PGPM 31_NICMAR Assignments

NICMAR  NICMAR INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH SCHOOL OF DISTANCE EDUCATION

ASSIGNMENT

NICMAR/CODE OFFICE

1. Course No.

:

PGPM 31

2. Course title

:

Project Risk Management

3. Assignment No.

:

1

4. Date of Dispatch

:

5. Last Date of receipt

:

of Assignment at CODE office

ASSIGNMENT

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 project and formulate the most suitable structure for the management of such risks. There are certain variables and uncertainties are common to most of the infrastructure projects. Many risk mitigation techniques are applied to infrastructure infrastructure projects. Discuss in details the risk risk management in construction with special reference to any project project currently in progress with with your company. company.

SYNOPSIS 

Introduction



Risk identification in the project



Types of risk 



Risk mitigation



Risk assessm assessment ent in a project project



o

Scope of the work 

o

Risk assessment sheet

o

Risk control measures

Conclusion

INTRODUCTION The project of any industry depends upon the following uncertainties 1. Time 2. Money 3. Manp Manpow ower er and and 4. Resour ources

It is also a key factor to note that as as the project value increases, increases, the risk also increases. But as project duration decreases, the risk also increases. Thus on the successful running for a  project, optimum duration and optimum utilization utilization of the resources are the most important to  be considered. Thus risk minimization is the most key role for project profit maximization by any project manager man ager.. In the present assignment, I have tried to assess the risks involved in the project at which I have involved in my career. I have also explained the risk mitigation techniques u ndertaken  by us to reduce the risk in the project.

RISK IDENTIFICATION IDENTIFICATION IN THE PROJECT Risk Ri sk id iden enti tifi fica cati tion on oc occu curs rs th thro roug ugh h ea each ch of th thee tw two o pha phase sess of pr proj oject ect de deve velo lopm pmen ent: t: 1. Planning 2. Con Constr struct uction ion 1. Plann Planning ing phas phasee

In the planning phase risk is been identified from one of the following following methods, 1.1 Brai Brainsto nstormi rming ng 

It is an effective method. Brainstorming Brainstorming can range from a small informal informal project team.



Effort for simpler projects to a full-blown CEVP workshop and



Effective Effe ctive brainstorm brainstorming ing requires requires a skill skilled ed Facil Facilitator itator,, working together together with the proje project ct team and specialists who can bring additional expertise.

1.2 Checklist Checklistss and/or and/or Questionna Questionnaires ires to specialty groups 

Checklists/q Checkl ists/questi uestionnair onnaires es are a quick and easy-t easy-to-use o-use technique technique but limited limited in nature; they only deal with the items on the list.



Each project is unique; hence a standard list list will often not capture the project specific specific risks of most concern.



 Nonetheless a checklist/questionnaire can spark thinking prior to a more formal  brainstorming process

1.3 Examinat Examination ion of past similar similar projects projects  – 

Lessons learned from past projects help us to avoid repeating repeating mistakes; using past examples requires prudent and objective judgment, since a previous project may be similar but is nonetheless different different because each new project has unique requirements requirements and features, including inclu ding uncert uncertainti ainties es and risks 1.4 Combinati Combination on of above methods methods and/or others

It is quite likely likely that for most projects projects a combination of the above methods will be used to identify risks. risks. The important thing is that once identified the the risks are properly documented

2. Construction Phase

Among the most common risks encountered during during the construction of a project by a civil engineering engineering contractor contractor under under a standard standard type of constructio construction n contract, contract, are the followin following: g: 1. Design Design error errors, s, quanti quantifi ficati cation on errors. errors. 2. Design Design changes found found necessary necessary,, or required required by the employ employer er.. 3. Unforeseen Unforeseen physical physical conditi conditions ons or artif artificial icial obstructio obstructions. ns. 4. Unforeseen Unforeseen price price rises rises in in labour, labour, materials materials or or plant. plant. 5. Theft or damage damage to the the works, works, or materi materials als and equipmen equipmentt on site. site. 6. Weather eather conditions, conditions, including including floods floods or excessive excessive hot weather weather.. 7. Delay or inability inability to to obtain materia materials ls or equipment equipment requir required. ed. 8. Inability Inability to get get the amount or quality quality of of labour require required, d, or labour strikes strikes.. 9. Errors Errors in pric pricing ing by the the contrac contractor tor..

