Dr Robert Gaitskell QC, Chartered Engineer, Arbitrator, Mediator, Adjudicator, Expert Determiner
Keating Chambers, London, UK
‘As we boarded the helicopter in Aberdeen they asked for the name of our next of kin. We had already had a lecture on how to bale out if the helicopter went down en route to the oil rig.
As we approached the rig there was a strong breeze so that the helicopter floated about as it came in to land on the rig helipad. That was a pity, since this was a tension‐leg platform rig, secured to the sea bed by strong cables, so it bobbed around like a cork. I prayed for the skill of the pilot as he attempted to put floating aircraft onto bobbing helipad. Then I noticed a sobering sight. On the edge of the pad was someone with the appearance of a silver spaceman, kitted in fireproof garments and aiming the long nozzle of a foam gun at us as we closed in on the rig. Plainly, it was his job to smother us with foam to quench any fire if we hit the rig – a fire on an oil rig is catastrophic.
I suddenly understood one key aspect of the human factors in risk management. Ensure good training of staff – in this case the pilot, and the aircraft mechanics that keep the helicopter in the sky. But also have a viable fall‐back – in this case the foam gun.’
Risk management in the construction industry is the difference between success and failure; between profit and loss; between life and death. The industry itself is inherently risky. How then do we best address the human factors in managing risk? We have already looked at staff training. Next we will look at making decisions using the best data available. The final human factor we will address is minimising disputes on site by the use of a ‘standing dispute Board’.
A second significant human factor in engineering risk management is ensuring that important decisions are made in the light of all the known information, and the decision is not skewed by an overbearing client or a bullying boss. A classic case study here is the 1986 Challenger disaster. Imagine yourself in the situation that a group of American engineers found themselves in.
It was a freezing cold night in Florida. At Cape Kennedy, the Challenger space shuttle was on the launch pad. Around 8.15 p.m., Eastern Standard Time (EST), 27 January 1986 a teleconference started. On one end of the line was NASA's rocket engineering establishment, the Marshall Center in Texas. On the other end was Morton Thiokol, in Utah. This company, Thiokol, had the contract to build the solid rocket boosters (SRBs) for the shuttle.For some time all concerned knew there had been problems with the joints between the segments of the boosters. In particular, in operation there were difficulties with the gaps that opened up in the joints containing the O‐rings. A Thiokol engineer, Roger Boisjoly, felt there was a link between low temperature and damage to the seals from hot ignition gases. Various tests were carried out, but the results were inconclusive.
As the teleconference started, the NASA team were under pressure to launch. On board would be a school teacher, Christa McAuliffe, and it was intended that she would link up live with President Reagan as he gave his State of the Union address. Back in Utah the Thiokol team of engineers had already decided that the freezing conditions would reduce the O‐ring resiliency unacceptably. They had agreed amongst themselves to recommend scrubbing the launch unless the O‐ring temperature was at least 53 °F. The problem was that on site the temperature at launch was expected to be only 29 °F.
The telephone discussion did not go well. Thiokol gave its recommendation about 53°. Boisjoly referred to his concerns about low temperatures detrimentally affecting the O‐rings. The customer asked him to quantify his concerns but the data was incomplete. Larry Mulloy of NASA was not impressed by Thiokol attempting to create a new criterion at the last moment. He and others thought the 53 °F limit was arbitrary. Larry burst out: ‘My God, Thiokol, when do you want me to launch, next April?’
Eventually Thiokol requested a five‐minute off‐line private review. In a gloomy discussion lasting half an hour Boisjoly and other engineers explained their concerns.
The general feeling in the Thiokol team was that the engineering analysis was weak. The internal discussion was chaired by Senior Vice President Jerry Mason. He reminded everyone that the space vehicle was designed to be launched year‐round, so that restricting it to launching only on warm days would be a serious change. He reiterated NASA's points. Although Boisjoly and his engineering colleague Arnie Thompson strongly fought their corner, the other engineers said nothing. Eventually, Mason said that if there were no more engineering arguments then Thiokol management would make a decision. Boisjoly and Thompson both stood up to make their points a final time, and Boisjoly showed the managers two photographs from earlier launches.
