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GEOTECHNICAL PROJECT RISK and UNCERTAINTY

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En Nanyang Technological University

P. P. Nelson, NJITMarch 22, 2012

Topics

• Defining Project Risk Relative to BaselinesBaselines

• Risk Registries• Managing Risk• Project Controls• Process and Execution Risks

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• Process and Execution Risks• Risks and CM for Underground Projects• Probabilistic Approaches

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What is a Project?

A Project is Temporary and Unique

roje

ct D

efin

ition

….it is planned, has a definite beginning and end and is

Scope

Quality

Triple Constraint

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Pr

p , g gnon-repetitive

To be Successful a Project must have a Plan… Plan what you do … A goal without a plan is a wish

Setting Project Metrics

Scope – Defining What it is and How it is going to get done

Time – Defining When it will start and When it will end

Cost – Defining Who will do it using What and How muchit will cost

Metrics must be meaningful for the stakeholder/owners, the project, the engineers, and the contractor(s)Pr

ojec

t Met

rics

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p j , g , ( )

Project Baselines … used to track metrics and assess progress during project execution

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Schedule Baseline starts with the WBS ends with Timeline

Precedence Diagram

1.2.1 Excavate

1.2.4 Pour

Concrete

1.2.5 Remove Forms

1.2.6 Backfill

1.2.2 Build

Forms

1.1 1.2 1.3

1.2.3 Mix Concrete

S h d l

1.2.1 Excavate

MF JA M J OS DNJ A

1.2.2 Build the Forms

1 2 3 Mi C thedu

le B

asel

ine

WBS

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Schedule 1.2.3 Mix Concrete

1.2.4 Pour Concrete

1.2.5 Remove Forms

1.2.6 Backfill

Sch

Cost Baseline…how much and when to spend…

Precedence Diagram Estimate

J MF JA M J A OS DN

BudgetMF JAM J OS DNJ A

Excavate

Schedule PourRemoveBackfill

Mix

Cos

t B

asel

ine

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TIME

RES

OU

RC

ES

Baseline

C

4

Build

….a project has phases and a life cycle…oj

ect L

ife C

ycle

UR

CES EXECUTION

Design Close

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Pr

TIME

RES

OU

PLANNING

CONTROLLING

CLOSINGINITIATION

Risk in the Baselines

Cost T h l

Project Risk – “An uncertain event or condition that, if it occurs, has an impact on at least one project objective”.

RiskRiskRiskRisk

Schedule

CostQuality

Performance

Scope of work

Resources

VendorsInterfaces

Technology

Sources of Risks

Politics

Public Support

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Risks with positive impacts are referred to as “Opportunities”

Known Risk – Can be Analyzed and ManagedUnknown Risk – Cannot be managed proactively

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Risk Management

IdentifyRisk

Analyse Probability and

Impact

ApplyAvoidance or

Reduction

DefineContingency

Plans

Monitor &Manage

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Build a Risk Registry

• Try to identify all realistic risks that should be considered. Provide:

a description of the risko a description of the risk o the probability of the risk occurring o a description of the potential impact of the

risk o the likely cost to the project or organization if

that risk occurs what actions should be taken now and by

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o what actions should be taken now and by whom

o what contingency plans should be formulated now so that the organization is ready to act if the risk occurs.

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i. PRE-DESIGN PHASE

Project Phases

i. PRE DESIGN PHASEii. DESIGN PHASE iii. BID AND AWARD PHASEiv. CONSTRUCTION PHASEv. POST-CONSTRUCTION PHASE

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Note: Expansions of Phase Risks are appended to the end of this presentation

ITA Example Risk Matrix

FrequencyConsequence

Disastrous Severe Serious Considerable Insignificant

Very likely Unacceptable Unacceptable Unacceptable Unwanted Unwanted

Likely Unacceptable Unacceptable Unwanted Unwanted Acceptable

Occasional Unacceptable Unwanted Unwanted Acceptable Acceptable

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Unlikely Unwanted Unwanted Acceptable Acceptable Negligible

Very unlikely

Unwanted Acceptable Acceptable Negligible Negligible

Guidelines for Tunneling Risk Management, ITA (TUST) vol. 19, 2004, pp. 217-237 http://www.caee.utexas.edu/prof/tonon/Courses_files/Geotech%20seminar_files/David%20Hatem/Tust_Vol_19_3_217-237.pdf

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Geotechnical Hazard Risk Assessment Example

