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NICMAR

NICMAR INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH

SCHOOL OF DISTANCE EDUCATION

ASSIGNMENT

NICMAR/CODE OFFICE

1. Course No. : PGPM 31

2. Module :

3. Course title : Project Risk Management

4. Candidate Name :

5. Reg. No. :

6. ate o! is"atc# :

$. %ast ate o! recei"t :

ASSIGNMENT

&or t#e success!ul im"lementation o! a "roject' it is essential is t#at "ersons in(ol(ed in

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its im"lementation )e sensiti(e to t#e risk in(ol(ed in t#e "roject and !ormulate t#e most suita)le

structure !or t#e management o! suc# risks. *#ere are certain (aria)les and uncertainties are

common to most o! t#e in!rastructure "rojects. Man+ risk mitigation tec#ni,ues are a""lied to

in!rastructure "rojects. iscuss in details t#e risk management in construction -it# s"ecial

re!erence to an+ "roject currentl+ in "rogress -it# +our com"an+.

SYNOPSIS

ntroduction

Risk identi!ication in t#e "roject

*+"es o! risk

Risk mitigation

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Risk assessment in a "roject

o /co"e o! t#e -ork

o Risk assessment s#eet

o Risk control measures

Conclusion

INTRODUCTION

*#e "roject o! an+ industr+ de"ends u"on t#e !ollo-ing uncertainties

1. *ime

2. Mone+

3. Man"o-er and

4. Resources

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t is also a ke+ !actor to note t#at as t#e "roject (alue increases' t#e risk also increases. 0ut as

"roject duration decreases' t#e risk also increases. *#us on t#e success!ul running !or a "roject'

o"timum duration and o"timum utiliation o! t#e resources are t#e most im"ortant to )e

considered. *#us risk minimiation is t#e most ke+ role !or "roject "ro!it maimiation )+ an+

"roject manager.

n t#e "resent assignment' #a(e tried to assess t#e risks in(ol(ed in t#e "roject at -#ic#

#a(e in(ol(ed in m+ career. #a(e also e"lained t#e risk mitigation tec#ni,ues undertaken

)+ us to reduce t#e risk in t#e "roject.

RISK IDENTIFICATION IN THE PROJECT

Risk identi!ication occurs t#roug# eac# o! t#e t-o "#ases o! "roject de(elo"ment:

1. Planning

2. Construction

1. Planning pha!

n t#e "lanning "#ase risk is )een identi!ied !rom one o! t#e !ollo-ing met#ods'

1.1 "#ain$%#&ing

t is an e!!ecti(e met#od. 0rainstorming can range !rom a small in!ormal "roject team.

!!ort !or sim"ler "rojects to a !ull)lo-n CP -orks#o" and

!!ecti(e )rainstorming re,uires a skilled &acilitator' -orking toget#er -it# t#e "roject

team and s"ecialists -#o can )ring additional e"ertise.

1.' Ch!()li$ an*/%# +,!$i%nnai#! $% p!(ial$- g#%,p

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C#ecklists,uestionnaires are a ,uick and eas+touse tec#ni,ue )ut limited in nature7

t#e+ onl+ deal -it# t#e items on t#e list.

ac# "roject is uni,ue7 #ence a standard list -ill o!ten not ca"ture t#e "roject s"eci!ic

risks o! most concern. Nonet#eless a c#ecklist,uestionnaire can s"ark t#inking "rior to a more !ormal

)rainstorming "rocess

1. Ea&ina$i%n %0 pa$ i&ila# p#%!($8

%essons learned !rom "ast "rojects #el" us to a(oid re"eating mistakes7 using "ast

eam"les re,uires "rudent and o)jecti(e judgment' since a "re(ious "roject ma+ )e similar )ut is

nonet#eless di!!erent )ecause eac# ne- "roject #as uni,ue re,uirements and !eatures' including

uncertainties and risks

1.2 C%&3ina$i%n %0 a3%4! &!$h%* an*/%# %$h!#

t is ,uite likel+ t#at !or most "rojects a com)ination o! t#e a)o(e met#ods -ill )e used to

identi!+ risks. *#e im"ortant t#ing is t#at once identi!ied t#e risks are "ro"erl+ documented

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*#e !ollo-ing are t#e ten -a+s to mitigate risk in construction "rojects

1. nsure t#e ade,uac+ o! "roject !unding

2. >)tain more geotec#nical in!ormation

3. Conduct constructa)ilit+ re(ie-s

4. /et realistic contract "er!ormance times

5. ;ork ? re-ork cost in!ormation

6. ntroduced "#ase "ricing

$. Pre"lans !or "ermits' utilities ? oning

-ners also need "rotection against t#e risk o! running out o! mone+.suc# as t#at "ro(ided )+ a termination!orcon(enience clause t#at e"ressl+ limits or "recludes

reco(er+ o! antici"ated )ut unearned "ro!its.