Present, besides the engineers, were four managers, all engineers by background. Their views were polled: it was three for a launch but Robert Lund was reluctant to support the majority. Nevertheless, after being told to ‘take off his engineering hat and put on his management hat’, he stopped resisting. The teleconference resumed and Thiokol approved the launch. 1
As the world watched the television images and those at the launch site huddled in their coats on a bitterly cold morning, the space shuttle headed off at 11.38 a.m. Smoke soon started emanating through the O‐rings. Soon there was a flame that hit the external fuel tank and the strut holding the booster rocket. The hydrogen in the tank ignited, the booster rocket broke loose, smashed into Challenger's wing then into the external tank. At 50 000 ft Challenger was totally engulfed in fire. It had been aloft for only 76 s. The crew cabin separated and dropped into the ocean.
President Reagan set up a commission to investigate the accident (‘the Rogers Commission’). This group included Richard Feynman, a theoretical physicist from the California Institute of Technology. In the course of a televised hearing he made sure that he had a glass of ice cold water in front of him. When the camera turned to him he produced an O‐ring and dropped it into the freezing water. Then he pulled the ring out and snapped it, demonstrating that it had become less resilient at low temperatures. He later explained how, unlike most of the other Commission members, his investigation was not simply theoretical, and that he had spoken to engineers who had actually been involved in the project. He had strong views on the reliability of the shuttle and, in order to ensure these were included within the report, he threatened to withdraw his name from it unless those views were included within an appendix. He concluded: ‘For a successful technology, reality must take precedence over public relations, for nature cannot be fooled’.
Roger Boisjoly left his job at Morton Thiokol and became a speaker on workplace ethics. He was particularly critical of intense customer intimidation. The American Association for the Advancement of Science awarded him its Prize for Scientific Freedom and Responsibility.
Dispute Boards (DBs) involve a procedure whereby a panel of three engineers/lawyers (sometimes just one) is appointed, often at the outset of the project. Ideally, the DB will visit site three or four times a year and deal with any incipient grievances. This often avoids a complaint crystallising into a dispute. Disputes festering on site are known to sap morale and generate an air of grievance over the whole project. The result is other disputes, strikes, and even accidents.
After successful US experience with DBs in the 1960s and 1970s, in 1995 the World Bank made the procedure mandatory for all International Bank for Reconstruction and Development (IBRD) financed projects in excess of US$50 million. Since then the procedure has been introduced into many contract forms, particularly the FIDIC (the International Federation of Consulting Engineers) suite.
The commonly favoured model for DBs in the USA was and is the dispute review Board (DRB), under which ‘recommendations’ are issued in respect of the particular dispute being dealt with. This is a relatively consensual approach to dispute resolution. Broadly, if neither party formally expresses dissatisfaction with a recommendation within a stated period of time, the contract provides that the parties are obliged to comply with the recommendation. If either or both parties do express dissatisfaction within the limited time period, then the dispute may go to arbitration or court litigation. Although the parties may choose voluntarily to comply with a recommendation while awaiting the decision of the arbitrator or court, there is no compulsion to do so.
FIDIC, with World Bank encouragement, introduced the DB procedure into its engineering standard forms by way of the 1995 Orange Book form. This was followed by its 1996 introduction into Clause 67 of the Fourth Edition of the FIDIC Red Book for Building and Engineering Works Designed by the Employer. FIDIC adopted the dispute adjudication Board model, whereby effect must be given forthwith to a Board decision. If no ‘notice of dissatisfaction’ is issued within 28 days of the Board's decision, it becomes final and binding. If a notice is issued then the matter may proceed to arbitration, although the parties are obliged to comply with the decision in the meantime.
A Board is able to fulfil two separate functions:
Two types of DB need to be distinguished, although they may be used in conjunction with each other. There is the so‐called ‘standing’ DB, where the Board is appointed at the outset of the project and is in place throughout, making periodic visits and dealing with complaints when they first arise, so that, generally speaking, they never develop into disputes. However, on some projects the parties only appoint an ‘ad hoc’ Board when a particular dispute arises. Essentially, this process is akin to simple statutory 2 ‘adjudication’ as widely used in the United Kingdom and various Commonwealth jurisdictions.
