Risk Planning Essay For Hospital Construction Project In Queensland.

Question 1

1. Provide a risk assessment report for the ageing infrastructure in (i) a transport sector OR (ii) amanufacturing  Also, discuss your suggestions for the maintenance of chosen ageing infrastructure asset.

Question 2

2. (i) By assuming procurement/ project delivery for a major infrastructure project (e.g. energy or roads or water) in a particular region, prepare your risk assessment report and ‘Bowtie risk analysis’ for any one of following scenarios: (a) The main contractor becomes insolvent e.g. after 65% of project deliverables/ milestones have been completed; OR (b) A major specialist sub- contractor becomes insolvent during a critical stage of projectdelivery;

AND

• Assume that your organization is planning for transformation by adopting novel/ disruptive technologies to enhance competitive advantages. You are required to prepare a SWOT (i.e. Strengths, Weaknesses, Opportunities, and Threats) analysis report for any one of following: (a) Autonomous Robots; OR (b) 3D Printing; OR (c) LIFI and Visible Light Communication (VLC); OR (d) Unmanned Aerial Vehicle(UAV).

Question 1

Consider a Hospital complex construction project in Queensland. In the initial risk planning for project costing, the project

risks are clustered into following components:

• excavation and ground water infiltrationrisks;
• geotechnical risks for foundation and other substructure construction (i.e. affected by eventual geotechnicalconditions);
• weather related risks for superstructure construction (excludingfinishes);
• risks related to interior and exterior finishes (mainly by means of rework andchanges);
• labour union problems during the projectdelivery
• inflation risks (i.e. with respect to economy growth and central/reserve bankrates);

The estimators/ cost planners are asked to think of 3 scenarios (i.e. best, most likely and worst case) for each ‘clustered’ component, attributing a probability and value to each scenario. The combined probabilities of all those scenarios for each component must add up to 100% (as they are mutually exclusive scenarios which cannot occur together). Specific details are in the following table.

		Optimistic	Most likely	Pessimistic
Excavation and ground water infiltration Risks	Scenario Outcome Probability	No possibility of groundwater table raise and ground water infiltration $10,000 0.15	Raise of groundwater table in rainy season $80,000 0.5	Serious groundwater infiltration requiring dewatering, etc. $100,000 0.35
Geotechnical	Scenario	No rock found	Boulders	Solid rock found
risks of			found
substructure	Outcome	$200,000	$650,000	$900,000
	Probability	0.25	0.4	0.35
Weather	Scenario	Does not rain for whole	Rains for 15	Rains for 45 days
related risks of		contract	days
superstructure	Outcome	$100,000	$200,000	$400,000
construction	Probability	0.25	0.45	0.3
Interior and	Scenario	No rework and changes	Some rework	Several rework and
Exterior			and changes	changes
finishes	Outcome	$100,000	$150,000	$200,000
	Probability	0.3	0.3	0.4
Labour union	Scenario	No problems during this	Some minor	Few major problems
problems		project	problems	during this project
	Outcome	$5,000	$50,000	$250,000
	Probability	0.33	0.34
Inflation	Scenario Outcome Probability	Reserve Bank keeps rates on hold 4.5% 0.25	Economy grows & Reserve Bank increases by one base point 6.5% 0.55	Economy booms & Reserve Bank increases 2 points 8% 0.2

Prepare a risk management report based on the expected monetary value (EMV) in this project

Question 2

1. In a public sector procurement, the client opted for Design-Build-Maintain (DBM) integrated single point of responsibility arrangement and decided to select the DBM contractor through a ‘best value’ procurement process including “price + non-price” assessments and time value adjustments for the “Design-Build” (DB) part.The requisite responsibility for maintenance (M) by the DBM contractors is 10 years after completion of DB part. Six organisations have been prequalified in this 

The client’s ‘best value’ selection is based on following formula:

Selection score of a contractor’s DBM proposal = [(Price quoted by that contractor for DB + Price proposed by that contractor for M) + ‘Time value’ penalty adjustment for DB component]/ [(Technical score of that contractor’s DB component + Technical score of that contractor’s M proposal)]

The prequalified contractor with lowest ‘selection score’ will be selected as the ‘Best Value’ DBM proposer in this procurement. The client estimate for time of DB component is 365 days. For each extra day exceeding client estimate, the time value adjustment per day of DB = $220,000. (For example, if a contractor proposal require 367 days, time value penalty adjustment for DB = $440,000; if a contractor submits DB for 360 days, the time value penalty adjustment = 0).

