NICMAR NICMAR
NICMAR INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH NICMAR INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH
SCHOOL OF DISTANCE EDUCATION SCHOOL OF DISTANCE EDUCATION
ASSIGNMENT ASSIGNMENT NICMAR/CODE OFFICE NICMAR/CODE OFFICE 1 1.. CCoouurrsse e NNoo.. :: PPGGPPM M 3311 2
2.. CCoouurrsse e ttiittllee :: PPrroojjeecct t RRiissk k MMaannaaggeemmeenntt
3
3.. AAssssiiggnnmmeennt t NNoo.. :: 11
4
4.. DDaatte e oof f DDiissppaattcchh ::
5
5.. LLaasst t DDaatte e oof f rreecceeiipptt ::
of Assignment at CODE
ASSIGNMENT ASSIGNMENT
For the successful implementation of a project, it is essential is that persons involved in For the successful implementation of a project, it is essential is that persons involved in
its implementation be sensitive to the risk involved in the
its implementation be sensitive to the risk involved in the project and formulate the mostproject and formulate the most
suitable structure for
suitable structure for thethe management of such risks. There management of such risks. There are certain variables andare certain variables and
uncertainties are common to most of the infrastructure projects. Many risk mitigation uncertainties are common to most of the infrastructure projects. Many risk mitigation
techniques are applied to infr
techniques are applied to infrastructure projects.astructure projects. Discuss in details the riDiscuss in details the risk management insk management in
construction with
SYNOPSIS
SYNOPSIS
Introduction
Introduction
Risk identification in the project
Risk identification in the project
Types of risk
Types of risk
Risk mitigation
Risk mitigation
Risk assessm
Risk as
sessment in a
ent in a proje
project
ct
o
o
Scope of the work
Scope of the work
o
o
Risk assessment sheet
Risk assessment sheet
o
o
Risk control measures
Risk control measures
INTRODUCTION
INTRODUCTION
The projectThe project of any industry of any industry depends upon the following depends upon the following uncertaintiesuncertainties 1
1.. TTiimmee 2
2.. MMoonneeyy 3.
3. MaManpnpowower er anandd 4
4.. RReessouourrcceess
It is also a
It is also a key factor to note that akey factor to note that as the project value incrs the project value increases, the riskeases, the risk also increases. Butalso increases. But as project duration decreases, the risk also increases. Thus on the successful running for a as project duration decreases, the risk also increases. Thus on the successful running for a project, optimum duration and optimum utili
project, optimum duration and optimum utilization of the resources are the most important tozation of the resources are the most important to be considered. Thus risk minimization is the most
be considered. Thus risk minimization is the most key role for project profit maximization bykey role for project profit maximization by any project man
any project managerager..
In the present assignment, I have tried to
In the present assignment, I have tried to assess the risks involved in the assess the risks involved in the project at which Iproject at which I have involved in my career. I have also explained the risk mitigation techniques u
have involved in my career. I have also explained the risk mitigation techniques u ndertakenndertaken by us
RISK IDENTIFICA
RISK IDENTIFICATION IN
TION IN THE PROJECT
THE PROJECT
RiRiskskididenentitifificacatitiononococcucursrsththrorougughh eaeachchofofththeetwtwoo phaphasesess ofofprprojoject ect dedevevelolopmpmenent:t: 1. Planning
1. Planning 2.
2. ConConstrstructuctionion 1. P
1. Plannlanningingphasphasee
In the planning phase risk is
In the planning phase risk is been identified from one of the followibeen identified from one of the following methods,ng methods, 1.1
1.1BraiBrainstonstormirmingng
ItIt is an effective method. Brais an effective method. Brainstorming can range from a small informainstorming can range from a small informal project team.l project team.
Effort for Effort for simpler projects to simpler projects to a full-blown CEVP a full-blown CEVP workshopworkshop andand
EffeEffective brainctive brainstormstorming requireing requires a s a skillskilleded FacilFacilitatoritator, working togethe, working together with ther with the projeprojectct
team and specialists who can bring additional expertise. team and specialists who can bring additional expertise. 1.2
1.2ChecklistChecklists and/s and/or Qor Questionnauestionnaires ires totospecialty specialty groupsgroups
ChecklChecklists/qists/questiuestionnaironnaires are a es are a quickquickandand easy-teasy-to-use techno-use technique but limiteique but limited in nature;d in nature;
they only deal with the items on
they only deal with the items on the list.the list.
Each projectEach project is unique; hence a standard liis unique; hence a standard list will often not st will often not capture the project specificapture the project specificc
risks of most concern. risks of most concern.
Nonetheless a checklist/questionnaire can spark thinking prior to a more formal Nonetheless a checklist/questionnaire can spark thinking prior to a more formal
brainstorming process brainstorming process 1.3
1.3ExaminatExamination of past simiion of past similar projeclar projectsts – – Lessons learned from
Lessons learned from past projects help past projects help us to avoid rus to avoid repeatingepeating mistakes; using pastmistakes; using past examples requires prudent
examples requires prudent and objective judgment, and objective judgment, since a previous since a previous project mayproject may be similar be similar butbut is nonetheless diffe
is nonetheless different because each new rent because each new project has unique rproject has unique requirements andequirements and features,features, inclu
includingdinguncertuncertaintiainties and riskses and risks 1.4
1.4CombinatiCombination of above methodon of above methods and/or otherss and/or others
It is quite l
It is quite likely that for most prikely that for most projects a combinationojects a combination of the above methods will of the above methods will be usedbe used to identify ri
2. Construction Phase
2. Construction Phase
Among the most
Among the most common risks encountered durcommon risks encountered during the construction ing the construction of a projectof a project by aby a civil
civil enginengineering eering contracontractor unctor under a stder a standardandard type of type of constrconstructiouctionn contrcontract,act, areare the folthe followinlowing:g: 1.
1. DesDesign erign errorrors, quas, quantintifificatication erroon errors.rs. 2.
2. DesigDesign changes fon changes found necesund necessarysary, or requi, or required by the ered by the employmployerer.. 3.
3. UnforUnforeseen phyeseen physical csical conditionditions or aons or artifrtificial icial obstrobstructiouctions.ns. 4.
4. UnforUnforeseen preseen price rice rises iises in laboun labour, r, matermaterials oials or planr plant.t. 5.
5. Theft Theft or damor damage to tage to the workhe works, or mas, or materiterials and eals and equipmenquipment on sitt on site.e. 6.
6. WWeatheeather conditir conditions, inclons, including fluding floods or excessoods or excessive hot weaive hot weatherther.. 7.
7. Delay or Delay or inabiinability tlity to obtain mao obtain materiaterials or equls or equipment ripment requirequired.ed. 8.
8. InabiInability to gelity to get the amount or qut the amount or quality oality of labour ref labour requirequired, or labour std, or labour strikesrikes.. 9.
RISK MITIGATION
RISK MITIGATION
The following are the ten ways toThe following are the ten ways to mitigate risk in construction projectsmitigate risk in construction projects
1.
1. EnsEnsure ture the adhe adequequacy oacy of prof projecject fut fundindingng
2.
2. ObtObtain main more gore geoteotechnechnicaical infl informormatiationon
3.
3. ConConduct duct conconstrstructuctabiabilitlity ry revieviewsews
4.
4. Set reSet realialististic contc contracract perft performormancance timee timess
5.
5. WWork ork & re& reworwork cok cost ist infornformatmationion
6.
6. InIntrtroduoduceced phad phase pse priricicingng
7.
