101802110 Pgpm 31 Nicmar Assignments

NICMARNICMARINSTITUTEOFCONSTRUCTIONMANAGEMENTANDRESEARCHSCHOOL NICMARNICMARINSTITUTEOFCONSTRUCTIONMANAGE MENTANDRESEARCHSCHOOLOFDISTAN OFDISTAN CEEDUCATION ASSIGNMENT NICMAR/CODEOFFICE 1.CourseNo.2.Coursetitle3.AssignmentNo 1.CourseNo.2.Cours etitle3.AssignmentNo.4.DateofDispatch .4.DateofDispatch :::: PGPM31ProjectRiskManagement1 5.LastDateofreceipt:ofAssignmentatCODEoffice

ASSIGNMENTForthesuccessfulimplementationofaproject,itisessent ASSIGNMENTForthesuccessfulimplementationo faproject,itisessentialisth ialisth atpersonsinvolvedinitsimplementationbes atpersonsinvolvedin itsimplementationbesensitivetotheriskinvo ensitivetotheriskinvolvedint lvedint heprojectandformulatethemostsuitablestr heprojectandformula tethemostsuitablestructureforthemanagement uctureforthemanagementofsuch ofsuch risks.Therearecertainvariablesanduncerta risks.Therearecerta invariablesanduncertaintiesarecommontomost intiesarecommontomostofthei ofthei nfrastructureprojects.Manyriskmitigationt nfrastructureprojects .Manyriskmitigationtechniquesareappliedto echniquesareappliedtoinfrastru infrastru ctureprojects.Discussindetailstheriskma ctureprojects.Discus sindetailstheriskmanagementinconstruction nagementinconstructionwithspec withspec ialreferencetoanyprojectcurrentlyinprog ialreferencetoanyp rojectcurrentlyinprogresswithyourcompany. resswithyourcompany.

SYNOPSIS IntroductionRiskidentificationintheprojectTypesofriskRiskmitigationRi skassessmentinaprojectoScopeoftheworkoRiskassessmentsheetoRiskco ntrolmeasuresConclusion

INTRODUCTION Theprojectofanyindustrydependsuponthefollowinguncertainties1.Time2. Money3.Manpowerand4.Resources Itisalsoakeyfactortonotethatastheprojectvalueincreases,theriskal soincreases.Butasprojectdurationdecreases,theriskalsoincreases.Thuso nthesuccessfulrunningforaproject,optimumdurationandoptimumutilization oftheresourcesarethemostimportanttobeconsidered.Thusriskminimizatio nisthemostkeyroleforprojectprofitmaximizationbyanyprojectmanager.I nthepresentassignment,Ihavetriedtoassesstherisksinvolvedintheproje ctatwhichIhaveinvolvedinmycareer.Ihavealsoexplainedtheriskmitigat iontechniquesundertakenbyustoreducetheriskintheproject.

RISKIDENTIFICATIONINTHEPROJECT Riskidentificationoccursthrougheachofthetwophasesofprojectdevelopment :1.Planning2.Construction1.PlanningphaseIntheplanningphaseriskisbe enidentifiedfromoneofthefollowingmethods,1.1Brainstorming Itisaneffe ctivemethod.Brainstormingcanrangefromasmallinformalprojectteam. Effort forsimplerprojectstoafull-blownCEVPworkshopandEffectivebrainstorming requiresaskilledFacilitator,workingtogetherwiththeprojectteamandspeci alistswhocanbringadditionalexpertise.1.2Checklistsand/orQuestionnaires tospecialtygroupsChecklists/questionnairesareaquickandeasy-to-usetechni quebutlimitedinnature;theyonlydealwiththeitemsonthelist. Eachproje ctisunique;henceastandardlistwilloftennotcapturetheprojectspecific risksofmostconcern.Nonethelessachecklist/questionnairecansparkthinking priortoamoreformalbrainstormingprocess1.3Examinationofpastsimilarpro jects–Lessonslearnedfrompastprojectshelpustoavoidrepeatingmistakes;us ingpastexamplesrequiresprudentandobjectivejudgment,sinceapreviousproj ectmaybesimilarbutisnonethelessdifferentbecauseeachnewprojecthasuni querequirementsandfeatures,includinguncertaintiesandrisks1.4Combination ofabovemethodsand/orothersItisquitelikelythatformostprojectsacomb inationoftheabovemethodswillbeusedtoidentifyrisks.Theimportantthing isthatonceidentifiedtherisksareproperlydocumented

2.ConstructionPhaseAmongthemostcommonrisksencounteredduringtheconstru ctionofaprojectbyacivilengineeringcontractorunderastandardtypeofco nstructioncontract,arethefollowing:1.Designerrors,quantificationerrors. 2.Designchangesfoundnecessary,orrequiredbytheemployer.3.Unforeseenp hysicalconditionsorartificialobstructions.4.Unforeseenpricerisesinlabo ur,materialsorplant.5.Theftordamagetotheworks,ormaterialsandequipm entonsite.6.Weatherconditions,includingfloodsorexcessivehotweather.7 .Delayorinabilitytoobtainmaterialsorequipmentrequired.8.Inabilityto gettheamountorqualityoflabourrequired,orlabourstrikes.9.Errorsinpr icingbythecontractor.

