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TABLE OF CONTENTS EXECUTIVE SUMMARY..................................................................................................1 EXECUTIVE SUMMARY..................................................................................................1 1. PURPOSE.....................................................................................................................2 2. BACKGROUND............................................................................................................2 3. REPORT SCOPE..........................................................................................................2 3.1 Project Scope..............................................................................................2 3.2 USACE Risk Analysis Process....................................................................2 4. METHODOLOGY/PROCESS.......................................................................................3 4.1 I enti!y an Assess Risk "actors................................................................4 4.2 #$anti!y Risk "actor I%pacts......................................................................& 4.3 Analy'e Cost Esti%ate an Sc(e $le Contin)ency....................................* 5. KEY ASSUMPTIONS.................................................................................................... !. RISK ANALYSIS RESULTS........................................................................................." +.1 Risk Re)ister..............................................................................................., +.2 Cost Risk Analysis - Cost Contin)ency Res$lts........................................1. +.3 Sc(e $le Risk Analysis - Sc(e $le Contin)ency Res$lts........................1. +.4 Co%/ine Cost an Sc(e $le Contin)ency Res$lts................................1. . MAJOR FINDINGS/OBSERVATIONS.......................................................................11 ". MITIGATION RECOMMENDATIONS.........................................................................12 LIST OF TABLES TABLE 1. #ORK BREAKDO#N STRUCTURE BY FEATURE....................................! TABLE 2. SAMPLE PROJECT CONTINGENCIES $BASE COST PLUS COST AND SCHEDULE CONTINGENCIES%.....................................................................................11 FIGURE FIGURE 1. SAMPLE OF PROJECT CONFIDENCE CURVES.....................................12 APPENDIX APPE0DI1 A Detaile Risk Re)ister

EXECUTIVE SUMMARY
Pro2i e a /rie! synopsis o! t(e %ain report3 keep pa)es o! t(e e4ec$ti2e s$%%ary to a %ini%$% co2erin): Report p$rpose. 5ack)ro$n . Project scope. Risk analysis %et(o olo)y. Project e2elop%ent tea% 6PD78 processes $tili'e 6e4cl$ e na%es8 9ey project an risk ass$%ptions. Contin)ency res$lts to t(e !eat$re le2el. :ajor !in in)s;o/ser2ations. :iti)ation reco%%en ations.

ES-1

1.

PURPOSE

Present report p$rpose< ackno=le )in) project na%e< location< an esi)n p(ase. 7(e p$rpose !or a cost an sc(e $le risk analysis 6CSRA8 =o$l /rie!ly present isc$ssion o! t(e st$ ie ele%ents relate to cost an sc(e $le =it( an o$tco%e contin)ency calc$lation at t(e reco%%en e con!i ence le2el !or /ot( cost an sc(e $le t(at are %eas$re in ter%s o! ollars an %ont(s< respecti2ely. 7(e %ost co%%on an reco%%en e contin)ency (as /een esta/lis(e at ,. percent con!i ence. 2. BACKGROUND

Present project /ack)ro$n < incl$ in) any relate con)ressional appropriations< esi)n e2elop%ent p(ase< an /rie! (istory. 3. REPORT SCOPE

