Seven of these thirteen give you nothing.

The tally

Five risks come back with both. The rock and the groundwater, through the unforeseeable conditions route we looked at last week. Late detailing, because the employer's designer owes us information by a date and sub-clause 1.9 deals with what happens when it is late. The wayleave, because sub-clause 2.1 obliges the employer to give us access to the site. The temporary power, because it was answered by others and sub-clause 4.6 deals with what happens when other people on the employer's site get in the way.

Between them those five carry $54,140 of expected value.

One risk comes back with time but no money, and we will come to it in a moment.

Seven come back with nothing at all. The switchgear supplier who is slow. The pump that fails. The supplier who goes under. The waterproofing gap between two of our own packages. The temporary water. The discharge consent. The crane.

Every one of those is our problem in full, by design, and that is not a failure of the contract. It is what a construction contract is: a list of the things the employer accepts responsibility for, and everything else is yours by default. Those seven carry $26,590, and there is no mechanism anywhere in a hundred and forty pages that will ever pay a penny of it.

The asymmetry that catches everybody

Now the winter shutdown, because it is the most misunderstood line on most registers.

Weather sits in two places. Exceptionally adverse conditions are one of the grounds for extending the completion date under sub-clause 8.5, and genuinely extraordinary events sit in Clause 18 under the heading Exceptional Events, which is the 2017 successor to what everybody still calls force majeure.

Both of those move the date. Neither of them, on its own, hands you money.

That distinction is the single most expensive misunderstanding in construction risk. An extension of time protects you from delay damages. It does not pay for your preliminaries. Get eight weeks of extension for a wet February and you have avoided liquidated damages, which is real and valuable — and you have also just funded eight weeks of site establishment, supervision, cabins, fencing, insurance and a project manager out of your own margin.

Cost & Cash Week 4 priced this project's preliminaries at $85,200 across the programme. Run the arithmetic on a week of that and it is roughly $1,900 of pure time-related cost for every week you stand still. The extension of time does not touch it.

Time and money are separate mechanisms with separate tests. A register that scores weather as covered because there is an extension of time clause is carrying no money against something that will cost money.

What insurance actually covers

Which brings us to the other thing people assume is a safety net.

Clause 19 requires insurance, and Clause 17 deals with care of the works and the indemnities that sit behind it. Between them they cover physical loss and damage — the works, the plant, the materials, third parties, employees. That is genuine and it matters. A fire, a collapse or a struck pedestrian is a category of risk this project does not have to carry alone.

But look at what that leaves out, using our own crane.

The crane breaks down on a Tuesday. The impact on the register is $11,500. Of that, about $2,800 is the gearbox — a physical thing, damaged, and the plant policy will deal with it subject to the excess.

The other $8,700 is six days of standing gangs, a pour that had to be pushed, and two subcontractors resequenced around a hole in the programme. None of that is physical loss or damage to anything. It is the cost of a week in which nothing happened.

Insurance covers the thing. It does not cover the week. Three quarters of that impact was never insurable, and the register had it down as covered.

The bond protects the other side

One more item that appears on registers in the wrong column.

Sub-clause 4.2 requires performance security. On a job this size that is typically ten percent of the contract, so a hundred thousand dollars of bond, and it costs a fee every year plus a chunk of the company's banking facility that is now unavailable for anything else.

It is worth being blunt about what that instrument does. If we fail, the employer calls the bond and gets paid. The bank then comes to us for the money. It is a risk transfer, and it runs from the employer to us, not the other way round.

The bond is not a response to any risk on our register. It is a cost we carry so that the employer does not have to carry one of his.

That is perfectly normal and nobody should be outraged by it. But a register that lists the bond as a mitigation has the arrow pointing the wrong way, and a project manager who thinks the bond is somehow behind him is going to be surprised.

And on a turnkey job it gets worse

Do the whole exercise again on the assumption that this contract is the Silver Book instead.

The rock moves. The groundwater moves with it. That is $31,200 of expected value crossing the line from there is a mechanism to this is ours whatever happens, and the recoverable column falls from $54,140 to $22,940.

Nothing about the ground has changed. Nothing about the site, the programme, the gang or the winter has changed. One line on the front page of the contract moved nearly two thirds of the entire margin on this job, which is $48,163.

Practical insight

Add two columns to your register. Head them time and money. For every line, put the sub-clause number that gives you each one, or a dash.

It will take an afternoon and you will need the contract, not a summary of it. Most of the entries will be dashes, and that is the point — the dashes are the lines your contingency is genuinely funding, and they should be the ones you spend your attention on.

Then take every line where you have written a clause number and check one more thing: whether that clause requires notice, and how long you have. That is the difference between having an entitlement and having an entitlement you can still use, and it is where the next track begins.

If you do only one thing from this article, do it for the weather line. Ask whether the money is covered, and not just the date. On most projects it is not, and nobody has noticed because everybody stopped reading at extension of time.

Key takeaways

✔ Of thirteen risks, five give time and money, one gives time alone, and seven give nothing at all.
✔ The seven with no mechanism carry $26,590 that no clause will ever pay, by design rather than by oversight.
✔ An extension of time protects you from delay damages. It does not pay your preliminaries, which run at about $1,900 a week here.
✔ Time and money are separate mechanisms with separate tests. Scoring weather as “covered” carries no money against something that costs money.
✔ Insurance under Clause 19 deals with physical loss and damage. The crane's gearbox is $2,800 of an $11,500 impact.
✔ The performance bond transfers risk from the employer to you. It is a cost, not a mitigation.
✔ Under a turnkey form the same register moves $31,200 into the column you fund yourself.

What's coming next

That closes the question this track set out to answer. We know what is on the register, what each line is worth, how the numbers combine, what the job should be holding, what can be done about each risk and who carries it when it happens.

All of which is true on the day it was written, and progressively less true every week afterwards.

The rock will be found or it will not. The wayleave will be confirmed or it will not. Every one of those closing dates from Week 4 will arrive, and when they do the register is either updated or it becomes a historical document that people quote in meetings.

Next week: what a register looks like when it is alive — triggers, review discipline, and how to revise a probability properly when the first three piles come up clean.