RISKMITIGATION Thefollowingarethetenwaystomitigateriskinconstructionprojects1.Ensu retheadequacyofprojectfunding2.Obtainmoregeotechnicalinformation3.Co nductconstructabilityreviews4.Setrealisticcontractperformancetimes5.Wo rk&reworkcostinformation6.Introducedphasepricing7.Pre-plansforpermit s,utilities&zoning8.Pre-definedrates,equations&procedures9.Useexperi encedprojectpersonnel10.Usethecontractingprocessasariskavoidancemeas ureTheabovetechniquesarethemostcommonlyusedtopreventtheriskinanyp roject.EnsuretheadequacyofprojectfundingCertainly,allpartieshavealeg itimateconcernthattherewillbesufficientfundstodesignandconstructthe project.Ownersalsoneedprotectionagainsttheriskofrunningoutofmoney.s uchasthatprovidedbyatermination-for-convenienceclausethatexpresslylimi tsorprecludesrecoveryofanticipatedbutunearnedprofits.Furthermore,owner sneedtounderstand,inadvance,thatchangesandcostincreasesarevirtually inevitable.Accordingly,areasonablecontingencyshouldbeincorporatedintoth ebudgettodealwithinevitablechangesandunexpectedomissions.

ObtainmoregeotechnicalinformationItshouldgowithoutsayingthatthemorei nformationacontractorhasaboutsubsurfaceconditions.Themoreaccuratetheb id-andlesslikelywillbeclaimsfordifferingsiteconditions.Thereisade cidedtrendtoward(1)investingalittlemoremoneyduringprojectplanningand designforthepurposeofobtainingmoregeotechnicalinformationand(2)makin gallofthegeotechnicalinformationavailabletocontractors.Someownersand theircounselwillarguethatthisopendisclosurewillleadtoclaimsifthege otechnicalInformationiswrong.Thismissesthebasicpointthatifthebidwas basedonless-than-completeinformation,thatbecomesthebargain.Accordingly ,iftheactualundergroundconditionsareworsethanthegeotechnicalinformati onprovided.Theownershouldpaybecause,ifthecontractorhadbeenadvisedof themoresevereconditions,itcertainlywouldhaveincreaseditsbid.Conduct constructabilityreviewsContractorssometimescomplainthatthedesignstheyar erequiredtofollowarenotconstructibleorpractical.Ifthisisthecase,th eremaybedelaysandadditionalcostsincurredincomingupwithalternatives. Evenifthedesignisconstructibletheownermayhavetopaymoretogetthesa meresults.Byhavingtheplansandspecificationsreviewedfor"constructabilit y"beforecontractorsbidonthem,ownershavebeenabletomodifythedesignsa ndtherebymakeconstructioneasier.SetrealisticcontractperformancetimesIf thecontractperformancetimeisinsufficient.eitheritwillcostmoretodoB yhavingtheplansandspecificationsreviewedfor"constructability"beforeco ntractorsbidonthem,ownershavebeenabletomodifythedesignsandtherebym akeconstructioneasier.Eitherscenarioisdisadvantageoustotheowner.Owners areavoidingtheseproblemsbyobtainingcontractoradviceandinputonsetting arealistictimetoallowforconstructionofa.givenprojectWork&reworkcos tinformationTheownercanrequireasacontractobligationthatthecontractor makefulldisclosureofitscostestimatesforallaspectsofthework.i.e.•pr ocurementofmaterials.subcontractors

self-performedworkandevenoverheadandprofit.Indoingso,theownerandits staffcanbetterassurethemselvesthatnosignificantmistakeshavebeenmade inpricing.theworkandthatallowancesandalternativesarereasonable.Introd ucedphasepricingAsthedesignisbeingdeveloped,eachphaseofthedesignca nbeprovidedtothecontractorforreview,analysisandsubmissionofprogressi vecostestimates.Obviouslycontractorsmaytalkatthisintrusionintotheirp ricingdomain.However,inordertowintheproject,thecontractorwillbemore likelytoagreetothisprocesswhichintheendwillreducethelikelihoodfor cost-overrunclaims.Pre-plansforpermits,utilities&zoningGiventhevariou sregulatoryrequirementsthathavetobecompliedwithinthecourseofdesigni ngandconstructingaproject,itisobviousthat,iftheserequirementsarenot knownandconsideredinadvancedelayswillresult.Toavoidthisastuteowners andtheirengineersarenowbeginningtospecificallyidentifypermittingrequi rementsinadvanceofbiddingandsigningthecontractsPre-definedrates,equat ions&proceduresInordertoeliminatemanyissuesfromthecontractadministra tionphase,smartownerswillspecifyclearandaccurateformulaeormethodsto predeterminevaluesfordisputableitems.Homeofficeoverheadrates,althoughs ubjecttowidevariationwithintheindustry,canbepresetandacontractgener allyacceptedmanualfordeterminingtheequipmentratestobeusedin,pricing changeorders.Itisequallyimportantforthecontracttocontainveryclearpr ovisionswithrespecttohowchangeorderswillbeprocessedandwhatinformatio nshouldbeincludedinarequestforchangeorders.Thesameistrueforfarcea ceountprovisions;whichwouldenablethecontractortobepaidonatimelyisf ordisputedwork,pendingnegotiationofachangeordermodification.Alsogive someconsiderationtoincludingasaunitprice.Aperdiemvalueforextendedp rojecttime.Intheeventofanowner-causeddelay•.thisvaluecouldbeincludedi nanycbangeordercarryingwithitentitlementtoanextensionoftime.

