NICMAR NICMAR INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH SCHOOL OF DISTANCE 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 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 projects. Discuss in details the risk management in construction with special reference to any project currently in progress with your company.

SYNOPSIS
Introduction Risk identification in the project Types of risk Risk mitigation Risk assessment in a 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. Manpower and 4. Resources

It is also a key factor to note that as the project value 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 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. 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 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 been identified from one of the following methods, 1.1 Brainstorming It is an effective 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 specialists who can bring additional expertise. 1.2 Checklists and/or Questionnaires to specialty groups Checklists/questionnaires are a quick and easy-to-use technique but limited in nature; they only deal with the items on the list. Each project 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 projects Lessons learned from past projects help us to avoid repeating mistakes; using past examples requires prudent and objective judgment, since a previous project may be similar but is nonetheless different because each new project has unique 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 combination 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 construction of a project by a civil engineering contractor under a standard type of construction contract, are the following: 1. Design errors, quantification errors. 2. Design changes found necessary, or required by the employer. 3. Unforeseen physical conditions or artificial obstructions. 4. Unforeseen price rises in labour, materials or plant. 5. Theft or damage to the works, or materials and equipment 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 pricing by the contractor.

RISK MITIGATION
The following are the ten ways to mitigate risk in construction projects 1. Ensure the adequacy of project funding 2. Obtain more geotechnical information 3. Conduct constructability reviews 4. Set realistic contract performance times 5. Work & rework cost information 6. Introduced phase pricing 7. Pre-plans for permits, utilities & zoning 8. Pre-defined rates, equations & procedures 9. Use experienced project personnel 10. Use the contracting process as a risk avoidance measure The above techniques are the most commonly used to prevent the risk in any project. Ensure the adequacy of project 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. The more accurate the bid - and less likely will be claims for differing site conditions. There is a decided trend toward (1) investing a little more money during project planning and design for the purpose of obtaining more geotechnical information and (2) making 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 geotechnical 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 information 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 are required to follow are not constructible or practical. If this is the case, there 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 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 contract performance times If the contract performance time is insufficient. either it will cost more to do 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. 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 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 work. i.e . procurement 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. Introduced phase pricing As the design is being developed, each phase of the design can be provided to the contractor for review, analysis and submission of progressive cost estimates. Obviously contractors may talk at this intrusion into their pricing 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 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 rates, equations & procedures In order to 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 in, pricing change orders. It is equally important for the contract to contain very clear provisions with respect to how change orders will be processed and what information should be included in a request for change orders. The same is true for farceaceount provisions; which would enable the contractor to be paid on a timely is for 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 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 projects With a construction boom underway. Design and construction firms are often maxed out in terms of experienced project managers and superintendents. Notwithstanding this reality. no design flrm or contractor wants to lose a good job. Consequently, many projects are being led and managed by inadequately trained and inexperienced 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 key 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 early 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 Location Project definition : : : Metro Rail Project Proposal Mumbai, India The Government of India has decided the increase

the infrastructure facility in India, so as to increase economic growth of the nation by increasing the import & export facility. Project duration Type of contract 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 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 construction of a 6.6 km underground metro corridor with six underground stations and a twin tunnel system. The underground stations are referred to as S1, S2,. S6. Here S6 is the terminal station equipped with an over-run tunnel (where an up train can be converted to a down train). The client is a public sector company floated jointly by the State and Central Government. The principal contractor is a Joint Venture (JV) of three foreign contractors and two domestic contractors. The type of contract is a Design Build Turnkey (DBT) where the principal contractor is required to design the 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 and their Time Estimates in the Underground Corridor Construction Project (Terminal Station S6) Activit y A B C D E F G H I J K Descripti on Feasibility studies Design Technology selection Traffic diversion Utility diversion Survey works Shoulder / King piles Timber lagging Soil excavation Rock excavation Fabrication and erection of Immediate Duratio ES 0 1875 1875 2280 1965 2280 2755 1965 3111 2655 1965 1965 2280 2655 2110 3441 1965 2110 2280 3561 2280 EF 1875 2170 1965 2755 2280 2570 3111 2205 3411 2820 2135 2655 2565 2775 2280 3561 2110 2232 2850 3786 2505 LS 0 1985 1875 2280 1965 2821 2755 2871 3111 3276 2941 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 decks 0 Fabrication erection of steel 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 wall 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 N, 22 U installations& &restoration works S 5 ES: Early Start; EF: Early Finish; LS: Late Start; LF: Late Finish O 5 services

