Project Risk Management - the Capital Metro Light Rail Project - Case Study Example

Project Risk Management Written Report 1. Introduction The Capital Metro Light Rail Project is an initiative of the labour government to provide a rapid transport system for the city. This project is the product of decades of investigation and citizens concern over the growing traffic congestion, high cost of transportation, inadequate housing within the city, and the impact of their vehicle emissions on the environment . Construction of the Capital Metro Light Rail Project will begin by 2016 with a budget of $18.7 million . However, like other large construction projects, the Metro Light Rail project has its share of risks and other issues associated with construction and operation. Risk management according to is generally about anticipating things that could go wrong in a project and formulation of measures that can prevent or control the impact of these risks . It is about making decisions and attempts to optimise the outcome, minimising risks to meet the expectations of stakeholders , and taking actions to positively influence the outcomes . In other words, it include opportunity assessment, identifying risks, developing mitigation strategies and contingency plans, monitoring, and learning for future project use . The following sections described the various risks associated with the Metro Light Rail project through environmental scanning and review, identified stakeholders and their role in the project, risk and opportunities associated with the project, control strategies and action plan, and effective monitoring, review, and learning plan that may be implemented throughout the project. 2. Environmental scanning and critical review The objectives of the project as mentioned earlier is to ease the growing traffic congestion, reduce cost of travel from home to work, reduce harmful emissions such as noise and greenhouses gases. Scanning the environment associated with the project suggest that the project is a political commitment made by the new government which in essence can be affected by changing political atmosphere and pressures from affected stakeholders. For instance, the labour party decided to enter into a private sector partnership in planning, financing, and development of the project but according to this private partner will unlikely to accept the financial risk of payments based on the number of passengers and therefore a financial risk on ACT taxpayers who will carry the cost of the project. Similarly, construction of light rail transport system will have it share of environmental impact as according to , all of the road in the Northbourne will be excavated during the first stage of the Capital Metro light rail network construction. Moreover, the construction will require relocation of existing services and new electricity substations along the 12km Civil to Hibberson Street in Gungahlin. Note that aside from waste and noise from excavation, large scale construction projects such as the Metro light rail will require large volume of materials and large number of heavy equipments moving around the construction site producing significant amount of dust and other health hazards. The social impacts of the project include additional traffic problems, reduced business profitability and significant employment problems during construction. Another is the concern of the public over private sector partnership, the cost of construction, running cost, and low patronage that will eventually affect taxpayers . The legal issues include the inability of the government to conduct and produce enough evidence to justify that there is a “nationally significant problem” associated with traffic congestion, access, and amenities along the corridor. Note that this project was not on the list of 2012 national infrastructure priorities and has not demonstrated its feasibility considering the positive impact of the Majura Parkway (a large parallel corridor located East of Canberra) in reducing traffic problems along Northbourne Avenue corridor . Like other light rail projects around the world, the technical issues that must be resolve in the Metro Light Rail project is relocation of existing services, constructing a portion of the line in commercial area, and building new electricity substations every 2km . The economic impact of Metro Light Rail may be positive but during the construction stage, its economic effect may be significant to businesses and their employees. Moreover, the cost of relocation of existing services such as water pipes, data cables, and others make this project more expensive that kerbside light rail or rapid bus transit. In the URS report as cited in , trams receiving power under the track is more expensive compared to overhead power cables. 3. Stakeholder identification, analysis, and consultation Using a nine-sector stakeholder analysis table, the following are identified key stakeholders and their roles in the Metro Light Rail Project. A – Key Stakeholders 1. ACT Minister/Chief/Project – have authority to manage and terminate the light rail project when necessary. 2. Construction Industry – can influence the success of the project through termination of services and contracts. 3. Transport Industry – can influence the success of the project through alternative means of public transport. 