7. PrePre-pl-plans fans for peror permitmits, utis, utilitlities & zoies & zoninningg
8.
8. PrePre-de-definfined rated rates, eques, equatiations & prons & procedocedureuress
9.
9. Use Use expeexperieriencenced prd projeoject pct persersonneonnell
10.
10. Use the contractiUse the contracting process as a ng process as a risk avoidance measurerisk avoidance measure
The above techniques are the most commonly
The above techniques are the most commonly used toused to prevent the risk in prevent the risk in any project.any project.
Ensure th
Ensure the adequae adequacy of prcy of project funoject funding ding
Certainly, all parties have a legitimate concern that there will be sufficient funds to Certainly, all parties have a legitimate concern that there will be sufficient funds to
design and construct the project. Owners also need protection against the risk of running out of design and construct the project. Owners also need protection against the risk of running out of money. such as that
money. such as that provided by a provided by a termination-for-convenience clause thattermination-for-convenience clause that expressly limits or expressly limits or precludes recovery of anticipated but unearned profits.
precludes recovery of anticipated but unearned profits.
Furthermore, owners need to understand, in advance, that changes and cost increases Furthermore, owners need to understand, in advance, that changes and cost increases are virtually inevitable. Accordingly, a reasonable contingency should
are virtually inevitable. Accordingly, a reasonable contingency should be incorporated into thebe incorporated into the budget to deal with inevitable changes and unexpected omissions.
Obtain more geotechnical information Obtain more geotechnical information
It should go without saying that the more information a contractor has about subsurface It should go without saying that the more information a contractor has about subsurface condit
conditions.ions. TheThe more more accurataccurate the thee bidbid -- and and less less likely likely will will be clbe claims aims for for diffediffering ring sitesite conditions.
conditions.
There is a decided trend
There is a decided trend toward (1) investing atoward (1) investing a little more money durlittle more money during projecting project planning and design for the purpose of obtaining more geotechnical information and (2) planning and design for the purpose of obtaining more geotechnical information and (2)
making all
making all of the geotechnical of the geotechnical information availinformation available to contractorable to contractors.s. Some owners and their counsel
Some owners and their counsel will argue that this open disclosur will argue that this open disclosur e will lead to claims if e will lead to claims if the geote
the geotechnical Ichnical Informatnformation is wrong.ion is wrong. This misseThis misses the basic points the basic point that if the bid was basethat if the bid was based ond on
less-less- than-complete infthan-complete information, that ormation, that becomes the babecomes the bargain.rgain. Accordingly,
Accordingly, if the actif the actual underground conditions arual underground conditions are worse than e worse than the geotechnicalthe geotechnical infor
informatiomation provn provided.ided. TheThe owner owner should should paypay because, because, if tif the conhe contracttractor had or had been abeen adviseddvised of theof the more severe conditions, it certainly would have increased its bid.
more severe conditions, it certainly would have increased its bid. Conduct constructability reviews
Conduct constructability reviews
Contractors sometimes complain that the designs they are
Contractors sometimes complain that the designs they are required to follow are notrequired to follow are not constructible or practica
constructible or practical. If this is the l. If this is the case,case, there may be delays and additional costs ithere may be delays and additional costs incurredncurred in com
in coming uing up witp with alth alternatiernatives.ves. EvenEven if thif the desie design is cgn is constronstructibluctiblee thethe owner owner may hamay have to ve to paypay more to get the same results. By having the plans and specifications reviewed for
more to get the same results. By having the plans and specifications reviewed for "constructability"
"constructability"
before contractors bid on
before contractors bid on them, owners have been able to modify the designs and thereby makethem, owners have been able to modify the designs and thereby make construction easier.
construction easier. Set rea
Set realistic conlistic contract pertract performance tiformance timesmes
If the contract performance time is insufficient. either it will cost more to do
If the contract performance time is insufficient. either it will cost more to do By having By having the plans and specifi
the plans and specificatiocations reviewedns reviewed for "construcfor "constructabiltabilityity " before contrac" before contractors bid on them,tors bid on them, owners have been able
owners have been able to modify the to modify the designs and thereby mdesigns and thereby make constructionake construction easier.easier. Either scenario is disadvantageous to the owner.
Either scenario is disadvantageous to the owner. Owners are avoiding these problemsOwners are avoiding these problems by obtaining contractor advice and input on
by obtaining contractor advice and input on setting a realistic time to allow for constrsetting a realistic time to allow for construction of uction of a.given project
a.given project
Work & rework cost information Work & rework cost information The owner can require as
The owner can require as a contract obligation that the contractor make full disclosurea contract obligation that the contractor make full disclosure of its cost estimates
self-performed work and even overhead and p
self-performed work and even overhead and profit. In doing so, the owner and rofit. In doing so, the owner and its staff canits staff can better assure themselves that no significant mistakes have been made in pricing .the work and better assure themselves that no significant mistakes have been made in pricing .the work and
that allowances and alternatives are reasonable. that allowances and alternatives are reasonable. Introdu
Introduced phasced phase pricine pricing g As the design
As the design is being developed, each is being developed, each phase of the designphase of the design can be provided tcan be provided to theo the contr
contractor for reviactor for review, analysiew, analysis ands and submisssubmissionion of progresof progressive cost estimatsive cost estimates. Obviousles. Obviouslyy contractors may
contractors may talk at this talk at this intrusion into their intrusion into their pricing domain.pricing domain. Howeve
However,r, inin order order to wito win the pn the projeroject,ct, the cthe contracontractor witor will be ll be moremore likely to agree to thislikely to agree to this process which in the end will reduce the likelihood for cost-overrun claims.
process which in the end will reduce the likelihood for cost-overrun claims. Pre-pla
Pre-plans for pns for permits, utermits, utilities & zonilities & zoning ing
Given the various regulatory requirements that have
Given the various regulatory requirements that have to be complied with in the courseto be complied with in the course of designing and constructing a project, it is
of designing and constructing a project, it is obvious that, if these requirements are not knownobvious that, if these requirements are not known and considered in advance delays will result.
and considered in advance delays will result.
To avoid this astute owners and their engineers are now beginning to specifically To avoid this astute owners and their engineers are now beginning to specifically identify permitting requirements in advance of bidding and signing the contracts
identify permitting requirements in advance of bidding and signing the contracts Pre-def
Pre-defined rateined rates, equatios, equations & procns & procedureeduress In order to el
In order to eliminate many issues from the iminate many issues from the contract administration phase,contract administration phase, smart ownerssmart owners will specify clear and accurate formulae or methods to
will specify clear and accurate formulae or methods to predetermine values for disputablepredetermine values for disputable items. Home office overhead rates, although subject to wide variation within the industry, can items. Home office overhead rates, although subject to wide variation within the industry, can be preset and a contract generally accepted manual for determining the equipment rates to be be preset and a contract generally accepted manual for determining the equipment rates to be
use
usedd in, prin, priciicingng chachange ordnge ordersers..
It is equally important for the contract to contain very clear provisions with respect to It is equally important for the contract to contain very clear provisions with respect to how change orde
how change orders willrs will be processebe processed and what informd and what informationation should be inclshould be included in a request for uded in a request for change orders.
change orders. The same
The same is true for fis true for farceaceount provisions; which would enable tarceaceount provisions; which would enable the contractor to behe contractor to be paid on a timely
paid on a timely is for disputed work, pending negotiation of a change order modification. Alsois for disputed work, pending negotiation of a change order modification. Also give som
give some considee consideratiration to inclon to includinguding as a unitas a unit price. A price. A per diem vper diem value for ealue for extended prxtended projectoject time.
time.