7(e scope o! t(e risk analysis report is to calc$late an present t(e cost an sc(e $le contin)encies at t(e ,. percent con!i ence le2el $sin) t(e risk analysis processes as %an ate /y U.S. Ar%y Corps o! En)ineers 6USACE8 En)ineer Re)$lation 6ER8 111.2-11&.< En)ineerin) an Desi)n !or Ci2il >orks< ER 111.-2-13.2< Ci2il >orks Cost En)ineerin)< an En)ineer 7ec(nical ?etter 111.-2-&*3< Constr$ction Cost Esti%atin) @$i e !or Ci2il >orks. 7(e report presents t(e contin)ency res$lts !or /ot( cost an sc(e $le risks !or all project !eat$res. 7(e st$ y an presentation can incl$ e or e4cl$ e consi eration !or operation an %aintenance or li!e cycle costs< epen in) $pon t(e pro)ra% or ecision oc$%ent inten e !or !$n in). 3.1 P&'()*+ S*',) Pro2i e any con)ressional %an ates an appropriations. 7(e report incl$ es t(e project tec(nical scope< esti%ates< an sc(e $les as e2elope an presente /y 6list t(e na%e o! t(e pro $ct e2eloper /y istrict or esi)n !ir%8. ConseA$ently< t(ese oc$%ents ser2e as t(e /asis !or t(e risk analysis. In )eneral ter%s< t(e constr$ction scope consists o! t(e !ollo=in): ?ist %ajor project !eat$res st$ ie !ro% t(e ci2il =orks =ork /reak o=n str$ct$re 6C>>5S8. In icate t(e appro4i%ate esi)n p(ase. :any ti%es< 2ario$s esi)n !eat$res are at 2aryin) esi)n sta)es< =(ic( i%pact t(e contin)ency res$lts. I! t(ere is a esi)n A$ality or scope 2ariance /et=een 2ario$s critical !eat$res< =(ic( s(o$l /e %a e kno=n.

3.2 USACE R-./ A0123.-. P&'*).. 7(e risk analysis process !ollo=s t(e USACE Bea A$arters reA$ire%ents as =ell as t(e )$i ance pro2i e /y t(e Cost En)ineerin) Directory o! E4pertise !or Ci2il >orks 6Cost 2

En)ineerin) D18. 7(e risk analysis process re!lecte =it(in t(e risk analysis report $ses pro/a/ilistic cost an sc(e $le risk analysis %et(o s =it(in t(e !ra%e=ork o! t(e Crystal 5all so!t=are. 7(e risk analysis res$lts are inten e to ser2e se2eral !$nctions< one /ein) t(e esta/lis(%ent o! reasona/le contin)encies re!lecti2e o! an ,. percent con!i ence le2el to s$ccess!$lly acco%plis( t(e project =ork =it(in t(at esta/lis(e contin)ency a%o$nt. "$rt(er%ore< t(e scope o! t(e report incl$ es t(e i enti!ication an co%%$nication o! i%portant steps< lo)ic< key ass$%ptions< li%itations< an ecisions to (elp ens$re t(at risk analysis res$lts can /e appropriately interprete . Risk analysis res$lts are also inten e to pro2i e project lea ers(ip =it( contin)ency in!or%ation !or sc(e $lin)< /$ )etin)< an project control p$rposes< as =ell as pro2i e tools to s$pport ecision %akin) an risk %ana)e%ent as t(e project pro)resses t(ro$)( plannin) an i%ple%entation. 7o !$lly reco)ni'e its /ene!its< cost an sc(e $le risk analyses s(o$l /e consi ere as an on)oin) process con $cte conc$rrent to< an iterati2ely =it(< ot(er i%portant project processes s$c( as scope an e4ec$tion plan e2elop%ent< reso$rce plannin)< proc$re%ent plannin)< cost esti%atin)< /$ )etin)< an sc(e $lin). In a ition to /roa ly e!ine risk analysis stan ar s an reco%%en e practices< t(e risk analysis is per!or%e to %eet t(e reA$ire%ents an reco%%en ations o! t(e !ollo=in) oc$%ents an so$rces: ER 111.-2-11&.< En)ineerin) an Desi)n !or Ci2il >orks Projects. ER 111.-2-13.2< Ci2il >orks Cost En)ineerin). E7? 111.-2-&*3< Constr$ction Cost Esti%atin) @$i e !or Ci2il >orks. Cost an Sc(e $le Risk Analysis Process )$i ance prepare /y t(e USACE Cost En)ineerin) D1. :e%oran $% !ro% :ajor @eneral Don 7. Riley 6U.S. Ar%y Director o! Ci2il >orks8< ate C$ly 3< 2..*. En)ineerin) an Constr$ction 5$lletin iss$e /y Ca%es C. Dalton< P.E. 6C(ie!< En)ineerin) an Constr$ction< Directorate o! Ci2il >orks8< ate Septe%/er 1.< 2..*.