Title Description Scale

Probable

Likely to occur during the construction of the tunnel, possibly on more than one occasion 3

Likelihood

Probable one occasion 3

OccasionalLikely to occur at least once during construction of the tunnel 2

RemoteUnlikely to occur during construction of the tunnel 1

Title Description ScaleCatastrophic Total loss of a section of tunnel 5

Major damage or delay to tunnel or major environmental impact affecting

Consequence

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Criticalj p g

the project 4

Serious

Some damage or delay to tunnel or some environmental impact affecting the project 3

MarginalRoutine maintenance or repair to tunnel; minor hindrance 2

Negligible Of little consequence to project 1Ref.: Hencher, 2012, “Practical Engineering Geology”, Spon Press

Geotechnical Hazard Risk Assessment Example

Catastrophic Critical Serious Marginal Negligible

Probable 15 12 9 6 3

Occasional 10 8 6 4 2

Remote 5 4 3 2 1

Score

10 to 15Very high risk - not acceptable for tunnel construction. Need to apply mitigation measures to eliminate or reduce risks.High Risk - apply mitigation measures to eliminate or reduce risk Residual risk indicates need for adaptive management

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Ref.: Hencher, 2012, “Practical Engineering Geology”, Spon Press

6 to 9

1 to 5

risk. Residual risk indicates need for adaptive management control and response plans to be well developed with well trained personnel, materials and plant readily available.Low risk - may be accepted if required mitigating measures are in place under active management control.

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Safety and Risk

• Safety and the Cliento Controls procurement, finances, and required participationo Sets overall strategy for health and safety on project –

including partnering and shared responsibilities for managing health and safetyhealth and safety

• Safety and Designerso Determine tunnel diameter, alignment, shaft diameter, depth

and locationsWorking space must be adequateContaminated land to be avoidedAll openings and changes in section should be designed for safe execution

o Set standards for fire, air, communications, ventilation – early involvement of contractor(s) in safety choicesP f i l d l t h ld i l d f t d h lth

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o Professional development should include safety and health issues

• Safety and Contractors – greatest influence on project safetyo Plan work, assess risk, implement controlo Workforce training – importance of competence of front-line

supervisors and of workers

Risks can be introduced and impacts magnified during contract execution – starting from “hasexecution starting from has everyone read the contract?”

Problems arise from:1) not knowing the contract2) not keeping records

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2) not keeping records3) bureaucracy (unneeded

complexity, slow response)4) posturing and personalities

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Outcome from Problems

o Owner, Designer, CM and contractor get a bad reputation.

o Contractor gets defensive ando Contractor gets defensive and aggressive in changes and claims.

o Contractor/owner experience high legal / claims consultant costs.

o Contractor’s documentation is often better thatn the owner’s and

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often better thatn the owner s and prove owner/CM is responsible in the end.

o No winners except the attorneys.

Risk and Construction Management ofUnderground Projects

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Underground Projects

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Geotechnical Site Investigations for Underground Projects

USNCTT (US National Committee on Tunneling Technology) 1984Technology), 1984

• Evaluated 84 tunnel projects• Over 60% had significant claims related to

“unanticipated soil conditions”• Less than 1% of project cost had been

spent on subsurface explorationf

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• Overall, claims averaged 30% of engineer’s cost estimate for the project

• Claims were settled for 12% of the project cost

Problems and Claims Reported for Tunnels(as % of tunnel projects)

Problems ClaimsRunning ground 27% 9%Flowing ground 5 4Flowing ground 5 4Squeezing ground 19 8Groundwater inflow 33 6Noxious fluid 6 4Methane gas 7 2Existing utilities 1 0Pressure binding of shield 4 4

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Pressure binding of shield 4 4Mucking 5 3Surface subsidence 9 3Face instability (soil) 11 5Obstructions (e.g. boulders, old foundations) 12 11Steering problems 4 0

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USNCTT Recommendations

• It is in the owners best interest to conduct and report a thorough site p ginvestigation

• Include a comprehensive data report in the contract documents

• Disclaimers for validity of data are ineffective

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ineffective• Need to establish a procedure for

equitable risk sharing to minimize impacts

Contract Options for Underground Risks

• Client takes all risks. Contractor is paid the cost of completing project in full. No incentive for the contractor to resolve problems cost-effectively when they arise

Low Risk for Contractor

effectively when they arise.

