The risk factors pressuring pipeline projects are very similar to those that influence any capital construction project, except that the scale and complexity are magnified as are the consequences of even minor disruptions to the progress of the work. Essential to the successful planning, design, and construction of large capital projects is risk management. Project issues such as regulatory compliance, resource constraints, aggressive competition, and the access to and requirements of capital markets require aggressive and thorough risk management and control. Moreover, the ability to influence and mitigate cost and schedule risk decreases as the project progresses through the construction life cycle. This paper will discuss the major components of proper risk management including scoping, identification, analysis and evaluation, timely response, mitigation, control, and risk allocation using proven techniques. The significant risk areas in each phase of the project life cycle including, feasibility, planning and design, construction, and start up & turnover will also be discussed. This paper will also focus on tools and strategies in dealing with the common and costly areas of risk, particularly the use of CPM scheduling in the identification, control and quantification of risk management issues using statistical models, such as Monte Carlo simulations, and the use of CPM scheduling in the avoidance of claims will be highlighted.
PROJECT RISK MANAGEMENT BASED ON A SET OF BEST PRACTICES