4.

METHODOLOGY/PROCESS

Present tea% %ake$p< incl$ in) PD7 %e%/ers an tec(nical positions< as =ell as t(e tea% %ake$p per!or%in) t(e risk analysis 6/ot( USACE an contracte %e%/ers< not /y na%e< /$t /y position8. Present ti%e!ra%e o! t(e st$ y. In icate =(et(er t(e cost an sc(e $le pro $cts $n er analyses (a2e s$ccess!$lly passe an A)ency 7ec(nical Re2ie= 6A7R8 6i! not< t(e risk analysis o$tco%e is /ase $pon an $nappro2e pro $ct an likely to c(an)e a!ter an A7R is co%plete 8.

7(e risk analysis process !or t(is st$ y is inten e to eter%ine t(e pro/a/ility o! 2ario$s cost o$tco%es an A$anti!y t(e reA$ire contin)ency nee e in t(e cost esti%ate to ac(ie2e any esire le2el o! cost con!i ence. A parallel process is also $se to eter%ine t(e pro/a/ility o! 2ario$s project sc(e $le $ration o$tco%es an A$anti!y t(e reA$ire sc(e $le contin)ency 6!loat8 nee e in t(e sc(e $le to ac(ie2e any esire le2el o! sc(e $le con!i ence. In si%ple ter%s< contin)ency is an a%o$nt a e to an esti%ate 6cost or sc(e $le8 to allo= !or ite%s< con itions< or e2ents !or =(ic( t(e occ$rrence or i%pact is $ncertain an t(at e4perience s$))ests =ill likely res$lt in a itional costs /ein) inc$rre or a itional ti%e /ein) reA$ire . 7(e a%o$nt o! contin)ency incl$ e in project control plans epen s< at least in part< on t(e project lea ers(ipDs =illin)ness to accept risk o! project o2err$ns. 7(e less risk t(at project lea ers(ip is =illin) to accept t(e %ore contin)ency s(o$l /e applie in t(e project control plans. 7(e risk o! o2err$n is e4presse < in a pro/a/ilistic conte4t< $sin) con!i ence le2els. 7(e Cost En)ineerin) D1 )$i ance !or cost an sc(e $le risk analysis )enerally !oc$ses on t(e ,.-percent le2el o! con!i ence 6P,.8 !or cost contin)ency calc$lation. It s(o$l /e note t(at $se o! P,. as a ecision criteria is a risk a 2erse approac( 6=(ereas t(e $se o! P&. =o$l /e a risk ne$tral approac(< an $se o! le2els less t(an &. percent =o$l /e risk seekin)8. 7($s< a P,. con!i ence le2el res$lts in )reater contin)ency as co%pare to a P&. con!i ence le2el. 7(e risk analysis process $ses Monte Carlo tec(niA$es to eter%ine pro/a/ilities an contin)ency. 7(e Monte Carlo tec(niA$es are !acilitate co%p$tationally /y a co%%ercially a2aila/le risk analysis so!t=are packa)e 6Crystal 5all8 t(at is an a -in to :icroso!t E4cel. Cost esti%ates are packa)e into an E4cel !or%at an $se irectly !or cost risk analysis p$rposes. 5eca$se Crystal 5all is an E4cel a -in< t(e sc(e $les !or eac( option are recreate in an E4cel !or%at !ro% t(eir nati2e !or%at. 7(e le2el o! etail recreate in t(e E4cel-!or%at sc(e $le is s$!!icient !or risk analysis p$rposes t(at re!lect t(e esta/lis(e risk re)ister< /$t )enerally less t(an t(at o! t(e nati2e !or%at. 7(e pri%ary steps< in !$nctional ter%s< o! t(e risk analysis process are escri/e in t(e !ollo=in) s$/sections. Risk analysis res$lts =o$l /e pro2i e in section +. 4.1 I4)0+-53 104 A..).. R-./ F1*+'&. I enti!yin) t(e risk !actors 2ia t(e PD7 are consi ere a A$alitati2e process t(at res$lts in esta/lis(in) a risk re)ister t(at ser2es as t(e oc$%ent !or t(e !$rt(er st$ y $sin) t(e Crystal 5all risk so!t=are. Risk !actors are e2ents an con itions t(at %ay in!l$ence or ri2e $ncertainty in project per!or%ance. 7(ey %ay /e in(erent c(aracteristics or con itions o! t(e project or e4ternal in!l$ences< e2ents< or con itions s$c( as =eat(er or econo%ic con itions. Risk !actors %ay (a2e eit(er !a2ora/le or $n!a2ora/le i%pacts on project cost an sc(e $le. C(ecklists or (istorical ata/ases o! co%%on risk !actors are so%eti%es $se to !acilitate risk !actor i enti!ication. Bo=e2er< key risk !actors are o!ten $niA$e to a project