RISK MITIGATION The following are the ten ways to mitigate risk in construction projects 1. Ensure Ensure the the adequ adequacy acy of of projec projectt fundi funding ng 2. Obtain Obtain more more geot geotechn echnica icall inform informati ation on 3. Conduct Conduct constr construct uctabi abilit lity y revi reviews ews 4. Set reali realisti sticc contrac contractt perform performanc ancee times times 5. Work & rewor rework k cost cost infor informat mation ion 6. Intr Introdu oduce ced d phase phase pri prici cing ng 7. Pre-pl Pre-plans ans for for permit permits, s, utilit utilities ies & zonin zoning g 8. Pre-de Pre-defin fined ed rates, rates, equati equations ons & proced procedure uress 9. Use experie experience nced d proje project ct pers personne onnell 10. Use the contracting contracting process as a risk avoidance measure The above techniques are the most commonly used to prevent the risk in any project.  Ensure the the adequacy adequacy of project project funding  funding 

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  money. such as that provided by a termination-for-convenience clause that expressly limits or   precludes recovery of anticipated but unearned profits. Furthermore, owners need to understand, in advance, that changes and cost increases are virtually inevitable. Accordingly, a reasonable contingency should be incorporated into the  budget to deal with inevitable changes and unexpected omissions.

Obtain more geotechnical information

It should go without saying that the more information a contractor has about subsurface conditions. conditions. The more accurate accurate the the bid - and less likely will be claims claims for differing differing site conditions. There is a decided trend toward (1) investing a little more money during during project  planning and design for the purpose of obtaining more geotechnical information and (2) making all of the geotechnical information available available to contractors. contractors. Some owners and their counsel will argue that this open disclosur e will lead to claims if  the geotechnical geotechnical Informat Information ion is wrong. This misses misses the basic point that if the bid was based based on less- than-complete information, information, that becomes the bargain. bargain. Accordingly, if the actual actual underground conditions are are worse than the geotechnical informatio information n provided. provided. The owner should pay because, if the the contract contractor or had been advised advised of the more severe conditions, it certainly would have increased its bid. Conduct constructability reviews

Contractors sometimes complain that the designs they are required to follow are not constructible or practical. practical. If this is the case, there may be delays and additional costs incurred incurred in coming coming up up with with alternati alternatives. ves. Even if the the design design is constr constructibl uctiblee the owner may have have to pay more to get the same results. By having the plans and specifications reviewed for  "constructability"  before contractors bid on them, owners have been able to modify the designs and thereby make construction easier.  Set realistic realistic contract contract performance performance times times

If the contract performance time is insufficient. either it will cost more to do  By having  the plans and specificatio specifications ns reviewed for "constructabil "constructability ity " before contractors contractors bid on them, owners have been able to modify the designs and thereby make make 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 construction of  a.given project Work & rework cost information

The owner can require as a contract obligation that the contractor make full disclosure of its cost estimates for all aspects of the the work. i.e .• procurement of materials. materials. subcontractors

self-performed work and even overhead and p rofit. 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.  Introduced  Introduced phase phase pricing  pricing 

As the design is being developed, each phase of the design can be provided to to the contractor contractor for review, review, analysis analysis and submission submission of progressive progressive cost estimates. estimates. Obviously Obviously contractors may talk at this intrusion into their pricing domain. However, However, in order to win win the proje project, ct, the contrac contractor tor will will be more likely to agree to this  process which in the end will reduce the likelihood for cost-overrun claims.  Pre-plans  Pre-plans for permits, permits, utilities utilities & zoning  zoning 

Given the various regulatory requirements that have to be complied with in the course of designing 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 requirements in advance of bidding and signing the contracts  Pre-defined  Pre-defined rates, rates, equations equations & procedure proceduress

