APM Risk SIG Conference 2019

1. Risk management maturity in the supply chain
1
Wes Cadby
Group Head of Risk
Management
J Murphy & Sons

2. Agenda
1. Who am I?
2. My journey in / to Risk Management
3. Investment in Risk Management maturity – J Murphy and Sons
4. Importance of Risk Management maturity in the supply chain in the HS2
enabling works and the approach taken
5. Contracts aren’t enough
6. How clients and the supply chain can improve

3. Me
14 years
2 years
6 months
1 year

4. The construction industry - ONS
•The value of construction new work in current prices continued to rise in 2017 in Great Britain, reaching its
highest level on record at £109,387 million; driven by growth in the private sector, which equates to
approximately three-quarters of new work.
•The rise in the value of construction new orders seen since 2011 has continued, in part due to the awarding
of several high-value orders relating to High Speed 2 (HS2), which drove the 7.4% increase in new orders in
2017.
•As the number of construction firms has risen, so has the number of insolvencies; the number of new
company construction insolvencies grew 3.4% compared with 2016, equating to 2,792 insolvent construction
firms.CV
•The number of firms operating in the construction industry has continued to rise, increasing by 6.2%
compared with the previous year, with 314,590 firms operating in Great Britain in 2017.

5. 5 Key Sectors
J Murphy and Sons

6. J Murphy and Sons
2015 2018 2025
£400m £800m £2bn
“Sustainable Growth”

7. J Murphy and Sons
2 years ago
No formal risk management governance or procedures at any level of organisation
• The exec had no vision of any of the threats it faced as a business, or the potential
opportunities it could embrace
• The business could not tell the board how much contingency it had for managing risk across its
projects
• Project overruns were only notified when it was too late
Now
A suite of risk management procedures to enable risk management at all levels of the business (Board to
projects)
• Cost risk assessment procedures to define robust contingency
• Schedule risk assessment procedures to enable robust allocation of time risk allowances and
confidence in the achievement of milestones and completion dates
• Board now aligns the delivery of business change as long as it mitigates a threat, or realises an
opportunity

8. • Clear the route
• Substantial number of different
scope items
• Considerable number of different
contracts and contractors

11. F
SME
C A
Supplier SME Supplier
E A C A

12. • Risk Management Maturity in the tier 1 supply chain not particularly
high
• Let alone in SMEs
• Delivery of a risk profile for the contract is a tender deliverable for all our contracts
• PQQ – assessment of project risk management experience
• Categorise into not needing support, and needing support
• Deliver competency development to suppliers to enable them to deliver risk
management in line with our requirements

13. I don’t have time to do risk!
• Personal experience - PM
• Risk Management was an add on – something to do if you had time
• Never seen by the business as important
• Personal experience – Risk Management
• Do we have to do this?
• Is this really going to take 4 hours?
• “Mate, as long as its 10% ill smash it”
• National college for High Speed Rail
• Get in early, before it becomes an “add-on”

14. Contracts aren’t enough
• Contracts define liability for risk
• This only deals with impact
• Commercial protection
• This is not enough to ensure success of projects
• Just because liability is defined, do not assume that this ensures successful
achievement of objectives

15. The future…
• To give our projects the best chance of success, clients and their supply chain need to
start taking the management of risk seriously – don’t assume
• Client organisations
• Include within PQQ’s and tenders evidence of the supply chains ability to manage
project risk and how they ensure risk management competencies and maturity
• Treat your supply chain as part of your “enterprise” – not a transactional relationship
• Support your supply chain in developing their risk management capability

16. The future…
• Supply chain
• Understand the risk management capability of your organisation and ensure it
develops
• Treat your supply chain as part of your “enterprise”
• Support your supply chain in developing their risk management capability
• Be prepared to share bad news

17. Thankyou
Questions