Canadian Lawyer InHouse

19 CANADIANLAWYERMAG.COM/INHOUSE SEPTEMBER 2016 ral Ontario, and last year, we were awarded the $5-billion Eglinton Crosstown job. You can imagine the difference in complexity between a road job and a complex transit job running right through the middle of Toronto. "You go from a 100-page contract to a 3,000- to 4,000-page contract. We needed to evolve in terms of our communication of risk to senior management so that they were completely informed as to the risks that we were entering into," says Fushman. He envisioned Project Excelsior and the following programs were created to change the risk manage- ment standard of the or- ganization: a Commercial Risk Committee (to review signifi cant risks and pro- vide guidance); training of project execution personnel; collecting lessons learned across projects; a Risk Evaluation Committee (to monitor projects during execution); enter- prise risk management to identify risks, gen- erate a heat map and assign risk weightings; a Risk Committee of Board of Directors; and to ultimately develop a compliance function. Excelsior is seen as being innovative in the construction industry — a sector that doesn't necessarily embrace change. It involved the organization from the board and senior executives through to those who execute the projects. Risk review committees, training and risk management invites participation of personnel with multi-disciplinary backgrounds from throughout the business, and the legal department takes the lead in the education development and enterprise risk-management analysis. "I think we're at the cutting edge in terms of leading the way in communicating risk to the organization and bridging the gap between legal, technical risk, and con- struction fi eld experience," says Fushman. He says the goal is simplicity. "What we're trying to do is take thousands of pages of contracts and complicated commercial agreements negotiated during tens of hours of calls with dozens of lawyers and simplify it on to a heat map showing what the risk profi le is and showing the delta between what you consider a standard risk and what the new reality is. I think that's where the innovation is — in the simplicity of commu- nication," he says. In the short term, Fushman says, it is expected that the risk identifi cation function of the Commerical Risk Committee will ensure that projects are priced properly and resourced as required to handle the identifi ed risks. In the medium and long term, the training component of Excelsior will develop the next generation of project personnel to have a more sophisticated commercial skillset than their predecessors, which will help the organization identify and mitigate or avoid risk at a granular level each and every day. Overall, in the long run, they expect the program to make a signifi cant contribution to reducing disputes and enhancing profi t margins. To date, the CRC has reviewed 16 projects with values totalling more than $20 billion since launching Excelsior in 2015. "I think we've proven our value to our operational partners, and on a signifi cant project we will staff a lawyer to a job either half or full time, and the lawyer really is there from a risk management perspective, not a purely legal perspective. Having them sit across the hall from the construction execution team — being able to put on their boots and go into the fi eld and see the issue really enables them to perform that risk management role and enhance controls on the project," says Fushman. Fushman says what the Aecon internal department has created with Excelsior is not something external counsel could achieve for a client. "This is the value proposition of the in- house lawyer, that we're so integrated with the business it's impossible to draw a distinction between risk management and compliance and legal advice — we're all just rowing in the same boat and sitting in a different seat and I would say this is something external counsel couldn't assist with because what we're doing is making risk assessments based on our understanding of the organization's risk tolerance and temperature. That's what we do," says Fushman. Swartz says the board is now getting more detailed analysis of risk management and a more complete map of the entire risk management across the organization. The next phase of Project Excelsior will be to spin off into developing a compliance function in 2016. IH metres can confront any number of issues in the ground, including problematic soil conditions or buried utilities. Critical struc- tures such as bridges or dams and techni- cally complicated systems such as Light Rail Transit systems require integration with teams of designers. Receiving equipment and materials procured by the owner from offshore creates co-ordination and quality management challenges. Against that backdrop of extremely com- plex operations, the industry in recent years has moved to more aggressive contracts that shift risk to the contractor while providing only very narrow avenues for relief. Although Swartz says there is a thor- ough job done in reviewing the projects at the project review committee level at the senior executive level, as the projects have became more complicated, the same level of detail was not always available from those involved at the project control level as well as insurance, fi nance, the estimating team and bid team. Swartz decided a more complex process should be put in place and he met with Aecon's deputy general counsel Yonni Fushman with the idea to enhance the risk review process. "There's been exponential growth in the complexity of projects," says Fushman. "When I started 10 or 11 years ago, it was a big deal to get a $100-million road job in ru- ROBIN KUNISKI CATEGORY: Risk Management DEPARTMENT SIZE: Small COMPANY: Aecon Group Inc. As part of Canadian Lawyer InHouse magazine's third annual Innovatio Awards program recognizing innovation in-house, Aecon Group Inc. was chosen by the judges as the winner in the category of Risk Management, small departments, and from all of the Innovatio category winners it was selected as "Innovation of the Year" for the work it did to revamp its risk management strategy.

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