Category Archives: Risk Allocation

Timing Can Be A “Risky Business”

The discussion on risk allocation and project contingency versus design-builder contingency has been well documented in several previous blogs. The WDBC Water and Wastewater Design-Build Handbook also provides excellent guidance on best practices for risk allocation. However, my recent experiences on current projects have led me to believe that, far too often, a project’s price, contingency, and schedule are adversely impacted by not addressing project risks with the right team members at the right time, and this topic is worthy of further discussion.

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Topics: Collaborative Delivery, Design-Build, Kiewit, Risk Allocation.

Hidden Risk Topics in Construction Contracts – What You Don’t Know Can Hurt You

As discussed in the previous blog, the underlying principle of allocating and managing risk in projects using CMAR or design-build delivery methods is to embark upon a collaborative process between the owner and construction professionals with initial discussions on how to allocate specific risks to the party best positioned to manage and assume the risk. These decisions ultimately end up in the contract between the owner and construction professional. As part of the initial discussions when formulating a contract, the following additional areas are highlighted for your attention. In addition, WDBC’s 2018 education program now includes a specific module on contracts which also addresses the elements of risk.

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Topics: Risk Allocation, WDBC Admin.

Construction Contract Risk Allocation – What You Don’t Know Can Hurt You

The underlying principle of allocating and managing risk in projects using CMAR or design-build delivery methods is to embark upon a collaborative process between the owner and construction professionals with initial discussions on how to allocate specific risks to the party best positioned to manage and assume the risk. Chapter 3 of the WDBC Water and Wastewater Design-Build Handbook is an excellent resource on the subject of risk in collaborative-delivery projects. However, the purpose of providing this more specific commentary is to share some of the risk allocating scenarios observed during the contractual process.

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Topics: Risk Allocation.

Can Collaborative Delivery Be Good for Allocating Risk?

For any business or organization (public or private) to be successful, risks must be proactively evaluated and addressed with mitigation plans. Risks, by their very nature, can sometimes produce undesirable consequences. This is especially true in construction where slim margins dictate risk identification and mitigation plans are used to protect those slim margins and enable businesses to be profitable. In public organizations, the public’s money needs to be responsibly spent and part of that responsibility is properly managing and allocating risks.

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Topics: PCL, Risk Allocation.

Managing Risks in Design-Build Delivery

  Findings in the research study of “Lessons Learned from Owners Using Design-Build Project Delivery” emphasizes that the key to successful design-build projects is an active and continuous collaboration between and owner and the selected project team.

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Topics: Design-Build, Risk Allocation, WDBC Admin.

How Much Risk Should an Owner Transfer to a DB Firm on Their Project? 

One of the benefits of collaborative project delivery is that it allows owners to transfer risks to the design-builder that they would normally have to retain in a standard design-bid-build project delivery framework; however, owners should resist the temptation to divest themselves of all project risk and transfer everything to the design-builder. Rather, owners should carefully weigh the cost/benefit of risk transference and develop a project risk allocation strategy.

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Topics: AECOM, Design-Build, Risk Allocation.

Mitigating Risks Through Collaborative Delivery

During the preliminary design or preconstruction phase of a project, developing a risk registry in parallel with the design, scope development and costing, gives the owner and the collaborative delivery firm a clear understanding of potential risks and their potential effects on delivering the final project.

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Topics: Collaborative Delivery, Risk Allocation.

Balancing Risk Reduces Design-Build Project Cost & Scheduled Time

A major advantage for utility and agency owners who chooses a design-build procurement process is the flexibility to optimize overall project risk to reduce cost and schedule. In contrast with design-bid-build procurement, owners are limited by the contracting approach and regulations that separate responsibilities for design and construction, and do not value overall performance.

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Topics: Risk Allocation, WDBC Admin.

Covering the Risks in Design-Build: WDBC’s Response to ENR’s Editorial

In Engineering News-Record’s March 30 editorial on “Covering Risks in Design-Build Delivery,” a representative of the Association of General Contractors posted the question as to whether “design-build projects were introducing industry contractors to risks for which they are unprepared?” While AGC’s statements are directed to those in the mechanical, electrical, and plumbing industries – they can seriously misconstrue and/or misinterpret the successful achievements of allocating risks in water design-build projects contracts.

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Topics: Risk Allocation, WDBC Admin.

When Does Protecting the Owner’s Best Interest Jeopardize the Project?

As I reflect on this year’s DBIA conference, I was encouraged by the dialogue between owners and practitioners during the General Session “Finding Common Ground Through Best Practices.” The open and candid discussion centered heavily on the key role owner’s advisors (OA) and owner’s engineers (OE) play during the life cycle of the project, from procurement planning through delivery and startup.

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Topics: Design-Build, Risk Allocation.