Delivering Client Value
through Uncertainty
Management
Tim Wells
Halcrow Group Ltd
1
Introduction
 PM for Halcrow Group Ltd
2
Our Markets
3
Selection of Projects
Seoul International Airport
Clyde Arc Bridge
Egyptian National Railways
Chendu Ecological Park China
Thames Barrier
Rhudbar Dam Iran
4
Scope
Adding Client Value through management of uncertainty
 What is Client Value
 Robust Decision Making
 Tour through hierarchy of case studies (coastal planning)
 Take Home Messages & Barriers
5
What adds value to clients

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





Innovation
Predicting their needs
Compliance
Technically rigorous solutions
Sustainable solutions
Social / Ethical / Environmental Responsibility (SEE)
Manage project risks (cost and programme)
Robust decisions
6
Robust Decision Making
Robust Decisions:
 Decisions that are not sensitive to uncertainty
 Stand the test of time / ‘Future Proofed’ / ‘No Regrets’
 Survival Strategies
o Organisational level
o Capital investment decisions
o Business Strategies / Mergers & Acquisitions
o Product development
o Flood Risk Management Options Appraisal
7
Robust Solutions – Top Down
Implement solutions that cope well with uncertainty
Resistant, Resilient, Reliable, Adaptability, Flexibility
8
Robust Solutions – Bottom Up
Understand and Formalise Uncertainty
Identify Uncertainties / Assumptions, Model Building, Defining
Parameters, Uncertainty / Probabilistic Analysis, Sensitivity
Testing, Supporting Decision Making
9
Hierarchy of Case Studies
• Technical - Flood defences ; Rock Sizing
• Project - Project Risk Management
• Strategic – Long Term Investment
Mon
tify
Iden
itor
Context
Project
Risk Register
M
iti
es
ga
te
R
s
s
As
10
Flood Defence Freeboard
Traditional Design
Design for Standard of Protection - 1:200 (0.5%AP)
Safety margin added on to represent uncertainty
7.50
99%
Waves
7.00
Uncertainty in modelling
95%
m (AOD)
Uncertainty in future SLR
6.50
50%
6.00
Defence crest elevation
(design water level)
5.50
5.00
11
Added Value
Traditional Design
Design for Standard of Protection - 1:200 (0.5%APF)
Safety margin added on to represent uncertainty
•
Better understanding of existing performance
•
Understand dominant parameters
•
Provides scientific rigor - robust
•
Better evidence for decision making
•
Transparent (share)
•
Potential cost savings
Regression Sensitivity for Defence
WL/D14
Extreme Water level at Sou.../D6
.778
Uncertainty on Transformat.../D10
.558
Wave Height/D12
-1
-0.75
.279
-0.5
-0.25
0
0.25
0.5
0.75
Std b Coefficients
12
1
Rock Sizing
Armouring for coastal structures
Design based on empirical formulation
(Van der Meer/Hudson)
Many uncertain parameters / lots of correlations / expert
choice
13
Rock Sizing
Armouring for coastal structures
Design based on empirical formulation
(Van der Meer/Hudson)
Many uncertain parameters / lots of correlations / expert
choice
Wn50 5.5T
14
Added Value
•
Understanding of performance envelope
•
Making informed choices
•
Trade-off [cost/safety & confidence in performance]
•
Support traditional methods
Rock size needed to
Prevent failure for
Given range in
Deterministic
Forcing events
15
Project Risk Management
The Environment Agency is the leading public
body for protecting and improving the
environment in England and Wales
NCPMS – National Capital Programme
Management Services = Delivery of the
nations flood defence projects
16
Drivers
“The Environment Agency has accepted the
culture of risk management. It is considered to
be best practice and is mandatory.”
£200M annual capital investment needs effective management (>500 live projects
)
17
Dedicated Extranet Website
18
RM Process
Understand Objectives
Project
Risk Register
tify
Iden
Review cycle
Manage actions
Update risk register
Share knowledge
Continuous
Integrated into PM
Capture Lessons
Mon
itor
Context
iti
M
s
ga
te
R
es
s
As
Actions become programmed tasks
Named ownership
Facilitated workshops
Key team members
Focus on programme / activities
ID Causes /Consequences
Ownership
Consensus
Risk Register
Prioritise (qualitative)
ID Mitigation
Residual probability
Quantitative (3 point)
Assumptions
@Risk simulations
Consensus
19
Sources of Uncertainty
Poor Decision
Making
Consultation process
Unrealistic Expectations
Insufficient Planning
Access Problems
Changes to Team
Delays to Approvals
Project
Objectives
Supplier / client Performance
Equipment Failure
Weakly defined outputs
Unfamiliarity
Unexpected Findings
Time and Resource Constraints
Poor Weather
Errors
Complexity
20
Risk Model – Risk Register
21
Risk Model – Risk Register
22
Risk Model
Single Risk
x
=
∑
Multiple risks
23
Risk Model – sensitivity analysis
Provide a means of prioritising
management effort
Regression Sensitivity for All Project
Risks inc' Big 5/...
Risk
Risk
Risk
Risk
Risk
Risk
Risk
Risk
Risk
Risk
Risk
Risk
Risk
ID20/AA30
ID4/AA14
ID1/AA11
ID3/AA13
ID8/AA18
ID6/AA16
ID7/AA17
ID24/AA34
ID12/AA22
ID2/AA12
ID18/AA28
ID15/AA25
ID9/AA19
-1
-0.75
.184
.134
.105
.099
.055
.054
.049
.046
.043
.04
.031
.031
.028
-0.5
-0.25
0
0.25
0.5
0.75
1
Std b Coefficients
24
Added Value (Project)
•
Improves the Deliverables
(Critical Review)
•
Develops team Understanding
(Sharing Knowledge)
•
Feel more in Control
(Understanding Risks)
•
Develop targeted Contingencies
(Quantify Risks)
•
Better Prepared for risk (resilience)
(Dry-runs of issues)
•
Improves personal / Firm Capability
(Thinking Differently)
•
Demonstrates Forward Thinking to clients
(Proactive not Reactive)
•
Saves Money
(Less Issues occurring)
25
Added Value (Programme)
• Balanced view of risk exposure across programme (efficient
decision making)
• Understand likelihood of budget delivery
 Early release of contingency - build more schemes!
• Schedule certainty (phase procurement input)
 Match supply with demand
26
Strategic Level Future Investment Requirement
Investment (£B)
95 percentile confidence outputs for future scenarios
2010
2020
2030
2040
2050
2060
2070
2080
2090
2100
2110
Year
27
Take Home Messages
How can exploring uncertainty add value
 Scientific Rigour & Richer understanding of the problem and
solutions
 Performance certainty, transparency, robust - defendable evidence
 Prioritisation of management effort
 Effective expenditure – potential to save £
28
Barriers / Challenges
Barriers
 Represents Change (expert & client)
 Still faced with tough decisions (confidence level)
 In hands of the Analyst
Challenges
 Communication of benefits and value
 Training of technical staff
 Selling value to clients (who get value and ultimately pay)
29
Thank you & Questions
30
Decision Making Process
UKCIP decision making framework – a framework for decision
making given uncertainty in climate change.
31