The Management Of Risk

INTRODUCTION When Palmer King asked me to prepare a paper for this conference, it seemed quite appropriate, since I am Chairman of Subcommittee No. 4 of the U. S. National Committee on Tunneling Technology and we are presently making a detailed study of contracting practices. Before the end of this year, we expect to publish our report containing guidelines aimed at improving our contracting practices and minimizing the problems which develop therefrom. The American construction and mining industries today are glowing examples of the ingenuity of man pitting his wits against the unknown. Without the promise of rewards commensurate with the perils faced and the effort expended, it is doubtful that these industries could have reached their present state of advancement. Nevertheless, these industries are still primitive compared to many others such as aerospace and electronics. That our present contracting practices leave something to be desired is evidenced by the fact that many of our underground projects wind up with tremendous increases in estimated cost, financial disaster, and costly dispute and litigation. The situation is aggravated by the current economic uncertainty, energy crisis, and shortage of materials. At the same time, if our industries are to develop their maximum technologic potential, we must employ contracting practices which will encourage that development. Most of the contractual problems related to underground construction are associated with risk and its management. Unless all of the ramifications of this subject are understood, it will be difficult