Project Management

CIA – 3
Project Risk Management-A Comparison

By
Yogendra SK (2127932)
Vineet Lookose (2127931)
Imran Khan (2127815)
Desai Vishwa Umesh (2127811)
Arpita Biradar (2127936)
Subin Suresh (2127928)
Alan Tom James (2127803)
Akshay TL (2127802)

Under the Guidance of

Prof. Vasudevan Murthy

MBA PROGRAMME
SCHOOL OF BUSINESS MANAGEMENT
CHRIST (DEEMED TO BE UNIVERSITY), BANGALORE
January 2023
Atal Tunnel

Risk Management Strategies

1. Seri Nala Fault Zone- Shear zone with heavy ingress of water up to 140L/s

The Seri Nala Fault Zone is a geological feature characterized by intense deformation and
movement of the rock, known as a shear zone. It is a zone of rock that has undergone intense
movement and deformation. The heavy ingress of water, up to 140L/s, refers to a high rate at
which water is entering the zone, which may be due to the proximity of the zone to a water
source and the presence of fractures and faults in the rock that allow water to flow through.The
high water ingress into this zone poses a risk to infrastructure such as tunnels, mines, and dams,
as it can cause instability in the rock mass, water seepage, and flooding in the tunnel.

To mitigate these risks, risk management strategies such as conducting detailed geotechnical
and hydrogeological investigations, implementing measures to stabilize the rock mass,
monitoring water levels and flow rates, inspecting the tunnel for signs of water damage or
instability, regular monitoring for changes in the rock mass, having a proper drainage system
in the tunnel and having a contingency plan in case of emergency are implemented.

2. Geological Hazards- Rock falls, landslides, soil instability

Strategies to mitigate

Geotechnical Investigation: Geotechnical investigation is the process of collecting and

analyzing information about the physical and mechanical properties of soil and rock at a
construction site. This information is used to understand the site conditions and design
appropriate foundations, slopes, and retaining structures. Geotechnical investigation typically
includes activities such as drilling, soil and rock sampling, and laboratory testing. This
information is used to understand the soil and rock properties and to predict their behavior
under load, and to identify potential hazards such as rockfalls, landslides, and soil instability.

Regular monitoring of slopes: Regular monitoring of slopes is a critical aspect of risk

management for geological hazards such as landslides and rockfalls. This can include installing
monitoring systems such as ground-based radar, tilt meters, and GPS, as well as visual
inspections of slopes. These monitoring systems can help detect early signs of instability, such
as changes in slope angle or movement of soil or rock, and provide early warning of hazards.
Installation of rockfall protection: Rockfall protection measures are designed to prevent or
reduce the damage caused by rockfalls. These can include installing rockfall barriers or netting
to catch falling rocks, or blasting or removing loose rock from slopes.

Slope stabilization measures: Slope stabilization measures are designed to prevent or reduce
the risk of landslides and soil instability. These can include building retaining walls, reinforcing
slopes with geosynthetics or rock bolts, and installing drainage systems to reduce water content
in the soil.

It is important to note that the most appropriate mitigation strategy will depend on the specific
characteristics of the site and the hazards present, and that these strategies are used in
combination, as a good geotechnical investigation and regular monitoring can inform the
design and installation of rockfall protection and slope stabilization measures.

3. Time and Cost Overruns

Time overruns: Time overruns occur when a project takes longer to complete than the
originally planned completion date. This can happen for a variety of reasons, including
unexpected complications, changes in scope, or delays in obtaining necessary approvals or
permits. Time overruns can cause delays in the delivery of the project, which can have a
negative impact on the project stakeholders.

Cost overruns: Cost overruns occur when a project costs more than the originally planned
budget. This can happen for a variety of reasons, such as unexpected complications, changes
in scope, or increases in labor or materials costs. Cost overruns can have a significant financial
impact on the project stakeholders, and can also lead to delays and other problems.

Both time and cost overruns can be caused by a variety of factors such as lack of proper
planning, underestimated costs, lack of proper risk management, poor quality of work, lack of
proper communication, lack of proper management, lack of proper monitoring and control,
lack of proper estimation of resources, and lack of proper coordination among stakeholders.

Strategies

Detail project plans: Detailed project plans are comprehensive documents that outline the
scope, schedule, and budget of a project. They include information such as project objectives,
deliverables, timelines, and resource requirements. Detail project plans are an essential tool for
managing a project, as they provide a clear and comprehensive overview of the project and
help to ensure that all stakeholders are working towards the same goals.

Regular monitoring: Regular monitoring of a project is the process of tracking progress,

identifying problems, and taking corrective action as necessary. This includes monitoring
project performance, cost, schedule, and quality. Regular monitoring helps to ensure that the
project stays on track and that any issues are identified and addressed in a timely manner.

