Risk Management in the Built Environment Management of Risk in Construction By Professor Simon Burtonshaw-Gunn – licensed under the Creative Commons Attribution – Non- Commercial – Share Alike License

Risk Management in the Built Environment School of the Built Environment MSc Construction Management Risk Management in the Built Environment Presentation 5: Risk Management on International Projects Model answer Professor Simon Burtonshaw-Gunn

Risk Management in the Built Environment The slides here provide a model answer of the main items that need to be examined in order to reduce international project risk. This is not an exhaustive answer but encourages the student to consider the international dimension more than when dealing with UK based construction projects. As a starting point it is often worth using the PESTLE tool which prompts thoughts around these key areas: P:Political E:Economic or Financial S:Social, in International locations this may have to consider Religious implications/ demands for example the availability of working around religious holiday periods, respecting local cultures and traditions T:Technology needed, or level of innovation of design or construction methods L:Legal issues around contracts, working arrangements etc E:Environmental issues of working, waste management, sustainability etc Importance of Risk Management in International projects

Risk Management in the Built Environment The Financial viability of the project which will need to be built on sound business plan The limitations of the Investing Consortium in the event that it may not be able to influence design, this may already have been done with the risk of incorrect or inappropriate design features. The risk that the traffic / passenger forecast which represents the income potential on which design is based may be flawed or over optimistic. The Political stability and support for third-party operation of a “state” asset. The selection of the project location – country, area, regional development etc The following risks will need to be considered and addressed: Importance of Risk Management in International projects

Risk Management in the Built Environment An agreement that the Prime Contractor’s supply chain partners are acceptable to the rest of the Consortium or local Government representatives. The influence of other government area and development schemes and changes in State legislation if this covers foreign investment and ownership and how such changes may impact on the project. Any changes in Environmental legislation which may change increases the risk to the operating assumptions made at the start of the project, particularly in the case of an airport. Management of the supply chain - as poor performance can have an impact on the projected profits The following risks will need to be considered and addressed: Importance of Risk Management in International projects

Risk Management in the Built Environment There may be pressure to use local suppliers proposed by Government and the Consortium also may chose other suppliers than those preferred by the Prime Contractor which may impact on financial arrangements and overall reputation. There is likely to be the risk that the project Consortium will only be interested in the share of profits and not other long-term business opportunities. With high profile projects, good performance will need to be demonstrated or else this will impact on other opportunities in the country or other BOT projects in other locations for different clients. The following risks will need to be considered and addressed: Importance of Risk Management in International projects