Burj Khalifa1599891

School of Civil Engineering, University of Birmingham

Hasnyan Haider

Construction Management, Engineering Production and Risk Management

Completed date: 24/01/2016

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ABSTRACT/SUMMARY

Burj Khalifa also known as the Burj Dubai is the centre jewel of Dubai, located within the UAE this building is the current tallest structure, holding more than one world record. As such, a project to construct this structure would be plagued with numerous risks from the early stages of concept all the way till the delivery phase. The risks involved within such a complex project would have required an extraordinary level of management.

This report looks into the processes in which this project would have had to have taken to manage the risks. From the risk identification stage, the risk assessment phase to the risk responses. For the purpose of the word limit how ever only the main design phase risks and construction phase risks would be evaluated.

It was found that the original plans and targets regards to time and cost had all been exceeded and not accomplished. The cost was overrun by nearly $700 million and the time exceeded another nine months from the original completion date. So was this project still a success and were the risks managed.

It was concluded that this project was still a success due to the increase of the net value in early years. Even though most risks was planned out and predicted many were left unforeseen. However this is neither here nor there as the risks which affected the end product could not have been predicted or prepared for in advance, due to these factors not being in the control of any of the 60 contractors nor the client.

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LIST OF CONTENT

LIST OF FIGURES...............................................................................................................................3

LIST OF TABLES................................................................................................................................4

1.0 INTRODUCTION...........................................................................................................................4

1.1 The Construction industry and Risk........................................................................................5

1.2 The Project.................................................................................................................................5

1.3 Details and Data of the Project.................................................................................................5

1.4 What are the Main Risks of the Project...................................................................................6

2.0 RISK MANAGEMENT REQUIREMENTS OF A CONSTRUCTION PROJECT/SUB-PROJECT TO BE ANALYSED.............................................................................................................................6

2.1 What is Risk Management and its Requirements...................................................................6

2.2 How does it work.......................................................................................................................6

2.2 Key Factor of Risk Management..............................................................................................6

2.3 Risk Drivers...............................................................................................................................7

3.0 RISK INFORMATION AND DATA COLLECTION....................................................................7

3.1 Risk Management Process........................................................................................................8

4.0 RISK IDENTIFICATION...............................................................................................................8

4.1 Hazard Identification................................................................................................................9

4.2 Risk Identification tools and techniques................................................................................10

4.2.1 Risk Check list for Construction Sector............................................................................11

5.0 RISK ANALYSIS.........................................................................................................................13

5.1 Risk assessment........................................................................................................................14

6.0 OUTPUT ANALYSIS AND DISCUSSION.................................................................................16

7.0 RECOMMENDATION OF THE IMPROVEMENT....................................................................17

8.0 FUTURE WORK..........................................................................................................................17

9.0 CONCLUSIONS...........................................................................................................................17

10.0 REFERENCES............................................................................................................................19

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LIST OF FIGURES

Figure 1.1: Risk Management Process

Figure 1.2: Risk Matrix

Figure 1.3: Risk Response

LIST OF TABLES

Table 1.1: Risk identification techniques

Table 1.2: Risk Checklist

Table 1.3: Risk Matrix

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1.0 INTRODUCTION

1.1 The Construction industry and Risk

The construction industry is a complex and unique industry compared to others, it’s filled with uncertainties. It is one of the largest industry within the UK and worldwide and with such a vast industry comes many issues. With each project there are its own unique risks, the entirety of construction projects are plagued with such risks.

A risk is identified within construction as a possible exposure to loss with regards to the project. It is impossible to neutralise all risks to make a risk free project so the best option is to manage the risks. (Surety Learn, 2014)

For a projects successful outcome, management techniques are put in place and one of the commonly used management techniques for large projects is risk management, this is risk planning, risk identification, risk analysis and risk response and monitoring.

