ECRI Sponsors Meeting Hilton Post Oak Hotel – Houston Day 1 – Wednesday 5 th December 2018 WELCOME ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 27 September 2006 1
Session – 1 Welcome, Safety Moment, New Introductions, Administration, Adoption of Previous Minutes and Review of Agenda Rod Kyle, ECRI ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 2
Programme – Wednesday 5 th December 2018 Session Time Description Discussion Leader 08.00 - 08.30 Registration / Refreshments 1. 08.30 - 08.50 Welcome, Safety Moment, New Introductions, Administration, Rod Kyle Adoption of Previous Minutes and Review of Agenda “ Company Introduction - ARCADIS “ -- Jan Bouten, Chief 2. 08.50 - 09.10 Risk Officer, ARCADIS 09.10 - 10.30 Tea / Coffee Break “ How Big Data & Innovation is Disrupting Approaches to 3. 10.30 - 11.20 Sustainability Risk“ -- Heloisa Schmidt, Sustainability Manager, Bechtel Corp. “ Cyber Security Up - Date ” – Tim Potier, VP, Chief Security 4. 11.20 - 12.10 Officer, Parsons Corp. and Darren Albers, Director – Information Security, Fluor Corp. “ Progress and Lessons Learned on the Risk 5. 12.10 - 13.00 Management Journey “ -- Borys Yarosh, VP Risk Management, Global Projects Support, SNC Lavalin 13.00 - 14.00 Lunch “ Breakout Group Topic Introductions ” 6. 14.00 - 14.30 Rod Kyle A. “ Key Geographic / Regional Risks ” B. “ Is Risk Management Working “ C. “ Increasing Political & Unforeseen Risks “ “Breakout Work Sessions” 7. 14.30 - 15.30 Groups 1,2 and 3 15.30 - 15.50 Tea / Coffee Break “Breakout Groups Feedback and Discussion” 8. 15.50 - 16.50 All -- Workshop Topic A, Group 1 Michael Neal -- Workshop Topic B, Group 2 Kenneth Grajek -- Workshop Topic C, Group 3 Mark Lemon 9. 16.50 - 17.00 Wrap-Up and Close Rod Kyle ECRI 17.00 End of Day 1 Session / Departure ENGINEE RING & CONSTRUCTION RISK INSTITUT E 3
Session - 2 Company Introduction – ARCADIS Jan Bouten Chief Risk Officer ARCADIS ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 4
Session - 3 How Big Data & Innovation is Disrupting Approaches to Sustainability Risk Heloisa Schmidt Sustainability Manager Bechtel Corp. ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 5
Session - 4 Cyber Security Update Tim Potier VP, Chief Security Officer, Parsons Corp. Darren Albers, Director – Information Security, Fluor Corp. ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 6
Session – 5 Progress and Lessons Learned on the Risk Management Journey Borys Yarosh VP Risk Management, Global Projects Support SNC Lavalin ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 7
Session – 6 Introduction to Breakout Group Workshops Rod Kyle, ECRI ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 8
Session 6 – Breakout Topics Topics taken from Sponsor Inputs, SIG Mtgs. and ECRI’s Annual Risk Survey – 2018 The above, plus Breakout Group Feedback used as the basis for possible New White Papers or Best Practices ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 9
Session 6 – Introduction to Breakout Group Workshops Topic A – “ Key Geographic / Regional Risks “ Group 1 Facilitator / Presenter : Michael Neal, Tecnicas Reunidas Group 1 Recorder : John Ruckert, ECRI (Breakout Group Allocation in Handout Packs) ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 10
Session 6 – Introduction to Breakout Groups Topic A – Key Geographic / Regional Risks ➢ Questions have arisen as to what are the Key Risks in the current and future geographic / regional markets and how are we addressing them ➢ Question is very relevant due to forecast increasing opportunities and growth in developing areas ( See attached slide ) ➢ There will therefore be increased Political Risk in many areas of opportunity ( which we are covering in Topic C ) ➢ Project location trends are, and will be, causing many other risk- related issues , some of which are highlighted below: -- Increased dealing with State Enterprises -- Dealing with bureaucracy, lack of experience / competence, “not doing things in the Internationally accepted way etc.” -- Increased Corruption Exposure and Reputational Risk ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 11
Session 6 – Introduction to Breakout Groups Increasing Importance of Emerging Markets Source: Global Construction Perspectives and Oxford Economics www.globalconstruction2030.com ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 12
