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Project Risk Management Of CBD And South East Light Rail

Question

Task: You are a project analyst at a large construction company. You have been asked to develop a risk
analysis and mitigation plan for one of the below five projects:
1. Sydney Light Rail:
https://www.parliament.nsw.gov.au/researchpapers/Documents/CBD%20and%20South%20East%20
Light%20Rail.pdf Also see:
   • https://www.railway-technology.com/features/sydney-light-rail-fiasco/
2. Singapore Sun Cable: https://www.suncable.sg/ Also see:
   • https://www.theguardian.com/environment/2019/jul/14/just-a-matter-of-when-the-20bn-plan-topower-singapore-with-australian-solar
   • https://www.straitstimes.com/business/economy/20b-plan-to-supply-solar-power-fromaustralia-to-spore
3. Future Frigates (War Ships)
https://www.defence.gov.au/CASG/EquippingDefence/SEA%205000%20Phase%201.asp Also see:
   • https://www.defence.gov.au/casg/Multimedia/Hunter_Class_FFG_Fact_Sheet-9-9243.pdf
   • https://www.defence.gov.au/casg/Multimedia/GCSInfographic-9-9233.pdf
4. Cross River Rail, Brisbane: https://crossriverrail.qld.gov.au/
5. Hudson Yards, New York: https://www.hudsonyardsnewyork.com/about/building-hudsonyards/
6. Western Sydney Airport, https://westernsydneyairport.gov.au/
There are three parts to the Analysis:
Part A – in which students discuss their allocated project case study (you are allocated one based
on your last name) and outline rationale, key features, funding and stakeholders
Part B – in which students develop their risk analysis framework
Part C – in which students identify mitigation measures and proposals for overcoming the risks
identified in their case study
Part A: Project Overview (10 marks)
For each student’s allocated case study students must be able to identify the following information
through their own research:
   • The overall budget for the project (real or projected)
   • Social and economic rationale: Including benefits and drawbacks for the project (2 Marks)
   • Key Statistics: Provide key information about the project: (5 Marks)
    o Scope and Size
    o Budget and estimated cost
    o Time required to complete the project
    o Key construction elements or phases (e.g. if you are building a toll road one key element may be the tunnel segment or bridge segment)
    o Environmental costs or benefits
   • Funding mechanisms: How the project makes money or provide return to its promoters (2
Marks)
   • Identify the Key Stakeholders in the project

Answer

Part 1
Introduction: The current scenario sheds light on the project risk management of the CBD and South East Light Rail (CSELR) which is one of the major initiatives that are taken by the NSW Government to bring down the congestion and make sure that the future growth is guaranteed. The project includes a new light rail service that will connect Circular Quay, CBD, and South-easy Sydney (Nsw, 2015). It will cover Moore Park, Randwick hospital along with the University of New South Wales.

Scope and Size
The scope will include the construction of light rail line that will connect Circular Quay with George Street and Central Station and will also include the University of NSW. These connections will be established via Anzac Parade and Alison Road.

Budget and estimated cost
The estimated project costs are $1.6 Billion and it is expected that the returns will be $4 Billion. The cost-benefit ratio for the project is determined as 1:2.5 which means that there will be $2.5 earned for every $1 invested (Islam and Rokonuzzaman, 2016).

Time required to complete the project
The project will be completed in four stages including the project risk management approach. The first stage will include service integration and its improvement. This will be done using the MyZone ticketing process and website that will be completed by June 2012. The opal card system will also be introduced in this stage that will ensure that the travel is made easier and comfortable.

The second stage will focus on the expansion and there will be construction of 5.6 kilometre of inner west extension done. The Dulwich Hill will be connected to CBD and it will be completed by March 2014 (Indelicato, 2015).

The third stag will focus on the delivery of new CBD and South-East service. It will include the construction of light rail line that will connect Circular Quay with George Street and Central Station and will also include the University of NSW.

The last stage will focus on the long-term investments and it will include the feasibility of the light rail investigations. The focus will be on the public transport and the entire construction process will be completed by the end of 2019.

