Tough Times Ahead for Constructers?
Richard attended and presented at the recent Construction Risk Management Summit in Melbourne on 1stand 2nd April. It had a diverse range of speakers and messages.
Possibly the most common message from academic speakers was that the majority of projects do not come in on time or budget. In fact very many had major cost blowouts approaching 100%. There were a number of perceived reasons why this occurs.
Sustainability Risk Management: (Legal) Due Diligence Obligations
Richard Robinson has been invited by Professor Tom Romberg to give a keynote address to the Engineers Australia Southern Highlands & Tablelands Regional Group for the Sydney Division Regional Convention 17-19 October 2014 in Bowral on the theme "Sustainability Risk Management".
Sustainability Risk Management focuses on environmental and social responsibility risks. US Professor Dan R Anderson observes that traditionally the costs associated with sustainability risk were externalised to the environment and general society. But increasingly they are being internalised to business.
EEA R2A Due Diligence Workshop Wrap Up
As a new addition to the R2A Consulting team, the timing of the recent EEA (Engineering Education Australia) and R2A ‘Engineering Due Diligence’ workshop was such that I was able to attend in my first few weeks of my new role.
Richard Robinson presented the workshop with eight participants from various industries and locations in Australia, which provided for interesting and varied discussion.
Critical Limitations of Monte Carlo Simulations
Monte Carlo simulations have become de rigueur for project risk assessments. There is no doubt the use of monte carlo simulations will provide sound insight into the most likely project outcomes.
However from a due diligence perspective there are major limitations when it comes to the long tail (low probability) distribution (high consequence) outcomes. Consider the situation where three long tail (say 1 in 1000) issues need to converge to cause total project failure. Collectively, that’s a 1 in a billion chance. To test for that, at least 1,000,000,000 trials would need to be completed. To make that statistically significant there would need to be at 10 to 100 billion trials.