In the event of an owner-caused delay•.this value could be included in any cbange order In the event of an owner-caused delay•.this value could be included in any cbange order carrying with it entitlement to an extension of time.
Use experienced project personnel Use experienced project personnel
No matter how enlightened the management and allocation of risk
No matter how enlightened the management and allocation of risk •.the project•.the project personnel
personnel (i.e.. people) will still have to design.(i.e.. people) will still have to design. BuildBuild and adminiSterand adminiSter the project, Experiencethe project, Experience counts,
counts, particularly for biparticularly for big projects With a constrg projects With a construction boom underway. Design anduction boom underway. Design and construction firms are often maxed out in terms of ex
construction firms are often maxed out in terms of ex perienced project managers andperienced project managers and superintendents. Notwithstanding this
superintendents. Notwithstanding this reality. no designreality. no design flrm or contractor wantflrm or contractor wants to lose a goods to lose a good job.
job.
Consequently, many projects are being led and managed by inade
Consequently, many projects are being led and managed by inadequately trained andquately trained and inexperienced personnel. w
inexperienced personnel. which inevitably hich inevitably leadsleads to problems. to problems. claims. disputes claims. disputes andand
terminations. No owner, who has the leverage in a megaproject to do so. should pass up the terminations. No owner, who has the leverage in a megaproject to do so. should pass up the opportunity to investigate the credentials and backgrounds of the
opportunity to investigate the credentials and backgrounds of the key parties' personnel andkey parties' personnel and require, as a matter
require, as a matter of contract, that only experienced projof contract, that only experienced project managers and superintendentsect managers and superintendents will run the high-profile project.
will run the high-profile project.
Use the contracting process as a risk avoidance measure Use the contracting process as a risk avoidance measure
The contract documents are an ea
The contract documents are an early opportunity to anticipate. define and deal withrly opportunity to anticipate. define and deal with potential issues and thereby avoid disputes.
potential issues and thereby avoid disputes.
Essentially. the contracting process is a "what if'
Essentially. the contracting process is a "what if' exercise, whereby the parties attemptexercise, whereby the parties attempt to determine what may go wrong, what issues may arise between the parties, and the best way to determine what may go wrong, what issues may arise between the parties, and the best way to resolve these challenges, in advance, by informed and enlightened risk allocation. This to resolve these challenges, in advance, by informed and enlightened risk allocation. This approach
approach is of course, the American way is of course, the American way of doing things, and at of doing things, and at least two downsides to aleast two downsides to a comprehensive contract are typically a lengthy document and
SCOPE OF THE PROJECT
SCOPE OF THE PROJECT
Name of the projectName of the project :: Metro Rail Project ProposalMetro Rail Project Proposal
L
Looccaattiioonn :: MMuummbbaaii, , IInnddiiaa
P
Prroojjeecct t ddeeffiinniittiioonn :: TThhe e GGoovveerrnnmmeennt t oof f IInnddiia a hhaas s ddeecciiddeed d tthhe e iinnccrreeaassee
the
the infrastructure facility infrastructure facility in India, so as to incrin India, so as to increase economic growth of the nation byease economic growth of the nation by
increasing the import
increasing the import & export facility& export facility..
P
Prroojjeecct t dduurraattiioonn :: 3377665 5 ddaayyss
T
Tyyppe e oof f ccoonnttrraacctt :: IItteem m rraatte e ccoonnttrraacctt
P
Prroojjeecct t ffuunnddiinngg :: FFiinnaanncce e aarrrraannggeed d bby y tthhe e GGoovveerrnnmmeennt t oof f IInnddiiaa
D
Deessiiggn n rreessppoonnssiibbiilliittyy :: RReennoovvaattiioon n oof f eexxiissttiinng g ssttrruuccttuurrees s nneeeedds s tto o bbee
considered considered
P
Prriicce e fflluuccttuuaattiioonn :: NNoot t aalllloowwaabbllee
E
Exxtteennssiioon n oof f ttiimmee :: NNoot t ppeerrmmiitttteedd
L
Liiqquuiiddaatteed d ddaammaaggeess :: 22% % oof f tthhe e ccoonnttrraacct t vvaalluue e ppeer r wweeeek k oof f tthhe e pprroojjeecctt
Limit upto 15% of the contract value Limit upto 15% of the contract value
Project Summary Project Summary
The project considered for analysis is the construction of an underground corridor for metro rail The project considered for analysis is the construction of an underground corridor for metro rail operations in the capital city of an emerging economic nation in South Asia. Phase-I of the project is operations in the capital city of an emerging economic nation in South Asia. Phase-I of the project is about 65 kms with 59 stations. The estimated capital cost of Phase-I is about INR 105 billion. The about 65 kms with 59 stations. The estimated capital cost of Phase-I is about INR 105 billion. The project
project under under study study for for this this research research work work is is a a part part of of Phase Phase I. I. The The scope scope of of work work is is the the design design andand constr
constructiouction n of a of a 6.6 6.6 km km undergunderground metro corridoround metro corridor with r with six undergrosix underground statiound stations and ns and a twin a twin tunneltunnel system. The underground stations are referred to as S
system. The underground stations are referred to as S11, , SS22,…. S,…. S66. Here S. Here S66 is the terminal stationis the terminal station equipp
equipped with an over-run tunnel (wheed with an over-run tunnel (where an up re an up train can be convertrain can be converted to a down train)ted to a down train). . The clienThe client is at is a public sector company
public sector company floated jointlyfloated jointly by the State by the State and and Central Central Government.Government. Th
The e prprinincicipapal l concontrtracactotor r is is a a JoiJoint nt VeVentnturure e (JV(JV) ) of of ththreree fore foreigeign contn contraractctorors and twos and two domestic contractors. The type of contract is a Design Build Turnkey (DBT) where the principal domestic contractors. The type of contract is a Design Build Turnkey (DBT) where the principal contra
contractor is ctor is requirrequired to ed to design the design the undergrunderground corridor and execute the project. The project cost for ound corridor and execute the project. The project cost for the execution of 6.6 kms is about INR 18 billion. The contract period is about five years (exclusively the execution of 6.6 kms is about INR 18 billion. The contract period is about five years (exclusively for execution).
