NICMAR NICMAR INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH SCHOOL OF DISTAN CE EDUCATION ASSIGNMENT NICMAR/CODE OFFICE 1. Course No.

2. Course title 3. Assignment No. 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 essential is th at persons involved in its implementation be sensitive to the risk involved in t he 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 i nfrastructure projects. Many risk mitigation techniques are applied to infrastru cture projects. Discuss in details the risk management in construction with spec ial reference to any project currently in progress with your company.

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

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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