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RISK MANAGEMENT TECHNIQUES
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Risk Management Techniques – Excel Modular Scaffold & Leasing
Kimberly M. Thomas
BMAL714: Section B03, Liberty University
Author Note
Kimberly M. Thomas
I have no known conflict of interest to disclose.
Correspondence concerning this article should be address to Kimberly M. Thomas.
Email: kthomas225@liberty.edu
RISK MANAGEMENT TECHNIQUES
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Abstract
Risk management is the process in which an organization analyzes their day to day operations
and current and future projects to identify any points in the execution of these operations where
the agreed upon method or procedure may become compromised. The identification of internal
and external risks is the first step in this process. Once risks have been identified the organization
can problem solve to identify strategies that may alleviate or eliminate the identified risks. Each
organization and project will have different risks associated. The refinery construction industry
has identified labor shortages, limited access to technology, physical environment, and human
error as the most identified risks. This paper seeks to evaluate the risks associated with Excel
Modular Scaffold’s construction project located at the Westlake Refinery in Lake Charles,
Louisiana. Internal risks of this project consist of shortage of adequately trained labor and issues
that could arise with the supply chain. The external risks of this project are that of employee
responsibility for safety, inflation, and weather that affects the physical environment. This paper
contains a risk management plan for the mitigation of these risks.
Keywords:
risk management, construction
RISK MANAGEMENT TECHNIQUES
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Risk Management Techniques – Excel Modular Scaffold & Leasing
Introduction
Organizational risk is defined as any circumstance or event that could affect the
organization’s ability to continue to operate under their current strategy or may require a change
in process or procedures to continue moving toward the organization’s objectives (Xia et al.,
2018). These impacts are not always negative, as occasionally an identified risk can have a
positive outcome for the organization. Any event that requires the organization to reevaluate a
project’s scope of work, could alter the costs associated with completing the project, or could
adjust the timeline and project completion date or the quality of work that the organization is
able to present can be considered a risk (Adeleke et al., 2018). When risks are not properly
identified and mitigated the outcome could be detrimental to the organization’s ability to
continue operations (Hamzaoui et al., 2019). These potential risks can have multiple possibilities
of initiation (Hamzaoui et al., 2019). It is in the best interest of the organization to identify any
activities, products, resources, and risk factors when identifying and analyzing risk events. Only
once a risk event has been identified and analyzed can it be mitigated. This paper evaluates the
internal and external risk factors at the Lake Charles, Louisiana Westlake Petrochemical plant
project for Excel Modular Scaffold & Leasing Corporation (Excel).
External Risk Factors
External risk factors are those that exist outside the processes and procedures of the
organization. They can be attributed to the changing political landscape, changes in the economic
climate of the organization or physical location, and changes in technology (Adeleke et al.,
2018). Adeleke et al. (2018) catalog these risks as pertaining to employee safety, possible legal
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remifications such as regulatory compliance, the demands of the organization to man the project
with qualified labor and other events that may cause the cost of necessary materials or the cost of
qualified labor to increase (Adeleke et al., 2018). Additionally, for this specific jobsite there are
concerns of weather events that could stall or completely stop production.
Weather
The Westlake Petrochemical Plant located in Lake Charles, Louisiana is a mere 35 miles
north of the Gulf of Mexico. This can be a tumultuous location during hurricane season. As such,
the concerns of weather events is a risk that Excel needs to evaluate on an ongoing basis. Isilp et
al. (2020) indicate that changes in climate and unforeseen weather events can create significant
production and costs effects where the refinery construction industry is concerned. For this
jobsite Excel must be aware of the natural weather conditions in the area. These weather events
include extreme heat and increased humidity during the summer, the very real possibility of
tropical storm and hurricane conditions, and an unpredictable winter that could consist of
unseasonably cool or warm temperatures. Any of these events can affect Excel’s ability to
complete their contractual obligations to the Westlake Petrochemical Plant. However, some of
these conditions can drastically reduce or eliminate qualified workforce and the ability for the
plant to function as normal. Especially in the event of utility disfunction.
