How STRABAG manages risk across projects in volatile times

Risk in construction is a broad, deep and complex issue with a multitude of possible considerations and applications. But managing risk in the Built Environment, in all its forms, is a fundamental and core concern for any contractor sincerely interested in the viability and longevity of its operations and business.  

That could mean accounting for risk events as part of developing health and safety policies and protocols; in possible (and likely) delays due to the bureaucracies of the English planning system; in labour supply shortages or conflicts; in taking on too many projects (or not enough); and, among a litany of other possible concerns, in financial investments that affect operations and wages and impact the livelihoods of everyone in the supply chain, right on up to the boardroom.   

Sometimes, the approach to ‘risk management’ across many projects can feel somewhat abstract and a bit fractured, depending on what the specific details and demands are – and there are inherent and well-established merits (and indeed pitfalls) to simply relying on experience and fluidity, and then having processes formalised in a document or official policy with the proper checks and balances firmly in place. 

That said, what can generally be agreed upon, is that risk and risk management are inherent in conducting a construction business, because it is intrinsic to the nature of the industry itself – and perhaps the one thing that no contractor should be resistant to, is a fresh perspective on its risk assessment and management approaches, to ensure its chances of avoiding costly setbacks are the best they can be.  

‘What used to be low probability-high impact events are not so low probability anymore. We’ve seen that over past years – the risk landscape is changing.’ 

Andrew Dixon, managing director for STRABAG UK, spoke to Construction Wave alongside other industry experts in a recent roundtable presented by construction health and safety consultants Havio.  

The multi-billion-pound international construction company is responsible for a retinue of contractors and subcontractors on any given number and variety of projects the world over, and therefore the probability of risk events across all those investments goes up exponentially.   

Dixon explained STRABAG’s simple yet methodical approach to Managing Risk Across Construction Projects in Volatile Times to the group, and how the success of its business model doesn’t just hinge upon rigorous internal policies and procedures, but on the calibre of its people, capable of making critical and informed recommendations based on reliable and testable data, possible outcomes and thorough accountability measures. 

“We adopt what’s called the ‘COSO’ model,” he said. “This is a three-line defence model. The first line of defence in managing risk is that we have Management and Processes and Tools to manage and identify risk. Then we have Functions and Governance. And the final level is Audit – there’s an audit committee, there’s an audit process. 

“And, in theory, when unexpected risk events occur and we hadn’t foreseen them, then there’s a learning process as a result of those three lines of defence. And then, in theory, we’ve learned our lesson, and we won’t repeat the mistakes of the past. 

“But managing risk in dynamic times isn’t addressed by tools and processes alone – they facilitate the good process management and identification and assessment and recording of risk. But good risk management actually comes from having competent people in a proper organisational structure that brings the right approach to risk. 

“Construction is very much a can-do industry. We don’t like to say, ‘No, that might be beyond us’. That’s always a challenge for any business. But how do we really know that we are not subject to this overconfidence that might come from group think or overconfident managers?  

“As part of our culture, we really drill down on risk analysis and experienced people asking very probing questions; not as part of a thick layer of governance, but as an integral approach to how we manage business. 

“What used to be low probability-high impact events are not so low probability anymore, and we’ve seen that over past years. The risk landscape is changing, it’s becoming much more complex and dynamic, and businesses have to be able to respond to that.” 

‘Good risk management actually comes from having competent people in a proper organisational structure that brings the right approach to risk.’ 

A largely ‘self-delivery contractor’, Dixon explained STRABAG’s consistent approach to risk management allows it to be more self-reliant in its operations, as opposed to absorbing innumerable potential risk events across a large, complex and mobile external supply chain it doesn’t always have a comprehensive knowledge and management of.   

Theoretically, Dixon’s explanation makes complete sense from an internal standpoint, and offers a degree of control and agency that the contractor can measure and is accountable for. But he also provided some insight into how STRABAG ensures that same approach it takes is also adhered to practically on site.  

“A team on a particular project would be expected to produce a Risk Register,” he said. “The risk register would then identify particular owners for each risk, and they would be categorised and assessed. 

“But that is only one part of an important approach to risk management; which is having competent people in roles that really do understand the work they are doing so they can apply the right arrangements to control the outcomes, not take on risks that we can’t control. 

“The theory goes that businesses only take on risks that they can influence and control. I believe that’s what we’re actually doing.”  

To watch the webinar Managing Risk Across Construction Projects in Volatile Times in full, please follow this link – and please subscribe to our free daily newsletter for updates on new episodes which can be accessed here.