&urt#ermore' o-ners need to understand' in ad(ance' t#at c#anges and cost increases are

(irtuall+ ine(ita)le. 9ccordingl+' a reasona)le contingenc+ s#ould )e incor"orated into t#e

)udget to deal -it# ine(ita)le c#anges and une"ected omissions.

Obtain more geotechnical information

t s#ould go -it#out sa+ing t#at t#e more in!ormation a contractor #as a)out su)sur!ace

conditions. *#e more accurate t#e )id and less likel+ -ill )e claims !or di!!ering site conditions.

*#ere is a decided trend to-ard A1B in(esting a little more mone+ during "roject "lanning

and design !or t#e "ur"ose o! o)taining more geotec#nical in!ormation and A2B making all o! t#e

geotec#nical in!ormation a(aila)le to contractors.

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/ome o-ners and t#eir counsel -ill argue t#at t#is o"en disclosure -ill lead to claims i!

t#e geotec#nical n!ormation is -rong. *#is misses t#e )asic "oint t#at i! t#e )id -as )ased on

less t#ancom"lete in!ormation' t#at )ecomes t#e )argain.

9ccordingl+' i! t#e actual underground conditions are -orse t#an t#e geotec#nical

in!ormation "ro(ided. *#e o-ner s#ould "a+ )ecause' i! t#e contractor #ad )een ad(ised o! t#e

more se(ere conditions' it certainl+ -ould #a(e increased its )id.

Conduct constructability reviews

Contractors sometimes com"lain t#at t#e designs t#e+ are re,uired to !ollo- are not

constructi)le or "ractical. ! t#is is t#e case' t#ere ma+ )e dela+s and additional costs incurred in

coming u" -it# alternati(es. (en i! t#e design is constructi)le t#e o-ner ma+ #a(e to "a+ more

to get t#e same results. 0+ #a(ing t#e "lans and s"eci!ications re(ie-ed !or constructa)ilit+

)e!ore contractors )id on t#em' o-ners #a(e )een a)le to modi!+ t#e designs and t#ere)+ make

construction easier.

Set realistic contract performance times

! t#e contract "er!ormance time is insu!!icient. eit#er it -ill cost more to doBy 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.

it#er scenario is disad(antageous to t#e o-ner. >-ners are a(oiding t#ese "ro)lems )+

o)taining contractor ad(ice and in"ut on setting a realistic time to allo- !or construction o!a.gi(en "roject

Work & rework cost information

*#e o-ner can re,uire as a contract o)ligation t#at t#e contractor make !ull disclosure o!

its cost estimates !or all as"ects o! t#e -ork. i.e .D "rocurement o! materials. su)contractors sel!

"er!ormed -ork and e(en o(er#ead and "ro!it. n doing so' t#e o-ner and its sta!! can )etter

assure t#emsel(es t#at no signi!icant mistakes #a(e )een made in "ricing .t#e -ork and t#at

allo-ances and alternati(es are reasona)le.

ntroduced phase pricing

9s t#e design is )eing de(elo"ed' eac# "#ase o! t#e design can )e "ro(ided to t#e

contractor !or re(ie-' anal+sis and su)mission o! "rogressi(e cost estimates. >)(iousl+

contractors ma+ talk at t#is intrusion into t#eir "ricing domain.

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Eo-e(er' in order to -in t#e "roject' t#e contractor -ill )e more likel+ to agree to t#is

"rocess -#ic# in t#e end -ill reduce t#e likeli#ood !or costo(errun claims.

!re"plans for permits# utilities & $oning

Gi(en t#e (arious regulator+ re,uirements t#at #a(e to )e com"lied -it# in t#e course o!

designing and constructing a "roject' it is o)(ious t#at' i! t#ese re,uirements are not kno-n and

considered in ad(ance dela+s -ill result.

