Impact of Hidden Risk to Cost – The Case of Flint Water Crisis and I35W Bridge Collapse

This is the continuation of Ross’s discussion on the earlier post, “Explaining the ‘Levels of Service-Cost-Risk Diagram’ through Analyzing the Flint Water Crisis.”

He explained further by adding the case of I35W Mississippi River Bridge collapse in August 2007.

So the follow-up effects within this diagram, what’s going to happen now or what’s already happening is a huge amount of money is going to get put into that water supply. So dollars are going to go up, hugely shown in the diagram.

So the levels of service is going to come up above that threshold of safety but it’s not going to come up above the threshold of trust because that’s been lost and that would take a very long time to get back. And ultimately the risk is going to come back and below the threshold of safety as well if it hasn’t already.

But what happens in our society when trust is lost?

In a dictatorship or a society like that, if you lose the trust of the community and/or the ruling party or the government, you might get chucked into prison or the person will be shot, or something like that.

In a Western democracy, what happens when trust is lost is that we have legislation and we have regulations and we have the cost of alternative action and we have litigation and we have societal cost and litigation might be a class action, so it could be quite expensive.

And we end up with a lot of mandated inspections and investigations. So the cost carries on for a very long time as result of levels of service falling below the safety and trust threshold. And hidden risk showing up.

And the interesting thing is, this diagram or picture here is, again from Wikipedia, the Mississippi River bridge, the I35 collapsed on 1 August 2007, 13 died, 145 injured and cost hundreds of millions of dollars to rectify that problem.

And there is a whole of reasons why that bridge collapsed. Lots of very detailed reports on it. But if you go back to the 70s and 80s, or even in 1960s in the engineering profession, there was a lot of factors of safety built into the engineering.

And a lot of people will say, oh you over-engineered things. And it cost too much and society can’t afford that now. And that may or may not be true.

But the thing I think is as we’ve sharpened our practice and as we’ve moved towards less cost and just in time and all those sorts of good things, and sweating infrastructure and getting the most out of it.

The fact that safety has come down, and that’s part of that hidden risk equation and we don’t know where we are. We might have, previously we have a factor of safety of 2, 3 or 4 and maybe it’s now only 1.25, but we don’t know. And that’s about that hidden risk.

And so one of our challenges as a profession and particularly in this Deighton Conference is we’re about optimized decision modeling at this conference. That’s what the software does among other things.

And it’s how the model and communicate those risk trade-offs and the factors of safety. And I think it’s so important not to forget about factors of safety and just how you’re going to model them.

Please Post Your Comments