Inflation
Musarat et al. (2020) indicate that any change in the price of a product or service,
especially in the case of an increase, can be defined as inflation. Inflation directly affects the
refinery construction industry as it directly correlates to the costs associated with materials
necessary to complete a project (Musarat et al., 2020). While inflation is often referred to as the
RISK MANAGEMENT TECHNIQUES
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rise in the costs of products or materials this can also translate into an increase in the costs of
labor. This direct correlation is due to the fact that employees require more base pay to afford the
increased cost of living that the raise in rates of products and services has created. For Excel,
both of these scenarios ring true. During periods of economic inflation Excel experiences rising
costs of materials necessary to the manufacturing of their equipment, increased costs related to
the transport of materials to jobsites all over the United States, and an increase of labor rates to
man jobsites with qualified labor.
Safety
According to Wang et al. (2022) more occupational accidents and deaths occur yearly in
the construction industry than any other industry. These incidents and recordables can be
attributed to unsafe decisions made by the employees, unsafe conditions in the field, accidents,
injuries, or damage to the person or property of the organization. These events are often
unknown and happen at random. There is no way for an organization to know when an accident
will offer, therefore project specific training and detailed processes and procedures are necessary
for the organization to develop to reduce the occurrence of accidental injury or death. Due to the
nature of Excel’s business, the focus of safety efforts consist of awareness of confined space
protocols, training and educating employees working with combustible or flammable materials,
safety regarding high voltage electrical equipment, and emergency procedures for the company
and the jobsite location.
Internal Risk Factors
Research indicates that internal risk factors are easier for an organization to identify and
assess than their external counterparts (Kassem et al., 2019). The identified internal risk factors
RISK MANAGEMENT TECHNIQUES
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that Excel faces at their Westlake Petrochemical plant are those of interference to the supply
chain, internal infrastructure constraints and shortage of skilled labor to man the project.
Interference to the organization’s supply chain can cause a shortage of material that is available
to deliver to the jobsite whereas the internal infrastructure constraint can create communication
breakdown between the jobsite and other departments within the organization.
Supply Chain
Shojaei and Haeri (2019) indicate that an organization must adequately control their
supply chain or be faced with the possibility of not completing a project in a timely manner or
outside of the previously agreed upon budget constraints. When considering the risks associated
with supply chain, Excel needs to be aware of any conditions that could cause a shortage of
equipment necessary for the project or materials used during the project lifecycle. Additionally,
if the acquisition of equipment or production of materials cannot keep up with the demands of
the project then this could require the organization to change the scope of work (Pham et al.,
2022). In the case of Excel’s project at the Westlake Petrochemical plant supply chain issues are
internal rather than external. This is due to the fact that Excel manufactures all of the materials
necessary to perform their scope of work for any refinery project across the United States. If
Excel experiences any delays in material production, delays in the transportation of the materials
to the jobsite, or experiences the need to replace defective material this could create costly delays
in project completion.
Infrastructure
Having the right technology can make a marked difference in an organization’s ability to
meet project deadlines and produce a quality product within budget restraints (Afolabi et al.,
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2022). With the expansion of cellular and wireless technologies for communication purposes the
construction industry has become more efficient that ever before (Zhang et al., 2021). However,
these advancements do not come without risk. The chief complaint when relying on wireless
technology for communication is the availability of towers to provide sufficient signal and
available equipment within the organization to ensure that all primary players are well
connected. When considering Excel’s Westlake Petrochemical plant, the risk factors consist of
ensuring that the necessary equipment has a storage space that is free from the elements or other
risks that can occur in the refinery setting. Additionally, as Excel is a contractor for the refinery
client, there is the consideration of safety issues that can arise from having wireless technology
in an active unit.
Qualified Labor
In a construction project, the cost of acquiring skilled labor can range anywhere from 35-
55 percent of the total project budget (Karimi et al., 2018). Inability to man a project with
qualified labor can be detrimental to the completion of the project within time and budget
constraints. Hiring workers who do not have the appropriate on the job training or qualifications
can result in time and money losses due to low quality deliverables, reduced productivity, or
conditions that are unsafe and may lead to employee harm or death (Karini et al., 2018). The
personnel required at the Westlake Petrochemical plant are a site manager, site administrator,
time keeper, certified safety technicians, and scaffold builders from foremen to helpers. Each of
these positions has different experience requirements, training requirements, and certification
requirements.