Risk of Unexpected

• Compromise Alternatives:o Agreed upon reference

ground conditions at starto Clause allowing additional

paymento Partnering, allowing either

gain or loss to both parties if conditions are better or

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• Contractor takes all risks. Contractor likely to be unable (or unwilling) to price the risks – and so can go badly wrong.

Unexpected Ground

Conditions

High Risk for contractor

conditions are better or worse than anticipated.

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Traditional Disputes Resolution

• Litigationo Causes friction and ill-willo Causes friction and ill willo Diverts capitolo Jury or judge has limited construction

experienceo Conflicting expert witness testimony

complicates resolution

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po Factual data gets obscured by time – no

strong culture of creating an as-built case history

Recent Concepts in Risk Sharing: “A three legged stool”

• Disputes Review Board (GDR)• Escrowed Bid Documents

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• Geotechnical Baseline Report (GBR)

Geotechnical Baseline Reports for Construction, ASCE, 2007, Underground Technology Research Council, ASCE/SME, Randy Essex (1997 version titled “Geotechnical Baseline Reports for Underground Construction”)

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Disputes Review Board (DRB)

• Use for significant public or private projects (tunnels, buildings, bridges, p j ( , g , g ,etc)

• Forum to foster cooperation• Prompt and equitable resolution• Dissuade frivolous disputes and

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claims• Non-binding but admissible in court• Does not eliminate other owner’s

resolution method(s)

DRB Mechanics

• Three member Board• One member selected by the owner,

and one by the contractor• Third member selected by the first

two• All members approved by the owner

and contractor

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and contractor• Organized early in the contract• Meet regularly throughout the

contract

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Projects Using DRBs

ALL PROJECTS WITH DRBs

1 000

1,200

1,400

1,600

-

200

400

600

800

1,000

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

CONTRACT VALUE OF ALL PROJECTS US $ Billion

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-10.020.030.040.050.060.070.080.090.0

100.0

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

Escrow Bid Documents

• Escrowing of Bid Documents is intended to create a spirit of cooperation in an atmosphere of h d dhonesty and candor

• Escrowed bid documents are used to assist in the negotiation of price adjustments and change orders and in the settlement of disputes and claims.

• Remains property of contractor

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Remains property of contractor• Accessible jointly by owner and

contractor at request of either• Held by third party and not subject to

Freedom of Information Act inquiries

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Geotechnical Baseline Report

• Accompanied by comprehensive Geotechnical Data Report (GDR)

• Established anticipated o baseline• Established anticipated or baseline geotechnical conditions for bid

• Provides a clear and concise baseline for assessing differing site conditions (DSC)

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• Incorporated as part of the contract• No exculpatory language disclaiming

responsibility for accuracy or completeness

Differing Site Condition Clause (DSC)

• The contractor shall promptly, and before such conditions are disturbed give a writtensuch conditions are disturbed, give a written notice to the Contracting Officer of 1. subsurface or latent physical conditions at the

site which differ materially from those indicated in the contract

2. unknown physical conditions at the site, of an l t hi h diff t i ll f

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unusual nature, which differ materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in the contract.

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Differing Site Condition Clause (DSC)

• The Contracting Officer shall investigate the site conditionsinvestigate the site conditions promptly after receiving the notice. o If the conditions do materially so differ

and cause an increase or decrease in the contractor’s cost of, or time required for, performing any part of the work under

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performing any part of the work under this contract, an equitable adjustment shall be made under this clause and the contract modified in writing accordingly.

Geotech Baseline issues

• Estimated amounts and distribution of different materials along alignmento High or low top of bedrocko Mixed-face conditions

• Different properties for intact materials• Properties of the ground mass behavior

o Potential for faults and shear zoneso Extent of material weathering

• Groundwater conditions expected• Construction impacts on adjacent facilities• Other geotechnical and man made sources of

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• Other geotechnical and man-made sources of potential difficultieso Gaso Contaminated ground or groundwatero Obstructions

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Contractual Assumptions

• Indicate the expected range of conditions, uncertainty, and baseline

iassumptiono May be maximum, minimum, average, or

typical valueo Note: if too conservative, may result in

an increased bid priceIf ti t i f 100 t 300 b ld b t th

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If estimate is for 100 to 300 boulders but the baseline were set at 300, the owner would pay for 300 even if only 5 were encountered

• Baseline is not a warranty of conditions but is a basis for assessment of a DSC

Content of a GBR

• Project description• Sources of information• Project geologic setting• Ground characterization

o Soil and rock units and their physical characteristics

o Tables summarizing expected values of ti f b li

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properties for baselineo Hydraulic properties and baseline inflow

volumeso Properties relevant to TBM performance

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Content of a GBR (cont’d.)