1.2 The Project

This report will use a specific project to discuss and outline what construction project risks management systems are, using risk analysis techniques and methods to analyse risks. The project selected is the ‘Burj Khalifa’ also known as the ‘Burj Dubai. This jewel of Dubai situated in the UAE is currently the world’s tallest building. This is living proof of the advancements made in Dubai, not only a record holder but an incomparable feat of engineering. Mr Mohamed Alabbar, Chairman, Emaar Properties, said: "Burj Khalifa goes beyond its imposing physical specifications. In Burj Khalifa, we see the triumph of Dubai's vision of attaining the seemingly impossible and setting new benchmarks. (Emaar Psjc, 2015)

1.3 Details and Data of the Project

This building has around 160 storeys and is estimated to be at 828 meters tall. With the rough estimation cost of 1.5 billion USD. Constructed over four years from 2006 to 2010 this structure produced two entire floors every week. The owners being Emaar properties who were also the main contractor had at least 60 different contractors working on this project with an estimate of 1000 people per day working on the facility (Provident Real Estate Dubai 2015). With large complex buildings there is a high chance of it not following the original plan and this project was no exception. The original budget was $876 million which later increased to $1.5 billion. The final design of the building ended up being 100 meters taller than the original plan and finally the expected 47 months delivery for this project increased by another nine months.

This then tells us that the Burj Kahlifa’s quality time and cost objectives were altered and not met. But how can such a project avoid missing objectives, did they manage the risks properly and efficiently; this report will look into the risk management process for this project to see if

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the original objectives could have been met. (Jaggi, V.J. Singh, Y.S. Daley, T.D. and Kaur,K.K., 2013)

1.4 What are the Main Risks of the Project

With one of the world largest construction project with a world record of the current tallest building the risks involved are unprecedented. As such within this report only the design risk factors will be analysed and discussed.

The main risks with the design of this project are all surround the height factor. Contractors and workers working at height, materials being delivered at height and most of all nature at height. Such as the wind load and heat radiation from the sun.

2.0 RISK MANAGEMENT REQUIREMENTS OF A CONSTRUCTION PROJECT/SUB-PROJECT TO BE ANALYSED

2.1 What is Risk Management and its Requirements

There are many projects which fail to meet deadlines and end up over running, projects which exceed initial budgets and also projects which do not meet there purpose or specific quality. Objectives such as time, cost and quality are affected by the projects risks and uncertainties. A well risk managed project would enable a more successful outcome for the project.

Within a project the contractors or any member within the supply chain of the project should all aim to eliminate or at least manage the risks form within the project. A risk management system therefore is a technique used to help the performance of the project by managing the risks relating time cost and quality.

Risk management will focus on the future of the project to try and improve actions and decisions to help the outcome of projects.

2.2 How does it work

Risk management works through a systematic process of steps, the first step is to identify what could be a risk within the project, and this is risk identification. For example for the Burj Kahlifa this could be working at heights. Then you must quantifying the risk by understanding its affects through techniques such as risk analysis and risk assessment. So how dangerous is it working at such extreme heights as 828 meters. From here the next step is to develop a management response to the risk through risk response. Once again for working at heights it could be to put in a safety system to reduce the risk of falling like harnesses. Finally the last step is to provide risk control and an emergence plan.

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2.2 Key Factor of Risk Management

Risk management success rates relies on a number of factors these are: Leadership commitment Building a Team Questioning, why? Don’t Reinvent the Wheel First Define the work then explore the risk The Assessment Tool Risk Metrics Risk Assessment

All these key factors play a role in the successful outcome of risk management, if these are all implicated, this would prove more beneficial. (Easton J.E, 2012)

2.3 Risk Drivers

Risk drivers for a project are normally external or internal factors which drive the project towards risk. These then influence the risk to materialise and take place. For the Bujr Khalifa the idea of the project was to design the world’s tallest building therefore the risk of height came into factor. But the driver for the design to achieve the record of being the world’s tallest was the key risk driver. (Manigent, 2012)

3.0 RISK INFORMATION AND DATA COLLECTION

The Burj Khalifa, one of the world’s greatest engineering achievement, was not constructed and managed without any risks. There were many risks with this project from as early as the initial design phase, had it not been for the technological breakthroughs of our time this project would not have been completed. This project did not only have major risks in terms of design but in terms of quality and time.

As the design objective was to create the world’s tallest building, nature would have been the biggest risks, such as the wind load at heights and the heat levels from the sun. How they would tackle these risks would be added to the buildings design. Not only did they want this to be the world’s tallest as it was built in Dubai the world’s fastest growing city and the worlds regional capital it had to be done to the upmost highest level of quality and done quickly to keep up to pace with Dubai’s fast growing economy. This then leaves a daunting project to be completed, where in most projects there would be one main objective in this there was three.