UseexperiencedprojectpersonnelNomatterhowenlightenedthemanagementanda llocationofrisk•.theprojectpersonnel(i.e..people)willstillhavetodesign .BuildandadminiStertheproject,Experiencecounts,particularlyforbigproj ectsWithaconstructionboomunderway.Designandconstructionfirmsareoften maxedoutintermsofexperiencedprojectmanagersandsuperintendents.Notwiths tandingthisreality.nodesignflrmorcontractorwantstoloseagoodjob.Con sequently,manyprojectsarebeingledandmanagedbyinadequatelytrainedandi nexperiencedpersonnel.whichinevitablyleadstoproblems.claims.disputesand 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ke yparties'personnelandrequire,asamatterofcontract,thatonlyexperienced projectmanagersandsuperintendentswillrunthehigh-profileproject.Usethe contractingprocessasariskavoidancemeasureThecontractdocumentsareane arlyopportunitytoanticipate.defineanddealwithpotentialissuesandthereb yavoiddisputes.Essentially.thecontractingprocessisa"whatif'exercise, wherebythepartiesattempttodeterminewhatmaygowrong,whatissuesmayaris ebetweentheparties,andthebestwaytoresolvethesechallenges,inadvance, byinformedandenlightenedriskallocation.Thisapproachisofcourse,theAm ericanwayofdoingthings,andatleasttwodownsidestoacomprehensivecontra ctaretypicallyalengthydocumentandsometimeslengthynegotiations.

SCOPEOFTHEPROJECT NameoftheprojectLocationProjectdefinition:::MetroRailProjectProposa lMumbai,IndiaTheGovernmentofIndiahasdecidedtheincrease theinfrastructurefacilityinIndia,soastoincreaseeconomicgrowthofthen ationbyincreasingtheimport&exportfacility.ProjectdurationTypeofcontr actProjectfundingDesignresponsibilityconsideredPricefluctuationExtension oftimeLiquidateddamages:::NotallowableNotpermitted2%ofthecontract valueperweekoftheprojectLimitupto15%ofthecontractvalue::::3765 daysItemratecontractFinancearrangedbytheGovernmentofIndiaRenovation ofexistingstructuresneedstobe

ProjectSummaryTheprojectconsideredforanalysisistheconstructionofanun dergroundcorridorformetrorailoperationsinthecapitalcityofanemerging economicnationinSouthAsia.Phase-Ioftheprojectisabout65kmswith59st ations.TheestimatedcapitalcostofPhase-IisaboutINR105billion.Theproj ectunderstudyforthisresearchworkisapartofPhaseI.Thescopeofworki sthedesignandconstructionofa6.6kmundergroundmetrocorridorwithsixun dergroundstationsandatwintunnelsystem.Theundergroundstationsarereferr edtoasS1,S2,….S6.HereS6istheterminalstationequippedwithanover-runt unnel(whereanuptraincanbeconvertedtoadowntrain).Theclientisapubl icsectorcompanyfloatedjointlybytheStateandCentralGovernment.Theprinc ipalcontractorisaJointVenture(JV)ofthreeforeigncontractorsandtwodom esticcontractors.ThetypeofcontractisaDesignBuildTurnkey(DBT)whereth eprincipalcontractorisrequiredtodesigntheundergroundcorridorandexecut etheproject.Theprojectcostfortheexecutionof6.6kmsisaboutINR18bil lion.Thecontractperiodisaboutfiveyears(exclusivelyforexecution).Table 1:MajorActivitiesandtheirTimeEstimatesintheUndergroundCorridorConstr uctionProject(TerminalStationS6)ActivityABCDEFGHIJKDescriptio nFeasibilitystudiesDesignTechnologyselectionTrafficdiversionUtilitydive rsionSurveyworksShoulder/KingpilesTimberlaggingSoilexcavationRockexc avationFabricationanderectionofImmediateDuratioES018751875228019652 280275519653111265519651965228026552110344119652110228035612280E F187521701965275522802570311122053411282021352655256527752280356 121102232285037862505LS0198518752280196528212755287131113276294 12421315628712821344126042749299135613561LF18752280196527552280 3111311131113441344131113111344129912991356127492871356137863786 Predecesson1875A29rsA(Days905B,47)C31E5B,295D35E0C246 G,F,H330L,160C17R5constructionanderectionofsteel0Fabricationdeck sC69LRockanchorinstallationN,28Mstruts0Shotcreting&rockboltingL, 12NO5SubfloordrainageQ17OR0WaterproofingI,K,J,M12P0Diaphragmw allconstructionC14Q0TopdownconstructionQ12R5PermanentstructureN, 57S2Mechanical/ElectricalP,22TO0Backfilling&restorationworksN,22 Uinstallations&S5ES:EarlyStart;EF:EarlyFinish;LS:LateStart;LF:La teFinishO5services