Environmental costs or benefits
There will be costs and benefits that will be associated with the project. It is predicted that the combination of the project with the redesigned bus network will involve at least 220 lesser number of buses during the peak hours in the morning. The customer experience will improve with the faster and reliable services. There will be renewal of the services and amenities that will be required to be carried out. Also, the integration of Sydney Light Rail will be done with IWLR (Einhorn, Marnewick and Meredith, 2019).

The customers will be the ones that will receive the benefits out of the project risk management as the services will be faster and more reliable. There will be operational benefits that will be achieved as the unwanted public transport operating costs will be saved. The broader community benefits will also be achieved which will result with the decrease in the environment and health costs. There will be a wide range of economic benefits that will also be achieved with the project. With the improvement in the services, the greenhouse gas reductions will come down. The emissions will be reduced by at least 700,000 tonnes of CO2. The majority of this emission will be brought down with the reduction in the car use and the other share will be because of the reduction in the bus use.

There will be economic benefits of around $222 Million that will be achieved in the wider economic gains and $707 Million will be gained as operational savings. There will be high-capacity special events services that will be enabled as an outcome of the project

Funding mechanisms
The funds for the project risk management will come from the Government and there will be private sectors that will also invest in the project. Approximately $220 Million will come from the City of Sydney. The estimated project costs are $1.6 Billion and it is expected that the returns will be $4 Billion. The cost-benefit ratio for the project is determined as 1:2.5 which means that there will be $2.5 earned for every $1 invested (Rose, 2015).

The primary stakeholder associated with the project will be the NSW Government, ALTRAC Light Rail Partnership, D&C Contractors, Transdev Sydney Pty Ltd, and APP Corporation.

Part 2
How to perform risk identification and assessment by applying project risk management approach?
There will be three methods that will be used to identify and assess the risks. The first will be the Crawford Slip method. All the members in the project risk management team will be invited and there will be a slip that will be assigned to these team members. The key risks will be noted in these slips and the shortlisting of the primary risks in the project will be done in this manner.

The second will be the observations and review of the similar projects (Nasir et al., 2015). The team members that may have worked on the similar project earlier will be contacted and will provide their inputs on the risks. The third will be the involvement of the expert in the risk management of the project. 

Risk analysis 
The project risk management analysis will be conducted by the Project Manager and the Risk Manager. There will be an impact and probability score that will be assigned to each of the risk identified through the project risk management approach. The project team will be involved in the qualitative and qualitative analysis of the risks using the respective tools (Park, Lee and Ahn, 2017).

Likelihood rating

  • High: This will include the set of risks that will have the probability score more than 70%.
  • Medium: This will include the set of risks that will have the probability score more than 30%.
  • Low: This will include the set of risks that will have the probability score less than 90%.

Consequence rating

Insignificant

The risk associated with the project will be unexpected however, the impact on the project and its associated stakeholders will be negligible.

Minor

The risk associated with the project risk management will be unexpected and not desired. However, the impact on the project and its associated stakeholders will be considerable and may mainly impact the schedule or budget with certain deviations (Bugrova, 2019).

Moderate

The risk associated with the project will be unexpected and not desired. However, the impact on the project and its associated stakeholders will be significant.

Major

The risk associated with the project will be unexpected and not desired. However, the impact on the project and its associated stakeholders will be major and there may be deliveries missed or issues in achieving the project risk management goal(s).

Catastrophic

The impact on the project risk management and its associated stakeholders will be very high and it may lead to the failure of the project.

