dr. alexia nalewaik frics ccp cca november 2015€¦ · dr. alexia nalewaik [email protected] ....
TRANSCRIPT
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Dr. Alexia Nalewaik FRICS CCP CCA
November 2015
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Framing the project success ‘problem’
Risk assessment and management
Types of risk
Auditing risk
Questions and Answers
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Projects are often unique, complex, complicated, dynamic
Projects rely on people
Change is a constant
Different stakeholders have different definitions of success
Risk exists
There are many variables in projects and project management that are difficult to capture ◦ … especially the ‘people’ part
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Risk: vulnerability to the possibility of loss, as a consequence of inherent uncertainty when undertaking an endeavor or course of action
“Risk is 1. A hazard, danger; exposure to mischance or peril. 2. The chance or hazard of commercial loss. 3. An allowance made to cover accidental deficits.” (OED, 2015)
“Something bad could happen” (Hubbard, 2009)
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Multi-faceted Inter-dependent Constantly changing
Any action has more than one possible outcome
and impact
Any action may affect existing risks or generate subsequent risks
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Risks may be project-specific, or related to the organization
Risk can be objective or subjective
Risks can be unknown, then become known ◦ Black swans can become grey swans
Risk requires professional judgment regarding
severity and consequence ◦ … that’s the problem …
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Risk quantification tends not to focus on extreme-impact statistically-unlikely events such as: ◦ war, terrorism, political instability, corruption, earthquake,
tsunami, stock market crash ◦ extreme operational risks of the type discussed in Basel II (et seq.) ◦ space alien invasion, zombie apocalypse
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Technical ◦ Internal ◦ Related to the design of the project, and the materials &
equipment needed to make that design a reality
Financial / Economic ◦ Internal and external ◦ Related to the economic environment, market factors, financing
Statutory / Political ◦ External ◦ Related to the political, cultural, and regulatory environment of
the project and players
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Statutory & political risk
• local law or government policy • government influence on disputes • environmental regulations • property acquisition • permitting • external stakeholder influence • testing & certification • official and unofficial holidays • religious observance • customs (import / export) • visas (immigration)
Financial & economic risk
• inflation
• funding/financing
• market forces
• labor & material costs
• labor & material availability
• interest rate
• currency fluctuation
• bankruptcy
• alternative approaches to insurance
Technical risk
• proven/unproven technology
• implementation methodology
• equipment & material performance
• planning & design complexity
• commissioning & testing
• evolving requirements
• tie-in to existing project or interface
• scope change
• engineering & design change
• metric vs imperial measurement
• differing standards
• specialized equipment & materials
• long-lead equipment
• project in an operating facility
• design conflict / interference
• information technology systems
• scalability
• security vulnerabilities
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Organizational ◦ Internal ◦ Related to the structure of the organization, culture, relationships,
management, and capability
Contractual ◦ Internal ◦ Related to the structure and language of legal agreements
implements on the project
Other ◦ Internal and external
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Contractual risk
• contractual liability • warranties • liquidated / consequential / punitive
damages • construction defect • risk transfer • conflicting contract language • inadequate contract protections • intellectual property • new contract / delivery method
Organizational risk
• project team capability
• contractor failure
• contractor/vendor/consultant failure or
default
• mergers & acquisitions
• staff turnover
• stakeholder turnover
• degree of unfamiliarity
• schedule acceleration
• gaps in responsibility or scope
• communication
• executive support of project
• business processes
• delegated authority
• organizational culture
Other risk
• climate • safety • unknown conditions • archaeological findings • contamination • local customs • infrastructure • theft • translation error • productivity • competition
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Reg
ID
Maj Cat Type Description Consequence % Cost Time Score Rank Priority Business
Risk
14
Labor New employee integration Difficulty in hiring quality/skilled
people, efficiency decrease, delayed
startup, no budget to advance hire,
management issues90 3 3 270 High 2
46
Planning &
SchedulingFailure to meet scheduled down time
windows and / or overrun of down
time schedule
Production loss. No more downtime
is available. Need to accelerate,
increase overtime. 90 3 2 225 High 3
20Design Quality issue - pumping hot product
over long distance