for execution). Table 1:
Table 1: Major ActMajor Activities and theiivities and their Time Estimates r Time Estimates in thein the UndUndererggrroundound Corridor Construction Project (Terminal Station
Corridor Construction Project (Terminal Station SS6)6)
Activit
Activit DescriptiDescripti ImmediateImmediate DuratioDuratio A
A FeasibFeasibilit ilit studiesstudies -- 18751875 00 18751875 00 18751875 B
B Desi nDesi n A A 2929 1188775 5 2121770 0 1199885 5 22228800 C
C TecTechnohnolo lo seseleclectitionon A A 9090 1188775 5 1199665 5 1188775 5 11996655 D
D Traffic diversionTraffic diversion B B 4747 2222880 0 2727555 5 2222880 0 22775555 E
E UtiUtilit lit divediversirsionon C C 3131 1199665 5 2222880 0 1199665 5 22228800 F
F SurSurve ve worworksks B B 2929 2222880 0 2255770 0 2288221 1 33111111 G
G ShShouloulder der / / KiKin n ilileses D D 3535 2277555 5 3311111 1 2277555 5 33111111 H
H TiTimbmber er la la inin C C 2424 1199665 5 2222005 5 2288771 1 33111111 II SSooiil l eexxccaavvaattiioon n G G F F HH 3333 3311111 1 3344111 1 3311111 1 33444411 J
J Rock excavationRock excavation L L 1616 2266555 5 2828220 0 3322776 6 33444411 K
K Fabrication and erection of Fabrication and erection of C C 1717 1199665 5 2121335 5 2299441 1 33111111 L
L Fabrication and erection of steelFabrication and erection of steel C C 6969 1199665 5 2626555 5 2244221 1 33111111 M
M Rock anchor installationRock anchor installation N N 2828 2222880 0 2525665 5 3311556 6 33444411 N
N ShotcrShotcretin etin & & rock rock boltinboltin L L 1212 2266555 5 2277775 5 2288771 1 22999911 O
O SubflSubfloor oor draina draina ee 1717 2211110 0 2222880 0 2288221 1 22999911 P
P WWaatteer r rrooooffiin n I I K K J J MM 1212 3344441 1 3355661 1 3344441 1 33556611 Dia hra
Dia hra m wall constructionm wall construction C C 1414 1199665 5 2121110 0 2266004 4 22774499 R
R To To down down constrconstructionuction 1212 2211110 0 2222332 2 2277449 9 22887711 S
S Permanent structurePermanent structure N N 5757 2222880 0 2828550 0 2299991 1 33556611 T
T Mechanical / ElectricalMechanical / Electrical PP, , 2222 3355661 1 3377886 6 3355661 1 33778866 U
U BackfiBackfillin llin & & restorarestoration tion worksworks N N 2222 2222880 0 2255005 5 3355661 1 33778866 ES
METHODOLOGY METHODOLOGY
Risk
Risk Analysis Analysis by by Expected Expected Value Method Value Method (EVM)(EVM)
Assume a network of
Assume a network of determideterministic time and cost. We nistic time and cost. We also assume that the also assume that the criticritical pathcal path model network has “N” activities which are indicated by j = (1…… N) and there are “M” risk model network has “N” activities which are indicated by j = (1…… N) and there are “M” risk sources indicated by i = (1…..M). We extend the work of Roetzheim (1988) and Nicholas sources indicated by i = (1…..M). We extend the work of Roetzheim (1988) and Nicholas (2007), and explain, in this section, the concept of risk analysis by the Expected Value (2007), and explain, in this section, the concept of risk analysis by the Expected Value Method (EVM).
Method (EVM).
Define the variables as follows: Define the variables as follows:
METHODOLOGY METHODOLOGY
Risk
Risk Analysis Analysis by by Expected Expected Value Method Value Method (EVM)(EVM)
Assume a network of
Assume a network of determideterministic time and cost. We nistic time and cost. We also assume that the also assume that the criticritical pathcal path model network has “N” activities which are indicated by j = (1…… N) and there are “M” risk model network has “N” activities which are indicated by j = (1…… N) and there are “M” risk sources indicated by i = (1…..M). We extend the work of Roetzheim (1988) and Nicholas sources indicated by i = (1…..M). We extend the work of Roetzheim (1988) and Nicholas (2007), and explain, in this section, the concept of risk analysis by the Expected Value (2007), and explain, in this section, the concept of risk analysis by the Expected Value Method (EVM).
Method (EVM).
Define the variables as follows: Define the variables as follows:
L
Lijij : : LLiikkeelliihhooood d oof f iithth risk source for jrisk source for jthth activityactivity W
Wijij : : WWeeiigghhttaagge e oof f iithth risk source for jrisk source for jthth activityactivity IIijij : : IImmppaacct t oof f iithth risk source for jrisk source for jthth activityactivity CLF
CLF j j : : CoCompmposositite e LiLikekelilihohood od FaFactctor or fofor r jjthth activityactivity CIF
CIF j j : : CoCompmpososiite te IImpmpacact t FFacactotor r ffor or jjthth activityactivity BTE
BTE j j : : BBaasse e TTimime e EEssttiimmaatte e ffoor r jjthth activityactivity BCE
BCE j j : : BBaasse e CCoosst t EEssttiimmaatte e ffoor r jjthth activityactivity CC
CC j j : : CCoorrrreeccttiivve e CCoosst t ffoor r jjthth activityactivity CT
CT j j : : CCoorrrreeccttiivve e TTiimme e ffoor r jjthth activityactivity RC
RC j j : : RRiissk k CCoosst t ffoor r jjthth activityactivity RT
RT j j : : RRiissk k TTiimme e ffoor r jjthth activityactivity EC
EC j j : : EExxppeecctteed d CCoosst t ffoor r jjthth activityactivity ET
Ba
Base se titime me esestitimamate te (BT(BTE) E) of of ththe e prprojeoject ct is is ththe e esestimtimatated ed babasisic c prprojoject ect durduratiationon deter
determined by critical path mined by critical path method of the method of the projeproject ct networnetwork. Similarlyk. Similarly, the , the estimaestimated basic ted basic costcost of project determined by the cost for each activity is termed as the base cost estimate (BCE). of project determined by the cost for each activity is termed as the base cost estimate (BCE). The BTE and BCE data of all the major activities of the project have been obtained as per the The BTE and BCE data of all the major activities of the project have been obtained as per the detailed construction drawings, method statement and specifications for the works collected detailed construction drawings, method statement and specifications for the works collected from the project. The corresponding corrective time (CT) or the time required correcting an from the project. The corresponding corrective time (CT) or the time required correcting an activity in case of a failure due to one or more risk sources for each activity and their activity in case of a failure due to one or more risk sources for each activity and their corresponding corrective cost (CC) have been estimated based on the personal experiences and corresponding corrective cost (CC) have been estimated based on the personal experiences and have been tabulated. An activity may have several risk sources each having its own likelihood have been tabulated. An activity may have several risk sources each having its own likelihood of occurrence. The value of likelihood should range between 0 through 1.
of occurrence. The value of likelihood should range between 0 through 1. The likelihood of failure (L
The likelihood of failure (Lijij) defined above, of the identified risk sources of each) defined above, of the identified risk sources of each act
activiivity ty were were obtobtaineained d thrthrougough h a a quesquestiotionnainnaire re s s u u r r v v e e y y . . The The tartarget get resrespondpondentents s werweree experts
experts and profeand professionassionals involls involved in and associated wived in and associated with the project under anth the project under analysis and alsoalysis and also other similar proj
other similar projects. The ects. The correscorresponding weightagponding weightage e (W(Wijij) of each activity has also been) of each activity has also been obt
obtainained ed frofrom thm the e feefeedbacdback k of of the the quesquestiotionnannaire ire sursurvey vey circirculculateated d amoamong ng expeexpertsrts. . TheThe summation of the
summation of the weightages should be equal to 1.weightages should be equal to 1. M
M ∑
∑ WWijij = = 1 1 ffoor r aalll l j j ( ( j j = = 1 1 ……. . NN) ) ……. . ((11)) ii 11
The weightages can be based on local priority (LP) where the weightages of all the The weightages can be based on local priority (LP) where the weightages of all the sub-activities of a particular activity equal 1. Also, weightages can be based on global priority activities of a particular activity equal 1. Also, weightages can be based on global priority (GP) wh
(GP) where the weightere the weightages of all the activiages of all the activities of the projecties of the project equal 1. t equal 1. The mean of all theThe mean of all the responses should desirably be considered for analysis. Inconsistent responses can be modified responses should desirably be considered for analysis. Inconsistent responses can be modified using a second round questionnaire survey using the Delphi technique. The next step is to using a second round questionnaire survey using the Delphi technique. The next step is to compute the risk cost (RC) and risk time (RT) of the activities of the project. RC and RT for compute the risk cost (RC) and risk time (RT) of the activities of the project. RC and RT for an activity can be obtained from the following relationship:
an activity can be obtained from the following relationship: Risk Cost f
Risk Cost for actior activityvity j (RC)j (RC) j j = (CC)= (CC) j j x x LL j j for all j.for all j. ……… … ((22)) Risk Time for activity j (RT)
Risk Time for activity j (RT) j j = (CT)= (CT) j j x x LL j j for all jfor all j ……… … ((33))
The total risk time for an activity is the summation of the risk time of all the sub The total risk time for an activity is the summation of the risk time of all the sub activities along the critical path.
