Do you deal with the terrifying business of building with the help of an umbrella, an ostrich, your small intestines, your muscles, a snowboard or a mushroom?

Heaven knows your construction work is heaving, bubbling over with risk. There is a real chance that the job will make a loss, that you will get the blame, that the firm will go bust. In fact, there is so much risk that it is best not to think about it.

No, no. Stop turning a blind eye to 鈥渂loody risks鈥�. Turn that idea on its head 鈥� lick risk by looking it in the eye then managing it to make it more likely not to happen. This is where a University of Reading report, commissioned by the RICS, comes in handy. It鈥檚 called The Management of Risk 鈥� Yours, Mine and Ours.

Now the RICS must be fed up with being kicked in the groin; time for a pat on the back. And if this RICS president fella Barry Gilbertson really does want to get his members back to 鈥渁 sense of belonging鈥�, do something really useful, old chap. Take that theme in your report and help every RICS builder, QS, manager, measurer, valuer to get good at 鈥渕aking it more likely that good things will happen鈥�. And do it within their membership fee. In other words, for free.

The RICS report says risks are inherent in all construction projects. Yes, yes, they can be transferred, accepted, managed, minimised or shared but they must not be ignored. The traditional way of insulating yourself from risk is to treat it as another four-letter word and pass the price to the consumer. Another tradition, says the RICS, is to play off the subcontractors against each other to gain the cheapest price. The report says, 鈥渢aking on a risk at bid stage in the hope of passing it on to somebody else is folly in today鈥檚 business environment鈥�.

Apparently there are five ways to tackle risk (I think there are six):

  • The umbrella approach: where you add a large risk premium to the price.
  • The ostrich approach: where you assume that somehow you will muddle through.
  • The intuitive approach: that says don鈥檛 trust all the risk analyses, trust your intuition and gut feeling.
  • The brute force approach: that focuses on the uncontrollable risk and says we can force things to be controlled 鈥� which of course you cannot.
  • The snowboard approach: that says you are on a snowboard on the downhill run, you have

preplanned and analysed where the pitfalls are and you have taken corrective action. Some things can be controlled, others cannot. For example, speed and route can be controlled, the weather and the competition cannot. Focus on the actions needed to manage the risks throughout the run, arrive safely and win through.

Every QS will tell you that the industry uses the mushroom approach: keep everyone in the dark, then chop their legs from under them

And the sixth? Every QS will tell you that the construction industry uses the mushroom approach: keep everyone in the dark, then chop their legs from under them when nobody is looking.

Six ways to handle risk
Six ways to handle risk

Now let鈥檚 get down to it. Risk is the combination of the probability of an event and its consequence. If we can fathom these two and have a mindset of making it more likely that good things will happen, this will be fun. So, what is probable? First, at building concept stage, it is probable that the budget set by the client will be insufficient for the level of quality and performance expected from the project. Then at design stage it is probable that the design team will fail to design within budget and by then the job is under way. Also, it is probable that there will be lack of design co-ordination among the design consultants and little respect for design management. Then, at construction stage, it is probable that there will be changes in design and requirements, and in consequence programme delays and disruption. And, all that will lead to disputes.

So having fathomed the probability of events and fathomed the consequences, how can we 鈥渕ake it more likely that good things will happen鈥�? Easy, really. The good thing is that you will have a whopping catalogue of disputes and this will bring a smile to the face of all us adjudicators, arbitrators and dispute sorter-outerers, and, of course, the RICS. Last year it made about 10,000 arbitral-type appointments at 拢300 a go. So, come on 鈥� keep making it more likely that good things will happen 鈥�

Tony Bingham is a barrister and arbitrator