Risks that require attention

Risk Group

Risk Name & Description

Likelihood

Impact

Legislative & Documentation

Acquiring the rights to utilize the land available to OpCo

Low

Moderate

Non-adherence with the Protection of the Environment Operations Act 1997

Low

Moderate

Community disruptions at the time of the delivery

Low

Moderate

Design & Construction

Schedule overrun leading to delay of SLR works

Medium

Major

Inability to meet the specifications determined for the project risk management

Medium

Major

Existing Infrastructure

Accreditations may not be achieved as per the determined scenario

Low

Moderate

Vandalism

Vandalism at the time of construction leading to schedule and cost overrun

Low

Major

Branding / marketing

Lack of freedom in the branding and advertising processes

Medium

Major

Electrical Supply Cost

Cost overrun with increase in the per unit costs at the time of delivery

Medium

Major

Cost overrun with increase in the per unit costs at the time of operations

Medium

Major

Rail safety accreditation

Accreditations may not be achieved as per the determined scenario

Low

Moderate

Financing

Increase in the reference interest rate

Low

Moderate

Changes in the foreign exchange rates

Medium

Major

Force majeure

Inability to perform the project risk management tasks for over 180 days

Low

Moderate

Pandemic

Covid-19 related risk that restricts transportation and construction work

High

Moderate

Change in Law or NSW Government Policy

· project-related change

· change in the applicable regulations and laws

· general change

Medium

Major

Risks that require no treatment

Group

Risk Name and Description

Compliance

· Complete Disability and Discrimination Act 1992.

· Directive of information with NSW applications transportation and interface with it.

· Ticket selling including ticketing duties.

Disruption

Interruptions to travel services throughout period of operation

Information System

Responsibility asset information system pertaining to the light Rail.

Ticketing

Farebox revenue differs from that of the forecast.

Responsibility for Fare setting.

 

Events beyond OpCo jurisdiction, under which OpCo has the right to be exempted of its responsibilities.

Part 3
Risk Treatment & Mitigation

Risk Name & Description

Risk Prioritization

Budget

Time

Risk treatment strategies

Acquiring the rights to utilize the land available to OpCo

High

Yes

No

· Make sure all guidelines are in effect.

· Update all of the of involved stakeholders

· Purchase to be subject to the Australian Land Acquisition and Compensation Act of 1986.

Non-adherence with the Protection of the Environment Operations Act 1997

High

No

Yes

· Ensure that all directives are in effect

· Engage specialists if necessary to make sure adherance

Community disruptions at the time of the delivery

Low

Yes

Yes

· Conduct pre-construction dilapidation surveys and extensive modeling to assess the region of impact.

· During building and maintainin, relocate the impacted tenants.

· Provide regular dialogue with the groups impacted to help evaluate possible mitigations

Schedule overrun leading to delay of SLR works

Low

Yes

Yes

· Project manager to track reporting times, provide appropriate reporting samples and try to ensure execution well in advance of deadlines to meet.

Inability to meet the specifications determined for the project

High

No

Yes

· Engage all stakeholders in drawing up concept plans (Yuan, 2017).

Accreditations may not be achieved as per the determined scenario

Medium

No

Yes

· Project manager is essential track reporting times, procure correct and proper reporting papers as well as ensure execution well in advance of tight deadlines;

· Continue to keep stakeholders well informed;

Vandalism at the time of construction leading to schedule and cost overrun

Low

   

· Successful completion of site's security assessment.

· Required defence in place in order to protect the construction site.

Lack of freedom in the branding and advertising processes

Low

   

· Engage all stakeholders in development as well as branding and allied marketing plans.

Cost overrun with increase in the per unit costs at the time of delivery

Low

Yes

No

· Separate GL account currently generated for construction project and that is to be credited / debited for both profits and expenditure, accordingly (Alkhlaifat, Abdullah and Magassouba, 2019).

· Expenditure passed and as well as pending to be reviewed at each and every project risk management meeting responsible for ensuring that it is on schedule.

· Cost figures which have been collected to date.

Cost overrun with increase in the per unit costs at the time of operations

Medium

Yes

No

· Separate GL account currently generated for construction project and that is to be credited / debited for both profits and expenditure, accordingly.

· Expenditure passed and as well as pending to be reviewed at each and every project risk management meeting responsible for ensuring that it is on schedule.

· Cost figures which have been collected to date.

Accreditations may not be achieved as per the determined scenario

Low

No

Yes

· Selection of a Project manager for the project

· Periodic auditing of the plan related to the project risk management

· Documentation verification prior to project commencement.