Risk Management Plan
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Ho et al. (2019) advises that the first step of any risk management plan is to identify any
circumstances that could affect the projects timeline, budget, or the deliverables of the project.
When all risks have been identified the process of placing policies and procedures in place to
mitigate these risks can begin. The mitigation process seeks to not only minimize the occurrence
of these circumstances, but also to record a predetermined response should any of these risks
become a reality (Ho et al., 2019). These responses should contain specific action items, that are
assigned to specific teams, departments, or employees, to minimize the level of confusion on
how to respond should a crisis arise. Once these steps have been completed the plan is
communicated organization wide (Ho et al., 2019)
Minimize External Risks
Weather
The Westlake Petrochemical plant, located in lake Charles, Louisiana, is a mere 50 miles
from the Gulf of Mexico. Due to its physical location, the weather is an extreme concern for
Excel. During the months of April – September the temperatures in the area can swell to nearly
110 degrees. This can create severe health problems for Excel employees. For this reason, Excel
provides their field employees with frequent water breaks, which are logged on a sign in sheet
for each crew. Additionally, Excel has several cool down stations located throughout the refinery
which are shaded locations containing air conditioning where possible, and mist spray fans
where air conditioning cannot be provided. Excel utilizes the resources available to the
organization to track any tropical formations and movements through the National Hurricane
Center. All employees are connected to Excel’s emergency response text messaging system. This
system allows senior management to contact the entire jobsite with a single text message should
wesather conditions become unsafe and work halting for a period of time.
RISK MANAGEMENT TECHNIQUES
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Inflation
Excel prides itself on the lean manufacturing techniques that it uses organization wide.
These techniques include root cause analysis, equipment effectiveness, and just-in-time
manufacturing. Root cause analysis is a technique that evaluates every single safety event and
OSHA recordable to determine the root cause of the event, rather than simply addressing the
symptoms of the event (Ghobakhloo et al., 2018). Equipment effectiveness seeks to reduce and
eliminate unnecessary waste by analyzing the performance and quality of the work that Excel
employees are producing (Ghobakhloo et al., 2018). And as previously mentioned, Excel uses
just-in-time manufacturing of their proprietary equipment so that there is not an excess of
materials or equipment and only what is needed is produced.
Safety
Excel expects their qualified labor force to be able to handle any safety concerns that
arise at the jobsite. These tasks include the ability to recognize safety concerns, analyze the
probability of these concerns become a legitimate threat, and mitigating these risks before an
accident or injury occurs (Ibrahim et al., 2022). Excel understands that as a project is in the
process of completion safety concerns grow and change. Therefore, Excel requires their
employees to attend safety standdown meetings at the beginning of their shift and in the
afternoons after lunch. The supervision that Excel hires and trains understands the importance of
stretching and hydration to ensure that all employees are physically ready for the tasks that lie
ahead of them, additionally, this time is used to discuss any safety issues that have been brought
up during the Job Safety Analysis process.
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There are many factors that can affect the way an individual assesses risks. Ibrahiem et
al. (2022) indicate that these factors can consist of the employee’s age, the level of training that
the employee has received, the culture of the organization and the specific jobsite location, and
other socioeconomic factors. For this reason, Excel ensure that all management and supervisory
positions are held by individuals who have the appropriate amount of experience in the scaffold
construction industry as well as any necessary training or certifications. However, Excel stresses
to it’s employees that everyone is responsible for safety. This is why Excl has created an
incentivized program for stop work authority. This program puts the authority to stop work on
any project for any reason when unsafe working conditions have been identified.
The stop work authority is a points-based system in which any time an employee uses
this authority and calls attention to a safety risk that has not yet been identified or mitigated they
are awarded Bartlett Points. These points allow the employee to purchase organizational branded
items from the company store. These items range from personal protective equipment, to
branded clothing items, to leisure items such as outdoor equipment. The incentivization of this
program has yielded positive results as over 150 incidents have been identified and mitigated in
the second quarter alone.
Minimize Internal Risks
Supply Chain
To ensure the integrity of their supply chain, Excel controls the majority internally. The
equipment that Excel uses in their refinery projects is manufactured in house. This allows the
organization to control costs and mitigate risks associated with delayed manufacturing.
