Audience Focus: Intermediate
Application Type: Research
Time/Room: MON 2:00-3:00/Hoover
Abstract: This paper is an exploratory cross disciplinary qualitative investigation of the factors considered in initial capital investment decisions. Two teams of participants (Expert opinion) on current best practices in front-end planning - the executive when approving budgets (corporate board) and the project execution and delivery (project management) are investigated. 27 Experts participated in three rounds of online Delphi surveys. Data collected is analyzed using SPSS software and data coding of interviews 10 factors are identified, ranked and compared by both teams. Experts assessed the communication and quality of the information shared. Influential financial (tangible) and non tangible considerations during early decision making is identified. There exists disconnect between the decisions made at the (top) corporate level versus those communicated (down) at the project management level. There are two worlds for both teams when justifying funds and costs one that is politically correct and visible and another that is needed to get the job done but invisible. Are we in dichotomy? Is the current practice of investment decision making the best? (RISK-1238) Use Decision Trees to Make Important Project Decisions
Primary Author: Dr David T. Hulett Hulett & Associates, LLC
Abstract: A large part of the risk management process involves looking into the future, trying to understand what might happen and whether it matters. An important quantitative technique which has been neglected in recent years – decision trees – is enjoying something of a revival. Decision trees help organizations choose between alternative courses of action, for instance project management strategies, when the results of such actions are uncertain.
The decision tree technique can be applied to many different uncertain situations. For example:
Should we use the low-price bidder when delivery and quality uncertain?
Should we adopt a state-of-the-art technology if we may not know how to do this?
This paper looks at two different approaches to making the decision:
Maximize expected monetary value, which is a hallmark of a risk-neutral organization
Maximize expected utility, which is the appropriate measure of merit for a risk-averse or even a risk-seeking organization
Abstract: There have been a lot of presentations and papers on implementing qualitative and quantitative risk programs but not much on we plan such a program. What this presentation will do is review the recommended process for planning the risk management program per RP 72R-12 and as applied on a multi-billion dollar oil and gas project. The time invested in preparing, documenting, and communicating a solid Risk Management Plan will increase the success of the execution of the project by describing specific processes, procedures, tools and systems that guide and support effective risk management through out the life cycle of the project. The plan is a narrative of the Who, What, Where, When, Why, and How the risk process for the project will be implemented, as well as providing a typical Table of Contents and RASCI. The benefit of this presentation is provided by clarifying in part what should be included in a Project Risk Management Plan, especially those new to risk management. (RISK-1284) Tailored Project Risk Management Assessment Tool
Primary Author: Mr Bryan A Skokan PE Project Time & Cost Inc.
Co-author(s): Mr Dan Melamed CCC EVP U.S. Department of Energy; Mr Rodney Lehman U.S. Department of Energy; Mr Jake Lefman Project Time & Cost Inc
Abstract: The Office of Environmental Management (EM) of the U.S. Department of Energy developed a tool based upon analyses of a database of risk registers from a variety of both ongoing and completed EM projects to help determine the adequacy of project risk in addition to a means to incorporate lessons learned from past risk approaches and mitigation. For new or ongoing projects, it provides a means to develop risk registers that can be tailored to specific environmental projects and facilitate risk management adequacy assessments. This tool consists of three components. The first are lists, by project phase, of common or universal risks for each type of project. The second component consists of risk probabilities along with risk impact cost ranges. Lastly, criteria that will allow the user to adjust probability and impact range information to project size and scope. This tool allows the user to evaluate and adjust specific project risks to allow for a more accurate representation of project uncertainty. General applications and future uses for this methodology will be discussed. (RISK-1308) Managing Operator Risk Profile for Upstream Projects
Primary Author: Ms Tina Sara Thomas Genesis Oil and Gas
Abstract: Managing complex capital project requires continuous monitoring of the factors that impact the project from start to completion. The portfolio of risks is a key factor and it varies throughout the lifecycle of the project, with varied risks impacting the activities performed at each stage. In addition, uncertainty factor changes over time as the project develops from conceptual, design, fabrication, installation, commissioning, and operations to decommissioning. As the project progresses through the stages, the ability to influence project costs and duration decreases. If the risks are left unattended, they accumulate over time and can have adverse impact on the overall cost and performance of the project. Making decisions on selecting the best prospects and right investment at each stage is a challenge for the operators and is only possible with the support of a well defined risk management framework. This paper outlines the type of risks and uncertainties that impact each stage of project life cycle and its influence on the subsequent stage in the project life cycle. (RISK-1317) Conducting Risk Assessments Using a Combined Cost and Schedule Model
Primary Author: Mr Timothy J. Havranek Cardno ENTRIX
Co-author(s): Ms Leigh Hostetter Cardno ENTRIX
Audience Focus: Basic
Application Type: Application
Time/Room: SUN 1:30-2:30/Hoover
Abstract: Risk management is becoming increasingly important in the world of project management. Traditional risk management focuses primarily on evaluating and managing cost risk; while schedule risk is seldom or only marginally addressed. Schedule delays increase project carrying costs and in some cases introduce contract penalties and reduced project return on investment. In addition, there are many projects that are schedule driven rather than cost driven, such as having a major project complete in time for a scheduled event. Since both cost and schedule risk are important and often correlated, the ability to conduct both assessments concurrently using one model is ideal.