an not rea ily eri2a/le !ro% (istorical in!or%ation. 7(ere!ore< inp$t !ro% t(e entire PD7 is o/taine $sin) creati2e processes s$c( as /rainstor%in) or ot(er !acilitate risk assess%ent %eetin)s. In practice< a co%/ination o! pro!essional j$ )%ent !ro% t(e PD7 an e%pirical ata !ro% si%ilar projects is esira/le an is consi ere . "or%al PD7 %eetin)s are (el 6incl$ e t(e na%e o! t(e location in t(e report8 !or t(e p$rposes o! i enti!yin) an assessin) risk !actors. 7(e %eetin)s 6incl$ e t(e ate8 s(o$l incl$ e capa/le an A$ali!ie representati2es !ro% %$ltiple project tea% isciplines an !$nctions< !or e4a%ple: Project;pro)ra% %ana)ers. Contractin);acA$isition. Real Estate. Relocations. En2iron%ental. Ci2il< str$ct$ral< )eotec(nical< an (y ra$lic esi)n. Cost an sc(e $le en)ineers. Constr$ction. 9ey sponsors

7(e initial !or%al %eetin)s s(o$l !oc$s pri%arily on risk !actor i enti!ication $sin) /rainstor%in) tec(niA$es< /$t also incl$ e so%e !acilitate isc$ssions /ase on risk !actors co%%on to projects o! si%ilar scope an )eo)rap(ic location. S$/seA$ent %eetin)s s(o$l !oc$s pri%arily on risk !actor assess%ent an A$anti!ication. A itionally< n$%ero$s con!erence calls an in!or%al %eetin)s are con $cte t(ro$)(o$t t(e risk analysis process on an as-nee e /asis to !$rt(er !acilitate risk !actor i enti!ication< %arket analysis< an risk assess%ent. 4.2 6710+-53 R-./ F1*+'& I8,1*+. 7(e A$antitati2e i%pacts o! risk !actors on project plans are analy'e $sin) a co%/ination o! pro!essional j$ )%ent< e%pirical ata< an analytical tec(niA$es. Risk !actor i%pacts are A$anti!ie $sin) pro/a/ility istri/$tions 6 ensity !$nctions8< /eca$se risk !actors are entere into t(e Crystal 5all so!t=are in t(e !or% o! pro/a/ility ensity !$nctions. Si%ilar to t(e i enti!ication an assess%ent process< risk !actor A$anti!ication in2ol2es %$ltiple project tea% isciplines an !$nctions. Bo=e2er< t(e A$anti!ication process

