quantitative risk assessment & risk management on a large
Post on 16-Jan-2022
9 Views
Preview:
TRANSCRIPT
Quantitative Risk Assessment & Risk Management on a large transportation project
July 2019| HIGHWAY CONCESSION CONFERENCEINFRA | TECH | O&G | MARITIME
2
01 Malaysia Development Bank at a glance
02 Risk Management Overview
03 Risk Management Process
04 Qualitative & Quantitative Risk
05 Conclusion
Content
3
Corporate Information
Marine venture
capital investment holding
Provision of credit
facilities to SMEs
Regulator
Date of Establishment
28 November 1973
Shareholders
MoF (99.99%)
Federal Land Commissioner (0.01%)
Authorised Capital
RM10.0 B
Paid Up Capital
RM3.1 B
Credit Rating
AAA by RAM
$$$
Group Structure Brief Information
4
Focus on Mandated Sectors
Infrastructure MaritimeOil & Gas
• Area Development
(Mixed / Commercial /
Industrial)
• Community & Public
Services (Education /
Health)
• Port (Airport /
Warehouse / Logistics
Hub)
• Road / Highways /
Bridges / Transport
• Tourism
• Utilities (Water / Power /
Sewerage)
• Vessels
• Shipyard
• Shipbuilding
• Ship repair
• Engineering Works
• Yard Facilities
• Fabrication
• Vessel Services
• Machinery
• Offshore
• Onshore
• Support Vessels &
Logistic
• Air Transportation
• Fabricators
• Operators (Fields / Rigs
/ Platforms / Tank
Farms)
• Machinery
Technology
• Telco
• Aerospace
• Renewable Energy
• Waste to Wealth
• Manufacturing
• Biotech / Biofuel
• Electrical
• Engineering
• ICT
• Pharmaceutical
Page 5
“To provide medium to long term credit facilities to finance mandated
sectors i.e. infrastructure, maritime, oil
& gas and technology, in line with the
country’s development policy”
Building The
Nation
Risk Management Overview
7
What is Risk ?
“An uncertain event that may have a positive or
negative effect on one or more project objective/s
“ by Project Management Book Of Knowledge (PMBOK)- PMI June 2015
8
WHY do we need to manage risk?
9
VUCA is an acronym used by the American Military to describe
extreme conditions in Afghanistan and Iraq.
10
11
Volatility Explained
12
Uncertainty explained
Uncertain weather leads to unusually heavy
rainfall and flood
New Strait TimesFebruary 9, 2017 @ 10:11am
IDF - Intensity Duration Frequency
Intensity–duration–frequency (IDF)
relationship of rainfall amounts is
one of the most commonly used
tools in water resources engineering
for planning, design and operation
of water resources projects
Flood model vs actual event
(prediction accuracy?)
13
Complexity explained
Source from moxa.com
Risk Management Process -Implementation in Projects
15
Facts about Projects in general
“The risks associated with megaprojects—those that cost
$1 billion or more—are well documented. In one influential
study, Bent Flyvbjerg, an expert in project management at
Oxford’s business school, estimated that nine out of ten go
over budget.1
Rail projects, for example, go over budget by an average
of 44.7 percent, and their demand is overestimated by
51.4 percent”
Source McKinsey Article 2015 by Niklas Garemo, Stefan Matzinger and Robert Palter
16
BPMB’s current portfolio (Highway)
“As of July 2019, BPMB financed a total of 5 road
construction projects (4 highways and 1 federal road
upgrading) by means of either Term Loan, BG or
Revolving Credit. A total 5 out of 5 projects are facing
delays of more than 45 days and the construction work
programme (CWP) has been re-baselined at least once”
17
Risk Management Process
18
1. Risk Identification: RBS for a Project
POLITICAL/
SOCIAL
TECHNICAL
FINANCIAL
19
Political & Social Risk
20
Political & Social Risk- Example
1. Public objection on the proposed alignment – e.g. the pier located very near to
schools, mosque, temple etc.
2. Delay in land acquisition resulted in a delay to commencement of the
construction.
3. Change of Policy, Laws and Local Standards (foreign worker, technology
transfer etc.)