4. Sub-contractors – may delay progress due to incompetence and disagreement with main contractor 5. Work, Health, and Safety Agencies – can delay or completely stop the project if there is significant work, health, and safety concerns during construction or in the actual operation of the light rail system. 6. Town Planning – a branch of government that in later time discover the negative impact of the light rail network in the efficiency of city services and convenience of residents 7. End Users of the Light Rail Network – can greatly influence the success of the project when there is low patronage from this group. 8. Government accounting and financial institutions – may be instrumental in delaying the completion of the project due to financial issues. 9. Environmental interest groups – can significantly affect the project particularly when there is evident and considerable impact on the environment. 10. Media- can actually affect the success of the project through reporting and influencing public opinion. 11. Lobby groups – although less capable than media, these groups can actually delay or stop the project completely. 12. Emergency services – can influence project needs in terms of emergency services. 13. Local business groups – has strong link to media and can be very vocal since the project will significantly affect their business operation, employees, and profit. 14. Residents and business along light rail construction route- residents and businesses along the construction route will undoubtedly suffer from significant traffic congestion, reduction of customers and sales, and pollution. 15. Trade unions – can increase of the project by demanding higher salaries and additional benefits. They can also terminate the project through long-term strikes and lockout. 16. Utility Service Providers on light rail construction route – groups that will be significantly affected by the need to relocate existing installations. They can delay the project by being uncooperative and unsupportive of the project B- Important Stakeholders 1. Educational institutions – can influence public and other stakeholder’s opinion through exposure of non-acceptable construction practices. 2. Competitors or other construction companies seeking to win the light rail network contract – although not equally influential as education institutions, they can somehow delay the awarding and initial execution of the project. 3. Weather Advisors – with little impact but the information they have can significantly affect the project or continuity of the project. C- Minor Stakeholders 1. Road users (pre project completion) – their opinion on the impact of light rail network construction on traffic and convenience may be influential in the level of public support particularly when they have access to media. 2. Federal government – may have political interest in the project thus no significant effect on progress and completion. 3. Alternative public transport – may place strong competition in order to retain market share. 4. Other light rail services – may be influential particularly when they comment on the services being provided by the Metro Light Rail network. Table 1 - Nine sector stakeholder identification and impact analysis Low Moderate High High B - 3 A- 1 to 8 Moderate C- 4 A-5 A-9 to 16 Low C-2 C-1 and C-3 B-1 to 2 4. Identification of risk and opportunities Analysis of the Metro Light Rail project and in consideration with the identified risks presented by , the following tables contains relevant risks and opportunities. Table 2 - Risk and Opportunities Table Risks Opportunities 1. Cost related risks Cost of project delay Changes in scope and design Disputes Price inflation of construction materials Delay in approval and release of funds 2. Time related risks Same as those in cost related risks but more associated with scheduling, bureaucracy, quality, and variations in design. 3. Quality related risks Low-level competency of subcontractors resulting to repair and modification. Insufficiency in the number of skilled and qualified labour. Lack of coordination between project participants 4. Stakeholder related risks Impact of type A stakeholders (as shown in Table 1) 5. Environment related risks Inadequate construction site information Noise and other pollution caused by construction projects Delay of approval from government environmental agency. 6. Safety related risks Occurrence of accidents Lack of coordination Error in construction safety management Inability of qualified professionals and managers 1. Contractor related opportunities Completing the project on time and benefit from mass patronage. Opportunity to work on large-scale project Opportunities for growth. Opportunities for building positive reputation in the industry. Opportunity to serve the Australian public and learn from experience. 2. Government related opportunities Opportunity to ease growing traffic congestion in the area. Opportunity to reduce the impact of CO2 emissions and other traffic related pollutants. Opportunity to provide convenient, reliable, and fast public transport. Opportunity to reduce travel time and increase productivity. 