Risk Planning and Management for the Panama Canal ... · Management for the Panama Canal Expansion...
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Las Vegas Executives Association Presentation Risk-Based Models for Project Planning Edited per 1/15/08 Meeting David B. Ashley President University of Nevada, Las Vegas January 30, 2008 Risk Planning and Management for the Panama Canal Expansion Program Canal Expansion Program Keith Molenaar Luis F. Alarcón, David B. Ashley, Angelique Sucre de Hanily and Ricardo Ungo September 30, 2010 Construction Engineering Conference: Opportunity and Vision for Education, Practice, and Research Presentation Outline 1. Motivation for risk analysis on Canal Expansion 2. The project risk management approach 3 Lessons learned 3. Lessons learned Expansion Background • ACP formally proposed project with public referendum in 2006 • What was the construction market like in 2000-2006?
Transcript of Risk Planning and Management for the Panama Canal ... · Management for the Panama Canal Expansion...
Las Vegas Executives AssociationPresentation
Risk-Based Models for Project Planning
Edited per 1/15/08 Meeting
David B. AshleyPresident
University of Nevada, Las Vegas
January 30, 2008
Risk Planning and Management for the Panama
Canal Expansion ProgramCanal Expansion Program
Keith MolenaarLuis F. Alarcón, David B. Ashley,
Angelique Sucre de Hanily and Ricardo Ungo
September 30, 2010Construction Engineering Conference:
Opportunity and Vision for Education, Practice, and Research
Presentation Outline
1. Motivation for risk analysis on Canal Expansion
2. The project risk management approach
3 Lessons learned 3. Lessons learned
Expansion Background
• ACP formally proposed projectwith public referendum in 2006
• What was the constructionmarket like in 2000-2006?
Las Vegas Executives AssociationPresentation
Risk-Based Models for Project Planning
Edited per 1/15/08 Meeting
David B. AshleyPresident
University of Nevada, Las Vegas
January 30, 2008
History of Mega Projects
• Tren Urbano Rail, Puerto Rico1
– 1996 Estimated $1.25 billion
– 2002 Estimated $2.25 billion
• The Big Dig, Boston2
1985 E ti t d $2 5 billi– 1985 Estimated $2.5 billion
– 2002 Estimated $14.6 billion
• Flyvbjerg Study (2002)– 256 public project over 70 years
– 8 of 10 project had cost overruns
11 Federal Transit Administration Inspector General 2004Federal Transit Administration Inspector General 20042 2 National Academy of Sciences 2003National Academy of Sciences 2003
History of Mega Projects
• New cost estimating and cost management methods research
New Cost Estimating Methods
• 18 primary cost escalation factors
• 8 strategies to address cost8 strategies to address costescalation factors
• 30 implementation methods
• 90 tool applications
Las Vegas Executives AssociationPresentation
Risk-Based Models for Project Planning
Edited per 1/15/08 Meeting
David B. AshleyPresident
University of Nevada, Las Vegas
January 30, 2008
New Cost Estimating Methods
• Risk StrategyIdentify risks, quantify their impact on cost their impact on cost, and take actions to mitigate the impact of risks as the project scope is developed.
Canal Expansion – A risky project?
New Locks: Water-Saving Basins and Rolling Gates
Bottom- or side-filling?