The
The liklikelielihood hood (L(Lijij) ) of of alall l ririsk sk sosoururces for each ces for each acactitivivity j ty j cacan n be be comcombibinened d anandd expressed as a single composite likelihood factor (CLF)
expressed as a single composite likelihood factor (CLF) j j. The weightages (W. The weightages (Wijij) of the risk ) of the risk sources of the activities are multiplied with their respective likelihoods to obtain the CLF sources of the activities are multiplied with their respective likelihoods to obtain the CLF for the activity.
for the activity.
The impact of a risk can be expressed in terms of the effect caused by the risk to the The impact of a risk can be expressed in terms of the effect caused by the risk to the time and cost of an activity. This time impact and cost impact can be considered as the risk time and cost of an activity. This time impact and cost impact can be considered as the risk time and risk cost of the activity. A similar computation as that of likelihood can be done for time and risk cost of the activity. A similar computation as that of likelihood can be done for obt
obtainaining a ing a singsingle le combcombineined d compcomposiosite te impimpact act facfactor tor (CI(CIF) F) by by conconsidesiderinring g the the weigweightehtedd average as per
average as per the relationship given below:the relationship given below:
M M Composite Impact Factor (CIF)
Composite Impact Factor (CIF) j j = = ∑∑ IIijij WWijij ………(5)(5) ii 11
M M 0 ≤ I
0 ≤ Iijij ≤ 1 and≤ 1 and ∑∑WWijij = 1 for all j= 1 for all j.. ii 11
Risk consequence or severity can be expressed as a function of risk likelihood and Risk consequence or severity can be expressed as a function of risk likelihood and ris
risk impak impact. ct. Thus the numeThus the numerirical valcal value will ranue will range from 0 to ge from 0 to 1. This seve1. This severitrity can also bey can also be expressed in terms of qualitative rating as “no severity” for value 0 and “extremely high expressed in terms of qualitative rating as “no severity” for value 0 and “extremely high severity” for value 1. The numerical value of the Risk Severity (RS) is obtained from the severity” for value 1. The numerical value of the Risk Severity (RS) is obtained from the below mentioned relationship:
below mentioned relationship: Risk Conseq
Risk Consequence / Severiuence / Severityty (RS)(RS) j j = L= L j j x Ix I j j ffoor r aalll l j j ……... . ((66))
The risk consequence derived from this equation measures how serious the risk is to The risk consequence derived from this equation measures how serious the risk is to project performance.
project performance. Small Small values values represent unrepresent unimportant risks important risks that that might be might be ignored and ignored and largelarge values represent important risks that need to be treated.
values represent important risks that need to be treated. The expecte
The expected d coscost t (EC(EC)) j j and and expeexpectected d timtime e (ET(ET)) j j for each for each proproject activiject activity ty andand subs
subsequeequently ntly the the comcomputaputatiotion n of of the the expeexpectected d proprojecject ct cost ost and and timtime we was as carcarrieried od out ut frfromom the concept of the expected value (EV) of a decision tree analysis.
the concept of the expected value (EV) of a decision tree analysis. Expected value (EV) = probability
Expected Cost (EC)
Expected Cost (EC) j j = = LL j j (BCE(BCE j j + + CCCC j j) + (1-L) + (1-L j j)) BCE
BCE j j = BCE= BCE j j + CC+ CC j j (L(L j j)) = BCE
= BCE j j + RC+ RC j j ffoor r aalll l jj. . …………... . ((77)) Expected Time (ET)
Expected Time (ET) j j = L= L j j (BTE(BTE j j + CT+ CT j j) + (1-L) + (1-L j j) BTE) BTE j j = BTE
= BTE j j + CT+ CT j j (L(L j j) ) = = BBTTEE j j + RT+ RT j j ffoor r aalll l jj. . …………. (. (88))
CASE ANALYSIS CASE ANALYSIS
The sample stretch under analysis consists of a 530 metre(m) cut and cover tunnel The sample stretch under analysis consists of a 530 metre(m) cut and cover tunnel connecting station S
connecting station S55 and Sand S66, a 290m S, a 290m S66 station box and a 180m cut and cover over runstation box and a 180m cut and cover over run tunnel adjoining the S
tunnel adjoining the S66 station box. Sstation box. S66 station being the terminal station, the down trainsstation being the terminal station, the down trains towards this station after leaving station S
towards this station after leaving station S55 will travel through the 530m cut and cover will travel through the 530m cut and cover tunnel and
tunnel and enter the platforms of the terminal statienter the platforms of the terminal station Son S66. After the commuters vacate the train. After the commuters vacate the train at this terminal station, this down train will travel through the 180m over run tunnel and will at this terminal station, this down train will travel through the 180m over run tunnel and will be
be converted into an up line train which will travel from converted into an up line train which will travel from station Sstation S66 to Sto S11..
The activities of the sample stretch under analysis consist of the installation and erection The activities of the sample stretch under analysis consist of the installation and erection of temporary supporting and retaining structures to enable construction by cut and cover of temporary supporting and retaining structures to enable construction by cut and cover technology and for the construction of permanent structures like tunnels and station boxes technology and for the construction of permanent structures like tunnels and station boxes which are RCC single boxes / twin boxes for tunnels and RCC boxes with intermediate which are RCC single boxes / twin boxes for tunnels and RCC boxes with intermediate concourse slab for station boxes.
concourse slab for station boxes.
We have considered some basic assumptions during the analysis. These assumptions We have considered some basic assumptions during the analysis. These assumptions are (i) the maximum cost overrun permissible is 25 % of the basic cost estimate beyond which are (i) the maximum cost overrun permissible is 25 % of the basic cost estimate beyond which th
the e prprojojecect t bebecocomemes s leless ss fefeasasibible le anand d (i(ii) i) ththe e mamaxiximumum m pepermrmisissisiblble e titime me ovovererrurunn for infrastructure projects is about 30% of the base time estimate, beyond which the feasibility for infrastructure projects is about 30% of the base time estimate, beyond which the feasibility of the project reduces.
Table 2: Identification and Classification of Risks Involved in the Project Table 2: Identification and Classification of Risks Involved in the Project
S.