METHODOLOGYRiskAnalysisbyExpectedValueMethod(EVM)Assumeanetworkofdet erministictimeandcost.Wealsoassumethatthecriticalpathmodelnetworkha s“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(2007),ande xplain,inthissection,theconceptofriskanalysisbytheExpectedValueMeth od(EVM).Definethevariablesasfollows:Likelihoodofithrisksourceforjth activityWeightageofithrisksourceforjthactivityImpactofithrisksourc eforjthactivityCompositeLikelihoodFactorforjthactivityCompositeImpact FactorforjthactivityBaseTimeEstimateforjthactivityBaseCostEstimate forjthactivityCorrectiveCostforjthactivityCorrectiveTimeforjthactivi ty::::RiskCostforjthactivityRiskTimeforjthactivityExpectedCostf orjthactivityExpectedTimeforjthactivity LijWijIijCLFjCIFjBTEjBCEjCCjCTjRCjRTjECjETj :::::::::

Basetimeestimate(BTE)oftheprojectistheestimatedbasicprojectduration determinedbycriticalpathmethodoftheprojectnetwork.Similarly,theestima tedbasiccost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o ftheprojecthavebeenobtainedasperthedetailedconstructiondrawings,meth odstatementandspecificationsfortheworkscollectedfromtheproject.Theco rresponding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co rrespondingcorrectivecost(CC)havebeenestimatedbasedonthepersonalexper iencesandhavebeentabulated.Anactivitymayhaveseveralrisksourceseachh avingitsownlikelihoodofoccurrence.Thevalueoflikelihoodshouldrangebet ween0through1.Thelikelihoodoffailure(Lij)definedabove,oftheidentifi edrisksourcesofeachactivitywereobtainedthroughaquestionnairesurve y.Thetargetrespondentswereexpertsandprofessionalsinvolvedinandassoc iatedwiththeprojectunderanalysisandalsoothersimilarprojects.Thecorre spondingweightage(Wij)ofeachactivityhasalsobeenobtainedfromthefeedba ckofthequestionnairesurveycirculatedamongexperts.Thesummationofthewe ightagesshouldbeequalto1.M∑Wij=1forallj(j=1….N)….i1Theweightage scanbebasedonlocalpriority(LP)wheretheweightagesofallthesubactivit iesofaparticularactivityequal1.Also,weightagescanbebasedonglobalpr iority(GP)wheretheweightagesofalltheactivitiesoftheprojectequal1.T hemeanofalltheresponsesshoulddesirablybeconsideredforanalysis.Incons istentresponsescanbemodifiedusingasecondroundquestionnairesurveyusing theDelphitechnique.Thenextstepistocomputetheriskcost(RC)andriskt ime(RT)oftheactivitiesoftheproject.RCandRTforanactivitycanbeobta inedfromthefollowingrelationship:RiskCostforactivityj(RC)j=(CC)jxL jforallj.…………(2)(3)RiskTimeforactivityj(RT)j=(CT)jxLjforalljactivit iesalongthecriticalpath.(1) Thetotalrisktimeforanactivityisthesummationoftherisktimeofallthe sub

Thelikelihood(Lij)ofallrisksourcesforeachactivityjcanbecombinedand expressedasasinglecompositelikelihoodfactor(CLF)j.Theweightages(Wij) oftherisksourcesoftheactivitiesaremultipliedwiththeirrespectivelikel ihoodstoobtaintheCLFfortheactivity.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riskcos toftheactivity.Asimilarcomputationasthatoflikelihoodcanbedoneforo btainingasinglecombinedcompositeimpactfactor(CIF)byconsideringtheweig htedaverageaspertherelationshipgivenbelow:MCompositeImpactFactor(CIF )j=∑IijWiji1M0≤Iij≤1and∑Wij=1forallj.i1Riskconsequenceorseverity canbeexpressedasafunctionofrisklikelihoodandriskimpact.Thusthenum ericalvaluewillrangefrom0to1.Thisseveritycanalsobeexpressedinterm sofqualitativeratingas“noseverity”forvalue0and“extremelyhighseverity”forv alue1.ThenumericalvalueoftheRiskSeverity(RS)isobtainedfromthebelow mentionedrelationship:RiskConsequence/Severity(RS)j=LjxIjforallj….. (6)Theriskconsequencederivedfromthisequationmeasureshowserioustheri skistoprojectperformance.Smallvaluesrepresentunimportantrisksthatmigh tbeignoredandlargevaluesrepresentimportantrisksthatneedtobetreated. Theexpectedcost(EC)jandexpectedtime(ET)jforeachprojectactivityands ubsequentlythecomputationoftheexpectedprojectcostandtimewascarriedou ttheconceptoftheexpectedvalue(EV)ofadecisiontreeanalysis.Expectedv alue(EV)=probabilityofoccurrence(p)[higherpayoff]+(1-p)[lowerpayoff] .from…………(5)