• Design considerationso Ground classificationo Criteria for selection of primary ground supporto Criteria for design of final liningo Environmental limitations such as dewatering,

settlemento Need for ground performance instrumentation

• Construction considerationso Anticipated ground behavior, and sources of

delays

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delayso Construction sequencing requirementso Specific anticipated construction difficulties or

risksMethods of managingInclude groundwater, ground control

When to do Risk Analysis for a GBRIf there is little uncertainty and the consequences of being wrong are minor, risk analysis is not necessary. On the other hand, if there is much uncertainty and/or the consequences of being wrong are high, it is essential to perform an extensive risk analysis.

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Hazard Aspect Mitigation/Actions

Access/egress To site and work areas Safe routes and methods

Biological health hazards Burial sites, etc. Site investigation

Confined spaces

Asphyxiation, explosion, flooding, heat, humidity

Minimize need for working in confined spaces in design

Example Risk Register from the Channel Tunnel Project

Confined spaces ya) existing confined spaces b) confined spaces to be constructed

gReduce need to enter confined spaces Safe working practices

Contaminated land Contaminated ground, ground gas

Site investigation to identify Avoid disturbance Ventilation and monitoring Appropriate disposal

Demolition and site clearance To existing or new structures

Survey structures and condition Consider stability Plan and phase work to minimize disturbance Fencing and security Design to ensure practical and safe sequence Communication Site investigation

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Earthworks Ground movements

Site investigationMinimize earthworks Consider effect on existing structures Adequate information to contractor

Excavation

Collapse or falls associated with ground movements Areas prone to flooding (e.g., cavernous limestone, old mine workings) Contaminated ground, ground gas, old mine workings

Geotechnical investigation to identify design constraints Minimize deep excavation Consider existing structures Adequate information to contractor Liaise with authorities re flooding Safety plan

Program Risk Assessment for Excavation by Drill and Blast (Young Dong Mountain Loop Tunnel, S. Korea, Halcrow)

No. Hazard Risk Mitigation Measures

L C R L C R

1Highly jointed rock mass (possibly in association with high-water pressure)

Ravelling ground, roof falls and sidewall or face instability with high amount of primary support

3 4 12

Reduce length of excavation/advance; face support and/or buttressing; partial face advance; reduce powder factor to lessen blast damage; increase rock support and install rock bolts and steel fiber reinforced shotcrete without delay; use probing and pre i

2 2 4

Risk Level Residual Risk Level

probing and pre-i

2 Fault ZonesSoft ground or mixed face conditions with potential roof falls and sidewall instability requiring high level of primary support

3 4 12

Reduce length of excavation/advance; face support and/or buttressing; partial face advance; reduce powder factor; increase rock support and install bolts, shotcrete, lattice girders and spiling without delay; probe hole drilling; use seismic methods to id

3 2 6

3Water ingress, possibly under high pressure up to 40 bar (4 MPa)

Water in cavities, joints and fissures in the rock mass entering excavation and causing instability of ground. Difficulties with shotcrete application

3 4 12

Drive tunnel upgrade for water to drain; provide poumpos to handle high flows and backup systems to deal with pumps and power failure; probe drilling to identify areas of high water flows and to carry out pre-injection grouting to styem the flow; excavati

2 2 4

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Cavities in the rock mass (including mine works) possibly associated with water inflow

Instability of tunnel face, roof fall, and side wall instabiklity; flooding; need for major structural work or infilling

3 4 12

Use seismic methods to identify cavitied; probe hole drillingh to determine extent of cavities and provide access for grouting or other advance stabilization measures; reduce length of excavation advance.

2 3 6

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5

Tunnel atmosphere and ventilation including accumulation of explosive and noxious gases

Explosion risk, possible accumulation of explosive and/or noxious gas; potential for asphyxiation. (Gases of concern include methane, carbon dioxide, carbon monoxide, sulfur dioxide, and hydrogen sulfide).

3 5 15

Provide adequate freshair to the face; provide atmospheric monitoring system; explosion-proof equipment; automatic stop control linked to instrumentation; standby generators to power fans; use appropriate explosives designed for tunnels with fire risk; av

1 4 4

6 Mechanical breakdown Failure of key equipment 3 3 9 Planned maintenance strategy; instrument and inspect to monitor condition; maintain spare parts.