Session 6 – Introduction to Breakout Groups Topic A – Key Geographic / Regional Risks -- “Souk Mentality” causing significant Pricing Pressure -- Increased dealing with Client JV’s with State Enterprises (Misaligned Parties, Confusion of Responsibilities, Accountability, Cultural clashes, “Worst -of-all- worlds“ Contracts with most onerous from each Party, Partner with No money / Approvals, Counter Party Payment Risk, Several Liability !!) -- Greater Contractor need for JV’s ( Project size, Risk sharing, Access to local knowledge in difficult areas etc. ) -- More Client Forced “Shotgun marriages” with local Contractors -- Client Forced additional Local Content for Eqpt. / Matls. and Labour with less sophisticated Supply Chains -- Greater need for Financing, Technology Transfer, Counter- Purchase / Offsets ( but could be a big differentiator ) ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 13
Session 6 – Introduction to Breakout Groups Topic A – Key Geographic / Regional Risks -- Introduction of VAT extending to most GCC Countries with Compliance and Procedural issues and impact on existing Contracts -- Greater use of standard “Model Contracts” and “Take it or Leave” is more widespread especially in the ME. -- Challenges of increased working with “High Value” Centres -- Requirement for Extensive and Expensive Due Diligence when entering New Geographic Territories ➢ With some focus on the Near and Middle East, India and China, we would like Group 1 to pool its views of the current and emerging difficulties and possible solutions in this increasing area of Risk ➢ Based upon the Feedback, we will then consider a whether a first- step White Paper would be of general benefit ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 14
Session 6 – Introduction to Breakout Group Workshops Topic B – “ Is Risk Management Working” Group 2 Facilitator / Presenter : Kenneth Grajek, KBR Group 2 Recorder : Susan Mahon, ECRI (Breakout Group Allocation in Handout Packs) ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 15
Session 6 – Introduction to Breakout Groups Topic B – Is Risk Management Working ➢ Question arises time and again as to tangible benefits to sound Risk Management and how to demonstrate and measure effectiveness ➢ Linked to concerns about consequent Reputational Damage, Investor Confidence, Stock Price Decline, Loss making Jobs, Morale and Career Security arising from inadequate RM effectiveness ➢ Most Sponsors today agree that we are better today than say 10yrs. ago and there is certainly a trend towards Risk Management, and not Crisis Management , being understood as central to success and avoidance of catastrophe ➢ So, some examples of what measures can be used : -- Is there an Increased sales success rate -- Are we better able to meet Client’s RM requirements -- Are there overall Customer Satisfaction improvements -- Is there an improvement in Change Management and a more successful Client approval rate ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 16
Session 6 – Introduction to Breakout Groups Topic B – Is Risk Management Working -- Are there Fewer Projects on “Loss making Jobs” Report -- Is there Increased consistency / accuracy of forecasting and increased Project / Company profitability over time -- Has there been an Enhanced Credit Rating / Lower cost of Debt -- Is there an improvement in Claims History and Success Rate -- Are Analysts Views, where Relevant, more favourable -- Comparison of Risk Registers – Initial / Mitigated v. Realised -- Comparison of Key Enterprise Financial Metrics with Industry Averages over time ➢ With the above “seed” thoughts, we would like the Group’s views regarding what key measures are or could be used for measuring Risk Management success ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E
Session 6 – Introduction to Breakout Group Workshops Topic C – “Increasing Political & Unforeseen Risks ” Group 3 Facilitator / Presenter : Mark Lemon, Skanska Group 3 Recorder : John Lee, ECRI (Breakout Group Allocation in Handout Packs) ECRI ENGINEE RING & CONSTRUCTION RISK INSTITUT E 18
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