4. Public complaint due to heavy congestion, safety issues, noise as a result of
the highway construction.
5. River pollution – leads to stop work order and river cleaning to be conducted
accordingly.
21
Risk Engineering/Construction
22
Engineering & Construction Risk- Example
1. Misinterpretation of Drawings and Specification
2. Delay issuance of construction drawings (requires input from Architect, C&S ,
M&E and so on)
3. Shortage of Manpower, Material and Equipment/Machineries
4. Major safety incident – heavy crane, segments collapsed etc.
5. Construction at a flood prone area – leads to very low production at site.
6. Management risk: improper planning, poor communication between parties
involved, changes in management, poor resource management.
7. Unforeseen underground condition (utilities, geotechnical)
8. Poor site supervision and management
23
Financial
24
Financial Risk- Example
1. Delay in payment to main contractor, subcontractor
2. Contractor’s cash flow constraint
3. Inaccurate and unrealistic cost/budget estimation – too optimistic assumption
that didn’t take into consideration of the risks that might occur.
4. FOREX risks – equipment and material imported from foreign country.
5. Substantial construction delay that leads to cost overrun. (LD & LAD)
25
Highway project risk overview
26
Risk Analysis & Management (RAMP) Example
Source: Published by Institute of Civil Engineer UK
27
2. Risk Analysis (Evaluate P and I of Risk)
Risk Management Process : Risk Analysis (Qualitative)
PMBOK® Guide Sixth Edition defines Perform Qualitative Risk as “The process of
prioritizing individual project risks for further analysis or action by assessing their
probability of occurrence and impact as well as other characteristics.”
29
Qualitative – Impact determination
30
PROBABILITY
/LIKELIHOOD1 2 3 4 5
Minimal Minor Moderate Major Critical
5 Almost certain (75%-
100%)
Likely to occur 12 time
or more per year
5 10 15 20 25
4 Very Likely (50% to
75%)
Like to occur 4 times or
more per year
4 8 12 16 20
3 Likely – could happen
occasionally (25% to
50%)
Likely to occur once a
year
3 6 9 12 15
2 Unlikely – could happen
rarely (5% to 25%
Likely to occur once in 5
years 2 4 6 8
10
1 Very Unlikely – probably
will not happen (0% to
5%)
Unlikely, but may
exceptionally occur
1 2 3 4 5
Qualitative – Risk Assessment Matrix
31
Qualitative – Risk statement example
Risk: Delay in commencement of SBG launching
Cause: 1) Approval delay from TNB due to incomplete documentation/drawings (1mo)
2) Delay in finalizing the drawings by consultant (1.5mo)
3) Delay in Land Acquisition (2.0mo)
Impact: Direct impact on the schedule (4.5 months delay on average based on previous
projects)
Probability: 50% of the times, it happened in the past
Risk Management Process : Risk Analysis (Quantitative)
PMBOK® Guide Sixth Edition defines Perform Quantitative risk Analysis as “The
process of numerically analysing the combined effect of identified individual
project risks and other sources of uncertainty on overall project objectives.
33
Quantitative Risk Analysis
“In particular, for large transportation construction projects,
quantitative risk management is being utilized as an optimal
process. Quantitative risk management involves quantitative (i.e.
probabilistic) risk assessment in addition to risk response.
Probabilistic risk assessment of a project takes into account all
significant uncertainties that affect project “
QRA Output (Cost Exposure)
There is a 80% chance that this project shall experience RM2,11b cost
increase on top of the project budget. For a project that cost RM10b, P80
represent 20% of the budget.
It is way above its initial contingency level set at 10% of the project budget.
Thus a diligent risk mitigation plan is needed to further reduce the risk for this
project.
QRA Output (Tornado Chart)
Tornado Chart provide actual impact of the risk on project duration. With this
chart project team would be able to prioritise their effort for mitigation action.
36
1) Determine Likelihood for the project to complete on
time, budget and specs.
2) Estimate reasonable contingency (Duration & Cost)
needed to achieve the desired level of certainty.
3) Identify which risks that hurts project the most, thus
effectively assign resource to mitigate those risks.
Benefits of implementing QRA
37
In a Nutshell , Project Risk Management ….
Thank You
top related