Cost/schedule impact to fix
contamination and mold50 2 3 125 Medium
55
Planning &
SchedulingMech/Electrical permits not received
on time
Delay to construction causing
delayed completion and increased
overtime costs 50 2 2 100 Medium
30
Planning &
SchedulingGMP's (existing lines) Contamination, air flow change when
areas are partitioned ; BUSINESS
ISSUES 50 2 2 100 Medium YES
42
Design Inadequate floor loading to take new
Fermentation tanks
Additional rebar / structure
80 1 1 80 Low
2
Generic Risk Changing market forecast Scope change, equipment layout
affected25 3 3 75 Low 1
35
Design Inadequate fire main capacity with
increase of potable water
requirements
Fire pump needed to increase
pressure 35 3 1 70 Low
Impact
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3
4
42
43
45
46
48
49
50
51
53
54
55
56
57
58
59
60
61
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65
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A B E G H I M
MARK # SUBSYSTEMORIGINAL
ESTIMATEMIN. M.L. MAX. Probability
15 BUILDING 13,365,000 13,111,952 13,763,739 15,023,257
1505 Site Works 495,037 432,978 455,766 495,037 100%
1505 Excavation 342,890 220,000 259,410 342,890 100%
1505 Paving 626,782 520,000 541,283 626,782 100%
1510 New Building 823,383 900,859 948,272 995,686 100%
1510 Precast Concrete 3,600,000 3,600,000 3,750,000 4,125,000 100%
1510 Cast-in-Place Concrete 0 1,087,750 1,145,000 1,259,500 100%
1510 Foundations & Curbs 710,568 329,460 346,800 364,140 100%
1510 CMU 419,208 300,960 316,800 348,480 100%
1510 Structural Steel & Metal Platforms 296,751 238,083 250,614 275,675 100%
1510 Roofing & Weatherproofing 381,565 526,738 554,461 582,184 100%
1510 Flooring, Tiles 600,391 568,910 598,853 600,391 100%
1510 Freight Elevator 80,350 76,333 80,350 92,403 100%
1510 Dock Equipment 171,920 150,000 153,040 171,920 100%
1510 Building Electrical 448,174 335,635 353,300 388,630 100%
1510 Building Lighting 552,691 440,783 463,982 510,380 100%
1515 HVAC 832,856 832,856 848,288 890,702 100%
1515 HVAC Electrical 155,968 155,968 166,861 175,204 100%
1520 Storm Water 20,000 20,000 20,000 40,000 100%
1525 Sanitary Sewer 400,000 380,000 400,000 450,000 100%
1530 Utility Rooms 137,000 106,564 112,173 137,000 100%
1535 Fire Protection 185,000 175,000 185,000 200,000 100%
1545 Raw CIP Room 40,000 37,000 40,000 60,000 100%
1565 Recycle & Compactor Area 60,000 130,055 136,900 143,745 100%
1580 Bulk Bag Unloading Area 0 104,500 110,000 115,500 100%
1585 Process Area (Batch Tanks) 0 157,523 165,814 174,105 100%
1599 Building Expense 205,000 97,822 102,970 113,267 100%
Risk 44 Danger of trucks hitting columns 75,000 87,500 100,000 90%
Risk 32 NPDES storm run-off requirements 250,000 425,000 600,000 100%
Risk 13 Addiitional building foundation too shallow 200,000 240,000 250,000 100%
Risk 11 Public utility Commission approval delay 50,000 75,000 100,000 50%
Risk 21 Packaging flow materials capacity 100,000 175,000 250,000 25%
Risk 7 Seismic Issues (investigative works only) 67,000 67,000 67,000 100%
Risk 12 Capped oil well 25,000 75,000 150,000 10%
Risk 45 Insufficient strength in roof to take loads 50,000 150,000 250,000 10%
Risk 52 Fire hydrants needed at back of building 30,000 40,000 50,000 80%
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Cost Risk Analysis
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
45.00 46.00 47.00 48.00 49.00 50.00 51.00 52.00 53.00 54.00
Values $ Million
Pro
ba
bilit
y
Base Estimate Base Estimate With Contingency Risk
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Deming cycle of identification, quantification, modeling, management, and monitoring
Risk Management Plan should include: ◦ risk description ◦ likelihood of occurrence ◦ potential impact ◦ consequences ◦ risk owners ◦ root causes ◦ early warning signs ◦ action plans
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Risk Entry Form Date :
Risk # : Risk Owner :
Current Impact
Risk Description Probability (Percentage)
Consequence Time Impact (1 to 3)
Current Mitigation Cost Impact (1 to 3)
Notes Field Business Impact (Yes/No)
Fallback Plan
Risk Reduction MeasuresAction #: Action Manager Description Target Date Actual Date Status
1
2
3
4
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Results generated from compliance audit more frequently surface human error than fraud
Review scope can be fine-tuned to address the specific needs of the project ◦ Directs team resources to areas that can benefit the most
◦ Tailored to the specific needs of the project at key milestones in the project lifecycle
◦ Focus on obtaining value and return on investment from the review process
Risk-based methodology includes evaluation of any activity that consumes program resources
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Largest school district in the country ◦ Knew they had monies in contingency & reserves for
old projects
◦ Wanted to fund new projects
Issues ◦ Quantify needed contingency and reserves
◦ Formalize processes
◦ Find existing contingency, reserves, & other monies
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Infrastructure project with global impact ◦ Client wanted to develop a five year audit plan
◦ Performance review done at the time of bid award
Issues ◦ Risk
◦ Governance
◦ Additional concerns
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Dr. Alexia Nalewaik [email protected]