Skanska

Christian Sandberg is a senior operations and strategy leader with extensive experience scaling complex service businesses and international education organizations. He works as a fractional executive and consultant, helping founders and leadership teams strengthen operations, partner ecosystems, and customer centric growth strategies across global markets.

Questions That Safeguard Projects

Operational Risk Assessment is about identifying all types of risks you expose yourself to by pursuing, winning and executing a contract and develop plans to mitigate such risks.

Just one bad project can erase all efforts and successes of your complete portfolio. While it is not reasonable to expect a project without risks, by applying some common sense and established processes, you can reduce the likelihood of risks being realized as well as reducing or minimizing the impact of an occurring risk. You can lay the foundation of a robust, sustainable and competent risk mitigation process by asking questions.

Risk is part of the business

Within the construction industry, taking risks is part of the business. It is not reasonable to expect a no-risk project; however, you can achieve a project in which you know and understand the risks. With this knowledge you can develop controls and mitigation efforts.

• You can transfer the risks to the client, or to a subcontractor

• You can insure against risks

• You can price risks and include as contingencies in your price

• You can modify schedule, materials, means and methods, sequence of works, resources etc. to reduce likelihood or impact.

Lessons learned can be painful

Without an approach, a process or a system that helps raise red flags, you are unnecessarily exposing your business to risks. If you don’t know the risks, you cannot manage them.

Many organizations struggle to learn from their mistakes. Many tend to look past the issues and problems and focus on opportunities. Risks they should be aware of, pop up as a surprise to ruin an otherwise great project. The key to better risk management is to ask questions. Ask the right questions and become aware of your project risks, will provide you an opportunity to manage those risks.

Ask the questions

Risk exposure starts early. Already when you start considering whether to pursue a project you are starting to expose your business for risks. Hence, it is important to start asking questions early. Below you will find a series of questions that cover a significant part of typical project risk exposure.

Project Type and Size

• What is your experience with this type of construction?

• Have you undertaken a project of this size before?

• If you have built a project of this size before, when was this? Is your experience still relevant?

Contract type

• Have you worked with this type of contract previously?

We manage operational risk by asking the right questions early, identifying exposures, and building controls that transform uncertainty into sustainable, well governed project execution.

• Has a legal review been completed by legal counsel?

• What is legal counsel’s opinion of the contract provisions?

• Do you have experience with the commercial model?

Client

• Is it a private client, a public client, or a developer?

• Have you worked with this client before?

• Is it a fair client?

Schedule

• Has the client provide a schedule?

• Is the schedule reasonable?

• Are the identified milestones reasonable?

• Do the contract provisions carry liquidated damages for delays?

Financial Exposure

• How will your cash flow look like?

• Are there advance payment or down payment offered?

• What is the financial strength of the client?

• Do you need payment guarantees?

• Is a bid bond required?

Team

• Do you have a competent and available team?

• Have you identified a project lead?

• What your project leads experience?

Geography and Subcontractors

• Have you operated in this geography before?

• Do you know the subcontractors and vendors in this area?

Design

• Is it a Design Build project?

• If you are to take on the Design responsibility, who is your Design Manager and what is his/her experience?

• Is a designer identified?

• What is your experience with this designer/architect?

Competition

• How is the competition?

• Are the competitors aggressive in their pursuits?

• What are the award criteria?

Before resources are committed to a pursuit or bid you should ask yourself these types of questions. to the satisfaction of relevant authority. Relevant authority is the decision maker based on your procedural rules, i.e. Limits of Authorization.

Once you submit a bid you are committing financial resources and exposing the company to the risks associated with this project.

Now you have asked all the questions and come to know the project with its risk parameters. It is time to decide and if you decide to proceed you can now plan to manage those risks.

Risk management is central in any governance structure and it starts with a question.