Implementing a contingency plan: A contingency plan is a set of procedures and actions that
are implemented in case of an unforeseen event or emergency. It provides a framework for
responding to unexpected events or changes that may have an impact on the project. A
contingency plan should include a risk assessment, identification of key resources, and a
communication plan. The contingency plan should be developed and tested before the start of
the project, so that it can be implemented quickly and effectively in case of an emergency.

4. Safety of Workers

Cold Climate Effects, Medical Challenges, Communication Challenges, Working

Temperatures, Varying efficiency of machineries at high altitude and low temperatures

Strategies

Comprehensive Safety Plan: A Comprehensive Safety Plan is a detailed document that outlines
the safety procedures and protocols that are in place to protect workers from hazards and
injuries in the workplace. It typically includes information on hazard identification and
assessment, emergency response procedures, safety training, and the use of personal protective
equipment (PPE). The plan should be reviewed and updated regularly to ensure that it stays
current with the latest safety standards and regulations.

Regular safety inspections: Regular safety inspections are an important aspect of safety
management. These inspections should be conducted by a trained and qualified safety
inspector, and should be carried out on a regular basis to identify hazards and ensure that safety
procedures are being followed. Safety inspections can include checking for compliance with
safety regulations, identifying and correcting unsafe conditions, and ensuring that safety
equipment and PPE is being used properly.

Provision of appropriate safety equipment and training for workers: Providing workers with
appropriate safety equipment and training is essential to ensuring their safety on the job. This
includes providing workers with personal protective equipment (PPE) that is appropriate for
the specific task, and providing training on the proper use and maintenance of the equipment.
The employer should also ensure that the workers are aware of the hazards that they may
encounter while working, and provide them with the appropriate training to avoid those
hazards.

NICE ROAD

Awaiting land acquisition for the toll project, future real estate development, and ongoing
construction risk: The project's scope comprises the acquisition and development of 6173 acres
of land, of which 1575 acres will be used to build three roads and the other 4598 acres will be
used to develop real estate and build the proposed township. Out of the aforementioned, NECE
currently has 4184 acres of land, with the remaining 1989 acres need to be purchased. The
development of the motorway and township is the main purpose of the awaiting property.

As of March 31, 2022, NECE had made advances for land acquisition totaling Rs. 267.71 crore,
of which Rs. 129.42 crore had been advanced to the Karnataka Industrial Agency Development
Board (KIADB) and the remaining amount had been distributed to various private parties for
the acquisition of land next to motorways and peripheral roads. Additionally, because land
losers are expected to demand increased compensation, the corporation will continue to be
exposed to the risk of rising land prices.

NECE is additionally exposed to the ongoing construction risk brought on by the development
of an motorway, eight interchanges, and a township. To meet its funding needs, the
aforementioned construction is reliant on the availability of land and is connected to land
monetisation. Two interchanges, totaling around 215 acres, have been created by NECE, and
GoK authorisation for the sale of such plots is awaited. 3 CARE Ratings Ltd. will be able to be
funded in part using the proceeds from this interchange sale.

Press Release

In the event of a balanced land allocation, balance capex In the future, timely land parcel
monetization will be essential from a credit viewpoint.

Financial Risks

A subsidiary of publicly traded BF Utilities, Nandi Infrastructure Corridor Enterprises, sold its
8% holding to JP Morgan Chase private equity unit Airro Holding V Mauritius. According to
a person with first-hand knowledge of the transaction, the deal is valued at Rs 500 crore.
The funds will be utilised to partially fund the NICE-developed Bangalore Mysore
Infrastructure Corridor (BMIC) project.

Adichunchanagiri International School to Bidadi, a 7-km route, would be developed right

away. NICE has already finished five kilometres of the road project while still seeking
additional state government approvals for land acquisition.

Section of NICE road may be demolished for encroachment

Due to its encroachment on the lakes Gottigere and Sompura, the Nandi Infrastructure Corridor
Enterprise (NICE) faces the prospect of having portions of its motorway demolished and
realigned. The district administration identified NICE on its list of lake encroachers after
discovering that two lengths have been constructed that encroach on portions of the Gottigere
and Sompura lakes.

The allegations of lake encroachment have been refuted by NICE. The motorway was built,
according to the managing director of NICE, after the High Court approved their alignment
after investigating the lake difficulties.

65-km peripheral ring road in Bengaluru

The much-delayed Peripheral Ring Road (PRR) project will be implemented over the course
of a four-year plan created by the Urban Development Department (UDD). To make NICE
Road fully circular, the 65-km PRR will finish the section between Tumakuru Road and Hosur
Road.