S. NoNo. . RisRisk k ClassificationClassification Nomenclature Nomenclature Risk Risk Description Description 1
1 FFPPR R FeasibiFeasibilitylity Project RiProject Risk sk 2
2 PEPR PEPR 11 Pre execution Project Risk – Design RisksPre execution Project Risk – Design Risks 3
3 PEPR PEPR 22 Pre execution Project Risk – Technology RisksPre execution Project Risk – Technology Risks 4
4 EPR EPR 11 Execution Project Risk – Risks in trafficExecution Project Risk – Risks in traffic 5
5 EPR EPR 22 Risks in utility diversion worksRisks in utility diversion works 6
6 EPR EPR 33 Risks in survey worksRisks in survey works 7
7 EPR EPR 44 Risks in soldier piling and king piling works.Risks in soldier piling and king piling works. 8
8 EPR EPR 55 Risks in timber lagging works.Risks in timber lagging works. 9
9 EPR EPR 66 Risks in soil excavation worksRisks in soil excavation works 10
10 EPR EPR 77 Risks in rock excavation worksRisks in rock excavation works 11
11 EPR EPR 88 Risks in installation of construction decksRisks in installation of construction decks 12
12 EPR EPR 99 Risks in installation of steel strutsRisks in installation of steel struts 13
13 EPR EPR 1010 Risks in installation of rock anchorsRisks in installation of rock anchors 14
14 EPR EPR 1111 Risks in shotcreting and rock bolting worksRisks in shotcreting and rock bolting works 15
15 EPR EPR 1212 Risks in subfloor drainage worksRisks in subfloor drainage works 16
16 EPR EPR 1313 Risks in waterproofing worksRisks in waterproofing works 17
17 EPR EPR 1414 Risks in diaphragm wall constructionRisks in diaphragm wall construction 18
18 EPR EPR 1515 Risks in top down constructionRisks in top down construction 19
19 EPR EPR 1616 Risks in permanent structure worksRisks in permanent structure works 20
20 EPR EPR 1717 Risks in mechanical and electrical installationRisks in mechanical and electrical installation 21
Application
Application of of EVM for EVM for Risk Risk Analysis Analysis of of the the Project Project
The network diagrams consisting of the major activities of the project have been drawn The network diagrams consisting of the major activities of the project have been drawn and their activity times (early start, early finish, late start and late finish) have been calculated and their activity times (early start, early finish, late start and late finish) have been calculated by
by forward and forward and backward backward pass pass and and then then their their critical critical path path has has been been tracked tracked out. out. The The durationduration along the critical path is the longest duration path and is considered as the duration of the along the critical path is the longest duration path and is considered as the duration of the project.
project. The The BCE BCE and and BTE BTE of of each each activity activity and and sub-activity sub-activity of of the the project project have have beenbeen calculated as per the actual site data. The corrective cost and time for each activity have been calculated as per the actual site data. The corrective cost and time for each activity have been assumed as a certain percentage (25% to 75%) of BCE and BTE respectively depending upon assumed as a certain percentage (25% to 75%) of BCE and BTE respectively depending upon the severi
the severityty and casualty causeand casualty caused by that risk.d by that risk.
Each activity of the project as presented in figure 1 has been analyzed at the Each activity of the project as presented in figure 1 has been analyzed at the sub-activity level for computation of RC, RT, EC, ET and risk severity. The detailed analysis activity level for computation of RC, RT, EC, ET and risk severity. The detailed analysis for computation
for computation of risk cost and time for all the activities of the project is of risk cost and time for all the activities of the project is presented below.presented below. Table 4:
Table 4: Expected Cost and TimExpected Cost and Time Analysis for e Analysis for the Projectthe Project
Activity
Activity (CLF)(CLF) j j
Bas
Basee CostCost Est Estiimatmatee (BCE)j (BCE)j INR INR Co
Correcrrecttiivvee Cost Cost (CC)j (CC)j INR. INR. R R iisk sk Cost Cost (RC)j (RC)j INR INR Bas Basee T Tiimmee Est Estiimatmatee (BTE)j (BTE)j Co Cor.r. T Tiimmee (CT)j (CT)j Days Days R R iisk sk T Tiimmee (RT)j (RT)j Days Days Exp Exp Cost Cost (EC) (EC) j j Exp Exp T Tiimmee (ET)j (ET)j Days Days EC EC % % H Hiigg h herer ET ET % % H Hiigg h herer A A 00..33448 8 22440 0 60 60 2200..888 8 1188775 5 1111330 0 339933..224 4 226600. . 22226688. . 8 8 2200..99 B B 00..33556 6 11110 0 32 32 1111..33992 2 22995 5 22445 5 8877..222 2 112211. . 338822..2 2 1100. . 2299..55 C C 00..227 7 440 0 110 0 22..7 7 990 0 85 85 2222..995 5 4 4 111122..9 9 66..7 7 2255.. D D 00..33119 9 550 0 1111..9 9 33..7799661 1 44775 5 33555 5 111133..225 5 5533..7 57 58888..2 2 77..5 5 2233..88 E E 00..22662 2 11000 0 8282..4 4 2211..5588888 8 33115 5 22667 7 6699..995 15 12211..5 5 338844..9 9 2211. . 2222..22 F F 00..11886 6 110 0 88..666 6 11..661100776 6 22990 0 22447 7 4455..994 14 111..661 1 333355..9 9 1166. . 1155..88 G G 00..228 8 22220 0 117766..44665 5 4499..4411002 2 35356 6 33556 6 9999..668 8 226699..4 4 445555..6 6 2222. . 22 H H 00..22552 2 220 0 1155..99775 5 44..0022557 7 22440 0 11880 0 4455..336 6 2424..0 20 28855..3 3 2200. . 1188.. II 00..33777 7 11550 0 11222 2 4455..99994 4 33330 0 22005 5 7777..229 9 119955. . 440077..2 2 3300. . 2233..44 JJ 00..44119 9 880 0 556 6 2233..44664 4 11665 5 14140 0 5588..666 6 110033. . 222233..6 6 2299. . 3355..55 K K 00..33998 8 11220 0 11008 8 4422..99884 4 11770 0 11113 3 4444..997 7 116622. . 221144..9 9 3355. . 2266..44 L L 00..33667 7 33000 0 24245 5 8899..99115 5 66990 0 48485 5 11778 8 338899. . 8 8 2299. . 2255.. M M 00..33445 5 550 0 4499..2 2 1166..99774 4 22885 5 22550 0 8866..225 5 6666..9 9 337711..2 2 3333. . 3300..22 N N 00..33443 3 880 0 7700..3 3 2244..1111229 9 22660 0 11885 5 6633..446 16 10044..1 1 332233..4 4 3300. . 2244..44 O O 00..33006 6 660 0 558 8 1177..77448 8 11770 0 11330 0 3399..778 8 7777..7 7 220099..7 7 2299. . 2233.. P P 00..33884 4 11220 0 8833..2 2 3311..9944888 8 12120 0 995 5 3366..448 18 15511..9 9 115566..4 4 2266. . 3300.. 0 0..22778 8 660 0 5599..2 2 1166..4455776 6 11445 5 11115 5 3311..997 7 7766..4 14 17766..9 9 2277. . 2222..00 R R 00..22227 7 880 0 7777..2 2 1177..5522444 4 11222 2 888 8 1199..998 8 9977..5 15 14411..9 9 2211. . 1166..33 S S 00..22223 3 88000 0 559966..5 5 113333..00119 9 55770 0 44115 5 9292..555 5 993333..0 0 666622..5 5 1166. . 1166..22 T T 00..33998 8 33000 0 221177..7 7 8866..6644446 6 22225 5 11880 0 7171..664 4 338866..6 6 229966..6 6 2288. . 3311..88 U U 00..33554 4 22550 0 118899..3 3 6677..0011222 2 22225 5 11663 3 5577..7 7 331177..0 0 228822..7 7 2266. . 2255..66 TOTAL TOTAL 3322440 0 2233229 9 772299..22002 2 3377886 6 888844..447 7 33996699. . 44667700. . 2222. . 2233..33 As
studies) the CLF is 0.348 as obtained from the feedback of the questionnaire survey (refer studies) the CLF is 0.348 as obtained from the feedback of the questionnaire survey (refer appendix 2). The base cost estimate (BCE)
appendix 2). The base cost estimate (BCE) j j for the activity feasibility studies (A) is INR for the activity feasibility studies (A) is INR 240 Million, the corrective cost (CC)
240 Million, the corrective cost (CC) j j is INR 60 Million (assumed in consultation withis INR 60 Million (assumed in consultation with experts); the base time estimate (BTE)
experts); the base time estimate (BTE) j j is 1875 days; the corrective time (CT)is 1875 days; the corrective time (CT) j j is 1130is 1130 days (assumed in consultation with experts).
days (assumed in consultation with experts).
