Risk management is embedded within the core principles of the UK government’s Environment Agency. Halcrow has used @RISK for a number of years on a wide variety of projects such as flood risk management, as well as financial risk management for budgets.
Around five million people, in two million properties, live in flood risk areas in England and Wales. It is believed that changes in the climate, such as sea-level rise, more severe storms, and wetter winters will increase that risk.
The UK government’s Environment Agency is the leading public organization for protecting and improving the environment in England and Wales. Through flood risk management, the Environment Agency can reduce the probability of flooding from rivers and the sea through the management of land, river systems, and flood and coastal defenses. They also work to reduce the damage floods can do through effective land use planning, flood warning and emergency responses.
Halcrow Group and the Environment Agency
Halcrow Group Ltd specializes in the provision of planning, design and management services for infrastructure development worldwide. With interests in transportation, water, maritime and property, the company has commissions in over 70 countries. It has a network of 73 offices around the world (27 of which are in the UK), nearly 6000 employees, and an annual turnover of more than £280 million (about $500 million).
For many years Halcrow has undertaken contracts that form an integral part of the Environment Agency’s Flood Defense program, with work including:
- improving hard flood defenses in urban environments
- re-instating rivers to flow in their original form (a river’s meandering path and resulting flood plain acts as a natural guard against excess water)
- managed realignment of coastal regions (re-flooding areas where original flood defenses are no longer sustainable in order to relieve pressure on the overall system)
- construction of groins (structures running perpendicular to a beach) to recharge beaches (more sand on the beach offers more protection against flooding)
The Role of Risk Management at the Environment Agency
Risk management is embedded within the core principles of the Environment Agency. It facilitates the effective delivery of projects by managing threats to a project’s objectives. Careful management of financial risks can also assist in delivering more flood risk management schemes to protect vulnerable communities.
All suppliers to the Environment Agency must therefore adhere to a proactive level of risk management. Their selection and procurement is carried out under Environment Agency Frameworks1 by the National Capital Program Management Service (NCPMS), which is responsible for the nation’s capital flood defense program.
To further encourage effective use of budget through risk management, the Environment Agency administers an incentivized contract scheme that is increasingly standard in the construction industry. If suppliers meet the agreed terms of the contract they receive a pre-agreed share of the project budget. If however they do not perform as well as expected, their revenue is reduced.
Project Manager, Halcrow
@RISK for Portfolio Optimization and Budgetary Compliance
Halcrow has used @RISK for a number of years on a wide variety of projects. For Environment Agency projects, Halcrow employs @RISK in the risk quantitative stage to set risk budgets at the start of each phase of the project commission. Starting with the ‘sunny day estimate’ of the project risk, it identifies, assesses and quantifies every potential threat that could affect (i.e. increase) this base figure.
For example, severe weather could lead to a delay in the collection of survey data, with knock-on effects for related work. Or poorly articulated project outputs can result in tasks with weak focus that lead to inefficient resourcing and the need for reworking. Equally, novel techniques might fail to deliver robust results, again leading to abortive work and an overall delay to the program. Other hazards that can potentially affect NCPMS projects include: increases in material costs; changes to the team; equipment failure; delay for required approvals; unforeseen ground conditions and errors, etc.
Using @RISK for ongoing risk quantification on individual projects allows Halcrow to monitor progress against original budget incentive thresholds and potentially allows the NCPMS to make strategic decisions on allocating funds across the whole portfolio of Flood Defense projects.
@RISK Shows “Most Effective Use” of Public Funds
Tim Wells, project manager at Halcrow, comments: “Halcrow’s line of business makes robust risk analysis an essential part of our daily lives, and the Environment Agency’s core principles reinforce this way of working. Palisade and @RISK provide us with a flexible product that is easy to use, as a result of which we are able to maximize our own revenues on projects. In addition they ensure that the Environment Agency is accountable to the UK public by putting its funds to the most effective use to guard against flooding.”