Additionally, due to the fact that the equipment is machined in house, Excel is able to repair and
RISK MANAGEMENT TECHNIQUES
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replace any materials that are lost, broken or damaged. The materials that Excel manufactures are
labeled with a barcode and a serial number to ensure that the real time inventory tracking system
the organization uses can locate any piece of equipment across the more than twenty jobsites
across the United States. This system is used by each jobsite to request materials, return
materials, and identify any materials that need to be repaired or replaced. This lean
manufacturing method means that Excel can provide “just in time” delivery of any of the
materials that are needed for any project across the United States.
Infrastructure
After seeing the success of keeping the supply chain internally motivated, Excel designed
their infrastructure to be equally as efficient and managed internally, rather than externally.
Every jobsite has a wealth of information technology equipment at their disposal. From laptop
computers, to radios, to tablets, to internet hotspots, Excel ensures that the jobsites are able to
communicate not only with one another in the field, but also with the Human Resources offices.
To ensure that their proprietary information is kept secure the equipment used by field personnel
has several built in safety measures. Each laptop and tablet require a fingerprint or facial
recognition to access. The internal internet connections are set up in such a way that only Excel
devices can connect and each piece of equipment comes with state of the art antivirus software to
further protect any information stored. Additionally, excel has elected to split its Information
Technology Department into teams of two employees per region. This ensures that each jobsite
has a dedicated IT professional at their disposal, and within traveling distance should an
emergency arise.
Qualified Labor
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To mitigate the risks of finding qualified labor, Excel must examine why turnover rates
are higher in the construction industry than any other industry. High turnover, regardless of the
industry, can be attributed to employees who are experiencing a decrease in job satisfaction,
concerns surrounding job security, positions that provide a poor work-life balance, and job
opportunities with other organizations where pay and benefits outweigh what is being offered
(Acyodele et al., 2022). Excel chooses to focus on the recruitment of qualified labor through
word of mouth. Additionally, Excel incentivizes referrals so that employees are more likely to
recommend positions within the organization to their friends and family in the industry. Another
way Excel mitigates the risk of lack of qualified labor is to do a labor market analysis at the
beginning of each contract. This allows Excel to know what the median pay in the geographic
location for these skilled workers is and not only meet it, but exceed it. For employees who are
travelling away from their home, Excel offers nontaxed per diem which provides additional
funds for employees to cover their travel and living expenses. To ensure that employees meet all
the training and certification requirements, Excel offers to pay for trainings and certifications for
new or rehired employees with the agreement that the employee will work at least ninety days.
Once an employee is on the jobsite, Excel offers additional training and certifications so that
open positions can be filled by employees rather than needing to hire outside the organization.
Not only is this a cost savings for Excel, but it ensures that the management team of each jobsite
has the experience necessary to perform any aspect of the scope of work, thus reducing safety
concerns and providing valuable insight on policies and procedures as it relates to their area of
expertise.
Communication of Risks
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Risk management plans are useless if they are not communicated to the individuals,
departments, and groups of people who are responsible for enacting the plans should these risks
become a reality. For Excel, this means that the organization is divided into groups with each
group being responsible to communicate down the hierarchy. The top of that pyramid is the
Senior Vice President of Health, Safety, and Environment. For this single individual, the
hierarchy deepens at a jobsite level with the Project Manager and Site Safety Engineers, to the
foreman of each individual crew, to the lead builders, carpenters, and helpers. Every employee in
the organization has a specified role that must be adhered to where safety is concerned. While
many of the policies and procedures are created toward the top of this hierarchy, communication
is built to flow from bottom to top as well.
Conclusion
Park of a successful risk mitigation plan is understanding that some risks are statistically
more likely to occur than other risks. A successful risk mitigation plan seeks to identify any and
all risks, a plan to reduce or eliminate those risks from occurring, and the communication of
those plans and procedures throughout the organization. Excel has evaluated the risks associated
with the Westlake Petrochemical plant in Lake Charles, Louisiana, and has a detailed risk
mitigation plan in place to ensure the safety of their employees, staff, and equipment at this
location.
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