i

DECLARATION

I hereby declare that this project report entitled RISK MANAGEMENT IN

LIGNITE BASED THERMAL POWER PLANT COSNTRUCTION PROJECT is a

bonafide record of the project work carried out by myself during the academic year 2013-

2015, in partial fulfilment of the requirements for the award of POST GRADUATE

PROGRAMME IN PROJECT MANAGEMENT (PGPPM) of NICMAR School of

Distance Education, Pune.

This work has not been undertaken or submitted elsewhere in connection with any

other academic course.

ii

ACKNOWLEDGEMENT

I would like to express my deep sense of gratitude and profound thanks to all staff

members of M/s Bhavnagar Energy Limited, Bhavnagar for their kind support and

cooperation which helped me in gaining lots of knowledge and experience to do my project

work successfully.

I would like to acknowledge my sincere gratitude to Professor Pramod Deshpande,

my project guide for helping me in this project.

At last but not least, I am thankful to my Family and Friends for their moral support,

endurance and encouragement during the course of the project.

iii

CONTENTS

CHAPTER 1

1.1Background of Construction Industry ............................................................................................ 1

1.2Thermal Power Plant System General Description ....................................................................... 2

1.2.1 General ....................................................................................................................................... 2

1.2.2 Boiler.......................................................................................................................................... 2

1.2.3 Turbine ....................................................................................................................................... 3

1.2.4 Electrical System ....................................................................................................................... 3

1.2.5 Control and Instrumentation ...................................................................................................... 4

1.2.6 Ash Handling ............................................................................................................................. 5

1.2.7 Lignite Handling System ........................................................................................................... 5

1.2.8 Water Treatment ........................................................................................................................ 5

1.2.9 Environmental Protection .......................................................................................................... 5

1.2.10 Ancillary Facilities ................................................................................................................... 6

1.3 Thermal Power Plant Construction Activities .............................................................................. 6

1.3.1 Civil Construction Main Activities, Sub-Erection Activities and its Duration &

Manpower Requirement...................................................................................................................... 6

1.3.2 Mechanical Construction Main Activities, Sub-Erection Activities and its Duration &

Manpower Requirement...................................................................................................................... 8

1.3.3 Electrical Construction Main Activities, Sub-Erection Activities and its Duration &

Manpower Requirement...................................................................................................................... 9

1.4 Risks in Thermal Power Plant Construction Activities .............................................................. 10

1.4.1 In Civil Work ........................................................................................................................... 10

1.4.2 In Mechanical Work ................................................................................................................ 10

1.4.3 In Electrical and I & C ............................................................................................................. 10

iv

1.4.4 Common Risks in Thermal Power Project............................................................................... 11

1.5 Major Construction Quantities in Thermal Based Power Plant .................................................. 11

1.5.1 In Civil System ........................................................................................................................ 11

1.5.2 In Mechanical System .............................................................................................................. 12

1.5.3 In Electrical and Instrument & Control system ....................................................................... 12

1.6 Clearances/Agreements Required For Implementation of Thermal Power Project .................... 12

1.7 Risk Management through Management Techniques ............................................................... 13

CHAPTER 2

2.1 Introduction to Risk Management .............................................................................................. 14

2.2 Defining Risk and Uncertainty ................................................................................................... 14

2.3 Review of Literature ................................................................................................................... 16

CHAPTER 3

3.1 Risk Management Process .......................................................................................................... 23

3.2 Construction Risk Management Approach-Conceptual Model .................................................. 23

3.3 Risk Identification ....................................................................................................................... 24

3.4 Risk identification Techniques ................................................................................................... 25

3.4.1Brainstorming ........................................................................................................................... 25

3.4.2 Delphi Technique ..................................................................................................................... 26

3.4.3 Influence Diagram ................................................................................................................... 26

3.4.4. Interview/ Expert Judgment .................................................................................................... 27

3.4.5. Checklist ................................................................................................................................. 27

3.4.6. Nominal Group Technique ..................................................................................................... 27

3.4.7. Flowcharts ............................................................................................................................... 27

3.4.8. Pondering ................................................................................................................................ 28

3.4.9. Root Cause Identification ....................................................................................................... 28

v

3.4.10. Cause-and-Effect Diagrams .................................................................................................. 28

3.4.11. Questionnaire ........................................................................................................................ 28

3.4.12. SWOT Analysis (strengths, weaknesses, opportunities, threats) ........................... 29

3.4.13. Synectics ............................................................................................................................... 29

3.4.14. Case Based Approach ........................................................................................................... 29