&

relies %ore e4tensi2ely on colla/oration /et=een cost en)ineerin)< esi)ners< an risk analysis tea% %e%/ers =it( lesser inp$ts !ro% ot(er !$nctions an isciplines. 7(e !ollo=in) is an e4a%ple o! t(e PD7 A$anti!yin) risk !actor i%pacts /y $sin) an iterati2e< consens$s-/$il in) approac( to esti%ate t(e ele%ents o! eac( risk !actor: :a4i%$% possi/le 2al$e !or t(e risk !actor. :ini%$% possi/le 2al$e !or t(e risk !actor. :ost likely 2al$e 6t(e statistical %o e8< i! applica/le. 0at$re o! t(e pro/a/ility ensity !$nction $se to appro4i%ate risk !actor $ncertainty. :at(e%atical correlations /et=een risk !actors. A!!ecte cost esti%ate an sc(e $le ele%ents.

In t(is e4a%ple< t(e risk isc$ssions !oc$se on t(e 2ario$s project !eat$res as presente =it(in t(e USACE Ci2il >orks >ork 5reak o=n Str$ct$re !or cost acco$ntin) p$rposes. It =as reco)ni'e t(at t(e 2ario$s !eat$res carry i!!erin) e)rees o! risk as relate to cost< sc(e $le< esi)n co%ple4ity< an esi)n pro)ress. 7(e e4a%ple !eat$res $n er st$ y are presente in ta/le 1: T192) 1. #'&/ B&)1/4':0 S+&7*+7&) 93 F)1+7&) ;1 ;2 ;< 11 13 ?A0DS A0D DA:A@ES RE?ECA7IE0S CBA00E?S F CA0A?S ?EGEES F "?EED>A??S PU:PI0@ P?A07 P?A00I0@< E0@I0EERI0@ F 3; DESI@0 31 CE0S7RUC7IE0 :A0A@E:E07 7(e res$ltin) pro $ct !ro% t(e PD7 isc$ssions is capt$re =it(in a risk re)ister as presente in section + !or /ot( cost an sc(e $le risk concerns. 0ote t(at t(e risk re)ister recor s t(e PD7Ds risk concerns< isc$ssions relate to t(ose concerns< an potential i%pacts to t(e c$rrent cost an sc(e $le esti%ates. 7(e concerns an isc$ssions are %eant to s$pport t(e tea%Ds ecisions relate to e2ent likeli(oo < i%pact< an t(e res$ltin) risk le2els !or eac( risk e2ent.

4.3 A0123=) C'.+ E.+-81+) 104 S*>)472) C'0+-0?)0*3 Contin)ency is analy'e $sin) t(e Crystal 5all so!t=are< an a -in to t(e :icroso!t E4cel !or%at o! t(e cost esti%ate an sc(e $le. Monte Carlo si%$lations are per!or%e /y applyin) t(e risk !actors 6A$anti!ie as pro/a/ility ensity !$nctions8 to t(e appropriate esti%ate cost an sc(e $le ele%ents i enti!ie /y t(e PD7. Contin)encies are calc$late /y applyin) only t(e %o erate an (i)( le2el risks i enti!ie !or eac( option 6i.e.< lo=-le2el risks are typically not consi ere < /$t re%ain =it(in t(e risk re)ister to ser2e (istorical p$rposes as =ell as s$pport !ollo=-on risk st$ ies as t(e project an risks e2ol2e8. "or t(e cost esti%ate< t(e contin)ency is calc$late as t(e i!!erence /et=een t(e P,. cost !orecast an t(e /ase cost esti%ate. Eac( option-speci!ic contin)ency is t(en allocate on a ci2il =orks !eat$re le2el /ase on t(e ollar-=ei)(te relati2e risk o! eac( !eat$re as A$anti!ie /y Monte Carlo si%$lation. Stan ar e2iation is $se as t(e !eat$re-speci!ic %eas$re o! risk !or contin)ency allocation p$rposes. 7(is approac( res$lts in a relati2ely lar)er portion o! all t(e project !eat$re cost contin)ency /ein) allocate to !eat$res =it( relati2ely (i)(er esti%ate cost $ncertainty. "or sc(e $le contin)ency analysis< t(e option sc(e $le contin)ency is calc$late as t(e i!!erence /et=een t(e P,. option $ration !orecast an t(e /ase sc(e $le $ration. 7(ese contin)encies are t(en $se to calc$late t(e ti%e 2al$e o! %oney i%pact o! project elays t(at are incl$ e in t(e presentation o! total cost contin)ency in section +. 7(e res$ltin) ti%e 2al$e o! %oney< or a e risk escalation< is t(en a e into t(e contin)ency a%o$nt to re!lect t(e USACE stan ar !or presentin) t(e Htotal project costI !or t(e !$lly !$n e project a%o$nt. Sc(e $le contin)ency is analy'e only on t(e /asis o! eac( option an not allocate to speci!ic tasks. 5ase on Cost En)ineerin) D1 )$i ance< only critical pat( an near critical pat( tasks are consi ere to /e $ncertain !or t(e p$rposes o! contin)ency analysis. 5. KEY ASSUMPTIONS