Where a standing DB is used there is an opportunity for the composite Board, consisting of members with both legal and engineering expertise, to walk around the site at regular intervals to see what work has been done. Thus, if subsequently a dispute arises about work that has been covered over, there is a chance the Board will have seen some aspect of that work before it disappeared. In addition to inspecting the site, a typical visit by a Board will involve holding a semi‐formal meeting at which all interested parties may air any grievances that they have. The Board, of course, is entirely neutral and independent and will give all concerned a fair opportunity to explain their views.
The precise procedure for any particular DB will be set out in the contract governing the creation, constitution, and activities of the Board in question. It is sometimes the case that the contract will permit separate meetings to be held, so that the Board may meet with one or other party privately in ‘caucus’. It is generally good practice, before this happens, for the matter to be discussed so that both parties know precisely what is contemplated, and can agree on the procedure to be followed. If the procedure is not consensual, then there is always the danger that one or other party will feel that things were said at the other party's separate meeting with the Board that ought not to have been said, or which are prejudicial to it and cannot be dealt with since the details are not known.
Sometimes the contract will provide that, after the site meeting and, ideally, prior to the Board departing, it should produce a short written report for distribution to all concerned. This would record the attendees and details of the meeting, what was seen on the site visit, any grievances raised, and any determinations (whether recommendations or decisions) made. Future action required of the parties (e.g. the production of documents for the next meeting), and an explanation of what the Board itself will be doing, if anything, prior to the next meeting, should also be noted in the report. The proposed date for the following visit can also be identified.
Ordinarily, a standing Board will remain in place until the conclusion of the project, which is often marked by, for example, a certificate of practical completion or some equivalent document.
My experience of standing DBs is that they work; they really do stop all or most complaints crystallising into disputes that need expensive arbitration or litigation.
An exciting project that is using a standing DB is the International Thermonuclear Experimental Reactor (ITER) Fusion for Energy project in the south of France. This aims at demonstrating electricity generation from ‘fusion’ rather than from the conventional fission process. This high‐value experimental project is supported by a wide range of nations. I ought to emphasise that what I say is all in the public domain – on the project's website, or elsewhere – so you will find no commercial secrets in what follows!
Nuclear fusion is quite unlike nuclear fission. The fission process has, of course, far more public recognition, since that technology lies behind the atomic bomb and conventional nuclear power stations. In the fission process the nucleus of an atom splits into smaller parts, usually producing free neutrons and releasing a very large amount of energy. In a conventional nuclear power station a nuclear reaction is deliberately produced. The fuel rods are bombarded with neutrons and the result is that further neutrons are emitted. This sets up a self‐sustaining chain reaction that releases energy at a controlled rate in a nuclear reactor (for a power plant), or at a very high uncontrolled rate (in an atomic bomb). The fission process is linked with nuclear waste problems and with well‐known examples of escaping radioactivity (e.g. Chernobyl).
The fusion process, by contrast, is significantly different. At the moment we know a limited amount about the process and are on a steep learning curve. Much of what we do know is very encouraging. Stars, including the sun, experience the fusion process at their cores. The ITER project aims to establish, if it can, that the fusion process may be used to generate electricity on a commercial basis. The process that is to be used involves two fuels that are relatively easily obtained. Deuterium may be extracted from seawater, and lithium is in the Earth's crust. Used together in the fusion process they create tritium on a significant scale. Ultimately, therefore, the supply of tritium is potentially unlimited. Mass for mass, the tritium/deuterium fusion process envisaged for the ITER Project is expected to release about three times as much energy as uranium 235 fission. Of course, this will be millions of times more energy than any chemical reaction such as burning fossil fuels like oil, gas, or coal.
The ecological credentials of fusion include the fact that it emits no pollution or greenhouse gases. Its primary by‐product is helium, an inert, nontoxic gas. Unlike fission ‘melt‐down’ chain reactions, there is no possibility of a fusion ‘run‐away’ reaction, since any alteration in the conditions of a fusion reaction results in the plasma cooling within seconds so that the reaction ceases. There is a low waste output.