In order to eliminate eliminate many issues from the contract administration phase, smart owners will specify clear and accurate formulae or methods to predetermine values for disputable 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 used used in, prici pricing ng change change orders orders.. It is equally important for the contract to contain very clear provisions with respect to how change orders orders will be processed processed and what information information should be included included in a request for  change orders. The same is true for farceaceount farceaceount provisions; which would enable the the contractor to be  paid on a timely is for disputed work, pending negotiation of a change order modification. Also give some some considerati consideration on to including including as a unit price. A per diem value value for extended extended project project time. 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 

 No matter how enlightened the management and allocation of risk •.the project  personnel (i.e.. people) will still have to design. Build and adminiSter the project, Experience counts, particularly for big big projects With a construction construction boom underway. Design and construction firms are often maxed out in terms of ex perienced project managers and superintendents. Notwithstanding this reality. no design flrm or contractor wants wants to lose a good  job. Consequently, many projects are being led and managed by inadequately inadequately trained and inexperienced personnel. which 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 key parties' personnel and require, as a matter of contract, that only experienced project project managers and superintendents will run the high-profile project. Use the contracting process as a risk avoidance measure

The contract documents are an early ea rly opportunity to anticipate. define and deal with  potential issues and thereby avoid disputes. Essentially. the contracting process is a "what if' exercise, whereby the parties attempt 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 approach is of course, the American way of doing things, and at least two downsides to a comprehensive contract are typically a lengthy document and sometimes lengthy negotiations.

SCOPE OF THE PROJECT  Name of the project

:

Metro Rail Project Proposal

Location

:

Mumbai, India

Project definition

:

The Government of India has decided the increase

the infrastructure facility in India, so as to increase increase economic growth of the nation by increasing the import & export facility. facility. Project duration

:

3765 days

Type of contract

:

Item rate contract

Project funding

:

Finance arranged by the Government of India

Design responsibility

:

Renovation of existing structures needs to be

Price fluctuation

:

Not allowable

Extension of time

:

Not permitted

Liquidated damages

:

2% of the contract value per week of the project

considered

Limit upto 15% of the contract value

Project Summary

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 about 65 kms with 59 stations. The estimated capital cost of Phase-I is about INR 105 billion. The  project under study for this research work is a part of Phase I. The scope of work is the design and constructio construction n of a 6.6 km underground underground metro corridor corridor with six underground underground stations stations and a twin tunnel system. The underground stations are referred to as S 1, S2,…. S6. Here S6 is the terminal station equipped equipped with an over-run tunnel (where (where an up train can be converted converted to a down train). train). The client client is a  public sector company floated jointly by the State and Central

Government.

The The prin princi cipa pall contr contrac acto torr is a Joint Joint Ve Vent ntur uree (JV) (JV) of thre threee foreig foreign n contra contract ctor orss and two domestic contractors. The type of contract is a Design Build Turnkey (DBT) where the principal contractor contractor is required required to design the underground underground 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 for execution). Table 1: Major Activities Activities and their their Time Estimates in the Underground Corridor Construction Project (Terminal Station S6)

Activit A B C D E F G H I J K 

Descripti

Feasibilit Feasibilit studies Desi n Techno Technolo lo selec selecti tion on Traffic diversion Utilit Utilit diversi diversion on Surve Surve works works Shoul Shoulder der / Kin Kin iles iles Timb Timber er la in Soil excavation Rock excavation Fabrication and erection of 

Immediate Duratio A A B C B D C GFH L C

1875 29 90 47 31 29 35 24 33 16 17

C 69 Fabrication and erection of steel N 28 Rock anchor installation L 12 Shotcretin Shotcretin & rock boltin 17 Subfloor Subfloor draina e 12 Water roofin IKJM C 14 Dia hra m wall construction 12 To down construction construction R  N 57 Permanent structure S P, 22 Mechanical / Electrical T N 22 Backfillin Backfillin & restoration restoration works U ES: Early Start; EF: Early Finish; LS: Late Start; LF: Late Finish L M N O P