3. End user related opportunities Fast and convenient transport. Reduced travel time Reduced pollution 7. Analysis and prioritisation of risks and opportunities Using risk-ranking matrix, the ranking table shows the risk and priorities that must be considered in the project. Table 3 - Risks Matrix for Construction Very likely Noise and other pollution caused by construction Delay due to safety related risks Project delay Changes in scope and design Disputes Likely Scheduling conflict Subcontractor incompetence Shortage in skilled labour Impact of type A stakeholders Occurrence of accidents Lack of coordination Error in construction safety management Price inflation of materials Delay in approval and release of funds Unlikely Minor Moderate Major 8. Control strategy and action plan Based on recommended control strategy and action plan in international construction projects by , the following may be implemented in Metro Light Rail project. 1. Execution of the work in an efficient and safe manner Break the overall project programme activities into a hierarchy of small but detailed construction programmes. Monitor progress and record variations Analyse gains and shortfalls and implement remedial action 2. Achievement of quality standards Review project plan and specifications Follow client specifications in detail Hire highly skilled workers Monitor and assess quality of work 3. Performance within budget Create a productivity benchmark Determine the correct construction method and sequence of activities against the time-scale from commencement to handover. Use the detailed programme and follow agreed working practices. 4. Achievement of time targets Familiarise with the physical nature of the site and the extent of construction that will be undertaken. Ensure supplier can deliver on time and with products meeting the quality required. Centralise procurement of goods and services Manage subcontractors effectively. Establish good working relationship with stakeholders Study the location of supporting services such as batching plants and the location of equipments, cranes, hoists, and others. Ensure effective communication. Ensure safety, health, and welfare of internal and external stakeholders against potentially dangerous and risk-prone activities. 5. Coordination and effective utilization of resources Build an efficient and effective site management team. Integrate consultants, contractors, and suppliers. Make all project decisions and actions transparent. Conduct project cost optimization by determining the critical path that is cheaper to expedite. Conduct earned value analysis or evaluate the finances of the project throughout its life cycle. 9. Monitoring, review, and learning plan Feedback about the currently executing task will enable the project team to make necessary adjustment in real time and make improvements whenever necessary. However, this is not possible a top-down command and control organisation where information is restricted. It may be necessary for the Metro Light Rail project to adapt a distributed knowledge approach where facts gathering, decisions, and judgements are being made in the field or those people who are actually doing the work . As the person responsible for the entire Metro Light Rail project, the Project Manager or PM must be familiar with the project requirements and the task required. For this reason, monitoring, control, and review must conducted following best practices. The monitoring, review, and learning plan may include the following: a. Project management should demand and facilitate good requirements analysis. b. Acquire information from those actually performing the work and allocate resources based on their requirements. c. Additional requirements discovered during the course of the project along with assumptions and identified risks must be process and used as a guide in shaping and refining the project plans. d. Ensure that work practices, methods, techniques, tools, and templates are being used by monitoring and reviewing every aspect of project. e. Ensure that stakeholders are identified and consulted to keep the project on track and in harmony with their specific requirements. f. Record and document project progress, risks, revision, mitigation strategy used, and the outcome of specific tasks. 10. Summary/Conclusion The Metro Light Rail project is a political commitment made during election of the new government thus it may be influence by change in leadership. Some identified risks include the private sector partnership scheme, environmental risk during construction, relocation of existing services along Northbourne, and construction of new electricity substations. Moreover, aside from waste and noise during construction, the project is also expected to use large quantities of construction materials and equipment which in turn produce additional pollution and health hazards. The additional traffic problems arising from excavation of existing road will likely affect business profitability, employment, and delivery of basic services. The project must also face some legal, technical, and economic issues particularly in justifying feasibility and cost of the project. Result of stakeholder analysis suggest that key stakeholders of this project are those that very influential and with direct authority over the project. Similarly, the opportunities outweighs the risks and the risk-ranking demonstrate that project delay, changes in scope and design, and dispute are priority risks that must be resolve accordingly. Based on recommendations, this report developed control strategies and action plan, monitoring and review, and learning plan that may be implemented in Metro Light Rail Project. 11. References Read More