ITER originally stood for the ‘International Thermonuclear Experimental Reactor’. However, nowadays it is generally taken to refer to the Latin word for ‘the way’. The member states for the project are the EU, India, Russia, China, South Korea, the United States, and Japan.
Broadly, the ITER Project involves about 10 years for the construction of all facilities at Cadarache in southern France, followed by 20 years of operation. If this essentially experimental project is successful, then a demonstration fusion power plant, named DEMO, will follow, introducing fusion energy to the commercial market by converting the heat generated by the fusion process into electricity in fairly conventional ways familiar to those with an understanding of current power plants.
The broad objective of the ITER Fusion Project is to establish that the reactor, using 50 MW of input power, is able to produce 10 times as much (500 MW) of energy output. Provided that can be achieved for a relatively short period (a matter of minutes) then the principle will have been established and the ultimate success of the DEMO power plant is assured. Another of the key objectives of the ITER Project is to verify that tritium, one of the necessary ingredients for the process, can be ‘bred’ in the reactor, so that the supply of that fuel becomes self‐supporting.
The technological and scientific challenges involved in the ITER Project should not be under‐estimated. Pierre‐Gilles de Gennes, the French Nobel physics laureate, once said about fusion: ‘We say that we will put the sun into a box. The idea is pretty. The problem is, we don't know how to make the box’. 3
To be successful, the reactor must contain high temperature particles, with their enormous kinetic energy, in a sufficiently small volume and for a sufficiently long time for fusion to take place, creating the plasma. Ordinarily protons in each nucleus of the isotope fuel will strongly repel each other, since they each have the same positive charge. However, when the nuclei are brought sufficiently close, with sufficient energy, they are able to fuse. In the ITER tokamak machine the nuclei are brought close together using high temperatures and magnetic fields.
The plasma in the ITER tokamak is a hot, electrically charged gas. It is created, at extreme temperatures by electrons separating from nuclei. About 80% of the energy produced in the plasma is carried away from the plasma by the neutrons, which, having no electrical charge, are unaffected by the constraining magnetic fields. These neutrons then hit the surrounding walls of the tokamak, and are absorbed by the blankets on the walls and so transfer their energy to the walls as heat. In the ITER Project this heat is simply dispersed through cooling towers. However, in the forthcoming DEMO fusion plant prototype the heat generated will be used to produce steam and, through the intermediaries of turbines and alternators, generate electricity.
The plasma needs to be heated to 150 million degrees centigrade in the core of the machine. Plasma at that temperature, and with its constitution, cannot be allowed to touch the walls of the reactor, since the plasma would rapidly destroy any constraining vessel and would also cool down, ending the process. Therefore, the plasma is controlled by so‐called ‘magnetic confinement’. The plasma is shaped by magnetic fields into a ring, or ‘torus’, and thus it is kept away from the relatively cold vessel walls. These surrounding walls have ‘blanket modules’ containing lithium. They are termed ‘breeding blankets’ because, as part of the fusion reaction, tritium can be generated.
At the heart of the project is the ITER tokamak machine. This machine draws on the experimental work that broadly stems from a major breakthrough in 1968 when Soviet Union scientists achieved temperature levels and plasma confinement times significantly beyond anything achieved hitherto. The Soviet scientists termed their device, which achieved doughnut‐shaped magnetic confinement, a ‘tokamak’. The ITER tokamak will be twice the size of the largest current machine. If all goes according to plan, fusion power should be feeding into the world's electricity grid systems by about 2040.
The ITER construction contracts may well make good use of the DB procedure. Certainly, this procedure has the potential for minimising disputes and dealing with crystallised disputes in a cost‐effective way. Risk management involving this sophisticated dispute avoidance procedure is likely to pay for itself and bring a range of benefits in levels of satisfaction among the key players. This will contribute to the timely and efficient completion of one of the world's most exciting energy projects, and benefit us all.
We have looked at the human factors in risk management from three different perspectives: staff training, decision making using the best data available unimpeded by difficult clients or management, and avoiding and dealing with disputes efficiently. Of course, there are a multitude of human factors relevant to a proper risk management methodology, but the essential thing to bear in mind is that the more staff and workers are empowered by training, protection from bullying, and protection from intercompany disputes on site, the more successful the project will be.