Present key ass$%ptions in t(is section. Certain ass$%ptions %ay /e ictate /y t(e c$sto%er. Et(er ass$%ptions %ay /e ass$%e /y t(e risk analyst or cost en)ineer. 9ey ass$%ptions are t(ose t(at are %ost likely to si)ni!icantly e!!ect t(e eter%inations an ;or esti%ates o! risk presente in t(e risk analysis. 7(e key ass$%ptions are i%portant to (elp ens$re t(at project lea ers(ip an ot(er ecision %akers $n erstan t(e steps< lo)ic< li%itations< an ecisions %a e in t(e risk analysis< as =ell as any res$ltant li%itations on t(e $se o! o$tco%es an res$lts. 6Certain risks %ay (a2e /een e4cl$ e $e to USACE or PD7 )$i ance J t(ese s(o$l /e %entione .8 7(e !ollo=in) is an e4a%ple o! key ass$%ptions !or t(e risk analysis t(at co$l /e i enti!ie /y t(e PD7 an risk analyst. A ress esi)n sta)e.

A A A A A A A A A A A A A

ress con!i ence in esi)n scope. ress any critical incl$sions or e4cl$sions o! scope or risk. ress any s$nk or e4pen e costs not incl$ e =it(in t(e risk st$ y. ress li!e cycle costs< =(et(er incl$ e or e4cl$ e . ress operations an %aintenance< =(et(er incl$ e or e4cl$ e . ress %ajor !eat$res. ress con)ressional a$t(ori'ation. ress !$n in) pro!iles. ress contract acA$isition strate)y. ress A7R stat$s: s$ccess!$lly co%plete< inco%plete< or $nsatis!actory. ress !eat$re cost acco$nts. ress con!i ence an A$ality o! cost esti%ates an project sc(e $les. ress t(e contin)ency con!i ence le2el reco%%en e =it(in t(e report.

A ress =(ic( i%pact le2els =ere st$ ie or applie =it(in t(e risk analysis. 7(ese relate to t(e (i)(< %o erate< or lo= risk le2el ratin)s 6)enerally< t(e (i)( an %o erate risk le2els are st$ ie 8.

!.

