Our approach to risk management within asset creation in the water and wastewater industry employs a stage gate approach as shown here:

Risk management within asset creation (Zoom)
The approach to maximising efficiency is to seek the least whole life cost solution with the optimum risk and value balance. The approach may be streamlined for smaller projects as appropriate – the one presented above is for larger complex projects.

Our risk management methodology is closely linked to the management of scope, cost and schedule. We believe that effective management of these 4 areas – "The 4 Pillars" – delivers.

The key principles of The 4 Pillars (Zoom)
The ability to deliver projects with ever increasing efficiency demands tight management of risk. The key principles underlining our approach are:

• Collaboration between parties so that all risks are laid bare
• Clear assignment of risk between parties
• Active management of risk to mitigate effectively at least cost

We use statistical tools to understand the distribution of cost and schedule risk and other tools to map change in risk through time such as illustrated here:

Understanding the distribution of costs (Zoom)

Integral with each stage are facilitated workshops.

RVM1 Initial risk assessment

The purpose of this stage gate is to agree a statement of the business problem and an initial risk log including a view of the risk impact on cost and schedule. In addition an outline solution is agreed including its outline scope, cost, schedule and risk. This stage gate is required in the preparation of the business plan.

RVM2 Programme and sub-programme agreement

The purpose of this stage gate is to agree project bundling into efficient programmes of work and thence allow release of an instruction to procure services.

RVM3 Options freeze

The purpose of this stage-gate is to agree the options that will be taken forward for design and costing. This stage-gate is intended to avoid the situation where additional options are identified at an inappropriate late stage causing delay due to re-working of designs and cost estimates.

RVM4 Solution freeze

The purpose of this stage-gate is to select the single option that will be taken forward for development and detailed design. This is a key stage-gate and, to avoid delay, effort should be made to ensure that this meeting only has to be called once for each project. For this meeting to be effective, it is essential that sufficient data be provided to make a risk and value judgement between the options. The input data for the meeting should be clearly defined and should include for each option: a description, a list of advantages and disadvantages, a cost and risk. In outline, the output of this meeting should be an agreed complete scope of work for the project with justification for its selection.

RVM5a Design review 1

RVM5a is a key stage-gate and is carried out at layout level to agree the overall concepts of the solution before more detailed design is commenced.

RVM5b Design review 2

RVM5b is carried out at general arrangement level detail for sections of the works that have been identified as being appropriate to review separately. Close attention must be paid to the interfaces between the sections. A checklist approach for design review will be developed and adopted where appropriate. After this review, drawings, modified as necessary, should be able to be issued ‘for construction’.

RVM6 Post project delivery review

The purpose of this stage gate is to review the effectiveness of the delivered project and permit feedback.

RVM7 Operational review

The purpose of this stage gate is to agree the actual operational performance of the asset against criteria agreed at RVM5 and permit further feedback.