3 1 3

7 Use of explosivesPremature detonation or uncontrolled explosion 2 5 10

Employ only qualified staff; comply with safety regulationsl use proper storage and transport facilities; use non-electric detonators; site security.

1 5 5

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Initial Risk

Zoning Building

Flood Risk Management: Buying Down Risk

CodesOutreach

Evacuation Plan

Levee

Risk

ResidualRisk

Insurance

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Everyone is a risk manager.All stakeholders can contribute to reducing risk!

Risk Reduction Tools (Cumulative)

Quantitative Risk Assessment

• Safety Assessment• Scenario Planning• Scenario Analysis

o Deterministic Scenario Analysiso Probabilistic Scenario Analysis

• Sensitivity Analysis• U t i t A l i

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• Uncertainty Analysis• Modeling• Vulnerability Assessment

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Principles

•What is probabilistic risk analysis (PRA)?o Structured approach to identifying failure modes and analyzing their effects

o Accounting scheme for combining uncertainties

o Approach to reasoning about uncertainties i th th f b bilit

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using the math of probability.

•What it is not …o Inherently different from traditional practice

Principles

•Levels of probabilistic reasoning

TheoreticalAssessment

Model-basedAssessment

odel

Com

plet

enes

s

Ideal: theoreticalunderstandingwith many data

Purely theoretical, with few or no data

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StatisticalAssessmentGuess

Data Completeness

Mo

Little understanding,but many data

Little understanding, few or no data

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HazardHazard

InventoryInventory

VulnerabilityVulnerability LossLoss

Risk models

InventoryInventory

Some of the hazards (perils) modeled:EarthquakesFloodsHurricanesFire wildfire conflagration

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Fire, wildfire, conflagrationTornadosTsunamisLandslidesOther extreme weather

Approaches to inventory modeling

• Geospatial databases (GIS)p ( )• Biggest advance in recent years; changing

quickly• Mostly publicly available records

o Impacted by DHS concerns• Many web-based (free or cheap) tools

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HazardHazard

InventoryInventory

VulnerabilityVulnerability LossLoss

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Approaches to vulnerability (reliability) modeling

• Failure modes and effects analysis (FMEA)• Event tree analysis• Fault tree analysis• Stochastic simulation (Monte Carlo)

HazardHazard

V l bilitV l bilit LL

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InventoryInventory

VulnerabilityVulnerability LossLoss

You may be familiar with such an approach through HAZUS from FEMA for Earthquake Loss Estimation

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The effect of level of information on cost uncertainty

CostCost

Cost

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When does it pay to acquire additional information?

The Effect of Mitigation on Project Cost (adapted from Parsons et al 2004)

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Data-Driven Tunnel Performance Simulation Approach

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Data Base Levels Created

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Data Base Project Parameters

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TBM Performance Parameters

• AR = TBM Advance Rate = Machine advance per unit shift timeadvance per unit shift time

• PR = Penetration Rate = Machine advance per unit of time in operation(may also be expressed as advance per cutterhead revolution)

• U = Utilization = % of shift time that a

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machine is actually in mining operation

AR = PR * Utilization

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Advance Rate Project Analysis

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Weekly Advance Rate for a TBM Drive in Granodiorite

PDFs for TBM Performance Parameters

Probability Density Function

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Data Histograms and Probability Density Functions can be established for Advance rate, Penetration Rate and Utilization for Case History Projects – these can be sampled from in scenario

building and Monte Carlo simulation

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Extreme Geotechnical Events

A Di t B t M j

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Average Distance Between Major Geotechnically-Driven Stoppages in

TBM Mining, km/event

Other Approaches to TBM Performance Prediction

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“Fuzzy Modeling Approaches for the Prediction of Machine Utilization in Hard Rock Tunnel Boring Machines,” Simoes and Kim, 2006, IEEE Industry Applications Conference, pp. 947 – 955.

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Simulations of Tunnel Mining Using Sampled Data

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Schematic Overlay Showing Results of Multiple Excavation Simulations

TTCT = Time To Complete Tunnel

For Each Simulation, Cost Can be Evaluated

Cost to Complete Tunnel CTCT, $Million

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Case Study

During the construction of the spectacular Oresund bridge and tunnel, which connects Sweden to D k i k l i h d th tDenmark, risk analysis showed that the project was unlikely to meet its planned opening date upon which its financial viability was calculated.