RISK ANALYSIS RESULTS

P&).)0+ +>) &-./ ,&'47*+. 104 &).72+. -0 01&&1+-@) 5'&8 1. :)22 1. +192). 104 5-?7&). -0*274-0? t(e cost an sc(e $le risk analysis res$lts. In a ition to contin)ency calc$lation res$lts< sensiti2ity analyses pro2i e ecision %akers =it( an $n erstan in) o! 2aria/ility an t(e key contri/$tors to t(e ca$se o! t(is 2aria/ility. !.1 R-./ R)?-.+)& A risk re)ister is a tool co%%only $se in project plannin) an risk analysis an ser2es as t(e /asis !or t(e risk st$ ies an Crystal 5all risk %o els. A s$%%ary risk re)ister t(at incl$ es typical risk e2ents st$ ie 6(i)( an %o erate le2els8 s(o$l /e presente in a ta/le in t(is section. 7(e risk re)ister re!lects t(e res$lts o! risk !actor i enti!ication an assess%ent< risk !actor A$anti!ication< an contin)ency analysis. A %ore etaile risk re)ister =o$l /e pro2i e in appen i4 A. 7(e etaile risk re)isters o! appen i4 A incl$ e lo= le2el an $nrate risks< as =ell as a itional in!or%ation re)ar in) t(e speci!ic nat$re an i%pacts o! eac( risk. ,

It is i%portant to note t(at a risk re)ister can /e an e!!ecti2e tool !or %ana)in) i enti!ie risks t(ro$)(o$t t(e project li!e cycle. As s$c(< it is )enerally reco%%en e t(at risk re)isters /e $p ate as t(e esi)ns< cost esti%ates< an sc(e $le are !$rt(er re!ine < especially on lar)e projects =it( e4ten e sc(e $les. Reco%%en e $ses o! t(e risk re)ister )oin) !or=ar incl$ e: Doc$%entin) risk %iti)ation strate)ies /ein) p$rs$e in response to t(e i enti!ie risks an t(eir assess%ent in ter%s o! pro/a/ility an i%pact. Pro2i in) project sponsors< stake(ol ers< an lea ers(ip;%ana)e%ent =it( a oc$%ente !ra%e=ork !ro% =(ic( risk stat$s can /e reporte in t(e conte4t o! project controls. Co%%$nicatin) risk %ana)e%ent iss$es. Pro2i in) a %ec(anis% !or elicitin) risk analysis !ee /ack an project control inp$t. I enti!yin) risk trans!er< eli%ination< or %iti)ation actions reA$ire !or i%ple%entation o! risk %ana)e%ent plans.

In si%ple ter%s< a correlation is a epen ency t(at e4ists /et=een t=o risks an %ay /e irect or in irect. An in irect correlation is one in =(ic( lar)e 2al$es o! one risk are associate =it( s%all 2al$es o! t(e ot(er. In irect correlations (a2e correlation coe!!icients /et=een . an -1. A irect correlation is one in =(ic( lar)e 2al$es o! one risk are associate =it( lar)e 2al$es o! t(e ot(er. Direct correlations (a2e correlation coe!!icients /et=een . an 1. Correlations are i%portant to $n erstan t(e lo)ic $se in t(e risk analyses. 7(e %at(e%atical correlations $se in t(e Monte Carlo si%$lations are as !ollo=s: Present any risk e2ent correlations< a ressin) t(eir relations(ips.

Present t(e !inal risk re)ister or t(e con ense 2ersion. At a %ini%$% incl$ e t(ose risk e2ents st$ ie 6an appen i4 can incl$ e t(e co%plete risk re)ister8: Risk e2ent i enti!yin) n$%/er. Risk or opport$nity e2ent. PD7 concerns. PD7 isc$ssions. Project cost likeli(oo < i%pact< an risk le2el.

 Project sc(e $le likeli(oo < i%pact< an risk le2el< Insert ta/le containin) a con ense risk re)ister ta/le. !.2 C'.+ R-./ A0123.-. A C'.+ C'0+-0?)0*3 R).72+. Pro2i e a cost contin)ency narrati2e presentation o! t(e res$lts !ollo=e /y ta/les presente !ro% t(e Crystal 5all reports epictin) t(e: Cost sensiti2ity c(art. Con!i ence ta/les in 1. percent incre%ents o! con!i ence associate =it( ollars. Con!i ence c$r2es relations(ip o! percent con!i ence =it( contin)encies in ollars 6/$il !ro% con!i ence ta/les8.

