Risk Management and Schedule Management E. Keith Sinkhorn Department of Engineering 21 February 2007

Outline Risk Management –Cost of Doing Business –Shared Risk Schedule Management Engineering at CSU-Pueblo –Industrial Engineering BSIE MSISE –Engineering – Mechatronics BSE

Risk Management Risk management is the art and science of accounting for business conditions that involve some element of chance. In the construction industry, sources of risk can include: SafetyWeather Resource AvailabilityLiability CostTechnology

Cost of Doing Business The price of nearly everything comes down to some version of this equation: Price = cost to provide a service + money the provider makes for providing it For a service that involves risk, this equation looks like: Price = cost to provide a service + money the provider expects to make The second part of price is the “cost of doing business” with the provider

Shared Risk Insurance premiums are the sum of cost to insure plus the cost of doing business with the insurance company. In any business venture involving risk, you should expect to be fairly compensated for accepting risk. An employer that will not equitably share risk is not worth working for.

Risk Management - Safety Risk management gets easier with experience. Record keeping is key to improvement in the management of risk. Always remember that the cost to prevent an accident is cheaper than the cost of an accident occurring. According to OSHA, the average cost of an eye injury is about $1,463

Schedule Management Schedule management is a subset of the larger activity of project management. Construction contracts tend to be long- term projects involving multiple activities. Estimating the durations of these individual activities is crucial. Again, record keeping is the best way to improve your estimation of activity times.

Activity Durations You should always estimate an optimistic and pessimistic duration for each activity. –Optimistic – How long will it take if nothing goes wrong? –Pessimistic – How long will it take if there are some reasonable obstacles? If you have no basis for estimating the pessimistic duration, begin by adding 30%-50% to the optimistic duration.

Schedule Management Identify which activities are critical activities and cannot be delayed without affecting the duration of the entire project. Remember not to over-promise and under- deliver. Customers hate that. In the long run, a reputation for developing schedules that you can stick to will mean more to you than winning a few bids by over-promising.

Engineering Opportunities at CSU-Pueblo Bachelor of Science in Industrial Engineering –Four year degree accredited by the Accreditation Board for Engineering and Technology (ABET) Master of Science in Industrial and Systems Engineering –Core courses (15 hours) + Track (9 hours) + Electives (12 hours)

Engineering Opportunities at CSU-Pueblo Bachelor of Science in Engineering with an emphasis in Mechatronics –New hybrid degree –Mechatronic systems are electrical and mechanical devices integrated with computer controls. –The Engineering department will pursue ABET accreditation once the first class of graduates is produced.