Mitigating actions and alternative scenarios were considered leading to significant changes in approach. After the mitigating actions were applied the

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the mitigating actions were applied, the risk analysis showed high confidence that Oresund could be opened three months early - which it was. Early opening easily paid for the specialist risk management work.

http://www.epmbook.com/risk.htm

Selected References

• Guidelines for Tunnelling Risk Management, ITA (TUST) vol. 19, 2004, pp. 217-237http://www.caee.utexas.edu/prof/tonon/Courses_files/Geotech%20seminar_files/David%20Hatem/Tust_Vol_19_3_217-237.pdf

• Hencher, S. 2012, “Practical Engineering Geology,” Spon Press.g g gy• Geotechnical Baseline Reports for Construction, ASCE, 2007,

Underground Technology Research Council, ASCE/SME, Randy Essex (1997 version titled “Geotechnical Baseline Reports for Underground Construction”)

• Washington State DOT, 2010 (January), “Project Risk management: Guidance for WSDOT Projects”

• ITA Technical Papers (ITA/AITES) has a very strong working group process, and many countries have their own societies that are very strong and technically involved):http://www.ats.org.au/index.php?option=com docman&task=cat view&gid=23&mosmsg=You+ar

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p g p p p _ _ g ge+trying+to+access+from+a+non-authorized+domain.+%28www.google.com%29

o Contractual Sharing of Risk: The International Perspectiveo Geotechnical Risk Assessment and Management for Maintenanceo Contractual Sharing of Risk in Underground Constructiono Guidelines for Tunnel Risk Managemento ITA Recommendations on the Sharing of Riskso Risk Assessment and Risk Sharing in Tunnelling

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• Extra Slides

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• Extra Slides

62

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i – PRE-DESIGN PHASE

Project justification/valueo Technical feasibilityo Economical feasibility/valueo Political circumstances/pressureso Delay in various approvals

Scopeo Management of the scopeo Clarity of owner’s objectives

Effect of interaction witho Competing projectso Statutory/regulatory (local, state, federal)

constraintso Public acceptance

Funding/financialo Sources of fundingo Political climate and public support

(especially public projects)o Potential opportunities and timelinesso Bond market and rates

o Effect of interaction with constituents on the scope (e.g., scope creep)

o Complexity and size of the projecto Sole source equipment and

service providerso Opportunity for equipment

discounts (concurrent projects/clients)

o Design and performance criteriao Constructabilityo Omissions

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o Exchange rateo Inflation rateo Cash flow uncertaintieso Authorization/appropriation risk (congress)o Underestimation of budget and durationo Overestimation of project benefitso Adequacy of marketplace supply (vendors,

subs, labor, etc.)

o Selection of preferred alternatives based on limited design information

ii - DESIGN PHASEDesign consultants

o Designer’s qualifications, availability, teamwork spirit

o Designer’s understanding of cost/schedule management

o Incomplete designo Errors and omissions

Cost estimate and scheduleo Soundness of engineer’s estimateo Omitted quantitieso Financial costs risk/opportunityo Escalation assumptions

Unde estimation of design effo t/costso Errors and omissionso Design QA/QCo Accountability for designo System integrationo Coordination between section designerso Liability insurance, e.g., errors/omissionso Quality of design (proven vs. unproven,

constructable, biddable [multiple bidders])o Delays in design deliverables

Project/siteo Design and performance criteria

o Underestimation of design effort/costso Completeness and reasonableness of

scheduleo Schedule consistency with project

scopeo Level of schedule detail/integrationo Inadequate contingencyo Inadequate force account budget

Right of way acquisitiono Right-of-way appraisal and acquisitiono Delay in property acquisition/ court

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o Design and performance criteriao Complexityo Subsurface conditions/hazardous materialso Unreliable data and test results (geotech,

hazardous materials, env’t conditions)o Inaccurate or inadequate surveyso Design changeso Scope changeso Scope creepo Impacts from abutters

o Delay in property acquisition/ court injunction preventing property taking

Regulatory conditionso Licenses, permits, approvalso Environmental regulations and

requirementso ADA requirements for public facilitieso Delay in various approvals

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iii – BID AND AWARD PHASE

Project deliveryo Turnkey, design-buildo Design-bid-buildo DBOMo Joint venture

Si l i

Contractoro Experience and performance

on similar projectso Character, capacity, capital,

continuity (criteria used byo Single primeo Multi-primeo Public-private partnershipso Guaranteed Max Price/Gen