0 1875 1875 2280 1965 2280 2755 1965 3111 2655 1965

1875 2170 1965 2755 2280 2570 3111 2205 3411 2820 2135

0 1985 1875 2280 1965 2821 2755 2871 3111 3276 2941

1875 2280 1965 2755 2280 3111 3111 3111 344 1 344 1 3111

1965 2280 2655 2110 344 1 1965 2110 2280 3561 2280

2655 2565 2775 2280 3561 2110 2232 2850 3786 2505

2421 3156 2871 2821 3441 2604 2749 2991 3561 3561

3111 344 1 2991 2991 3561 2749 2871 3561 3786 3786

METHODOLOGY

 Risk Analysis by Expected Value Method (EVM)

Assume a network of deterministic deterministic time and cost. We also assume that the critical critical path 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 (2007), and explain, in this section, the concept of risk analysis by the Expected Value Method (EVM). Define the variables as follows:

METHODOLOGY

 Risk Analysis by Expected Value Method (EVM)

Assume a network of deterministic deterministic time and cost. We also assume that the critical critical path 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 (2007), and explain, in this section, the concept of risk analysis by the Expected Value Method (EVM). Define the variables as follows:

Lij

:

Likelihood of ith risk source for jth activity

Wij

:

th th Weightage of i risk source for j activity

Iij

:

Impact of i

CLF j

:

Comp Compos osit itee Like Likeli liho hood od Fact Factor or for for jth activity

CIF j

:

th Comp Compos osiite Impac mpactt Facto actorr for j activity

BTE j

:

Base Time ime Estimate for j

BCE j

:

th Base Cost Estimate for j activity

CC j

:

Corrective Cost for j

CT j

:

Corrective Time for jth activity

th

risk source for j

th

th

th

activity

activity

RC j

:

th Risk Cost for j activity

RT j

:

Risk Time for j

EC j

:

th Expected Cost for j activity

ET j

:

th Expected Time for j activity

th

activity

activity

Base Base time time esti estima mate te (BTE) (BTE) of the the proje project ct is the the estim estimat ated ed basi basicc proj project ect durati duration on determined determined by critical path method of the project project network. network. Similarly, Similarly, the estimated estimated 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 of the project have been obtained as per the 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 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 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. The likelihood of failure (L ij) defined above, of the identified risk sources of each activi activity ty were obtaine obtained d throug through ha

questio questionnai nnaire re s u r v e y . The target target respond respondent entss were were

experts and professiona professionals ls involved involved in and associated with with the project under analysis analysis and also other similar projects. projects. The corresponding corresponding weightage weightage (Wij) of each activity has also been obtain obtained ed from from the the feedbac feedback k of the questio questionna nnaire ire survey survey circul circulate ated d among among experts experts.. The summation of the weightages should be equal to 1.  M  ∑ Wij = 1 for all j ( j = 1 …. N) ….

(1)

i1 The weightages can be based on local priority (LP) where the weightages of all the subactivities of a particular activity equal 1. Also, weightages can be based on global priority (GP) where where the weightages weightages of all the activities activities of the project project equal 1. The mean of all the 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 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: Risk Cost for for activity activity j (RC) j  j = (CC) j  j x L j

for all j.

Risk Time for activity j (RT) j = (CT) j  j x L j for all j

……

(2)

……

(3 )

The total risk time for an activity is the summation of the risk time of all the sub activities along the critical path.

The likeli likelihood hood (Lij) of all all risk risk sour sources ces for each acti activi vity ty j can can be combi combine ned d and 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 likelihoods 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 cost of the activity. A similar computation as that of likelihood can be done for  obtain obtaining ing a single single combine combined d composi composite te impact impact factor factor (CIF) (CIF) by conside considerin ring g the weighte weighted d average as per the relationship given below:

 M  Composite Impact Factor (CIF) j = ∑ Iij Wij

…………(5)

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 risk impact. impact. Thus the numeri numerical cal value value will range range from 0 to 1. This severit severity y can also be 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  below mentioned relationship: Risk Consequence Consequence / Severity Severity (RS) j  j = L j x I j  j for all j

…..

(6)

The risk consequence derived from this equation measures how serious the risk is to  project performance. Small values represent unimportant un important risks that might be ignored and large values represent important risks that need to be treated. The expected expected cost cost (EC) (EC) j  j

and expecte expected d time time (ET) (ET) j  j

for each project project activity activity and

subseque subsequently ntly the computa computatio tion n of the expecte expected d projec projectt cost cost and time time w was as carrie carried d out out

from from

the concept of the expected value (EV) of a decision tree analysis. Expected value (EV) = probability of occurrence (p) [higher payoff] + (1-p) [lower payoff]. payoff].