Following table summarizes details of four prequalified Design-Build contractors in this project:

Prequalified DBM contractor	Technical proposal score for the DB component	Price proposal for the DB component ($)	Time required for the DB component (days)	Price proposal for the M component ($ per year)	Technical proposal score for the M component
Alpha	76.9	2,940,000	369	150,000	80.5
Beta	79.5	3,060,000	335	160,000	76.8
Gamma	68.7	2,880,000	385	125,000	84.3
Delta	84.2	3,900,000	394	175,000	88.8
Theta	78.5	3,850,000	357	160,000	83.1
Rho	80.0	3,000,000	365	140,000	80.0

• Select a best value DBM contractorin this public sector procurement 
  • Discuss your strategy if you would consider a “Best and Final Offer” process for suitable competitive negotiations in this

Description

The objective of having an infrastructure is to facilitate a country economy and strive to improve a better quality of life within the country. The investigation that will therefore involve aging infrastructure is fundamental in a sense that it will be supporting healthy and energetic communities. Published reports have indicated that I direct relationship that will coexist between investing in infrastructure and production of gross product which in turn create more jobs opportunities. However, the opposite of this is also true, where neglecting the infrastructure elements will affect the economy and result to numerous challenges that a country may have both in businesswise and its citizen in general. Over last decade the have been insufficient funds for investment on the aging infrastructure in order to upgrade them and maintain their quality all over the continents. America Society of Civil engineers on their report stated that deficiencies of infrastructure will have an effect on both the quality and quantity of the U.S. jobs in its economy and based to this there has been a result of loss in the disposal income.  A prediction has too been given to state that by the year 2025, the households each will be incurring about 3400 US dollars due to losses brought about with under investment of aging infrastructure, similar margin will be experienced both on economy and GDP losses on the same period of projection (Bivens, 2014).

1. To identify the risks
2. To determine the affected sectors
3. To evaluate the identified risks and define their remedies
4. To implement stipulated remedies

Major roads within  continents are at a poor state conditions , example, based in ASC America  has around 32 percent of its road in a poor state condition, this has been brought about with low infrastructure investment, this has resulted to increase in congestion of vehicles in the roads.  

The state of road bridges similarly are also another aging infrastructures facing the same problem of being neglected, their collapse will total disconnect the road from linking to another part and also can lead to loss of lives and negatively economic impact to the regions they serve through linking them.

Energy infrastructure comprises of three segments, which includes oil, electricity and natural gas, business and industries relies on supplied power for their effective operations, but there is insufficient investment in this type of infrastructure to satisfy the growing need. There has been a growing and developing challenges based on the provision of this segment of energy infrastructure to the demand of the energy in the growing population worldwide (US Energy Information Administration, 2011). The aging service to this infrastructure type has led to disruptions of power and also vulnerable to the cyber-attack, the breakdown of power leads to the risk on safety of public through shutdown of telecommunication networks, services offered by financial sectors and supply of water.

Risk Components

The other infrastructure that is included to be aging is water mains for fresh water supply and sewage lines which have been neglected to point where they are broken and are prone to damage roads hindering emergency efforts that may require the use of water and accessibility through the damage road.

Dams are also categorized under water infrastructures, though their initial design met the requirement but with time now their lifespan has been deteriorating, therefore many are believe they are not capable of withstanding the projected floods and earthquakes. But there neglecting can lead to their failures which will contribute to losses of other neighboring structures and risk the public safety.

The risk associated with neglected road is expected to hinder agricultural sectors and free mobility of the public.

The risks associated with neglected road bridges are expected to affect the link between several places that are separated by large flowing rivers.

The risk associated with neglecting energy infrastructure is expected to hinder communication, operation of industries and domestic lighting in houses.

The risks associated with water infrastructure are expected to hinder supply of fresh water, sewages and responses to emergencies like fire.

Several measures can be put in place in order prevent the risks associated with aging infrastructure from taking place, which includes;

• Gathering all the information regarding the infrastructure, which reflects the initial state, the current state of the infrastructure and framework to repair or replace the aged infrastructure.
• Increasing the investment funds to the infrastructure in order to ensure active inspection and correction and maintenance is done.
• Continuous review of the of the management plan of the infrastructure.  

Immediately the risks are identified, the remedies outlined then the final action is to implement the set plan either through repairs if the conditions are not adverse, but if the conditions are worse then a replacement plan will be used.

Manufacturing industry over the past decades have been concentrating on how to advance the management and its production activities in order to sustain the industry, enhance its productivity and improve on it innovation activities, over the resident time now the manufacturing industries have started incorporating management risks this after several emerging issues which did not lie on management side and production activities that initially were always focused.

1. To comply with the standard code and regulations to prevent occurrence of accidents
2. To provide safety designs in all the production infrastructures
3. To apply the occupation safety and health to the employees and the community

The first aging infrastructure in the manufacturing industry is abandonment of breakdown production machines which are more expensive.

Lack of the spear parts on the worn out parts of operating machines of the manufacturing industry..

Neglecting the standard regulations safety for the public and employees.. 