In order to expedite the project's implementation—which is expected to cost Rs 17,313 crore—

the government established a special purpose corporation called Bengaluru PRR Development
Corporation in October 2017. The massive responsibility of obtaining 1,810 acres of property,
either through transferable development rights (TDR), land-to-land compensation, or cash,
falls on the government. The government estimates the price to be Rs 10,176 crore because
monetary compensation will be used to acquire nearly 80% of the land.

Using a public-private partnership, the PRR's construction, which is anticipated to cost Rs

6,885 crore, would be undertaken. To pay for a portion of the infrastructure costs, the
government is looking at obtaining a long-term loan from the Japan International Cooperation
Agency (JICA)
.

1. Construction Risk

Construction risks in PPP projects are tied to a number of distinct aspects that have an impact
on the project's infrastructure construction. Below, a few risk factors are described. Comparing
estimated and actual project costs In the majority of cases, the actual project cost may exceed
the predicted project cost owing to a number of factors, including inefficient working, a delay
in public sector agreement approvals, changes in design, new taxes, etc. Private parties take
these kinds of risks the majority of the time. Project Finish Date Private parties, such as
contractors tasked with finishing the project within the allotted time, also assume this risk.
Standard Construction Practices Construction can be done to good standards with the right
supervision. Therefore, frequent inspections by the public sector can stop this.

2. Operating Risk

Risks associated with operations and maintenance of the project's infrastructure. Unless there
is an increase because of new or increased taxes, operating risks are often assumed by private
parties. Long-term PPP projects will be more sustainable with regular periodic assessments and
pricing adjustments.

3. Design Risk
Any errors or flaws in the design requirements or the design of the structural components are
referred to as design hazards. It might be challenging to determine if structural elements that
have been damaged are a result of incorrect design parameters or the design itself. The design
contractor typically has control over the design risks. Therefore, it is the design contractor's
duty to assume responsibility for risk elimination during the design phase.

4. Market and Revenue Risks

Money risk is present when a project cannot earn the revenue it is expected to. Any of the
following factors could put a PPP project in danger of losing money or facing market risks.
Lack of revenue from fares or tolls The revenue risk may arise if sufficient revenue from fares
or taxes is unavailable. In this situation, the private sector may ask the public sector for financial
compensation. Additionally, it may ask the public sector to raise the prices or tolls or prolong
the concessions' duration. Inadequate revenue from other operations The private sector might
ask the government to prolong the concession period if revenue risk is present due to
insufficient revenue from other operations. Not enough traffic A PPP project will receive
government funding if there is enough traffic. The government will only compensate the
project if the volume of traffic is adequate.

5. Legal Risk

Projects involving public-private partnerships may run into legal problems for various reasons,
some of which are listed below.

• Difficulties with property lease

• Owner consents
• Document breach
• Failure of the private sector financially
• Structure for corporations and security
•
6. Financial Risk

Funds will typically be raised for initiatives that demand a lot of operating capital. At this point,
there are two ways that financial risks are present. These dangers need to be carefully
considered by all parties. Foreign Exchange Risk When a project involves foreign currency
exchange or international finance, exchange rate concerns can arise. Since many emerging
nations experience unstable foreign exchange rates, this risk should be taken into account. Rate
of Interest Risk When a sizable sum of money is borrowed for the project at changeable interest
rates, interest rate risk is present. The money should be borrowed with a set interest rate to
lower this danger. Additionally, it's crucial to forecast a loan period that is longer than the
project's duration since otherwise, the risk of an increase in interest rates beyond the load period
could result.

7. Political Risk

Political risks from public sectors like the current government, the opposition government, the
nation's legislature, etc. may also have to be considered for PPP projects. The following are the
associated political risks:

• Project nationalisation
• Tax increase
• Failure to pay by the public sector
• Delay in public authority approvals
• Public sector's termination of the private sector

8. Force Majeure Risks

Most hazards associated with force majeure are unconnected to the project. None of the
project's participants can control or stop them. Natural Force is to blame for the majority of
force majeure dangers. Majeure Occasions Natural forces also include catastrophes like
cyclones, earthquakes, and floods. Although these dangers cannot be completely eliminated,
taking earlier safety procedures may benefit the project and reduce costs. Both sides are equally
responsible for this cost increase. Events Due to Direct Political Force Majeure Exploration
and nationalisation are two direct political actions that have an impact on the project. Politically
motivated events that are indirect Where there is an unstable political climate, indirect political
occurrences have occurred. Indirect political Force Majeure risks include war, riots, and other
such events.

9. Environment Risk

The implications of a project's implementation on the environment are referred to as

environmental risks. It is crucial to determine whether there are any rigorous environmental
liability laws inside the project zone. In order for the project to comply with current
environmental laws, careful planning is required. To reduce the possibility of fines, additional
fees, etc., it is advised to submit the report and obtain approval from environmental authorities
before starting a project.