1. Risk Management Practice (Case study: Sydney Opera House)

2. The Sydney Opera House The busiest performing arts centre in the world
Owner: State Government of New South Wales
Architect: Jorn Utzon – Ove Arup
Engineering Consultant: Arup & Partners
Funder: Public Works Department + Lottery fund
Cost of construction: £60M (A$107 M)
Construction started: 1959 Completed: 1973
Construction duration: 14 years
Well known case for cost and time overrun

3. Design specifications
There are 1000 rooms including 5 main auditoria
Size of the building is 185m x 120m
588 concrete piles in foundation
The roof is made up of 2,194 pre-cast concrete sections (each section weigh 15.5t), & covered with more than one million roof tiles from Sweden

4. Finance and construction
Budget estimate was set at £4.1M, funded by the Government from profits from a series of state run lotteries.
Three phases of construction
Phase 1 - foundation and the building (podium)
Phase 2 - roof;
Phase 3 - interior fittings, furniture and equipments.

5. Risk management process
Identify: Potential risks
Assess: the risk in terms of
its impact
probability of occurring
(Use appropriate scale e.g scale, 1 is for low impact/probability and 4 is for critical impact/probability)
Control:
Avoid (eg. new sub contractor) – Transfer (eg. insurance) - Tolerate (eg. take actions to lessen the impact) – Accept (eg. contingency plan)
Review:
Continually monitor risks

6. Risk management @ SOH Financial risk– Political risk –
Whole life cost covered by the proceeds of State Lotteries
Budget estimate was £4.1M however final cost was £60M (1400% cost overrun)
Political risk –
Sydney Opera House was severely affected by political decisions
£4.1M was political budget not the real one – to get approval from the Government system
100% cost overrun (i.e. £8.2M) was the realistic cost however the rest was political (£52M)

7. Risk management @ SOH cont..
Design risk –
Poor buildability – complex roof design – load transfer and structural problems (no computer programme was adopted for load calculation and errors in manual methods)
Roof shells were too heavy for the supporting columns and foundation that were already built, so these had to be demolished and rebuilt
Original design (2 theatres) was revised up to 4 theatres
Fit for purpose – poor acoustic properties and operation cost is £3.4M p/a only £1.1M can be covered from the income

8. Risk management @ SOH cont..
Construction risk –
The construction was estimated to take about five years at a cost of £4.1M
3 tower cranes imported from cost of £59,000 each
This was the first building constructed in Australia using tower cranes

9. Identified risks Poor Cost Estimate. Incomplete design.
Failure to keep within the cost estimate
Failure to achieve the required completion date.
Changes in project scope and requirements.
Design changes.
Pressure to deliver project on an accelerated schedule.
Inaccurate contract time estimate
Lack of communication between project participants.
Inadequately defined roles and responsibilities.
Insufficient skilled staff & technology.
Political influences.

10. Assess risk Risk Probability of occurrence Impact Risk Importance 1 4
Low 4
Medium 8
High 12
Critical 16
Risk
Probability of occurrence
Impact
Risk Importance
Poor Cost Estimate. 3 4
Critical
Incomplete design. 2
High
Failure to keep within the cost estimate.
Failure to achieve the required completion date.
Changes in project scope and requirements.
Medium
Design changes.
Pressure to deliver project on an accelerated schedule.
Low
Inaccurate contract time estimate.
Lack of communication between project participants.
Inadequately defined roles and responsibilities.
Insufficient skilled staff and technology. 1
Political influences

11. Assessment cont..

12. Control risk Risk Risk Control Poor Cost Estimate.
Poor Cost Estimate.
Client and Contractor
Incomplete design.
Failure to keep within the cost estimate.
Client
Failure to achieve the required completion date.
Changes in project scope and requirements.
Architectural Engineers
Design changes.
Contractor
Pressure to deliver project on an accelerated schedule.
Inaccurate contract time estimate.
Lack of communication between project participants.
Architectural Engineers, Contractor, Client and Client
Inadequately defined roles and responsibilities.
Architectural Engineers, and Client
Insufficient skilled staff and technology
Political influence

13. Review controls Most of the risk could be avoided by:
Working only after the design was completed.
Estimating at a very detailed level.
Not selecting an untested design approach.
Clear communication between stakeholders.
Using of an experienced architect.
Using a fixed price contract will transfer construction risk to the contactor.
Obtaining Insurance to cover costly risks.

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