Several measures can be put in place in order prevent the risks associated with aging infrastructure of manufacturing industry  taking place, which includes;

• Gathering all the information regarding the manufacturing infrastructure, which reflects the initial state, the current state of the infrastructure and framework to repair or replace the aged infrastructure.
• Increasing the investment funds to the manufacturing infrastructure in order to ensure active inspection and correction and maintenance is done.
• Continuous review of the of the management plan of the manufacturing infrastructure.  

Immediately the risks are identified, the remedies outlined then the final action is to implement the set plan either through repairs if the conditions are not adverse, but if the conditions are worse then a replacement plan will be used.

Conclusion

The risks associated with aging infrastructure on transport sector and manufacturing sector are mainly viewed to arise from the negligence by the concern authority, the risks are vital both economically and safety wise, from the positive perspective the risks can be resolved if the concern areas are either funded or serviced and always the reference point will be their design lifespan, and incase the feasibility studies on this aging infrastructure are done and recommendation on them is that they can no longer serve their purpose intended, then it will be advisable to prevent further risks that may arise on their permanent failures through either constructing new type of infrastructure in relation to transportation sector or purchasing new machines in relation to manufacturing industry.

1. Excavation and ground water infiltration risks;

	Optimistic	Most likely	pessimistic
Scenarios	Analysis of hydrological resistance on different layers of excavated soil	Analysis of infiltrated precipitation to subsoil, which increases phreatic level of water all over the building.	Unexpected settlement caused by large system of dewatering
Outcome	$5,000	$20,000	$25,000
Probability	0.1	0.4	0.5

 2. geotechnical risks for foundation and other substructure construction (i.e. affected by eventual geotechnical conditions);

	Optimistic	Most likely	pessimistic
Scenarios	Large volume of grout that is required to be drilled	Damage of pile tips at variation of bedrock elevation	Grounded pile stability on weak soil
Outcome	$50,000	$200,000	$250,000
Probability	0.1	0.4	0.5

3. weather related risks for superstructure construction (excluding finishes);

	Optimistic	Most likely	pessimistic
Scenarios	Moderate warm temperature throughout the season	Change in weather temperature always at evening  due to precipitation	Continuous freezing and thawing weather  temperatures throughout the season
Outcome	$1,000	$3,000	$6,000
Probability	0.1	0.3	0.6

4. Risks related to interior and exterior finishes (mainly by means of rework and changes);

	Optimistic	Most likely	pessimistic
Scenarios	Partial peeling of  plastered finishes due to incorrect mix of sand and cement	Roughness of the interior plastered surfaces	Complete peeling of the plastered surface
Outcome	$10,000	$12,000	$18,000
Probability	0.25	0.3	0.45

4. labour union problems during the project delivery

	Optimistic	Most likely	pessimistic
Scenarios	Agreement in terms of payment with the union members	Partial disagreement with union member on the time the employees will be reporting and leaving the site	Strikes with the labour union members on allowances to receive on overtime activities
Outcome	$5,000	$20,000	$25,000
Probability	0.1	0.4	0.5

1. inflation risks (i.e. with respect to economy growth and central/reserve bank rates);

	Optimistic	Most likely	pessimistic
Scenarios	Low economic growth and reserve bank increases by 5 %	Moderate economic growth reserve bank increases by 10 %	High economic growth reserve bank increases by 15 %
Outcome	7%	13%	20%
Probability	0.175	0.325	0.5

Prequalified DBM contractors	Technical proposal for DB component	Price proposal for the DB component (dollars)	Time required for the DB components (days)	Price proposal for M components (dollars per year)	Technical proposal score for the M component
Alpha	76.9	2,940,000	369	150,000	80.5
Beta	79.5	3,060,000	335	160,000	76.8
Gamma	68.7	2,880,000	385	125,000	84.3
Delta	84.2	3,900,000	394	175,000	88.8
Theta	78.5	3,850,000	357	160,000	83.1
Rho	80.0	3,000,000	365	140,000	80.0

Calculations

Price quoted by that contractor for DB + Price proposed by that contractor for M)	Time value’ penalty adjustment for DB component]	Technical score of that contractor’s DB component + Technical score of that contractor’s M proposal	Selection score of a contractor’s DBM proposal
3,090,000	880000	157.4	25222.36341
3,220,000	-6600000	156.3	-21625.08
3,005,000	4400000	153	48398.69281
4,075,000	6380000	173	60433.52601
4,010,000	-1760000	161.6	13923.26733
3,140,000	0	160	19625

1. Select a best value DBM contractor

Beta which has the lowest value of -$21625.08

1. Based on the Beta he willing to provide to provide his or her services at its own cost based on the calculations , so it will best if he or she is choose

References

Bivens, J., 2014. The Short-and Long-Term Impacts of Infrastructure Investments on US Employment and Economic Activity. Budget Taxes and Private Investment.

US Energy Information Administration ed., 2011. Annual Energy Outlook 2011: With Projections to 2035. Government Printing Office.