However this all came at a price, to achieve the end product the client Emaar properties paid an estimate of 1.5 billion USD to achieve all the goals.

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3.1 Risk Management Process

As mentioned before you must go through each individual step for a successful outcome for the projects risk management.

(Data Science, 2015)

Figure 1.1: Risk management process

4.0 RISK IDENTIFICATION

When it comes to projects as large as the Burj Khalifa, if a risk is not identified early within the process then this may prove problematic for the construction and later use of the building. The building may not even meet its requirements and aims such as the quality and time of completion.

For project risk management the risk identification is the most important process as it is the first step to understanding all the risks for the project. The purpose of risk management is to decrease the likelihood of negative impacts on the project and to do this you must first identify the source of the impact. (Rawi R.M.R, 2014)

Within risk management once the risks have been established they must then be categorised so they can be understood better. This enables for a better planning process of the risks later and may also then be used for future references.

For the Burj Khalifa there are just too many different risk profiles that can be categorised however for the purpose of this report I will be relating them to the main risks involving the

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design phase and construction phase of the project. Examples of the risks that can fit these categories are as stated below:

Design Phase

Change of design effect on budget and time Wind load of tall buildings The effect of gravity on tall buildings Location of the building Effects of the Sun Internal travel/transport within the building Materials and their durability

Construction Phase

Transport of materials to such heights Workers working at height Objects falling from height Vast number of people hard to manage Escape route from height Risk of collapse Workers exposed to sun radiation at height Scaffolding failure Danger of site machinery

4.1 Hazard Identification

For a project which has implemented risk management it may be useful to not only identify the risks but to identify the hazards as well. Hazards are normally sources which can cause the project to fail.

To identify a hazard you must first understand what is required for the projects objectives from here to create a planned path to achieve these objectives. Once this is complete you would normally go along the path to see if you could anticipate any possible hazards from appearing which may affect the path. There are many techniques which can be used to help identify hazards, the more popular ones are brain storming, checklists, Hazop (Hazard and operability) and FMEA (Failure Mode and Effect Analysis).

The types of hazards are:

Financial hazards Legal hazards Political hazards Social hazards Environmental hazards Communication hazards Geographical hazards

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Geotechnical hazards Design hazards Technological hazards Construction hazards Demand/product hazards

(Dr Min An, 2015)

4.2 Risk Identification tools and techniques

The risk identification stages within construction management, people argue to be the most important phase. So identifying the risks for the project is an important task and to implement this phase there are many different techniques or tools in which you could use to do so. The table below states the different methods and techniques available for construction projects:

Table 1.1: Risk identification techniques

(ISGIP Project Documents, 2015)

As you can see the technique ‘check list is one of the most used and more preferred technique used. For construction projects a risk checklist for the construction phase will consist of:

4.2.1 Risk Check list for Construction Sector Table 1.2: Risk checklist

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11

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(ISGIP Project Documents, 2015)

5.0 RISK ANALYSIS

If the risk identification is said to be the most important step in risk management then the risk assessment is defiantly the most significant. This step within the risk management process is where you start assessing the risks that have been identified. You can check the consequences of the risk the severity and the possibility of the risk through risk assessment. This is achieved through the use of techniques such as a risk matrix a cash flow or a fault tree analysis (FTA) and even through an event tree analysis (ETA).

Risk assessment can be a ‘very straightforward process based on judgement requiring no specialist skills or complicated techniques’. (Clarizen Success, 2013). One of the more popular techniques used today for risk assessment is the risk matrix. The Risk Matrix is also popularly known as the Probability and Impact Matrix. The Risk Matrix is used as a Qualitative Risk Analysis in the Risk Management process. It is a very effective tool that could be used successfully to raise awareness and increase visibility of risks, so that significant decisions on certain risks can be made in context. A risk is “rated” for its Probability and Impact on a scale to understand where on the Risk Matrix it lies. As shown below:

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(Chittoor A.C, 2013)

Figure 1.2: Risk matrix

5.1 Risk assessment

For the Burj Khalifa project a risk matrix can be used. There are three stages for risk matrix as following:

Step1: Consequence analysis

This stage is to assign the value to each hazard or risk from the risk identification as show in the table below:

Description Weighting Value

Catastrophic D (4)

Hazardous effect C (3)

Major effect B (2)

Minor effect A (1)

Step2: Probability of occurrence

In this next stage you must determine the probability of the risk or hazard occurring on a scale from 1 to 5 as shown below:

Description Scale

Frequent 5

Reasonably probable 4

Remote 3

Extremely remote 2

Extremely improbable 1

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Step3: Risk matrix

Last stage is to assign the risk from the risk identification into the risk matrix. For the Burj Khalifa the risk can be classified in the risk matrix as illustrated below; (C=Consequence, P=Probability, R=Risk Level).

Table1.3: Risk matrix

Ref Hazard/Risk Effect to Time /Quality /Cost/ Safety

C P R

A Wind load at height Q/C D 4 H/RB Gravity Pressure at height Q/C D 4 H/RC Weather of location (Sand Storms) Q/T B 4 L/RD Sun Radiation T/Q D 5 E/RE Change of Design Q/T D 3 H/RF Economic Decline Q/C C 2 L/RG Government Interference C/T C 2 L/RH Falling from height S D 2 M/RI Objects falling from height S C 3 M/RJ Manual labour of materials cause harm to

workersS B 2 L/R

K Scaffold failure S C 2 L/RL Risk of building infrastructure collapse S/C D 1 Min/RM Crane Collapse S/C D 2 M/RN Errors of measurements for plans Q/C D 2 M/R

O Allergic to cement powder S A 1 M/R

Low Risk Moderate Risk High Risk Extreme RiskD

Extreme Risk

Minimum Risk

Low RiskC

Moderate Risk High RiskA , B

Extreme Risk

Minimum Risk

Low RiskK

Moderate RiskI

High RiskE

High Risk

Minimum Risk

Low RiskJ

Low RiskF,G

Moderate RiskH, N, O

High Risk

Minimum RiskO

Minimum Risk

Low Risk Moderate RiskM

High Risk

Impact

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Probability

As you can see in the tables above there are four hazards which are in the high and extreme risk area, meaning these are very crucial to the project and there should be a plan implemented to tackle these hazards. Then you have five hazards in the moderate risk areas which may not be high but are still very important and every project manager should be aware of these hazards with plans to solve them in case they occur. Then with this project there is five hazards in the low risk area which may not impact the project as much but still should have some awareness. Finally there is one hazard in the minimum risk area which can be dealt with if it occurs.

6.0 OUTPUT ANALYSIS AND DISCUSSION

As you proceed after the risk assessment and have identified each risk and their individual severity the final step is for the risk response process.

(Perkins, 2016)

Figure 1.3: Risk response

Risk response is the vital final stage to risk management, in this process you take measures to either terminate, mitigate, transfer, exploit or tolerate the risk. This then reduces the amount of risk each contractor has to control and manage. The best advice for a project as complex as the Burj Khalifa would be to transfer the risk to whomever can manage it. This then enables for the most optimal management and response for this risk.

7.0 RECOMMENDATION OF THE IMPROVEMENT

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For such a project as the Burj Khalifa there can be many areas in which improvement can be implemented due to the size of the project. As they missed their budget by nearly $700 million the first area in which recommendation for improvement can be applied is budget cost planning. Pre cost planning for materials and design alterations, should be taken into consideration for projects as large as this. A design alteration can make a huge impact. A case study did also reveal that the increase of the initial budget was mainly due to alterations made to the designs.

Another area in which improvement could have been integrated is for the Project managers to plan for unforeseen events which could occur. Such as government influences, this is because the final delivery date was missed by nine months because the project was closed down for four months due to the government and also the decline in the property market which affected the main clients Emaar properties.

Finally a major improvement which is mainly used for risk management is risk training for the workers of the project within the construction phase. This is an effective tool where all the key stake holders and workers on site would be trained and informed about the risks and their impacts so they will be able to react appropriately in case of occurrence, this is called risk training.

With this project the initial budget plan was exceeded due to design alterations, if the design team had initially foreseen the implications of their design the cost forecast could have predicted the change before hand and saved millions for the project.