Contractor (GMP/GC)o CM @ Risk

Contracto Fixed priceo Unit priceo Cost reimbursable (even in fixed

continuity (criteria used by surety)

o Safety recordo Need for bonds, bond limits,

surety’s reputationo Familiarity with the areao Cost, schedule, and document

control practiceso History regarding claims and

change orderso History of delivering on-time

and on-budget

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o Cost reimbursable (even in fixed price contracts, parts can be cost reimbursable)

o Dated or stale contract documents

o Contract package size (too big and it may limit the number and type of bidders)

o Lowest responsible bid vs. low bid

and on budgeto Subcontractor qualifications

and capacityo Subcontractor roles and

responsibilitieso QA/QC program (contractor

and subcontractors)

iii – BID AND AWARD PHASE (cont’d)

Market conditionso Number of bidderso Availability of supplies and subso Unemployment rate in

construction trades

Owner/CM involvemento Clear definition of CM (Agency)

scope and authorityo Owners review/evaluation of bids

– adequate staff/consultant knowledgeconstruction trades

o Workload of regional contractors

o General economic climate that can affect bidding behavior

o Material and energy priceso Inflation rate, interest rate

Regulatory conditionso Environmental and ADA

requirements

knowledgeo Underestimation of the level of

effort (soft costs)o Supplying of materialo Testing, inspection, safetyo Start-up and providing clear

access to the siteo MOUs and coordination with local

agencies, companies, and community groups

o Communication channels/MISGuarantees

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requirementso DBE requirements and (local)

workforce participationo Taxes and dutieso Limitations on the use of

overseas materials and equipment

o Guaranteeso Contractors’ bonds or letters of

credito Designer’s liability insuranceo Consequential damageso Liquidated damageso Performance/qualityo Cost/schedule

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iv – CONSTRUCTION PHASEInsurance

o Coverage and requirementso Wrap-up insuranceo Owner purchased insurance program

Site

Work scheduleo Abutting contractorso Limited work hours, restrictions

on some construction activities such as blasting, truckingSite

o Accesso Congestiono Differing Site Conditions including but

not limited to:Soil and rock conditionsWater table and flow (underground work)Hazardous waste

o Archeological finds, siteso Endangered species and other

environmental concerns

o Maintenance of traffic, restrictions on traffic flow and access to site

o Disruption to public and businesses

o Coordination with utilities and other agencies

o Coordination with suppliers (long-lead orders)

o Subcontractors’ delay, contractor’s failure to effectively

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o Environmental mitigation and remediation

o Noise mitigation: supplemental structures, schedule restrictions

o Securityo New security concerns leading to

shutdowns, etc.o Abutting structures and their

conditionso Unanticipated settlements

contractor s failure to effectively manage subs

o Weather effects on scheduleo Cash flow and contractor

paymentso Process to handle change orders

and change controls in an expeditious manner

iv – CONSTRUCTION PHASE (cont’d)

Means and methodso New, untried techniqueso Noise, dust, fumes, excessive

vibrationso Utility relocation

Labor: Most of the risks involving labor is transferred to contractor; however, owner or CM could benefit by being aware of these, as th f t d l ff t

o Utility relocationo Errors in the design of

temporary facilitieso Construction errorso Accidentso Material shortages and large

price increaseso Delays in mobilization

(equipment and manpower)o Failure of major equipmento Hardware/software problems

these factors can adversely affect project schedule. Also, on Force Account contracts, labor cost can be a major risk to the owner.

o Strikeso Accidentso Large wage fluctuationso Sabotage, thefto Substance abuseo Unions

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o Hardware/software problems (control systems, integration, etc)

Acts of God/force majeure, including but not limited to

o Inclement weather, Earthquake, Flood, Fire, Terrorism

o Material wasteso Insuranceo Productivity (especially in Force

Account contracts this can directly affect the owner)

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v – POST-CONSTRUCTION PHASE

o Individual systems and full integrated testingOwner trainingo Owner training

o Full commissioningo Occupancy permit (building projects)o Warranty issueso Complete close-out of all financing,

funding, and permitting agreements and conditions

o Changing rules over duration of operation

o OM projects – loss of incentives to maintain

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maintain