First you want to sort. So what creates high risk? Risk is kind of a combination of probability, the likelihood that something will happen, and the severity. Something that might cause someone to lose their life, that's very, very severe. So even if the probability is relatively low, being struck by lightning, you don't want to tempt fate by standing under a tall tree in a thunderstorm. Because the probability may be low, but the consequences are severe. Priority is a established by looking at your timeline. When do I have to make decisions? So the first sort is to look at high priority, high risk, you want to address those items first. The last sort are low priority and low risk and inbetween you have to look at the items once you dealt with your first priorities. Okay, what's a low priority, but a high risk? What's a high priority, but a low risk? This is a first pass just a grand sort. Once you have that, you're able to look at the risk and opportunity register, which is a lean tool. It is as simple as an Excel spreadsheet, and it has these items, these fields of data, if you will, is the item and its description. There's this classification, is this a risk? Which is a negative or is it an opportunity, something that's a potential positive? What's the condition of satisfaction for the project? The overarching goal that this addresses, this risk or opportunity? What's it's probability? Now for a risk, any risk that's greater than a 5% probability is something that we're going to want put on the register but we raise the bar for opportunities. For and opportunity it's got to be greater than a 20% lowering of cost and 20% benefit or better for us to put it on the register. And I'll talk about that when we go through our register example in a few moments. What's the raw cost? What's the reasonable worst and best case parametric estimate? And by the way, for both probability and raw cost, this is where experience comes to play. We can't stop the process to do for every risk a detailed cost benefit analysis. So, you do want to be able to take advantage of designers, constructors owners, everyone who helps us see up the slope for risk to get a sense of what is the risk? What is the probability? And what do we think it might cost? It's built on experience it's based on parameters, it's based on being able to see patterns before they develop. And then develop a weighted cost which is simply probability times the raw cost. Each risk and or opportunity needs a champion someone who owns it and who addresses it and brings it to closure. And finally a sunset what's the key date by which we're either beyond this being a risk or we've lost the opportunity entirely. How does this look on a spreadsheet? Looks something like this. Here I'm going to give you five examples. So number one, do you have some raw cost price increase? That's a risk. The condition to satisfaction will be on fire and smoke ratings in the buildings. It's got a 50% chance of happening based on what we know about the project. Pardon me, this by the way is a hypothetical project. The row cost is $50,000, so the weighted cost, 50% of $50,000 is $25,000, John is champion and this sun sets next June. Item number two is an opportunity. You might be able to pre fab our drain waste and then piping. So it is an opportunity and the condition of satisfaction as we know from our parameters for the model that we developed in target value design for budget, that this system should be 2% or less of the total hard costs. We've got a 75% chance, because we know the trade contractors, and they have this experience of making this happen. The raw cost is a $20,000 savings, that's why it is a red negative number. And the way that savings would be $15,000. John's the champion, he's got until April to bring this to closure. Item three, rock removal, it's a risk. We know we've got rock, we think we've accounted for it all, but there is a chance that there is 20 cubic yards additional rock, 10% chance we might find that the raw cost is $10,000, the weight cost is 1,000. Sally owns that as champion, she needs to get that resolved by January. And related to that is another risk, we think we might have to have some more de-watering. It can be 30 or more days, 100 gallons per minute, 35% chance, $10,000, that's a $3500 cost. Sam owns that one, also in January, because we do things like site work and foundations, before we do things like piping and chips and wall board. And final on this list is another opportunity. Well maybe we can do concrete in lieu steel frame for this building because it's going to get us out of the ground faster. There's a 25% chance it could save us $50,000 raw cost and the weighted cost is $12,500. Pat is the champion, and Pat needs to get that done by February. So January we want to know about our site, February our super structure, and the stuff that goes in the building a little later on. The sun sets for both risk and opportunity. Now we can summarize all these numbers and we can see well our predicted risk is $70,000 and wow. Our predicted opportunity is $70,000 and this is the raw cost numbers because if a risk becomes true you've got to pay the whole raw cost, not just the weighted cost. So we got a running total here of zero, and you might say, well, we're probably okay. Don't say that. When you're looking in terms of construction financing and managing risks and minimizing risks, rule number five. You address risks as real, and opportunities as a bonus, every risk should be considered real. Work to those sunset dates, get the chance down to zero, and the next best thing after zero is 100%. Because if you know it's a true risk, then you've been doing things to deal with it and bring the cost down, and bring it into the flow of your project so that you can be pulling the project and not pushing it along. Address risks as real, and opportunities as a bonus. So if the numbers happen to cancel out in raw that doesn't mean that you're okay, it means you have some work to do. So to recap, all project delivery is risk, and waste is the enemy. Lean Project Delivery is a Risk Management Approach, and it is the four big processes plus the conditions and satisfaction that are at the heart of mitigating risk. And those conditions are satisfaction are affected by every stakeholder. Every stakeholder has an influence and if there are hidden stakeholders, insurance companies, lenders that are working with the owner, you want to bring that knowledge up early. You want to see up the slope of risk to ensure that you understand what their expectations are as soon as they are possibly identified. And then finally the lean tool that we use, the tool that works with the four big processes, is the risk and opportunity register. It's holistic in that it looks at both the pluses and the minuses together in a single sheet. And it's methodical, we sort our risks, we understand our probabilities, we understand our costs, and we worked that list through a sunset of time that's also by the way in the holistic sense of things, related ideally to our Last Planner System or Pull Planning. Which is telling us what's the last responsible moment to make decisions when risks and opportunities need to sunset. So amongst the universal habits of lean, are feedback. If this were a live presentation, you the audience right now would be feeding back to me take away an intent. You will be telling me what you took away from today's course and our presentation, and I will then compare that to what did I intend to see, did I get my message across. Because if you took away something that isn't what I intended, the fault lies with me, the presenter. Feel free to be in touch with me to let me know what you've taken away. And our second universal habit for continuous improvement, what was helpful so far and should continue to be included, and what would you add or subtract subtract to make this more helpful? I hope you've enjoyed this talk on lean and risk management as it relates to construction financing. Thank you very much.