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Title Page - AGC Managing Risk in the Digital Age

Associated General Contractors (AGC) and FMI recently published a survey of contractors’ perceptions of risk together with an analysis of factors expected to drive change in the U.S. engineering & construction (E&C) industry in the coming years. See Managing Risk in the Digital Age. The survey (completed late 2017 and published in 2018) yielded in four key findings: The “people factor” remains one of the biggest risks for E&C firms in today’s business environment. Industry stakeholders expect to see more change in the built environment within the next five years than there has been in the last 50 years. Most survey respondents are innovating “around the edges” and adopting technology in a piecemeal fashion (or not at all) but not fundamentally transforming their business approaches. For years, contractors have tackled risk by purchasing insurance programs and managing claims. Today that is no longer enough. The survey notes that business is strong and is expected to continue well into 2019. Despite the current positive activity, E&C industry leaders are concerned with a variety of risk factors including: labor shortages (especially skilled trades and field supervisors but including managers), the decline in the quality of design documents, and the accelerating pace of …

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Risk Management – How to Avoid the Construction Wheel of Misfortune

Roulette Wheel seen from space

Risk management is everywhere. The principles, definitions, and plans involving risk management can be applied to almost any industry or endeavor. Depending on the industry, the sources of risk and the consequences of a particular risk, the approach to risk management will vary. Some risk management is mandatory. For instance, the EPA requires facilities that use extremely hazardous substances to submit a risk management plan (RMP) every five years to be in compliance with Sec. 112(r) of the 1990 Clean Air Act Amendments. On the national level, the Department of Homeland Security developed a National Infrastructure Protection Plan outlining, “how government and private sector participants in the critical infrastructure community work together to manage risks and achieve security and resilience outcomes.” Some risk management plans are recommended by government agencies as industry standards. The US DOT Federal Highway Administration published a guidebook, Risk Assessment and Allocation for Highway Construction Management, concluding that, “(t)he business case for including risk assessment and allocation as a standard project management component of major capital projects is unambiguous: The ability to better understand potential risks and how to manage them yields benefits far in excess of the costs of adopting risk management practices.” CalTrans has …

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BIM Coordination Dispute

Building Information Modeling Litigation Architectural Record reports that XL Insurance recently settled a messy case arising out of the use of Building Information Modeling (BIM) to design and construct a life sciences building at a major university.  XL representatives would not name the parties involved but commented on the dispute to make people aware of the risks of BIM. The dispute centers on the lack of communication between the designers of the BIM model and the subcontractors actually responsible for performing the work – in this case the MEP contractor.  The BIM model’s tolerances for spacing in the plenum were very tight but the nature of the restriction was not communicated properly to the MEP contractor.  After the mechanicals were about 70% complete  using normal sequencing, it dawned on everyone that they were out of space.  Apparently, the design team did not communicate to the contractor that the very tight tolerances could only be achieved through a specific sequencing. The contractor sued the owner, the owner sued the architect, XL provides insurance to the design industry and so it brought in the MEP contractor. BIM Too Complicated for a Jury? The article reports that the resolution of the dispute was expensive …

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