead-based paint. When introducing a new manufacturing process, you may encounter potential health and safety risks and/or trigger permitting requirements. When clearing brush in a previously undisturbed area, you may risk removing a protected species or habitat.
These scenarios can not only derail your project and negatively affect scope, schedule, budget, and health and safety; they can bring civil and even criminal penalties - and compromise your business’s reputation.
That’s why it’s important, early in project planning, to 1) identify, analyze, and prioritize risks; 2) have risk response plans in place; 3) communicate about those risks to all stakeholders; and 4) track risks and associated task/responses.
Case in Point: Hindsight is Always 20/20
A state department of transportation (DOT) mowing contractor performed routine tree removal from a steep interstate right-of-way, due to safety concerns that some trees could fall onto the highway. However, the contractor exceeded the original scope and removed all trees and other vegetation, which led to instability of the underlying soil and significant amounts of sediment washing into a tributary of a local river. Several severe rainfall events resulted in major rill and gully erosion down the slope, burying the ecological habitat in and around the creek and downstream wetlands. Extraordinary emergency action was necessary to prevent a massive slope failure and rebuild the impacted stream and wetlands.
To avoid scenarios like this one, early in project planning, identify risks and implement one (or a combination) of these four potential responses: Share, Avoid, Reduce, Accept
1. Share (or Transfer) the Risks
Outsource risk (or a portion of the risk) to a third party or parties who can manage the outcome. This is done financially through insurance contracts or hedging transactions, or operationally through outsourcing an activity. We do this at EnSafe by selecting only experienced subcontractors to perform “high risk” tasks, by purchasing additional insurance coverage to shield us from unavoidable risks, by requesting “Additional Insured” status from lower-tier subcontractors or negotiating favorable indemnification clauses.
2. Avoid the Risks
Avoid the risk by changing project plans to circumvent the problem. In the case in point above, only trees in danger of falling onto the highway needed to be removed, but the state DOT contractor changed the work scope to remove all trees and vegetation. Working with a contractor with a strong record of sticking to the original work scope could have safeguarded against potential destabilization risks. Other examples of avoiding the risks could include:
- Avoiding projects known to contain flawed design, unproven technology, or unfavorable regulatory frameworks.
- Avoiding projects in which you don’t have the appropriate skill set.
- Halting work during inclement weather.
- Stopping work to reassess a “Changed Site Condition.”
- Thinking Things Through before restarting work (that’s EnSafe’s “T3” principle, which permeates everything we do).
3. Reduce (or Control/Mitigate/Modify) the Risks
Reduce threat impact or likelihood (or both) through intermediate steps. At EnSafe, we do this by following our Four-Step Risk Mitigation Plan, which we document in a portal-based, project-specific Risk Register that tracks our 1) identification, 2) evaluation, 3) mitigation and 4) monitoring of risks.
For example, on a recent large time-critical removal action project for removal of waste materials from several buildings and warehouses, EnSafe noticed that one of the buildings had limited access to remove the wastes from the third floor (since the elevator was non-functional and the building had no power); and manually bringing the wastes down the stairwell might cause injuries to the workers and posed a high potential for spills/releases of wastes. Therefore, to reduce the potential for injuries to the workers and to remove the wastes without spills/releases, EnSafe recommended the removal of a wall section to bring the materials using a boom lift.
4. Accept the Risks
Assume the chance of the negative impact and eventually budget the cost (e.g., via a contingency budget line). At EnSafe, when we have exhausted the three previous options handling risk for a client project, we follow these general guidelines for accepting the risk:
- Clarify the Scope/Schedule/Budget
We clearly define the what, when, and how much with our client.
- Get the Right Team
We make sure those in charge of the project are familiar with the associated potential risks and proficient at responding to those risks.
- Communicate and Listen
We’re proactive and alert from start to finish.
- Have a Contingency Plan
We’re at the ready with proven back-up strategies if risks are encountered.
“If problems arise, remain calm, report the situation immediately, and stay in problem-solving mode as you implement your contingency plan,” says Venky Venkatesh, CHMM, a Senior Project Director and Engineering Lead at EnSafe. Venky helps lead EnSafeUniversity’s project management training, which always includes risk management. He offers one more tip for successfully navigating your project around (or through) risks:
Keep risk management top of mind through continuous training.
“Effective risk management isn’t something that’s learned and filed away for future use,” says Venky. “Nothing is static. Markets, environments, laws, technologies – they’re all changing. A continuous training program that includes risk management will ensure your people are always up-to-date and that risk management is always top of mind.”
Need help with risk management? EnSafe personnel, says Kim Burke (ret), of Taft Stettinius & Hollister LLP, “always think about the issues as if they were in your shoes as owners of the business." That’s how we manage risk for our clients.