Beruflich Dokumente
Kultur Dokumente
Prepared By : -
Anuj Sharma
1907003
PGPEX-VLFM03
Risk Management Process (RMP)
• The European Community promoted a comprehensive risk management
methodology (RISKMAN) consisting of several phases. RISKMAN provides a
more comprehensive framework to enumerate and assess potential risk factors
associated with a project.
• Risk identification,
• Risk assessment,
• Risk evaluation,
• Risk mitigation,
• Risk contingency estimate,
• Risk decision making
• Risk control and monitoring.
It can be applied to any stage of the project life cycle, examining the progress in terms of the planned outcomes and take corrective actions necessary if any deviations
would occur.
Transmission Line Project Description
China Light & Power Company Ltd, Hong Kong reviews the viability of applying a risk management process to enhance capital
investment decisions, when planning the construction of an extra-high voltage (EHV) overhead transmission line project that could be
designed and built in the next 10 years.
Different project proposals will be considered for this transmission line as well as different completion dates. Each scenario will be
investigated to determine the rate of return and expected cost to customer, using the net present value model.
The lowest ‘cost to customer’ approach would be the normal criterion for project selection, assuming all proposals are technically
viable and compatible with Hong Kong Government infrastructure plans.
A RMP based risk management model for transmission line costs
Mission
• The mission of the project is to `develop, operate and maintain CLP's Transmission Business Group activities by safely
obtaining and delivering quality electricity supplies and providing services in a way that meets the expectations of
customers, shareholders and employees.
Aim
• The specific aims for the project is then to set up, relocate and empower resources in the execution and construction of
new EHV transmission
15.4, 15%
61.8, 62%
This information would be extremely useful in assessing probability distributions at the assessment phase
The triangular distributions for other cost elements used to determine the optimistic (minimum), most likely and
pessimistic (maximum) values
The @Risk software is used in this fashion to simulate all possible outcomes in order to determine the cumulative
probability distribution of project cost
The output distributions obtained above are to be evaluated in the next phase, and an appropriate
adjustment made to the budget, with reference to the expected value.
IV - Risk evaluation
A further stage of estimation would show whether the forecast ranges are reducing towards an end where contingency can
be reduced further, and uncertainties have been controlled or eliminated. If an adjustment cannot be made, then corrections
will need to be made to the project in the risk control and monitoring stage. The uncertainty in terms of the range of the
project cost distribution is reduced from project budget preparation stage to definition stage.
Once the assessment of risk is completed, strategies to mitigate undesirable risks needs to be developed.
• Risk reduction - This is the First step in loss control to make sure that the risk is as low as possible. Two possible aspects
are involved, namely pre-loss and post-loss reduction.
i. Pre-loss reduction involves steps, which the risk manager can take, once a risk has been identified but prior to any loss.
ii. Post-loss reduction involves steps where the risk manager can reduce the impact of a loss once the event has taken
place.
• Risk retention - Depending on the level or value of potential risk, some retention of risk can be made by the responsible
project manager. Some of this may be covered by an agreed contingency or, depending on the cost of cover, by insurance.
• Risk transfer - This is essentially trying to transfer the risk to another party. Three methods of contracting were considered
as described below
i. Turnkey contract - This contract is a total package, the contractor (or a consortium or joint venture) takes over the
wayleave tower sites from the client at the outset, executing the whole of the civil, mechanical and electrical
engineering, construction and commissioning through to commercial operation.
ii. Multi-contract - This would divide the project into numerous parcels of work of varying sizes, each individually
contracted. The advantages are in the competition achieved by contracting parcels directly with a specialist supplier and
avoid mark-up of an intermediary.
iii. Island contract - The island contract is effectively a compromise between the other two above-mentioned approaches.
V - Risk control and Monitoring
• In the risk control and monitoring phase, we examine the targets set and contract
strategies employed as a result of risk evaluation periodically and observe if any deviations
would occur.
• The development and distributing periodic reports on the progress of the project, including
the milestones, to the concerned senior management and project personnel is carried out in
this phase.
• At the end of every project life cycle and at the commissioning of the project, the person
re- sponsible should collect data and store it in risk data- bases for easy access.
Thank You