As per equations (2) and (3), Risk cost (RC)
As per equations (2) and (3), Risk cost (RC) j j = 0.348 x 60 x 10= 0.348 x 60 x 1066 = INR 20.88 x 10= INR 20.88 x 1066;; Risk time (RT)
Risk time (RT) j j = 0.348 x 1130 days = 393.24 days. Thus as per equations (7) and (8), the= 0.348 x 1130 days = 393.24 days. Thus as per equations (7) and (8), the expected cost (EC)
expected cost (EC) j j = BCE= BCE j j + + RCRC j j = INR 260.88 Million, expected time (ET)= INR 260.88 Million, expected time (ET) j j = BTE= BTE j j ++ RT
RT j j = 2268.24 days.= 2268.24 days. Table 5:
Table 5: Project Project Expected Expected Cost aCost and Time nd Time Analysis [Analysis [Based on Based on QuestionQuestionnairenaire Survey]Survey]
Base Base Cost Cost Risk Risk Cost Cost Base Base Time Time Risk Risk Time Time Expected Expected Cost
Cost (INR (INR
Expecte Expecte d Time d Time 3240 3240 729.2729.2 37863786 888844..447 7 39396699..2 2 44667700..4477
Thus as per the analysis, the
Thus as per the analysis, the EC EC of the project isof the project is 22.51 % higher than the BCE 22.51 % higher than the BCE of theof the project. The
project. The ET ET of the project is 23.36of the project is 23.36 % higher than the BTE % higher than the BTE . . AAs ps peer tr thhe be baassiicc assumptions considered for risk management analysis the cost overrun should not exceed 25% assumptions considered for risk management analysis the cost overrun should not exceed 25% of the estimated base cost and the time overrun should not be more than 30% of the estimated of the estimated base cost and the time overrun should not be more than 30% of the estimated base
base time. time. Exceeding Exceeding these these limits limits would would increase increase the the chances chances of of the the project project becoming becoming lessless fea
feasiblsible. e. The The risrisk k manmanagemagement analysent analysis is prepredicdicts ts thathat t the the expecexpected cost ted cost of of the the proproject isject is 22.51% higher than the estimated base cost. This situation is highly alarming as it is the upper 22.51% higher than the estimated base cost. This situation is highly alarming as it is the upper lim
limit it of of the the perpermissmissible cost ible cost overoverrunrun. . IIt t reqrequireuires s metmeticuiculoulous s planplanninning g and and propproper er risrisk k mitigation measures to enhance the probability of success of the project. The expected time mitigation measures to enhance the probability of success of the project. The expected time predicted
predicted from from the the analysis analysis is is 23.36% 23.36% higher higher than than the the estimated estimated base base time time which which is is close close toto the
the uppeupper r limlimit it of of the the permpermississiblible e timtime e oveoverrrrun. un. Thus Thus it it is is essessentential ial to to judjudiciiciously ously folfollowlow the
the risk risk mitigation measures mitigation measures to ensure to ensure that the prthat the project is oject is completed within completed within the scheduled the scheduled timetime frame.
Risk Severity Analysis using the Conce
Risk Severity Analysis using the Concept of pt of CLF and CIFCLF and CIF
Risk severity can be computed from equation (6). The product of the likelihood and Risk severity can be computed from equation (6). The product of the likelihood and impact of a risk can be considered as the severity of that risk. This concept can be extended impact of a risk can be considered as the severity of that risk. This concept can be extended for multiple risk sources in a work package, the likelihood and impact of which can be for multiple risk sources in a work package, the likelihood and impact of which can be expressed in terms of CLF
expressed in terms of CLF j j and CIFand CIF j j respectrespectivelyively. The . The scale for the scale for the classiclassificatification of on of the risk the risk severity is expressed as
severity is expressed as
Table 6:
Table 6: Risk SeveritRisk Severity Classificay Classificationtion S
Seevveerriit t CCllaassssiiffiiccaattiioonn 0 0..000 0 – – VV.. 0.03 – 0.03 – LoLo 0.06 – 0.06 – MediuMediu 0.16 – 0.16 – HiHi 0 0..221 1 – – VV.. Table 7:
Table 7: Risk Severity AnalysiRisk Severity Analysis of Total Project using the Conces of Total Project using the Concept of pt of ComposComposiittee Likelihood Factor (CLF) and Composite Impact Factor
Likelihood Factor (CLF) and Composite Impact Factor (CIF)(CIF)
Description
Description of of projectproject risk risk (activity)(activity) Composite Composite Likelihood Likelihood Factor Factor (CLF) (CLF) j j Composite Composite Impact Impact Factor Factor (CIF) (CIF) j j Severity Severity Quantitative Quantitative CLFj x CIFj CLFj x CIFj Qualitative Qualitative FPR A FPR A 00..33448 8 00..88775 5 00..330055 V. Hi hV. Hi h PEPR 1 (B) PEPR 1 (B) 00..33993 3 00..88668 8 00..334411 V. Hi hV. Hi h PEP PEPR R 2 2 CC 00..227 7 00..88229 9 00..222244 V. Hi hV. Hi h EPR 1 (D) EPR 1 (D) 00..33119 9 00..77884 4 00..2255 V. Hi hV. Hi h EP EPR R 2 2 EE 00..22662 2 0..80 8009 9 00..221122 V. Hi hV. Hi h EP
EPR R 3 3 FF 00..11886 6 0..80 8332 2 00..115555 MediumMedium EP EPR R 4 4 GG 00..228 8 00..88227 7 00..223322 V. Hi hV. Hi h PER 5 (H) PER 5 (H) 00..22552 2 00..88118 8 00..22006 6 HHii hh PE PER R 6 6 II 00..33777 7 00..88663 3 00..332255 V. Hi hV. Hi h EPR 7 (J) EPR 7 (J) 00..44119 9 00..88116 6 00..334422 V. Hi hV. Hi h EP EPR R 8 8 K K 00..33998 8 0..80 8442 2 00..333355 V. Hi hV. Hi h EPR 9 (L) EPR 9 (L) 00..33667 7 00..88228 8 00..330033 V. Hi hV. Hi h EPR EPR 10 10 MM 00..33445 5 0..8086 6 00..229988 V. Hi hV. Hi h EPR EPR 11 11 NN 00..33443 3 00..88227 7 00..228844 V. Hi hV. Hi h EPR EPR 12 12 OO 00..33006 6 00..88006 6 00..224477 V. Hi hV. Hi h EP EPR R 13 13 PP 00..33884 4 0..80 8558 8 00..332299 V. Hi hV. Hi h EPR 14 (Q) EPR 14 (Q) 00..22778 8 00..88772 2 00..224422 V. Hi hV. Hi h EPR EPR 15 15 R R 00..22227 7 00..88337 7 0..1019 9 HHii hh EPR EPR 16 16 SS 00..22223 3 00..88111 1 00..11881 1 HHii hh EPR EPR 17 17 TT 00..55113 3 00..88445 5 00..443333 V. Hi hV. Hi h EPR
the EVM and PERT analysis in terms of the severity of the major activities of the project is the EVM and PERT analysis in terms of the severity of the major activities of the project is presented in Table 8
presented in Table 8
Table 8: Outcome of Risk Severity analysis by Expected Value and PERT Table 8: Outcome of Risk Severity analysis by Expected Value and PERT
V.H
V.Hiiggh h HHiigghh MediumMedium LowLow
Design Technology Design Technology selection