This paper presents a hypothetical case study that is used to illustrate recommended modeling practices and to demonstrate the application and value of a combined cost and schedule risk assessment (CSRA) model. This case study involves a combined demolition / remediation project to prepare an industrial property for mixed use redevelopment. The CSRA model includes the use of probabilistic modeling to address risk events and uncertainties associated with project costs, materials, and durations. (RISK-1329) An Approach to Implementing Risk Management on Environmental Remediation Projects
Primary Author: Ms Christine W. Lametrie Chevron
Abstract: Environmental remediation projects can involve inherent risks, unforeseen conditions, and some uncertainty in scope. This paper will propose an approach for implementing a risk management process for common remediation scopes of work. Some risks in the environmental remediation world can be classified as “common” risks, such as underground obstructions, hazardous substances, uncertainty in limits of remediation area, or normal weather events. Other risks fall into the “uncommon” and unexpected category depending on the project and site location. Risk management can help to identify, mitigate, and avoid risks associated with environmental remediation work and probabilistically estimate potential cost and schedule impacts that could be associated risk events. This paper will review the steps that can be taken to implement risk management and provides guidelines for developing a risk management process. The process outlined in this paper will assist in developing a right-size approach for implementing risk management on environmental remediation projects. (RISK-1330) Use of Dynamic Progress Method (DPM) on Guaranteed Maximum Price (GMP) Contracts
Primary Author: Mr Mark P. McDowell CCC PSP Hill International
Co-author(s): Mr Barry B. Bramble Barry Bramble Attorney at Law; Mr J. Chris White ViaSim Solutions
Abstract: Project owners and contractors continue to be challenged when developing competitive Guaranteed Maximum Price (GMP) contracts. The purpose of this paper and presentation is to introduce project owners and contractors to Dynamic Progress Method (DPM) tools available to them when developing or evaluating trade contractor proposals required for GMP development. This paper will overview traditional GMP development and evaluation techniques and then introduce more advanced DPM techniques. All of the information and recommendations provided by this paper and presentation will equip owners, owner’s representatives and contractors to exercise increased and varying degrees of diligence when advancing projects through the design, preconstruction and construction phases of a GMP project. (RISK-1333) An Earned Value Analysis Framework for Evaluating Project Portfolios
Primary Author: Mr Mark D Steele PE CCE Resolution Management Consultants
Audience Focus: Intermediate
Application Type: Application
Time/Room: SUN 4:30-5:30/Hoover
Abstract: A range of purposes including financial or internal auditing, increasing bonding capacity or lines of credit, due diligence during an acquisition, or the desire to learn from existing projects to improve future projects might lead an organization to evaluate an entire project portfolio. While evaluating more than 40 projects over a 5 year period, the author developed methods for and insights in applying an earned value analysis (EVA) framework to the project portfolio. While expert judgment forms the ultimate foundation for any assessment of this type, the EVA framework proved to be as valuable in generating the right questions as in generating the "right" answers. This paper will include an introduction to the concept as well as a refresher on EVA concepts, an explanation of its suitability to portfolio evaluation, a description of the portfolio analyzed, a discussion of how EVA was applied and some potential pitfalls using project data samples, key lessons learned, and suggestions for other uses. (RISK-1363) Performance Audits of Construction Projects
Primary Author: Ms Maria Petrov PE CFCC Marsh USA Inc
Co-author(s): Mr Gaurav Lamba PE CCE Federal Reserve Bank of New York
Abstract: This paper will explore the objective, advantages, and framework of performance audits on construction projects, particularly those funded by public and tax revenue bonds. It will examine how an independent, practical, and valuable assessment can assist in identifying recoverable costs and time, as well as other operational cost savings arising from improved construction project management. This performance audit discussion will help auditors identify typical documents that should be analyzed, uncover potential risks to their organization, and develop checklists for conducting construction performance audits. Using examples of completed performance audits, the authors will analyze the different time periods during the construction project lifecycle when a performance audit can be conducted and the benefits of such audits. (RISK-1407) Synergies between Risk Management and Project Management