:ake note t(at t(ese res$lts re!lect only t(ose contin)encies esta/lis(e !ro% t(e cost risk analysis. !.3 S*>)472) R-./ A0123.-. A S*>)472) C'0+-0?)0*3 R).72+. Pro2i e a sc(e $le contin)ency narrati2e presentation o! t(e res$lts !ollo=e /y ta/les presente !ro% t(e Crystal 5all reports epictin) t(e: Sc(e $le sensiti2ity c(art. Sc(e $le con!i ence ta/les in 1. percent incre%ents o! con!i ence associate =it( %ont(s. Sc(e $le con!i ence c$r2es =it( contin)encies 6/$il !ro% con!i ence ta/les8.

:ake note t(at t(ese res$lts re!lect only t(ose contin)encies esta/lis(e !ro% t(e sc(e $le risk analysis. !.4 C'89-0)4 C'.+ 104 S*>)472) C'0+-0?)0*3 R).72+. Pro2i e a /rie! narrati2e presentation o! t(e co%/ine cost an sc(e $le res$lts !ollo=e /y ta/les epictin) 6co%/ine ta/les o! cost an sc(e $le reports8: Cost con!i ence ta/le in percent con!i ence =it( contin)encies in ollars. Sc(e $le con!i ence ta/le in percent con!i ence =it( contin)encies in %ont(s.

1.

MAJOR FINDINGS/OBSERVATIONS

Present t(e %ajor !in in)s an o/ser2ations !or /ot( t(e cost an sc(e $le risk analysis. It is /ene!icial to re!er /ack to t(e key ass$%ptions an (o= t(ey relate to t(e !in in)s an o/ser2ations. Present t(e total cost s$%%ary at 1. percent con!i ence inter2als $nless ot(er=ise irecte . Pro2i e a s$%%ary o! si)ni!icant risk analysis res$lts in t(is section< =(ic( (a2e /een i enti!ie in t(e prece in) sections o! t(e report. Risk analysis res$lts are inten e to pro2i e project lea ers(ip =it( contin)ency in!or%ation !or sc(e $lin)< /$ )etin)< an project control p$rposes< as =ell as to pro2i e tools to s$pport ecision %akin) an risk %ana)e%ent as projects pro)ress t(ro$)( plannin) an i%ple%entation. 5eca$se o! t(e potential !or $se o! risk analysis res$lts !or s$c( i2erse p$rposes< t(is section also reiterates an (i)(li)(ts i%portant steps< lo)ic< key ass$%ptions< li%itations< an ecisions to (elp ens$re t(at t(e risk analysis res$lts are appropriately interprete . 7a/le 2 presents project contin)encies< =(ic( incl$ e /ase cost pl$s cost an sc(e $le contin)encies. "i)$re 2 ill$strates t(e total project cost risk analysis in con!i ence c$r2e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

11

Linde S ite Total Project Cost Risk Analysis

$300,000,000

$250,000,000

$200,000,000

$150,000,000

$100,000,000

C c j r P l o T d e a m i t s E
$50,000,000

$0 P0 P10 P20 P30 P40 P50 Confidence Level P60 P70 P80 P90 P100

F-?7&) 1. S18,2) '5 P&'()*+ C'05-4)0*) C7&@).

".

MITIGATION RECOMMENDATIONS

Present key reco%%en ations t(at %ay assist in %iti)atin) risks. Present any reco%%en ations !or opport$nities !or /ot( cost an sc(e $le.

12

APPENDIX A DETAILED RISK REGISTERS $P&).)0+ +>) 4)+1-2)4 R-./ R)?-.+)& >)&)D *'@)&-0? 122 &-./ )@)0+.D &)?1&42).. '5 2':D 8)4-78D '& >-?> &-./ *'0*)&0.%

A-1