ExpectedCost(EC)j=Lj(BCEj+CCj)+(1-Lj)BCEj=BCEj+CCj(Lj)=BCEj+R Cjforallj.=BTEj+CTj(Lj)……..(7)…….(8) ExpectedTime(ET)j=Lj(BTEj+CTj)+(1-Lj)BTEj=BTEj+RTjforallj. CASEANALYSISThesamplestretchunderanalysisconsistsofa530metre(m)cuta ndcovertunnelconnectingstationS5andS6,a290mS6stationboxanda180mc utandcoveroverruntunneladjoiningtheS6stationbox.S6stationbeingthe terminalstation,thedowntrainstowardsthisstationafterleavingstationS5 willtravelthroughthe530mcutandcovertunnelandentertheplatformsofthe terminalstationS6.Afterthecommutersvacatethetrainatthisterminalstat ion,thisdowntrainwilltravelthroughthe180moverruntunnelandwillbeco nvertedintoanuplinetrainwhichwilltravelfromstationS6toS1.Theactiv itiesofthesamplestretchunderanalysisconsistoftheinstallationanderect ionoftemporarysupportingandretainingstructurestoenableconstructionbyc utandcovertechnologyandfortheconstructionofpermanentstructuresliketu nnelsandstationboxeswhichareRCCsingleboxes/twinboxesfortunnelsand RCCboxeswithintermediateconcourseslabforstationboxes.Wehaveconsidered somebasicassumptionsduringtheanalysis.Theseassumptionsare(i)themaxim umcostoverrunpermissibleis25%ofthebasiccostestimatebeyondwhichthe projectbecomeslessfeasibleand(ii)themaximumpermissibletimeoverrun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S.N o.RiskClassificationNomenclature123456789101112131415161718 192021FPRPEPR1PEPR2EPR1EPR2EPR3EPR4EPR5EPR6EPR7EPR8EPR 9EPR10EPR11EPR12EPR13EPR14EPR15EPR16EPR17EPR18RiskDescriptio nFeasibilityProjectRiskPreexecutionProjectRisk–DesignRisksPreexecution ProjectRisk–TechnologyRisksExecutionProjectRisk–RisksintrafficRisksin utilitydiversionworksdiversionworksRisksinsurveyworksRisksinsoldierp ilingandkingpilingworks.Risksintimberlaggingworks.Risksinsoilexcava tionworksRisksinrockexcavationworksRisksininstallationofconstruction decksRisksininstallationofsteelstrutsRisksininstallationofrockanchor sRisksinshotcretingandrockboltingworksRisksinsubfloordrainageworksR isksinwaterproofingworksRisksindiaphragmwallconstructionRisksintopdo wnconstructionRisksinpermanentstructureworksRisksinmechanicalandelect ricalinstallationRisksinbackfillingandrestorationworksworks

ApplicationofEVMforRiskAnalysisoftheProjectThenetworkdiagramsconsist ingofthemajoractivitiesoftheprojecthavebeendrawnandtheiractivityti mes(earlystart,earlyfinish,latestartandlatefinish)havebeencalculated byforwardandbackwardpassandthentheircriticalpathhasbeentrackedout. Thedurationalongthecriticalpathisthelongestdurationpathandisconsid eredasthedurationoftheproject.TheBCEandBTEofeachactivityandsub-ac tivityoftheprojecthavebeencalculatedaspertheactualsitedata.Thecorr ectivecostandtimeforeachactivityhavebeenassumedasacertainpercentage (25%to75%)ofBCEandBTErespectivelydependingupontheseverityandcasual tycausedbythatrisk.Eachactivityoftheprojectaspresentedinfigure1ha sbeenanalyzedatthesubactivitylevelforcomputationofRC,RT,EC,ETandr iskseverity.Thedetailedanalysisforcomputationofriskcostandtimeforal ltheactivitiesoftheprojectispresentedbelow.Table4:ExpectedCostandT imeAnalysisfortheProjectBaseCostActivity(CLF)jEstimate(BCE)jABCDE FGHIJKLMNOPQRSTUTOTALINR240Million110405010010220201 508012030050806012060808003002503240CorrectiveCost(CC)jINR.60 Million321011.982.48.66176.46515.9751225610824549.270.35883.259. 277.2596.5217.7189.32329RiskCost(RC)jBaseTimeEstimateCor.Time(CT)j Days1130245853552672473561802051401134852501851309511588415 180163RiskTime(RT)jExpCost(EC)ExpTime(ET)jEC%her8tha10..n6.7 367.57BC521.9E16.5922.1120.4630.1329.6635.3329.8233.9730 .9529.1426.5827.6221.4316.9128.6326.8822.851ET%her20.9tha 29.57n25.723.8BT522.24E15.812418.823.4935.5226.4525.63 0.2824.4623.130.422.0416.3516.2731.8425.6423.356 HigHig DaysjDays0.348393.24INR2268.260.0.35687.22121.382.2880.2722.95Mil li244112.93920.319113.2553.72588.2on20.26269.95121.55384.99610 .18645.9411.615335.9.0.2899.68888269.45455.670.25245.3607624.04 285.31020.37777.29195.8407.22570.41958.66103.6223.69940.39844.97 162.9214.94640.367178389.689840.34586.2566.97371.291560.34363. 46104.1323.47450.30639.7877.7209.780.38436.48129151.96156.4480. 27831.9776.48176.94880.22719.9897.58141.95760.22392.55933.07662. 52440.39871.64386.68296.61950.35457.7317.05282.74464884.473969. 4670.12256202647AsperFigure1whichrepresentsthecriticalpathdiagram oftheentireprojectoftheundergroundcorridorconstruction,andTable4,for activityA(feasibility INR(BTE)j20.881875MillioDays11.392295n2.7903.796147521.58883151.6 107629049.41023564.025724045.99433023.46416542.98417089.91569016.9 7428524.112926017.74817031.948812016.457614517.5244122133.01957086 .6446225567.0122225729.2023786