Expected Cost (EC) j  j = L j (BCE j + CC j) + (1-L j) BCE j

= BCE j + CC j (L j) = BCE j + RC j for all j.

……..

(7)

Expected Time (ET) j = L j (BTE j + CT j) + (1-L j) BTE j = BTE j + CT j (L j)

= BTE j + RT j for all j.

……. (8 ( 8)

CASE ANALYSIS

The sample stretch under analysis consists of a 530 metre(m) cut and cover tunnel connecting station S5 and S6, a 290m S6 station box and a 180m cut 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 S 5 will travel through the 530m cut and cover  tunnel and enter the platforms of the terminal station station S 6. After the commuters vacate the train at this terminal station, this down train will travel through the 180m over run tunnel and will  be converted into an up line train which will travel from station S6 to S1.

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  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 concourse slab for station boxes.

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 the the proj projec ectt beco become mess less less feas feasib ible le and and (ii) (ii) the the maxi maximu mum m perm permis issi sibl blee time time over overru run n 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. No. No. Risk  Risk Classification Nomenclature

Risk  Description

Feasibility Feasibility Project Risk  Risk 

1

FP R  

2

PEPR 1

Pre execution Project Risk – Design Risks

3

PEPR 2

Pre execution Project Risk – Technology Risks

4

EPR 1

Execution Project Risk – Risks in traffic

5

EPR 2

Risks in utility diversion works

6

EPR 3

Risks in survey works

7

EPR 4

Risks in soldier piling and king piling works.

8

EPR 5

Risks in timber lagging works.

9

EPR 6

Risks in soil excavation works

10

EPR 7

Risks in rock excavation works

11

EPR 8

Risks in installation of construction decks

12

EPR 9

Risks in installation of steel struts

13

EPR 10

Risks in installation of rock anchors

14

EPR 11

Risks in shotcreting and rock bolting works

15

EPR 12

Risks in subfloor drainage works

16

EPR 13

Risks in waterproofing works

17

EPR 14

Risks in diaphragm wall construction

18

EPR 15

Risks in top down construction

19

EPR 16

Risks in permanent structure works

20

EPR 17

Risks in mechanical and electrical installation

21

EPR 18

Risks in backfilling and restoration restor ation works

 Application of EVM for Risk Analysis of the Project 

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  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 considered as the duration of the  project. The BCE and BTE of each activity and sub-activity of the project 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 the severity severity and casualty caused caused by that risk. Each activity of the project as presented in figure 1 has been analyzed at the subactivity level for computation of RC, RT, EC, ET and risk severity. The detailed analysis for computation of risk cost and time for all the activities of the project is presented below. Table 4: Expected Cost and Time Time Analysis for the Project

Activity (CLF) j  j

A B C D E F G H I J K  L M  N O P R  S T U TOTAL

0.348 0.356 0.27 0.319 0.262 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 0.398 0.354

Base Cost

Corrective

R isk 

Base

Cor.

R isk 

Exp

Exp

EC

ET

Estimate

Cost

Cost

Time

Time

Time

Cost

Time

%

%

(BCE)j

(CC)j

(RC)j

Estimate

(CT)j

(RT)j

(EC)

(ET)j

Hig

H ig

INR 

INR.

INR 

(BTE)j

Days

Days

 j

Days

her

her

60 32 10 11.9 82.4 8.66 176.465 15.975 122 56 108 24 5 49.2 70.3 58 83.2 59.2 77.2 596.5 217.7 189.3 23 2 9

20.88 11.392 2.7 3.7961 21.5888 1.61076 49.4102 4.0257 45.994 23 .4 6 4 42.984 89.915 16.974 24.1129 17.748 31.9488 16.4576 17.5244 133.019 86.6446 67.0122 729.202

1875 295 90 475 315 290 356 240 3 30 165 170 690 285 260 170 120 145 122 570 225 225 3786