Las Vegas Executives AssociationPresentation
Risk-Based Models for Project Planning
Edited per 1/15/08 Meeting
David B. AshleyPresident
University of Nevada, Las Vegas
January 30, 2008
Las Vegas Executives AssociationPresentation
Risk-Based Models for Project Planning
Edited per 1/15/08 Meeting
David B. AshleyPresident
University of Nevada, Las Vegas
January 30, 2008
Unrecognized Costs(Unknown/Unknowns)
t C
ost
Baseline
Contingency
Known but not Quantifiable Costs(Known/Unknowns)
Project Baseline Cost
Pro
jec
Project Development Process
Project Planand Concept
30%Design
100%Design
ConstructionCompletion
Conservative Estimate with allowance at any pointKnown and
Quantifiable Costs(Known/Knowns)
Financial Risk Model
Consultants Guidance
Input from Other Units
Risk Model Approach Multidisciplinary Team Approach
Program Development Office- Risk identification
- Coordination
Engineering - Design- Cost Estimate
Finance- Risk variables- Others
Las Vegas Executives AssociationPresentation
Risk-Based Models for Project Planning
Edited per 1/15/08 Meeting
David B. AshleyPresident
University of Nevada, Las Vegas
January 30, 2008
More Detailed Analysis - 350 Risks
Risks identification AON, Value Management & ACP
More Detailed Analysis - 185 Risks
Workshop with ACP
Risk Model Approach Redefine Risks to be Modeled
pPersonnel
More Detailed Analysis - 40 Risks
Risks identification AON, Value Management & ACP
14 Key Risks forRisk Model
Factorsf Ri k
OrganizationRisks
Lack ofControls
InefficientPlanning
InefficientGeneral Referendum
Major Risk Factors for Risk Modeling
for Risk Modeling
ContractingProcess
GeneralInflation
ReferendumDelays
ExtremeBad Weather
Owner DrivenChanges
InsufficientRevenues
Inadequate Claims
Administration
Local LaborStrikes
Changes inDesign and Quantities
Lack of Skilled andLocal Labor
Material,Equipment and
Labor Cost Increases
Organizational risksOrganizational risks
Insufficient revenuesInsufficient revenues
MARKET
Risk Factor Categorization
Inflation Inflation
Poor claims administrationPoor claims administration
Material, equip. & labor cost increasesMaterial, equip. & labor cost increases
OVERRUNS
Lack of controlsLack of controls
Inefficient planningInefficient planning
Inefficient contractingInefficient contracting
Referendum delaysReferendum delays
Extreme bad weatherExtreme bad weather
Local labor strikesLocal labor strikes
Owner driven changesOwner driven changes
Changes in design & quantitiesChanges in design & quantities
Lack of skilled and local laborLack of skilled and local labor
DELAYS
Las Vegas Executives AssociationPresentation
Risk-Based Models for Project Planning
Edited per 1/15/08 Meeting
David B. AshleyPresident
University of Nevada, Las Vegas
January 30, 2008
Risk Model ResultsExample Total Cost
0.18
0.16
0.14
0.12
Distribution for Investment + Delay & Overrun
Total
Mean
Total costw / contingency
0.10
0.08
0.06
0.04
0.02
0.00
Risk Model ResultsExample Total Cost
0.16
0.14
0.12
0.10
Distribution for Commissioning Year
Total
Mean
Total costw / contingency
0.08
0.06
0.04
0.02
0.00
g y
Risk Model ResultsTornado Diagram
Factors with the greatest
Material X - Atlantic Locks
Event X
Material Y - Atlantic Locks
Productivity X - Access Channel
Delay Activity X
Material X - Pacific Locksthe greatest impact on total cost variation
Event Y
Material Z - Atlantic Locks
Event Y - Pacific Locks
Productivity x - Pacific Locks
Locks Delay Activity Y
Productivity Y - Pacific Locks
Locks Event Z
Material Z - Pacific Locks
Las Vegas Executives AssociationPresentation
Risk-Based Models for Project Planning
Edited per 1/15/08 Meeting
David B. AshleyPresident
University of Nevada, Las Vegas
January 30, 2008
Risk Mitigation Options
Risk ResolutionTotal Contingency
Contingency Management
Contingency
Lessons Learned
• Impact of project on country– Referendum– Communications
• Benefits of bottom-up contingency• Use of risk analysis and management• ACP’s willingness to innovate
Las Vegas Executives AssociationPresentation
Risk-Based Models for Project Planning
Edited per 1/15/08 Meeting
David B. AshleyPresident
University of Nevada, Las Vegas
January 30, 2008
Thank you!Thank you!