studies)theCLFis0.348asobtainedfromthefeedbackofthequestionnairesur vey(referappendix2).Thebasecostestimate(BCE)jfortheactivityfeasibili tystudies(A)isINR240Million,thecorrectivecost(CC)jisINR60Million( assumedinconsultationwithexperts);thebasetimeestimate(BTE)jis1875day s;thecorrectivetime(CT)jis1130days(assumedinconsultationwithexperts) .Asperequations(2)and(3),Riskcost(RC)j=0.348x60x106=INR20.88x 106;Risktime(RT)j=0.348x1130days=393.24days.Thusasperequations( 7)and(8),theexpectedcost(EC)j=BCEj+RCjRTj=2268.24days.Table5:Pr ojectExpectedCostandTimeAnalysis[BasedonQuestionnaireSurvey]=INR260. 88Million,expectedtime(ET)j=BTEj+ BaseCostEstimate3240(INR RiskCost(INR729.2Million) BaseTimeEstimate3786(Days) RiskTime(Days884.47) ExpectedCost(INRMillion)3969.2 ExpectedTime(Days)4670.47 Milion)Thusaspertheanalysis,theECoftheprojectis22.51%higherthant heBCEoftheproject.TheEToftheprojectis23.36%higherthantheBTE.As perthebasicassumptionsconsideredforriskmanagementanalysisthecostoverr unshouldnotexceed25%oftheestimatedbasecostandthetimeoverrunshould notbemorethan30%oftheestimatedbasetime.Exceedingtheselimitswouldin creasethechancesoftheprojectbecominglessfeasible.Theriskmanagementan alysispredictsthattheexpectedcostoftheprojectis22.51%higherthanthe estimatedbasecost.Thissituationishighlyalarmingasitistheupperlimit ofthepermissiblecostoverrun.Itrequiresmeticulousplanningandproperrisk mitigationmeasurestoenhancetheprobabilityofsuccessoftheproject.Thee xpectedtimepredictedfromtheanalysisis23.36%higherthantheestimatedbas etimewhichisclosetotheupperlimitofthepermissibletimeoverrun.Thusi tisessentialtojudiciouslyfollowtheriskmitigationmeasurestoensurethat theprojectiscompletedwithinthescheduledtimeframe.

RiskSeverityAnalysisusingtheConceptofCLFandCIFRiskseveritycanbecom puted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formul tiplerisksourcesinaworkpackage,thelikelihoodandimpactofwhichcanbe expressedintermsofCLFjandCIFjrespectively.Thescalefortheclassificati onoftheriskseverityisexpressedasTable6:RiskSeverityClassificationSe verityClassification0.00–V.0.03–Lo0.02Low0.06–Mediu0.05–w0.16Hig0.15–m0 .21V.0.20Table7:RiskSeverityAnalysisofTotalProjectusingthehConcepto fComposite1.00HighLikelihoodFactor(CLF)andCompositeImpactFactor(CIF) CompositeDescriptionofprojectrisk(activity)LikelihoodFactor(CLF)jFPR(A )PEPR1(B)PEPR2(C)EPR1(D)EPR2(E)EPR3(F)EPR4(G)PER5(H)PER6 (I)EPR7(J)EPR8(K)EPR9(L)EPR10(M)EPR11(N)EPR12(O)EPR13(P)EP R14(Q)EPR15(R)EPR16(S)EPR17(T)EPR18(U)0.3480.3930.270.3190.26 20.1860.280.2520.3770.4190.3980.3670.3450.3430.3060.3840.2780.2270 .2230.5130.254CompositeImpactFactor(CIF)j0.8750.8680.8290.7840.8090. 8320.8270.8180.8630.8160.8420.8280.860.8270.8060.8580.8720.8370.811 0.8450.544QuantitativeCLFjxCIFj0.3050.3410.2240.250.2120.1550.2320 .2060.3250.3420.3350.3030.2980.2840.2470.3290.2420.190.1810.4330.13 8V.HighV.HighV.HighV.HighV.HighMediumV.HighHighV.HighV.HighV. HighV.HighV.HighV.HighV.HighV.HighV.HighHighHighV.HighMediumS everityQualitative TheriskseverityanalysishasalsobeencarriedoutbyPERTanalysisandtheou tcomeofboth