1130 24 5 85 355 267 24 7 356 180 205 14 0 113 485 250 185 13 0 95 115 88 415 180 163

393.24 26 260. 2268. 87.22 121. 382.2 22 2 2.95 4 112.9 113.25 53.7 58 588.2 69.95 12 1 21.5 384.9 45.94 11 1 1.61 335.9 99.68 269.4 455.6 4 5 .3 6 24.0 28 285.3 77.29 195. 40 407.2 58.66 103. 223.6 44.97 162. 21 214.9 178 389. 8 86.25 66.9 371.2 63.46 10 104.1 323.4 39.78 77.7 209.7 3 6 .4 8 15 151.9 156.4 31.97 76.4 17 1 76.9 19.98 97.5 14 141.9 92.55 933.0 662.5 71.64 386.6 296.6 57.7 317.0 282.7 884.47 3969. 4670.

24 0 110 40 50 100 10 220 20 150 80 120 300 50 80 60 120 60 80 800 300 250 3 24 0

As per per Figure Figure 1 which which repr represe esent ntss the crit critica icall path path diag diagra ram m of the entir entiree

8 10. 6.7 7.5 21. 16. 22. 20. 30. 29. 35. 29. 33. 30. 29. 26. 27. 21. 16. 28. 26. 22.

20.9 29.5 25. 2 3 .8 22.2 15.8 2 18. 23 .4 35.5 26.4 25. 30.2 24 . 4 23 . 3 0. 22.0 16.3 16.2 31.8 25.6 23 .3

studies) the CLF is 0.348 as obtained from the feedback of the questionnaire survey (refer  appendix 2). The base cost estimate (BCE) j for the activity feasibility 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 days; the corrective time (CT) j  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  j = BCE j + RC j

= INR 260.88 Million, expected time (ET) j = BTE j +

RT j = 2268.24 days. Table 5: Project Expected Cost and and Time Analysis [Based [Based on Questionnaire Questionnaire Survey]

Base

Risk 

Base

Risk 

Expected

Expecte

Cost

Cost

Time

Time

Cost (INR 

d Time

3240

729.2

3786

8 84 .4 7

3969.2

4670.47

Thus as per the analysis, the EC of EC  of the project is 22.51 % higher than the BCE of BCE  of the  project. The ET  of the project is 23.36 % higher than the BTE .

As pe p er th t he ba b asic

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  base time. Exceeding these limits would increase the chances of the project becoming less feasibl feasible. e. The risk risk managem management ent analysis analysis predic predicts ts that that the expected expected cost of the project project is 22.51% higher than the estimated base cost. This situation is highly alarming as it is the upper  limit limit of the permiss permissible ible cost overrun overrun.. It require requiress meticu meticulou louss plannin planning g and proper proper risk  risk  mitigation measures to enhance the probability of success of the project. The expected time  predicted from the analysis is 23.36% higher than the estimated base time which is close to the upper upper limit limit of the permiss permissibl iblee time time overr overrun. un. Thus it is essent essential ial to judici judiciously ously follow follow the risk mitigation measures to ensure that the project project is completed within the scheduled time frame.

Risk Severity Analysis using the Concept Concept of CLF and CIF

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 for multiple risk sources in a work package, the likelihood and impact of which can be expressed in terms of CLF j and CIF j respectively respectively.. The scale for the classificati classification on of the risk  severity is expressed as Table 6: Risk Severity Severity Classification Classification Severit Classification 0.00 – V. Lo 0.03 –  Mediu 0.06 –  Hi 0.16 –  0.21 – V. Table 7: Risk Severity Analysis Analysis of Total Project using the Concept Concept of  Composite Likelihood Factor (CLF) and Composite Impact Factor (CIF) Composite

Composite

Description of project

Likelihood

Impact

risk (activity)

Factor

Factor

(CLF) j  j

(CIF) j  j

0.348 0.393 0.27 0.319 0.262 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

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

FPR A PEPR 1 (B) PEPR PEPR 2 C EPR 1 (D) EPR EPR 2 E EPR EPR 3 F EPR EPR 4 G PER 5 (H) PER PER 6 I EPR 7 (J) EPR EPR 8 K  EPR 9 (L) EPR 10 M EPR 11 N EPR 12 O EPR EPR 13 P EPR 14 (Q) EPR 15 R  EPR 16 S EPR 17 T EPR 18 U