Primary Author: Mr Kul B Uppal PE CEP Conquest Consulting Group
Audience Focus: Basic
Application Type: Application
Time/Room: SUN 2:45-3:45/Hoover
Abstract: Managing risk is nothing more than identifying risks, providing necessary risk analysis and risk response. However, managing risk is the most important function in making any project successful. In general, every company is initially responsible for all project related risks; as it is usually company decision to execute the project or not. Risks must be proactively managed throughout the Project Life-cycle. This paper discusses various methodologies that shows, how risk assessment is the starting point for effective risk management. There are two primary purposes for a pre-project risk assessment:
To decide whether to execute the project and accept the risks, or terminate it as unacceptable and risky.
To identify the highest-priority risk factors that should receive the most attention by project management.
Abstract: This paper details a project delivery system that provides key strategic information for go/no-go decision gates that effectively manage the risk-to-reward relationship during project development. The first three phases of the delivery system are collectively known as front-end loading and are devoted to project development. The paper explores critical project execution strategies to mitigate risks and maintain alignment of business and project objectives. Businesses have to make important and timely decisions regarding capital investments needed to sustain a position in the market or to exploit new business opportunities. We also discuss using third-party facilitators in augmenting the owner’s project management team as a valuable component of a well-rounded implementation process. To demonstrate the success of the concept, we provide two case studies in which experts worked with industry owners to incorporate successful strategies and project controls for critical plant investment projects. (RISK-1419) Managing Risk and Contingency from the Earliest Stages of Capital Planning
Primary Author: Mr Joseph M. Poskie Meridian Project Systems
Abstract: Capital facility owners and developers are faced with an environment of stringent funding requirements, demand for visibility and expected efficiency in the use of capital funds. Owners are expected to have reliable estimates and budgets early in the development continuum, prior to any design. Parametric estimating techniques leveraging values from historical projects and experience can be effective. Organizations that have established a collection of reliable and historic costs and estimates, using consistent cost and work breakdown structures, can leverage the statistical sample to derive expected costs for similar future scope. Doing this has inherent statistical risk which can be calculated and planned for as contingency. Furthermore, the calculated contingency can be effectively applied to allow for contingency drawdown and release as risk is mitigated over the course of the project or program. This paper will discuss calculation of contingency for estimates derived from a historic sample along with the management of the contingency in connection with a risk mitigation plan for a project or program. (RISK-1427) Schedule Risk Analysis Essentials for Project Success
Primary Author: Mr Calvenn Tsuu CCE Suncor Energy Services Inc
Abstract: Risk is generally viewed as a state of uncertainty where some possible outcomes have positive or negative effect on project objectives. One of the key challenges facing project planners is to produce a reliable and realistic completion date that accounts for the many variables that occur through out the project that impact the timelines. Risk analysis is a powerful tool to address this challenge. This article will evaluate the schedule risk analysis essentials (such as Activity Uncertainty, Probability Distributions, Three Point Estimates, Optimistic Duration, Most likely Duration, Pessimistic duration, Risk Input interview) and addresses how to use these tools to produce reliable completion dates. This article also identifies 4 critical success factors: Proper project schedule, high quality risk data, incorporation of risks in the schedule, risk aware corporate culture. This article also includes a description of the tool, the output and interpretation of the output. The take away from the article is to focuse on what counts - the most important tasks.