8.0 FUTURE WORK

With many projects risk management is an effective management tool which comes with many benefits for even small projects all the way to the biggest such as the Burj Khalifa. Through the risk management process you can identify all the risks/hazards within an organisations project from the concept phase all the way to the delivery. From the identification the severity and consequences are then known through risk matrix and other tool for risk assessment, which is vital information for any project due to the fact that the information received from this process will identify all the major risks which could prove hazardous for the project as it may cause the project to fail.

This technique then improves the success rate of the project and can allow for a more efficient project with better methods to obtain the main overall objectives for the project.

9.0 CONCLUSIONS

Burj Kahlifa’s complexity was not that of an ordinary project, it was one of the largest projects of our time and true engineering break through. Without the technological breakthroughs of our time we would not have seen the completion of this building. The entirety of the project defies much logic to previous building projects before our time. So of course with such an enormous project costing around $1.5 billion with over 60 different main contractors and over 1000 people on site per day with 24 hours a day construction the

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slightest error could turn out to be a major problem. There was a ridiculously large amount of risks and not all could have been foreseen and managed thus the extension of time and over run of costs. However seeing as the net value of the building has already increased more than predicted by 10% this project is still seen as a success.

Therefore this shows us that even though some risks may be managed depending on the project you may not be able to manage them all but this does not mean your project will fail. Risk management is vital to any large complex build but can also be very beneficial for small projects.

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10.0 REFERENCES

1. Surety Learn (2014) ‘A Quick Introduction to Construction Risks and Contracting Practices’. Available at: http://suretylearn.org/wp-content/uploads/2014/01/M8_SuretyLearn-Construction-Risks-2013.pdf (Accessed: 19 January 2016)

2. Emaar Pjsc (2015) ‘Burj Khalifa’. Available at: http://www.burjkhalifa.ae/en/the-tower/vision.aspx (Accessed on 19 January 2016)

3. Provident Real Estate Dubai (2015) ‘Constructing Tallest Building in The World – Burj Khalifa – Documentary’. Available at: https://www.youtube.com/watch?v=P7lWOkXuO8Q (Accessed on 20 January 2015)

4. Manigent (2012) ‘The Difference Between Business Drivers and Risk Drivers’. Available at: http://manigent.com/the-difference-between-business-drivers-and-risk-drivers/ (Accessed on 20 January 2016)

5. Easton, J.E (2012) ‘8 Key Factors in a Successful Risk Management Program Implementation’, Medgate, 8 (2), pp.22

6. Data Science (2015) ‘Risk Management’. Available at:http://www.datasciencespa.com/?page_id=110 (Accessed on 22 January 2016)

7. Rawi, R.M.R. (2014) ‘Project Risk Identification For New Project Manager’, Available at: http://www.projecttimes.com/articles/project-risk-identification-for-new-project-manager.html (Accessed on 22 January 2016)

8. ISGIP Project Documents (2015) ‘Risk Assessment Checklist for Construction Sector’. Available at: http://www.hesapro.org/files/checklist%20for%20risk%20assessment%20in%20construction%20sector.pdf (Accessed on 22 January 2016)

9. Dr Min An, (2015) ‘Constrction Project Risk Management’. Available at: https://canvas.bham.ac.uk/courses/13763/files/2281973?module_item_id=419519 (Accessed on 22 January 2016)

10. Clarizen Success (2013) ‘Risk Management – Useful Tools and Techniques’. Available at: https://success.clarizen.com/hc/communities/public/questions/203996208-Risk-Management-Useful-Tools-and-Techniques (Accessed on 23 January 2016)

11. Chittoor, A.C. (2013) ‘The Risk Matrix’. Available at: http://network.projectmanagers.net/profiles/blogs/what-is-a-risk-matrix (Accessed on 23 January 2016)

12. Jaggi, V.J. Singh, Y.S. Daley, T.D. and Kaur,K.K. (2013) ‘Burj Khakifa’. Available at: http://www.slideshare.net/jaggv42/burj-khalifa-it-pmp-project (Accessed on 23 January 2016)

13. Perkins, D.L.P (2016) ‘Eleven Steps to Smart Risk Management, Value Enhancement’. Available at:http://www.thebusinessowner.com/business-guidance/risk-management/2008/11/eleven-steps-to-smart-risk-management-value-enhancement (Accessed on 23 January 2016)

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