Severity

Quantitative

Qualitative

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 . 4 33 0.138

V. Hi h V. Hi h V. Hi h V. Hi h V. Hi h Medium V. Hi h Hi h V. Hi h V. Hi h V. Hi h V. Hi h V. Hi h V. Hi h V. Hi h V. Hi h V. Hi h Hi h Hi h V. Hi h Medium

the EVM and PERT analysis in terms of the severity of the major activities of the project is  presented in Table 8 Table 8: Outcome of Risk Severity analysis by Expected Value and PERT

V.High

High

Medium

Design Technology

Traffic diversion Top

Survey Backfilling

selection

down

&

Utility Utility diversion diversion Soldier  construction Timber  Piles King Piles

lagging Mechanical &

Soil / Rock excavation

Electrical Works,

Diaphragm

Permanent Structure

wall Steel struts Rock  anchors Shotcreting and rock   bolting

Restoration

Low  Nil

Application of Monte Carlo Simulation

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  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 the longest durati duration on of 3786 days. Hence this path path is conside considered red as the critic critical al path path of the projec projectt network (refer figure 1). The corresponding cost for the completion of activities along this  path is INR 1220 Million. It is also observed that the probability of o f the successful completion 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 with a probability of about 4.8% for successful completion within the stipulated time and cost frame. There are chances chan ces of this path becoming critical.

The application of the Monte Carlo simulation to the above path analysis resulted in the following outcome: Table 9: Outcome of Path Analysis of the Project Network Diagram App lying Monte Carlo Simulation

Path

Cost

Path

Activi Activity ty / Node

duration

(Rs. Crores)

1

A-B-DB-D-GG-II-P-P-T

3676 3676.1 .17 7

119.28

2

A-CA-C-E-D E-D-G -G-I -I-P-P-T T

3785. 3785.98 98

122.28

3

A-CAC-EE-FF-II-P-P-T

3244 3244.8 .88 8

96.17

4

A-C-H-I-P-T

2879.88

87.11

5

A-C-K-P-T

2479.67

82.09

6

A-C-L-J-P J-P-T

3164.79

108.19

7

A-C-QC-Q-RR-JJ-PP-T T

2741 2741.6 .60 0

92.20

8

A-C-Q-OQ-O-S S-T

3074.89

150.10

9

A-C-Q -O-U

2504.95

65.07

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  all all the the acti activi viti ties es along along the the crit critic ical al path path is INR INR 1222. 1222.8 8 Mill Million ion.. The The proba probabi bili lity ty of the the successful completion of path 2 or the critical path within the scheduled time is 50%. The  probability of the successful completion of the near critical path or path 1 within the schedul scheduled ed time time is 84.13% (Z = 1.009, 1.009, P = 0.8413). 0.8413). Also Also the probabil probability ity of the successf successful ul 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) 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 found to be 435 1.12 days. Proposed Risk Management Model for the Underground Corridor Construction for Metro Rail

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 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  planning can be adapted by the project authority: (i)

Risk transfe sfer,

(ii) (ii)

Risk Risk shar sharin ing g

(iii (iii))

Risk Risk reduc reducti tion on

(iv) (iv)

Risk Risk cont contin inge gency ncy planni planning ng and and

(v)

Risk Risk mitiga mitigation tion throug through h insuran insurance. ce.

CONCLUSION

Project risk management which primarily comprises schedule and cost uncertainties and risks should be essentially carried out for complex urban infrastructure 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 feasibility to the completion of the execution, are large, and if not treated or mitiga mitigated ted properly properly,, the probabi probability lity of successf successful ul comple completio tion n of the projec projectt within within the stipulated time and cost frame will reduce. This will have a direct impact on the efficiency and profitability profitability of the organization. organization. As per per the the analy nalysi siss carr carriied out out by EV EVM, M, base based d on the expe experrt ques questtionn ionnai airre survey, survey, the expected expected project cost for the sample stretch stretch under analysis (530 m tunnel from from station S5 to S6, S6 station box and 180 m over-run tunnel) is about 22.51% higher than the  base cost estimate of the project. According to the basic assumptions made for the analytical  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 cost and and tim timee over overru run n whic which h will will ulti ultimat mately ely reduc reducee the the

