When people talk about risk one of the first things that probably comes to mind is insurance or perhaps the chance of it raining, maybe the board game? Risk is present in everything we do. In the construction environment risk could typically identify potential payment & cashflow issues, safe build practices, training, statutory compliance and the like all under the Technical, Logistical, Financial & Socio-political text-book headings.

One thing that has always worried me is the misunderstood relationship between risk and margin. And the fact that very few people use the term risk margin when tendering build projects further adds weight to that belief. With many New Zealand construction companies going to the wall in the last few years it makes me question if risk is being correctly identified and managed at all?

When tendering a build project, the objective is to cover costs of construction based on a given design, with risk margin added on top (more correctly called mark-up). This premium is added in the expectation that the project will be a roaring success with the takeout at the end being profit.

In fact, at tender stage, the percentage markup should be correctly classified and accepted mentally as risk margin. Risk margin covers the possibility of something going wrong because until the project is delivered with payment in full there is a possibility that margin will be called upon to mitigate an unforeseen or an unaccounted for event. In some instances, risk continues for up to 10 years post completion for example structural defects, so in reality Practical Completion does not eliminate risk entirely.

Depending on how you represent your onsite and offsite overheads, risk margin may end up being buried in the markup calculation and in fact be under-allocated based on project variables and ones’ perception of the risks involved.

The process of defining risk is therefore complicated and requires a deep understanding of construction processes, the risks involved, with adequate margin built in at tender. By understanding the above implicitly, negotiating design and build contracts & keeping as many inputs under one roof as possible, IDB is able to control seen and unforeseen risk factors.

Putting the ‘art’ into one’s career is not often discussed. If you’re a portrait artist by definition your role is 100% creative but in the end many professions couldn’t be further from that.

As a trained Quantity Surveyor only part of what you deliver involves looking at plans and working with numbers to formulate budgets. It came as a surprise to me in 1999 whilst working with Alan Yau on his new London restaurant Hakkansan that in fact Quantity Surveying can be a creative endeavor.

The design team met at the empty basement location with what was a basic shell & core ready to receive a fit out. There were no drawings but a written brief containing ‘covers’, wall paneling from china, feature fountain wall, chefs kitchen size etc. I was then instructed as a PQS to produce a detailed budget estimate out of thin air right down to cutlery.

When the budget was finally issued, without reference to drawings but with many assumptions, I felt a sense of achievement and recognized that actually a QS role is creative. That creative process has stuck with me throughout my career. Either choosing to work closely with designers but also looking to elevate creativity in how I structure businesses.

What I personally recognized early on, is that every role has a creative aspect to it, and businesses operate better when there is a healthy balance of innovation and implementation.

IDB delivers fully integrated, end to end design build solutions for retail, commercial and residential clients that allow creative processes to be front and centre.