METHODOLOGY Risk Analysis by Expected Value Method (EVM) Assume a network of deterministic time and cost. We also assume that the 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: Likelihood of ith risk source for jth activity Weightage of ith risk source for jth activity Impact of ith risk source 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 activity : : : : Risk Cost for jth activity Risk Time for jth activity Expected Cost for 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 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 (Lij) defined above, of the identified 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 associated with the project under analysis and also other similar projects. The corresponding weightage (Wij) of each activity has also been obtained from the feedback of the questionnaire survey circulated among experts. The summation of the weightages should be equal to 1. M Wij = 1 for all j ( j = 1 . N) . 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 the weightages of all the activities of the 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 activity j (RC)j = (CC)j x Lj for all j. (2) (3) Risk Time for activity j (RT)j = (CT)j x Lj for all j activities 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 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 obtaining a single combined composite impact factor (CIF) by considering the weighted 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 numerical value will range from 0 to 1. This severity 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 / Severity (RS)j = Lj x Ij for all j .. (6) The risk consequence derived from this equation measures how serious the risk is to project performance. Small values represent unimportant risks that might 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 subsequently the computation of the expected project cost and time was carried out 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]. from (5)

Expected Cost (EC)j = Lj (BCEj + CCj) + (1-Lj) BCEj = BCEj + CCj (Lj) = BCEj + RCj 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 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 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 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 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. No. 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 Description 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 piling and king piling works. Risks in timber lagging works. Risks in soil excavation works Risks in rock excavation works Risks in installation of construction decks Risks in installation of steel struts Risks in installation of rock anchors Risks in shotcreting and rock bolting works Risks in subfloor drainage works Risks in waterproofing works Risks in diaphragm wall construction Risks in top down construction Risks in permanent structure works Risks in mechanical and electrical installation Risks worksin backfilling and restoration 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 and casualty 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 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 20 150 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 30.2 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 260. 2268. 0.356 87.22 121. 382.2 88 24 0.27 22.95 Milli 4 112.9 392 2 0.319 113.25 53.7 588.2 on 2 0.262 69.95 121.5 5 384.9 961 5 0.186 45.94 11.61 335.9 . 0.28 99.68 888 269.4 5 455.6 4 7 0.252 45.36 076 24.0 285.3 102 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 8 0.278 31.97 76.4 176.9 488 0.227 19.98 97.5 8 141.9 576 7 0.223 92.55 933.0 662.5 244 8 0.398 71.64 386.6 296.6 195 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 1.61076 290 49.4102 356 4.0257 240 45.994 330 23.464 165 42.984 170 89.915 690 16.974 285 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 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 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: Project 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 the 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 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 feasible. The risk management analysis 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 expected time predicted from the analysis is 23.36% higher than the estimated base time which is close to the upper limit of the permissible time overrun. Thus it 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 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 CLFj and CIFj respectively. The scale for the classification of the risk severity is expressed as Table 6: Risk Severity Classification Severity 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 of Total Project using thehConcept of Composite Table 7: Risk Severity Analysis 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) EPR 14 (Q) EPR 15 (R) EPR 16 (S) EPR 17 (T) EPR 18 (U) 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 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 0.138 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 Severity Qualitative

The risk severity analysis has also been carried out by PERT analysis and the outcome of both

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 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 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 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 completion of activities along this path is INR 1220 Million. It is also observed that the probability of 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 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 Applying Monte Carlo Simulation Path Path 1 2 3 4 5 6 7 8 9 Activity / Node A-B-D-G-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-R-J-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 longest 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 within the scheduled time is 50%. The probability of the successful completion of the 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 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 4351.12 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) (ii) (iii) (iv) (v) Risk transfer, Risk sharing Risk reduction Risk contingency planning and Risk mitigation through insurance.

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 mitigated properly, the probability of successful completion of the project within the 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 carried out by EVM, based on the expert questionnaire survey, the expected project cost 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 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 and time overrun which will ultimately reduce the feasibility of the successful completion of the project. The expected project time as obtained by the analysis is 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 alarming making the concerned authority feel the need for carrying out proper 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 construction, based on EVM, about INR 0.82 Million extra per day per station would be incurred 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 package 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 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. 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 Design 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 cum. super structures 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 Weightag Risk Delay in submission of preliminary feasibility report Description Delay in approval for carrying out detailed feasibility study Delay in preparation and submission of detailed project report Delay in approval of DPR (DPR) CLF = 0.027 CIF = 0.096 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 CIF = 0.167 FPR 3: Pre-investment Risks Cancellation of project after bidding Delay in setting 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 2 0.08 Total 0.155 0.90 0.95 0.80 0.35 0.15 0.45 0.5 0.08 5 0.05 5 0.03 5 0.01 Total 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 Impac t 0.65 (Iij 0.75 ) 0.85 0.90

FPR 4: Land Acquisition Risks

Risk Political interference Description Delay in finalizing temporary rehabilation schemes Public interference for changing the alignment Interference of environmental activists Delay due to interdepartmental issues Delay in construction of diversion roads for existing traffic Problems with the physical possession of land 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 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 CLF Feasibility = 0.348 (0.027 + 0.059 + 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 40.295 0.11 Total: 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 50.075 0.03 Total: 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