1.3  Risk Management Services

Our risk management services have helped protect the interests of many investors/financial institutions and Building Owners, who are investing in construction projects. We believe Infrastructure Ontario would benefit by receiving reliable information on the risk parameters of investing in and building infrastructure developments in Ontario to ensure stakeholders' interests are met.

We utilize sophisticated tools and techniques to assist building owners, developers and lenders in recognizing and controlling risks on their construction projects:

•  Risk Identification and Assessment

•  Risk Management - Strategies to control mitigate or manage risk

•  Risk Communication - Effective communication between the various parties

Exhibit 1-3: Risk Assessment and Analysis Process

From initial concept and as the project progresses through the various design and construction phases, it is both necessary and timely to review all financial and process matters that need to occur to make the project successful and identify areas of risk and control measures necessary to mitigate it. We believe that by including specialists from Altus Helyar in the Risk Identification Analysis and Risk Management process, we help our clients achieve a more balanced assessment on factors that impact cost, budget and schedule.

From initial concept and as the project progresses through the design development phase, major risks continue to be assessed in their relationships to the project budget and schedule. Risks identified at this stage would be high level that are specific to the project, e.g. budget risks, tender risks, construction risks, and risks that arise from macro market conditions. Lower‐level risks, such as increase in cost or schedule due to use of alternative structural or cladding systems, for example, could also be identified.

The risks are identified by various means, including formal risk management meetings and brainstorming sessions. We usually propose utilizing our RIAS Risk Information and Assessment System, which is able to forecast the financial effects of risks that are inherent in the project, and then analyze them and recommend response actions through the life of the project.

After the design of the project develops to a sufficient level that general information on the building's structure, materials, finishes, and system are generally known, further construction cost estimates should be carried out on more complete design information prior to final approval and commencement of construction. For effective Budget Control, we work closely with the client to refine the total project cost, as well as prepare projected cash flows on both cost and revenues, so final decisions on project profitability and financing could be made.

During the construction stage, the project should be progressing on budget, but issues may arise due to costs being over‐claimed against committed contracts and/or line‐item budgets. The most important constant to construction Cost Control is to have a thorough understanding of the scope of work being undertaken via a detailed control budget that is based on accurate quantities and realistic composite pricing rates. Based on this core information, it is then a matter of tracking awarded contracts that make up the various scopes of work and determining if the cost of work claimed on an ongoing basis relates to the value of work in place. Furthermore, to expedite construction and deal with payment requests for work not in place (e.g. offsite material/fabrications), additional adequate measures would need to be undertaken to mitigate potential loss.

The robustness of the construction market in Ontario would also necessitate the need for objective Schedule Control. Being extensively involved in the Ontario construction marketplace, we know first hand that tenders may be optically within budget but upon commencement of work the manpower requirements often fall short of what was required to move the project forward in the manner required.

All of the above measures are of paramount importance to the risk of any capital construction project.