Increase in the reference interest rate

Low

Yes

No

· Engage all stakeholders that are involved with the project risk management

· Ensure rates are pre-negotiated

Changes in the foreign exchange rates

Low

Yes

No

· Engage all stakeholders that are involved with the project risk management

· Try to monitor movement of the forex market

· Hedge forex risks accordingly

Inability to perform the project risk management tasks for over 180 days

Medium

Yes

Yes

· Contingencies needs to be included for dangerous working conditions and inclement weather.

· Ensuring that appropriate PPE are used.

· Ensuring that additional time and construction budget has been allocated for unexpected weather or other force majeure events.

Covid-19 related risks that restricts transportation and construction work

High

Yes

Yes

· Apropriate PPE equipment.

· Practising Social Distancing

· Isolation centres at construction site

· Temporary accommodation of workers at construction site

· Project-related change

· Change in the applicable Regulations and laws

· General change

Low

Yes

Yes

· Operation of and the permissions of environmental regulations as well as approvals

· Required permits identification and approval timeframe needs to be understood before any land acquisition takes place and also before pre-construction activity

Discussion and recommendation :
The Risk mitigation plan identified earlier does not have any implementation issues. In particular, the highest priority risks that includes related to Land acquisition, non-adherence of environment protection and Inability to meet specifications are the most challenging aspects of the plan. These risks must be mitigated at all costs and if they are not mitigated, then the project risk management can have serious implementation issues.

Even with all of the problems resolved, lingering threats will still remain. That is the intrinsic essence of threats. Uncertainty cannot be removed by one-time risk reduction techniques, but ongoing attempts should be made. In this way, having a strong team of Project Managers and a strong organizational structure to continuously track and resolve problem items is crucial for effective project growth.

References
Alkhlaifat, B.I., Abdullah, A.A. and Magassouba, S.M. (2019). Modeling Impact of Project Management Performance with Among Roles of Project Risk Management and Organizational Culture on Project Success. European Journal of Business and Management.

Bugrova, O. (2019). Risk Management of a Social Project: an Algorithm and a Business-case. Scientific Papers NaUKMA. Economics, 4(1), pp.14–19.

Einhorn, F., Marnewick, C. and Meredith, J. (2019). Achieving strategic benefits from business IT projects: The critical importance of using the business case across the entire project lifetime. International Journal of Project Management, [online] 37(8), pp.989–1002. Available at: https://www.sciencedirect.com/science/article/pii/S026378631930849X.

Indelicato, G. (2015). A Compendium of PMO Case Studies: Reflecting Project Business Management Concepts. Project Management Journal, 45(2), pp.e4–e4.

Islam, S. and Rokonuzzaman, M. (2016). Process Centric Business Case Analysis for Easing Software Project Management Challenges. Journal of Software, 6(1).

Nasir, M.H.N.M., Sahibuddin, S., Ahmad, R. and Fauzi, S.S.M. (2015). How the PMBOK Addresses Critical Success Factors for Software Projects: A Multi-round Delphi Study. Journal of Software, 10(11), pp.1283–1300.

Nsw (2015). Sydney Light Rail Public Private Partnership. [online] NSW. Available at: http://treasury.nsw.gov.au/sites/default/files/2017-02/Sydney_Light_Rail_PPP.pdf.

Park, K., Lee, S. and Ahn, Y. (2017). Construction Management Risk System (CMRS) for Construction Management (CM) Firms. Future Internet, 9(1), p.5.

Rose, J.T. (2015). Using A Project/Case Study To Teach Financial Statement Analysis In The Introductory Business Finance Course. Journal of Business Case Studies (JBCS), 4(3), p.1.

Qin, Y. (2015). Research on the System Construction of the Railway Enterprise Project Contract Management. Project risk management International Journal of Management Science and Engineering Research, 2(2), p.38.

Yuan, H. (2017). Achieving Sustainability in Railway Projects: Major Stakeholder Concerns. Project Management Journal, 48(5), pp.115–132.

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