selection Utili
Utilityty diversidiversion Soldier on Soldier Piles
Piles King King PilesPiles
Soil / Rock excavation Soil / Rock excavation Diaphragm Diaphragm wall Steel wall Steel struts Rock struts Rock anchors anchors
Shotcreting and rock Shotcreting and rock bolting
bolting
Traffic diversion Top Traffic diversion Top down
down
construction Timber construction Timber lagging Mechanical & lagging Mechanical & Electrical Works, Electrical Works, Permanent Structure Permanent Structure Survey Backfilling Survey Backfilling & & Restoration Restoration Nil Nil
Application of Monte Carlo Simulation Application of Monte Carlo Simulation
We apply the Monte Carlo simulation to predict the outcome of the expected time (ET) We apply the Monte Carlo simulation to predict the outcome of the expected time (ET) and expected cost (EC) of all the possible paths of activities as represented in the network and expected cost (EC) of all the possible paths of activities as represented in the network diagram of the project (figure 1). The Monte Carlo simulation also takes into account the diagram of the project (figure 1). The Monte Carlo simulation also takes into account the effects of the near critical paths becoming critical. By carrying out a detailed path analysis of effects of the near critical paths becoming critical. By carrying out a detailed path analysis of the project network diagram, we observed that the path A-C-E-D-G-I-P-T has the longest the project network diagram, we observed that the path A-C-E-D-G-I-P-T has the longest dur
duratiation on of of 3786 days. Hence this 3786 days. Hence this patpath h is is consconsideidered as red as the the cricritictical al patpath h of of the the proprojecjectt network (refer figure 1). The corresponding cost for the completion of activities along this network (refer figure 1). The corresponding cost for the completion of activities along this path is
path is INR 1220 Million. INR 1220 Million. It is also It is also observed that observed that the probability othe probability of the f the successful completionsuccessful completion of the project within the stipulated time and cost frame is only 4% (0.625 x 0.730 x 0.738 x of the project within the stipulated time and cost frame is only 4% (0.625 x 0.730 x 0.738 x 0.681 x 0.720 x 0.623 x 0.616 x 0.602 = 0.040). Path A-B-D-G-I-P-T is a near critical path 0.681 x 0.720 x 0.623 x 0.616 x 0.602 = 0.040). Path A-B-D-G-I-P-T is a near critical path with a probability of about 4.8% for successful completion within the stipulated time and cost with a probability of about 4.8% for successful completion within the stipulated time and cost frame. There are chan
frame. There are chances of this path becoming critical.ces of this path becoming critical.
The application of the Monte Carlo simulation to the above path analysis resulted in the The application of the Monte Carlo simulation to the above path analysis resulted in the following outcome:
following outcome:
Table 9: Outcome of Path Analysis of the Project Network Diagram
Table 9: Outcome of Path Analysis of the Project Network Diagram AppAppllyyiingng Monte Carlo Simulation
Monte Carlo Simulation
Path
Path ActActiviivityty / Node/ Node
Path Path duration duration Cost Cost (Rs. (Rs. Crores)Crores) 1 1 AA--B-B-D-D-G-G-II-P-P--T T 36367676.1.177 119.28119.28 2
2 A-A-C-C-E-DE-D-G-G-I-I-P--P-T T 3783785.5.9898 122.28122.28 3
3 A-A-C-C-E-E-F-F-II-P-P--T T 32324444.8.888 96.1796.17 4 4 AA--CC--HH--II--PP--T T 22887799..8888 87.1187.11 5 5 AA--CC--KK--PP--T T 22447799..6677 82.0982.09 6 6 AA--CC--LL--J-J-PP--T T 33116644..7799 108.19108.19 7 7 AA--C-C-Q-Q-R-R-J-J-P-P-T T 27274141.6.600 92.2092.20 8
8 AA--CC--Q-Q-O-O-SS--T T 33007744..8899 150.10150.10 9
From the above analysis we observed that path 2 (A-C-E-D-G-I-P-T) has the longest From the above analysis we observed that path 2 (A-C-E-D-G-I-P-T) has the longest duration of 3785.98 days and remains critical. The corresponding cost for the completion of duration of 3785.98 days and remains critical. The corresponding cost for the completion of al
all l ththe e acactitivivitities es alalong ong ththe e crcrititicical al papath th is is ININR R 1221222.2.8 8 MiMillllionion. . ThThe e prprobaobabibilility ty of of ththee successful completion of path 2 or the critical path within the scheduled time is 50%. The successful completion of path 2 or the critical path within the scheduled time is 50%. The probability
probability of of the the successful successful completion completion of of the the near near critical critical path path or or path path 1 1 within within thethe sche
schedulduled ed timtime e is 84.13% (Z = is 84.13% (Z = 1.001.009, P 9, P = = 0.840.8413). Als13). Also o the probathe probabilbility of the ity of the succsuccessfessfulul completion of all the paths within the scheduled time is 42.05% (P = 0.8413 x 0.5 x 1 x 1 x completion of all the paths within the scheduled time is 42.05% (P = 0.8413 x 0.5 x 1 x 1 x 1 x 1 x 1 x 1 x 1 = 0.4205)
1 x 1 x 1 x 1 x 1 = 0.4205)
Carrying out about 10,000 runs of the Monte Carlo simulation, the EC was found to Carrying out about 10,000 runs of the Monte Carlo simulation, the EC was found to have a value of
have a value of INR 3532.9 Million and the ET of the project was found to be 435INR 3532.9 Million and the ET of the project was found to be 435 1.12 days.1.12 days. Proposed Risk Management Model for the Underground Corridor Construction for Proposed Risk Management Model for the Underground Corridor Construction for Metro Rail
Metro Rail
The generalized risk management model for the underground corridor construction for The generalized risk management model for the underground corridor construction for the metro rail is proposed on the basis of the detailed analysis carried out. This model can be the metro rail is proposed on the basis of the detailed analysis carried out. This model can be effectively implemented in the ongoing and upcoming metro rail projects across the nation. effectively implemented in the ongoing and upcoming metro rail projects across the nation.
As a part of the formulation of risk mitigation strategies, the following risk response As a part of the formulation of risk mitigation strategies, the following risk response planning can
planning can be be adapted adapted by by the the project project authority:authority: (i)
(i) RRiissk k ttrraannsfsfeerr,, (i
(ii) i) RiRisk sk shsharariningg (i
(iiiii) ) RiRisk sk rereducductitionon (i
(iv) v) RiRisk sk cocontntiningegencyncy plaplanninning ng anandd (v)