*o a(oid t#is astute o-ners and t#eir engineers are no- )eginning to s"eci!icall+ identi!+

"ermitting re,uirements in ad(ance o! )idding and signing t#e contracts

!re"defined rates# equations & procedures

n order to eliminate man+ issues !rom t#e contract administration "#ase' smart o-ners

-ill s"eci!+ clear and accurate !ormulae or met#ods to "redetermine (alues !or dis"uta)le items.

Eome o!!ice o(er#ead rates' alt#oug# su)ject to -ide (ariation -it#in t#e industr+' can )e "reset

and a contract generall+ acce"ted manual !or determining t#e e,ui"ment rates to )e used in'

"ricing c#ange orders.

t is e,uall+ im"ortant !or t#e contract to contain (er+ clear "ro(isions -it# res"ect to

#o- c#ange orders -ill )e "rocessed and -#at in!ormation s#ould )e included in a re,uest !or

c#ange orders.

*#e same is true !or !arceaceount "ro(isions7 -#ic# -ould ena)le t#e contractor to )e

"aid on a timel+ is !or dis"uted -ork' "ending negotiation o! a c#ange order modi!ication. 9lsogi(e some consideration to including as a unit "rice. 9 "er diem (alue !or etended "roject time.

n t#e e(ent o! an o-nercaused dela+D.t#is (alue could )e included in an+ c)ange order

carr+ing -it# it entitlement to an etension o! time.

%se eperienced project personnel

No matter #o- enlig#tened t#e management and allocation o! risk D.t#e "roject "ersonnel

Ai.e.. "eo"leB -ill still #a(e to design. 0uild and admini/ter t#e "roject' "erience counts'

"articularl+ !or )ig "rojects ;it# a construction )oom under-a+. esign and construction !irms

are o!ten maed out in terms o! e"erienced "roject managers and su"erintendents.

Not-it#standing t#is realit+. no design !lrm or contractor -ants to lose a good jo).

Conse,uentl+' man+ "rojects are )eing led and managed )+ inade,uatel+ trained and

ine"erienced "ersonnel. -#ic# ine(ita)l+ leads to "ro)lems. claims. dis"utes and terminations.

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No o-ner' -#o #as t#e le(erage in a mega"roject to do so. s#ould "ass u" t#e o""ortunit+ to

in(estigate t#e credentials and )ackgrounds o! t#e ke+ "artiesF "ersonnel and re,uire' as a matter

o! contract' t#at onl+ e"erienced "roject managers and su"erintendents -ill run t#e #ig#"ro!ile

"roject.

%se the contracting process as a risk avoidance measure

*#e contract documents are an earl+ o""ortunit+ to antici"ate. de!ine and deal -it#

"otential issues and t#ere)+ a(oid dis"utes.

ssentiall+. t#e contracting "rocess is a -#at i!F eercise' -#ere)+ t#e "arties attem"t to

determine -#at ma+ go -rong' -#at issues ma+ arise )et-een t#e "arties' and t#e )est -a+ to

resol(e t#ese c#allenges' in ad(ance' )+ in!ormed and enlig#tened risk allocation. *#is a""roac#

is o! course' t#e 9merican -a+ o! doing t#ings' and at least t-o do-nsides to a com"re#ensi(e

contract are t+"icall+ a lengt#+ document and sometimes lengt#+ negotiations.

SCOPE OF THE PROJECT

Name o! t#e "roject : Metro Rail Project Pro"osal

%ocation : Mum)ai' ndia

Project de!inition : *#e Go(ernment o! ndia #as decided t#e increase

t#e in!rastructure !acilit+ in ndia' so as to increase economic gro-t# o! t#e nation )+

increasing t#e im"ort ? e"ort !acilit+.

Project duration : 3$65 da+s

*+"e o! contract : tem rate contract

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Project !unding : &inance arranged )+ t#e Go(ernment o! ndia

esign res"onsi)ilit+ : Reno(ation o! eisting structures needs to )e

considered

Price !luctuation : Not allo-a)le

tension o! time : Not "ermitted

%i,uidated damages : 2 o! t#e contract (alue "er -eek o! t#e "roject

%imit u"to 15 o! t#e contract (alue