theEVMandPERTanalysisintermsoftheseverityofthemajoractivitiesofth eprojectispresentedinTable8Table8:OutcomeofRiskSeverityanalysisby ExpectedValueandPERTV.HighDesignTechnologyselectionPilesKingPilesSoil /RockexcavationDiaphragmwallSteelstrutsRockanchorsShotcretingandrock boltingHighTrafficdiversionTopdownlaggingMechanical&ElectricalWorks, PermanentStructure&RestorationMediumSurveyBackfillingLowNil UtilitydiversionSoldierconstructionTimber

ApplicationofMonteCarloSimulationWeapplytheMonteCarlosimulationtopre dicttheoutcomeoftheexpectedtime(ET)andexpectedcost(EC)ofallthepos siblepathsofactivitiesasrepresentedinthenetwork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theprojectnetworkdiagram,weobservedthatthepathA-C-E-D-G-I-P-Thast helongestdurationof3786days.Hencethispathisconsideredasthecritical pathoftheprojectnetwork(referfigure1).Thecorrespondingcostforthecom pletionofactivitiesalongthispathisINR1220Million.Itisalsoobservedt hattheprobabilityofthesuccessfulcompletionoftheprojectwithinthestipu lated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witha probabilityofabout4.8%forsuccessfulcompletionwithinthestipulatedtimea ndcostframe.Therearechancesofthispathbecomingcritical.Theapplication oftheMonteCarlosimulationtotheabovepathanalysisresultedinthefollow ingoutcome:Table9:OutcomeofPathAnalysisoftheProjectNetworkDiagramAp plyingMonteCarloSimulationPathPath123456789Activity/NodeA-B-DG-I-P-TA-C-E-D-G-I-P-TA-C-E-F-I-P-TA-C-H-I-P-TA-C-K-P-TA-C-L-J-P-TA-C-Q-RJ-P-TA-C-Q-O-S-TA-C-Q-O-Uduration3676.17(days)3785.983244.882879.882479 .673164.792741.603074.892504.95Cost(Rs.Crores)119.28122.2896.1787.11 82.09108.1992.20150.1065.07

Fromtheaboveanalysisweobservedthatpath2(A-C-E-D-G-I-P-T)hasthelonges tdurationof3785.98daysandremainscritical.Thecorrespondingcostforthe completionofalltheactivitiesalongthecriticalpathisINR1222.8Million. Theprobabilityofthesuccessfulcompletionofpath2orthecriticalpathwith inthescheduledtimeis50%.Theprobabilityofthesuccessfulcompletionofth enearcriticalpathorpath1withinthescheduledtimeis84.13%(Z=1.009,P =0.8413).Alsotheprobabilityofthesuccessfulcompletionofallthepathsw ithin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)Carryingoutabout10,000runsoftheMonteCarlosimulation,theEC wasfoundtohaveavalueofINR3532.9MillionandtheEToftheprojectwasfo undtobe4351.12days.ProposedRiskManagementModelfortheUndergroundCorri dorConstructionforMetroRailThegeneralizedriskmanagementmodelfortheun dergroundcorridorconstructionforthemetrorailisproposedonthebasisoft hedetailedanalysiscarriedout.Thismodelcanbeeffectivelyimplementedint heongoingandupcomingmetrorailprojectsacrossthenation.Asapartofthe formulationofriskmitigationstrategies,thefollowingriskresponseplanning canbeadaptedbytheprojectauthority:(i)(ii)(iii)(iv)(v)Risktransfer, RisksharingRiskreductionRiskcontingencyplanningandRiskmitigationthroug hinsurance.

