02-10-2017

Assignment 4:
Risk Assessment

CT3101 BASISAPSECTEN PROJECTMANAGEMENT

GROUP 9B
MIKE MORITZ - 4287932
LISE ANDRINGA - 4454952

TU DELFT Minor Project Management: from Nano to Mega

1. Describe 10 key risks in different categories at least covering 5
categories. Why are these the key risks, in your opinion?
Below a description of a number of prominent risks has been provided, ranging between opportunities
and threats. Table 1 shows an overview of all the risks involved, their causes, effects, likelihood and
impact factor.

Risk 1 envelops the possibility that building permits are not granted. This is a risk with a high likelihood
when building near a historical city centre and with a very high impact. Impacting cost, schedule,
morale and possibly quality.

Risk 2 envelops the opportunity provided by the project being run near a densely populated area. Due
to proximity the local inhabitants will may have an interest in the project and the possibilities it
provides. This risk could have positive influence on the project success.

Risk 3 envelops the negative aspects that may be seen due to operating near a dense population
centre. People are often short-sighted, hence there exists a large possibility of underlying friction being
generated due to unfounded complaints.

Risk 4 envelops the possibility of budgets cuts while the project is underway. While the possibility of
this happening is very low, its impact could be massive. There is historical precedent where projects are
underfunded, which impacts the overall delivered quality.

Risk 5 envelops the opportunity provided by the projects great focus on security. With a design based
on security it is possible that the supervising parties will leave a more positive report. The high safety
value of the project has due to that an increased chance of being approved by the authorities, greatly
enhancing the timetable.

Risk 6 envelops the possibility that the new technology does not work as specifications indicated. While
using innovative technologies to reach ambitious environmental goals is commendable it is also a
mayor risk factor. Generally new technology has not yet been thoroughly tested by continued usage,
hence there might still be unexpected problems. When the technology does not operate according to
specifications the projects goals, timetable, quality and/or costs might suffer negative conswquences.

Risk 7 envelops the client not being satisfied with the current design. Scope creep is something a great
many projects suffer from. Scope creep can result in many changes within a project, which requires a
project to be stopped, before redoing certain phases. This has a massively negative effect on the
schedule and costs involved.

Risk 8 envelops the possibility that due to delays originating with contractors the next phase of the
project cannot be started. This has schedule and cost impacts due to contractors not being able to start
their work, possibly new contractors being required or a lot of extra work being required.

Risk 9 Envelops the chance that the project acquires more corporate or earlier interest than originally
envisioned. This has a lot of opportunities that could be grasped. Besides an increase in reputation for
the project developer joint development may be possible where part of the infrastructural costs are
handled by cooperating parties. This has possibilities of decreasing the budgetary strain on the project.
Apart from this the cooperation will allow for more possibilities in the future after the construction
phase finished and the operating phase started.

Risk 10 envelops the chance that resource prices experience rapid raises. This will negatively impact the
project budget. Due to the market never being stable it is likely this risk will occur one way or another.
# Category Cause Risk Event Consequences T/ Likelihoo Effect
O d (Impact)
1. External Planning of Not getting a Delay due to T Likely Very high
(Government) project in a build permit forced relocation
historic centre of the project
2. External High human Increase in An Increase in O Possible Medium
(Social) resource Local local support
requirements employment
3. External Construction Local residents Schedule and T Likely Medium
(Social) being near being against success criteria
residential the project. impact.
areas.
4. Financial Investors need Budget cuts Reduction in T Remote Very high
money quality and/or
elsewhere. delay in schedule.
5. Business Design with high Supervisors Increased chance O Possible Medium
(HSE) safety give positive for permits.
requirements. feedback.
6. Technical New technology Original Increased costs, T Rare Medium
is not fully designs do not delay in schedule,
tested. hold up to safety issues.
specifications.
7. Project Client not Changes to Cost and schedule T Possible Very High
Management satisfied with scope implications.
progress.
8. Project Delays due to Construction Schedule delays, T Rare High
Management construction phases not cost implications.
contractors. completed in
time.
9. Strategy Project being Increase in Cooperative O Likely Medium
positioned at local product
easy to access interested development,
area. stakeholders. increase in
reputation.
10. Commercial Contracts with Increase in Increased costs. T Possible Low
flexible resource resource
pricing prices

# Cause Risk Event Consequences Mitigation

1. Bad weather conditions. Construction works Increased down time to Plan in 25% down time.
being halted. 40%.
2. Protest from Design alterations Negative time and budget Active cooperation with
environmental agencies. or location shift. implications. agencies.
3. New monetary policies Budget cuts. Reallocation of money and Underspend during the
or priorities. possible negative project.
consequences.
4. Road safety impacts too Project being Severe schedule and Active participation of
high. halted. budget implications due to HSE agencies.
redesign of bridge deck
being needed
5. Large groups of parties Communication Damage to project image, Create individual
interacting with each errors. or material damages (e.g. departments.
other. wrong deliveries, etc.).
2. From the 10 key risks as identified in task 1: please select those 5 that
could make you stay awake during night. Why did you select these 5
risks?
Risk 1. No permits: With planning a project within an historical area there is a high probability that
there will be resistance by local entities. In the likely case that the project is not allowed to continue at
the selected location all the planning and preparation with relation to that location is void. Which in the
case of such a huge construction project can mean almost half of the project progress being nullified.
The effect will be massive costs, delays in schedule, new relationships with stakeholders and new
legislature to take into account. Apart from this the large changes will result in an increase of risks. Due
to the nature of this project it is very hard to either mitigate or transfer this risk properly.