3.4.15. Electronic Brainstorming ...................................................................................................... 30

3.4.16. What if? SWIFT structure The original SWIFT was developed as a simpler

alternative to the HAZOP (Hazard and Operability) ........................................................................ 30

3.4.17. Business Impact Analysis ..................................................................................................... 30

CHAPTER 4

4.1 Classification of Risk .................................................................................................................. 32

4.2 Risk Analysis .............................................................................................................................. 33

4.3 Methods of Risk Analysis .......................................................................................................... 33

4.3.1 Qualitative Risk Analysis ........................................................................................................ 34

4.3.1.1 Qualitative risk ranking guidelines ........................................................................................ 34

4.3.1.2 Uses of Qualitative Risk Analysis Results ............................................................................ 35

4.3.1.3 Tools and Techniques for Qualitative Risk Analysis ........................................................... 36

4.3.1.4 Data gathering & representation techniques ......................................................................... 37

4.3.2 Quantitative Risk Analysis & Modeling Techniques .............................................................. 37

4.3.2.1 Risk Response Planning ........................................................................................................ 38

4.3.2.2 Perform Qualitative Risk Analysis ....................................................................................... 39

4.3.2.3 Four Inputs to Qualitative Risk Analysis .............................................................................. 40

4.3.2.4.1 Risk register updates .......................................................................................................... 40

4.3.3 Five tools used in Qualitative Risk Analysis ........................................................................... 41

vi

CHAPTER 5

5.1 Description of Study Area .......................................................................................................... 43

5.1 Research Methodology - Introduction ........................................................................................ 43

5.2.1 Research Strategy ..................................................................................................................... 43

5.2.2 Research Design ....................................................................................................................... 44

5.2.3 Research Population ................................................................................................................. 45

5.2.4 Sample Size .............................................................................................................................. 45

5.2.5 Sample Method ........................................................................................................................ 46

5.2.6 Research Location .................................................................................................................... 46

5.3 Risk analysis techniques that could be used to analyse and estimate risk factors impact. ........... 46

5.4 Construction risk allocation ......................................................................................................... 46

5.5 Significance of risk and measurement scales .............................................................................. 47

5.6 Limitation of Rresearch .............................................................................................................. 47

5.7 Questionnaire Design .................................................................................................................. 48

5.8 Validity of Research .................................................................................................................... 49

5.9 Reliability of Research ................................................................................................................ 49

5.10 Data Collection ......................................................................................................................... 50

5.11 Data Analysis ............................................................................................................................ 50

5.12 Risk Management Process ........................................................................................................ 50

5.13 Risk Management Cycle ........................................................................................................... 51

5.14 Risk Analysis Methodology ...................................................................................................... 52

5.14.1 Qualitative Risk Analysis ...................................................................................................... 53

5.14.2 Quantitative Risk Analysis ..................................................................................................... 53

CHAPTER 6

6.1 Qualitative Analysis of Problem Risk Identification ............................................................... 55

vii

6.1.1 Risk Assessment ...................................................................................................................... 56

6.1.2 Risk Analysis ........................................................................................................................... 57

6.2 Probability and Impact Ratings ................................................................................................... 57

6.3 Performing Qualitative Risk ....................................................................................................... 59

6.4 Risk Matrix ................................................................................................................................. 59

6.5 Scale followed for risk categorization ........................................................................................ 60

6.6 Risk categorization ..................................................................................................................... 60

6.7 Entering Risk Responses into the Risk Register .......................................................................... 62

6.8 Risk Monitoring .......................................................................................................................... 72

6.9 Response towards Risk ............................................................................................................... 73

CHAPTER 7

7.1 Conclusion .................................................................................................................................. 75

7.2 Recommendations to Contractors ............................................................................................... 75

7.2.1Shared Recommendations ......................................................................................................... 76

ANNEXURE .................................................................................................................................... 77

viii

LIST OF FIGURES

Figure 3.1 Conceptual Model of Construction Risk Management 24

Figure 4.1 Qualitative Risk Factor Ranking Criteria 35

Figure 4.2 Risk Factor Evaluation 35

Figure 4.3 Integrated qualitative and quantitative risk analysis 36

Fig. 5.1 Risk Management Process 51

Fig 5.2 Risk Management Cycle 52

ix

LIST OF TABLES

Table 6.1 Risk Assessment 56

Table 6.2 Risk Analysis of different Events 57

Table 6.3 Risk Matrix 59

Table 6.4 Risk Score 60

Table 6.5 Risk Categorization 60

Table 6.6 Response towards Risk 70