CONCLUSIONProjectriskmanagementwhichprimarilycomprisesscheduleandcostu ncertaintiesandrisksshouldbeessentiallycarriedoutforcomplexurbaninfra structureprojectssuchastheconstructionofanundergroundcorridorformetro railoperations.Inthecurrentresearchworkwefoundthatthenumberofmajor andminorrisksinvolvedduringtheconstructionoftheproject,fromthefeasi bilitytothecompletionoftheexecution,arelarge,andifnottreatedormiti gatedproperly,theprobabilityofsuccessfulcompletionoftheprojectwithint hestipulatedtimeandcostframewillreduce.Thiswillhaveadirectimpacton theefficiencyandprofitabilityoftheorganization.Aspertheanalysiscarri edoutbyEVM,basedontheexpertquestionnairesurvey,theexpectedprojectco stforthesamplestretchunderanalysis(530mtunnelfromstationS5toS6,S6 stationboxand180mover-runtunnel)isabout22.51%higherthanthebasecos testimateoftheproject.Accordingtothebasicassumptionsmadefortheanaly ticalprocedureadopted,themaximumpermissiblecostoverrunfortheprojectis 25%.Thusifproperprojectriskmanagementisnotcarriedoutbytheauthority ,theprojectmayresultinacostandtimeoverrunwhichwillultimatelyreduce thefeasibilityofthesuccessfulcompletionoftheproject.Theexpectedproje cttimeasobtainedbytheanalysisisabout23.36%higherthanthebasetimees timateoftheproject,themaximumpermissibletimeoverrunasperthebasicass umptionsbeing30%ofthebasetimeestimate.Thisvalueisalsoquitealarming makingtheconcernedauthorityfeeltheneedforcarryingoutproperriskmanage mentforsuchcomplexinfrastructureprojects.Henceconsideringtheresultsof alltheanalysescarriedoutinthisresearchwork,itcanbeconcludedthatfor complexinfrastructureprojectslikethatofanundergroundcorridorconstructi on,basedonEVM,aboutINR0.82Millionextraperdayperstationwouldbeincu rredifproperriskmanagementisnotfollowedtomitigatetheanticipatedrisks .Thusforsixundergroundstationsforthis6.6kmundergroundmetrocorridorp ackageapproximatelyINR4.92Millionextraperdaywillhavetobeincurredby theprojectauthorities.Althoughatpresent,averynominalpercentageofident ifiedriskscanbeinsuredundertheexisting“ContractorsAllRiskPolicy”,thepot entialityofinsuranceandthemeansofmakinginsuranceastrongriskmitigatio ntoolfortheconstructionindustryprovidescopeforfutureresearch.APPENDIX 1:AdditionalProjectDetails

Lengthofroute Project Details6569m Description(a)Tunnel(byTunnelBoringMachine[TBM])-3811m(b)Tunnel(by Cut&Covermethod)937m(c)Stationboxes-1821m AveragedepthofstationsTypicalwidthofstationsTypicallengthofstationsD esignlifeMajorScopeofCivilEngineeringWorks 15-20mbelowgroundlevelAverage20m275mto300m120yearsforunderground structuresand50yearsfor (a)Excavation(soil)(b)Excavation(rock)(c)Concreting(d)Reinforcement(e) Strutting ::::: 10,90,000superstructurescum.2,15,000cum.3,00,000cum.47,500MT24,500MT

APPENDIX2:SampleQuestionnaireforFeasibilityProjectRisk(FPR) FPR1:FeasibilityProjectRisk1–RisksinPreparationofFeasibilityReportWei ghtagRiskDelayinsubmissionofpreliminaryfeasibilityreportDescriptionDel ayinapprovalforcarryingoutdetailedfeasibilitystudyinpreparationandsu bmissionofdetailedDelayprojectinapprovalofDPRDelayreport(DPR)CLF=0. 027CIF=0.096FPR2:ResettlementandRehabilitationRisksResettlementsiten otacceptedbyaffectedpartiesResettlementsiteverycostlyLitigationbyaffe ctedpartiesResistanceandagitationbypoliticalpartiesCLF=0.059CIF=0.1 67FPR3:Pre-investmentRisksCancellationofprojectafterbiddingDelayinse ttingofconsortium(JV)ProlongeddelayinprojectfinalizationCLF=0.045CIF =0.1340.10.350.30.0230.050.08Total20.1550.900.950.800.350.150.4 50.50.0850.0550.030.01Total50.1850.950.800.950.90Likelihood0.15 (Lij0.20)0.200.30e(LP0.02)90.03(Wi00.018j)0.04Total0.1214Imp act0.65(Iij0.75)0.850.90

FPR4:LandAcquisitionRisks RiskPoliticalinterferenceDescriptionDelayinfinalizingtemporaryrehabilati onschemesPublicinterferenceforchangingthealignmentInterferenceofenviro nmentalactivistsDelayduetointerdepartmentalissuesDelayinconstructionof diversionroadsforexistingtrafficProblemswiththephysicalpossessionofl andCLF=0.136CIF=0.264FPR5:FinancialClosureRisksProjectnotbankable LendersnotcomfortablewithprojectviabilityAdverseinvestmentclimateCLF= 0.011CIF=0.061FPR6:PermitandApprovalRisksDelayincontractualclearanc esDelayinprojectspecificordersandapprovalsDelayintheapprovalofmajor utilities(telecomcables,electricalcables,stormwaterdrains,sewerlines, filteredandunfilteredwaterlines)Delayinclearancefromenvironmentaland forestdepartmentsCLF=0.070CIF=0.153CLFFeasibility=0.348(0.027+0.05 9+0.045+0.136+0.011+0.070)CIFFeasibility=0.875(0.096+0.167+0.134+0 .264+0.061+0.153) Likelihood0.550.40.250.40.350.20.65 Weightage0.0130.0550.0550.0120.030.010.11Total:40.29560.90.850.9 0.90.90.850.95 0.20.150.1 0.0350.000.03Total:50.0755 0.850.750.80 0.20.25 0.0230.019 0.800.85 0.450.5 0.040.079Total:80.169GrandTotal:1 0.900.95