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Risk analysis needed to innovate

Sheriff Hashem, principal engineer - post contract operations, WSP Middle East, examines the risk analysis that should be made before attempting design and construction innovation.

Sheriff Hashem, principal engineer ? post contract operations, WSP Middle East.
Sheriff Hashem, principal engineer ? post contract operations, WSP Middle East.

Innovation has become inevitable in today's highly competitive Gulf construction marketplace. In many cases, modern designers and builders attempt daring technological breakthroughs in order to produce timely and cost-effective structures.

This is achieved either by reducing sizes of construction elements using exhaustive stress analysis or, indirectly, by developing record-breaking, breathtaking landmark buildings that impress developers and sell faster. The positive side of this attitude is that it helps advance the whole industry into new horizons. The downside is that adopting innovation and making departures from traditional and well-established limits, means and methods carries additional risks, which need to be managed very carefully.

Most organisations and professionals realise this fact but only few of them consciously manage innovation risks in a structured way. Relying on conventional risk transfer mechanisms, like insurance policies, is simply not enough to manage the risks associated with innovation. Risk management philosophy should focus on risk avoidance, rather than risk transfer, which remains essential.

This article presents some of the findings of a Master's degree thesis entitled: Managing Risks Involved with Innovation in Construction Projects. The thesis aimed to find the root causes for the failure of many innovative structures in recent construction history, and involved extensive research and investigation of the subject. The research hypothesis stated that 'we learn from failures more than from successes'.

The research involved numerous innovative structures and focused on 12 case studies of structures that had collapsed, including the Quebec Bridge - Canada in 1907; the Malpasset Arch Dam on the French Riviera - in 1959; the Ronan Point Residential Tower - UK in 1968; the Roof of Hartford Civic Centre Arena - USA in 1978; and the spectacular collapse of the Suspended Walkways of Kansas City Hyatt Regency - USA in 1981.

Research revealed that the predominant motive for attempting innovation in the first place was the designers and builders' scientific ambition and passion to achieve technological breakthroughs, followed by trying to achieve cost-savings.In 8% of the studied failure cases there was no evidence that scientific ambition was a factor; in 17% of the cases scientific ambition was a main factor among others for attempting innovation; while in 75% of the cases scientific ambition and the professional passion to achieve a breakthrough was clearly the primary driving forces.

In 100% of the studied failure cases the cost-saving aspect was traceable; in 25% of the cases cost-saving was a main factor, among others, for attempting innovation; while in 75% of the cases, cost-saving was clearly the main driving force. As for time-saving; in 33% of the studied failure cases there was no evidence that time-saving was a primary motive; in 50% of the cases time-saving was a factor for attempting innovation; while in 17% of the cases time-saving was clearly the primary driving force for innovation. On the other hand, research revealed that the number one reason for failures was the absence of adequate structural analysis, followed by introducing innovative modifications to details on site during construction.

Saving time and cost is a legitimate goal for all stakeholders, but it shouldn't be the primary goal when it comes to innovation. Scientific ambition and passion to achieve technological breakthroughs via innovation should be encouraged to achieve the desired continual advancement of the construction industry, but they need be free from cost and time pressures to avoid catastrophic failures. That should remain the case until the innovative methods are established and passed the test of time.

For process optimisation, the amount of the exerted risk management effort should be commensurate to the level of risk involved. In this regard, apart from the factual research findings, the research introduced a quick numerical risk management optimisation model for project managers and decision makers. The model consists of two distinct steps. In the first step the failed innovative project, subproject or structural element is analysed and put in one of three risk levels - one, two and three, with one being the highest risk. In the second step a predetermined risk response scope is automatically assigned for the pertinent risk level.

Risk level one requires strict measures and special dealings, including the provision of ample time and budget contingencies, a special insurance policy that recognises innovation, and a comprehensive independent structural analysis and design by a qualified third party. Risk level two includes some time and cost contingencies, a standard insurance package and a structural design peer review. Risk level three, which basically represents conventional construction projects, shall require standard quality assurance procedures and typical risk management arrangements as required by the contracting agency or the local authorities, which shall also apply to risk levels one and two.

Lastly, it remains the developers' responsibility to acknowledge innovation risks reported by professionals and to avail the necessary time and funds to allow professionals to produce ‘safe' innovations. On the other hand it remains the professionals' responsibility to identify innovation, qualify and quantify innovation risk, and to make sure that stakeholders are aware of innovation risk and buy into it before proceeding.

If you would like to write for Construction Week in this column, please email angela.giuffrida@itp.com

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