How a risky year taught seasoned risk-takers to reassess project and construction industry perils
Stakeholders must better prepare for infrastructure project risk, which has been creeping up for years. Emerging from a year defined by risk, panelists at RISK 2021: Building Trust, Contracts and Tools for Success said they better appreciated the mitigation tools at their disposal, but added that more strategic work is needed.
The infrastructure-focused webinar in December was hosted by SmartBrief, a leading digital media publisher of targeted business news and information by industry. An executive summary was released today.
Solutions cited by panelists ranged from the simple, such as scenario-building exercises, to the very complex, such as cross-industry, federal government-led initiatives.
The infrastructure industry has learned to allocate risk carefully via contract language, insurance policies and project agreements. Yet the rising levels of risk seen on current projects can be difficult to mitigate.
"Risks are increasingly outside the reach of any one organization to manage on its own," said panelist Jason Schupp, founder and managing member of Centers for Better Insurance.
That can be due to something as simple as the size of a design-build project, which can lead to early pricing errors, and "owners have a difficult time accepting that these are costs that they should pay," said panelist Donovan Olliff, senior vice president and assistant general counsel at HOK.
A key takeaway of 2020 is "how important it is to talk through risk," said panelist David J. Varoli, deputy commissioner and general counsel for New York City's Department of Design and Construction. "I have to be more strategic in how I'm advising the people in my organization as we're talking about the next new, big project."
Immediate risks for project contractors, owners and government stakeholders include a weakened economy and, specifically for contractors, a lack of backlogged work.
The year 2020 made it clear that the most effective risk mitigation is collaborative. Doing nothing is not an option.
"The greatest risk that our state and local governments and the local economies are facing is inaction," said panelist Charles G. Renner, partner and public-private partnership group chair at Husch Blackwell.
The RISK 2021 executive summary is available here.
The RISK 2021 webinar is available here.