feasi feasibi bili lity ty of the the succes successf sful ul

comple completio tion n of the project. project. The expected expected project project time as obtain obtained ed by the analysis analysis is about about 23.36% higher than the base time estimate of the project, the maximum permissible time overrun as per the basic assumptions being 30% of the base time estimate. This value is also quite quite alarmi alarming ng making making the concerned concerned authority authority feel the need for carryi carrying ng out proper proper risk  risk  management 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 corridor construction construction,, based on EVM, about INR 0.82 Million Million extra per day per station would  be incurred if proper risk management is not followed to mitigate the th e anticipated risks. Thus for for six six unde underg rgro roun und d stati station onss for for this this 6.6 6.6 km under undergr grou ound nd metr metro o corr corrid idor or packag packagee appr approxi oxima mate tely ly INR 4.92 4.92 Mill Million ion extra extra per per day will will have have to be incur incurre red d by the the proje project ct authorities. Although at present, a very nominal percentage of identified risks can be insured under the existing “Contractors All Risk Policy”, the potentiality of insurance and the means of making insurance a strong risk mitigation tool for the construction industry provide scope for future research.

Project

Detail

Length of route (a) Tunnel (by Tunnel Tunnel Boring Boring Machine Machine [TBM]) [TBM]) - 3811 m (b) Tunnel (by Cut & Cover Cover method) method) -

6569m

937 m (c) (c) Statio Station n boxesboxes- 1821 m

Average depth of stations

15 - 20 m below ground level

Typical width of stations

Average 20 m

Typical length of stations

275m to 300m

Design life

120 years for   underground

Major Scope of Civil Engineering Works

(a) Excavation (soil)

:

(b) Excavation (rock)

:

(c) Concreting

:

(d) Reinforcement

:

(e) Strutting

:

10,90,000 cum.

2,15,000 cum.

3,00,000 cum.

47,500 MT

24,500 MT

APPENDIX 2: 2: Sample Questionnaire Questionnaire for Feasibility Feasibility Project Project Risk (FPR)

FPR 1: Feasibility Project Project Risk 1 – Risks in Preparation Preparation of Feasibility Report Report

Risk  Delay in submission submission of prelimina preliminary ry feasibility feasibility report

Weightag

Impac

e

t 0.65

Likelihoo

Delay in approval for carrying out detailed feasibility

0.75

Delay in preparation and submission of detailed

0.85

Delay in approval of DPR 

0.90

Total CLF = 0.027

0.121

FPR 2: Resettlement and Rehabilitation Risks Resettlement site not accepted by affected parties

Resettlement site very costly Litigation by affected parties Resistance and agitation by political parties CLF = 0.059

Total

CIF = 0.167

0.185

FPR 3: Pre-investm P re-investment ent Risks

Cancellation of project after bidding Delay in setting of consortium(JV) Prolonged delay in project finalization Total CLF = 0.045

0.155

FPR 4: Land Acquisition Risks

Risk 

Like Likelih lihoo ood d

Weig Weight htag agee

Political interference Delay in finalizing temporary rehabilation schemes Public interference for changing the alignment Interference of environmental activists Delay due to interdepartment interdepartmental al issues Delay in construction of diversion roads for existing Problems with the physical possession of land CLF = 0.136 CIF = 0.264

Total: 0.295

FPR 5: Financial Closure Risks

Project not bankable Lenders not comfortable with project viability Adverse investment climate CLF = 0.011 CIF = 0.061

Total: 0.075

FPR 6: Permit and Approval Risks

Delay in contractual clearances 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

0.5

0 .0 7

Total: 0.169

CLF Feasibility = 0.348 (0.027 + 0.059 + 0.045 +0.136 +0.136 + 0.011+ 0.070)

Grand

CIF Feasibility = 0.875 (0.096 +0.167+0.134 +

Total Total:: 1

0.264 + 0.061 + 0.153)

0.95