Risk 3. Protests by locals: People do not respond good to change. With the project being directly
connected to the city of St. Petersburg with both its construction and success criteria it is imperative to
keep the local populace from forming a too negative opinion. Success criteria for this project include
greater business for the local area and increased reputation for the Gazprom group. If the local
population is opposed to this project the reputation of Gazprom will be tarnished, while the local
opportunities created by the project will be shunned, which will result in the local business not seeing a
notable increase.

Risk 4. Budget cuts: Despite the low chance that this risk can occur its impacts are massive. Budget
costs have the potential to completely change the course of the project. Making sure scope changes are
required. Budget cuts will result in measures being taken that will negatively impact the project quality,
timing and possibly safety, due to things as renegotiated contracts, redesigns or changing personnel.
The effects are hard to oversee resulting in a lot of unknowns and additional negative risks.

Risk 7. Scope change: Due to the nature of this project there is a likely event where the client or other
influential party will ask for additional features to be added, which will result in scope creep or change.
Scope creep or change is very dangerous for a project as it will ensure the project will be off track. This
will result in a great amount of delay, possibly having to do parts like the design process again or in a
faulty final product being delivered. Additionally the changes and work that will creep in a project with
scope creep is at first impossible to completely oversee.

Risk 8. Construction holdups: With this risk you are almost completely dependent on the construction
contractors. In the event that the risk occurs the schedule will be greatly affected. Delays with one
contractor can influence all the following ones. Stages that need certain parts finished can’t be started
resulting in contractors being paid without them doing anything. Contract renegotiations or expensive
replacements might even be needed. This will all influence the delivery time, cost and quality of the
overall project, either one or all of these aspects.
Table 1:Risk Importance

Impact
Probability 1 Very Low 2 Low 3 Medium 4 High 5 Very High
5 Very likely
4 Likely Risk 1
3 Possible Risk 3 Risk 7
2 Rare Risk 8
1 Remote Risk 4
3. For each of the 5 selected risks in task 2: formulate a risk response,
which must consist of a response strategy, and actions before and/or
after a risk event takes place.

Risk 1 can never be completely avoided when working in a city centre, however due to the extreme
impact the risk has when occurring it is imperative that steps to reduce it are undertaken. Prevention
can be done by having good relations with the local authorities and the people these authorities
answer to. This can be done by involving them with the project. Damage can further be prevented by
ensuring a backup location. If the risk occurs large schedule and cost damage can be prevented by
switching to the already prepared backup location or by adhering to the demands set by the
authorities in order to still get a permit.

Risk 3 is a risk that when working near a dense population centre cannot completely be avoided.
There will always be sceptics or organizations that have a vested interest in thwarting your project.
However, considering this project is closely linked with the local population it is important that this
risk is reduced as much as possible in order to turn the population from an obstacle to an
opportunity as described by risk 2 at question 1.

Risk 4 has a very low probability of happening and largely out of the hands of the project manager,
hence it is hard to do anything to prevent it from happening. This does not exclude the fact that
contingency plans need to be in place. To minimize the chance of this having a tangible effect board
members can be made clear the importance of the project, additionally a part of the budget can be
reserved for emergency expenses. Lower priced goods can be acquired at the cost of accepting the
risk that these resources are lower quality or extra sponsors can be considered. Additionally in
extreme cases a narrowing of the scope can be considered, this would allow the project to keep
running while avoiding the dreaded scope creep by only taking away extra amenities.

Risk 7 has a historic tendency to appear. Risk 7 can be completely avoided if prevention is well taken
care of. By at the start involving the parties capable of demanding scope changes deeply it can be
prevented that scope changes are needed due to lack of communication. Setting clear projects
boundaries while maintaining the information flow is imperative to minimize this risk. Additionally
such a large project as this could have its different functions divided into multiple smaller project,
where having scope changes in one small project will only marginally affect the project as a whole. If
the risk does appear it is best to stop the project and again go over the different phases to avoid
mistakes or the scope changes if applicable can be implemented in a new sub-project.

Risk 8 can best be transferred to the contractors themselves. Making the contractors responsible for
the delivered goods/construction allows for mitigation of cost effects as well as give the contractors
an incentive to keep themselves to the deadlines set. Costs can further be mitigated by demanding
damages in the case that deadlines aren’t reached. To ease the schedule strain new short term
contractors can be contacted, the extra costs from these need to be offset by damages paid.

Table 3 shows the preventive actions that are to be applied to minimize the risk effect on the project
and the actions that are to be done to minimize the damage in the event that the risks do occur.
Table 2: Risk prevention and mitigation

Response Prevention (before occurrence) Mitigation (after occurrence)

Type
Risk 1. Reduce - Ensure good relations with - Switch to backup location.
authorities. - Adjust project parameters
- Plan together with local to fit within demands.
stakeholders.
- Ensure a backup location.
Risk 3. Reduce - Provide positive information - Renegotiate contracts for
(emphasize opportunities). cheaper services.
- Work with the locals. - Cuts in personnel
- Minimize project negative - Take risk of sacrificing
impact on the surroundings. quality for cost benefits.
Risk 4. Accept - Reserve budget for - Narrow the scope,
emergencies. ensuring less costs in
- Ensure good relations with exchange for diminished
board members project end-value.
- Ensure project importance is - Find additional sponsors or
emphasized investors.
- Contact cheaper
contractors.
Risk 7. Avoid - Ensure good - Create a new small project.
communications. - Slightly narrow the scope
- Set clear project boundaries. in tandem with the
- Have the project divided in changes (if they aren’t
multiple sub-projects. large changes).
- Only redo sub-parts of the
project, keeping the rest
on schedule.
Risk 8. Transfer - Plan extra time for - Demand damages be paid.
contractors to finish - Get new short term
- Make contractors insure contractors to ease
their property and schedule. schedule strain