Breakout Session # 1709 Robert E. Ross Managing Director, Global Enterprise Consulting

2. Structured Risk Assessment to Define Contracting, Organization and Systems/Procedures Strategies for Project Management Breakout Session # 1709 Robert E. Ross Managing Director, Global Enterprise Consulting Date: April 25, 2007 Time: 1:30 pm – 2:30 pm

3. GEC Proprietary

4. Risk Assessment • What is it? An Exercise to Identify “ What Can go Wrong” and “How Can We Manage It” • Inexpensive Relative to the Benefits • Utilizes an Approach or Methodology • Defines the Selective Control Approach • Essential to Achieve Cost, Schedule, Technical Objectives

5. Risk Assessment • Who Performs Risk Assessment? An Exercise to Identify “ What Can go Wrong” and “How Can We Manage It” • No One Person Has All Project Knowledge • Establish a Small Team • Utilize an Independent Facilitator • Devote Time Early in a Project Lifecycle

6. Risk Assessment Project Phases Contract Administration Construction Planning Estimating Design Engineering Project Execution Feasibility Project Financing Contract Planning Contractor Management

7. Management Control Plan Project Management A PERFORMANCE-ORIENTED BUSINESS APPROACH WORK DEFINITION RISK ANALYSIS ESTIMATING, COMPARING MEASURING & SCHEDULING, REPORTING & PLANNED & ACCOMPLISH- CONTROL & PROJECT ANALYSIS ACTUAL MENT STRATEGY BUDGETING PERFORMANCE RESPONSI- BILITY ASSIGNMENT CONTRACT ADMINISTRATION & BILLING & WORK CONTROL STRUCTURE CHANGE CONTROL CONTROLLING PLANNING

8. Risk Assessment Select a Champion • Risk Assessment Work Steps • Obtain Overall Understanding of Scope • Identify Project Participants • Prepare Information Capture Forms • Determine Risk Categories • Review Feasibility, Planning, Concept Documents • Review Design Documents, Contracts • Interview Key Project Leaders, Technical Resources, and Management • Document Risks and Determine Risk Level, Probability

9. Risk Assessment Process Risk Analysis Categories • Regulatory • Environmental • Socio-Political • Safety • Financial/Cash Flow • Interest Rates • Escalation • Design • Construction Methods • Geological/Weather • Schedule • Resources • Manpower • Tools • Energy & Power • Procurement/Sourcing • Operational//Maintenance • Technology

10. Risk Assessment Process Project:_____________________________ Prepared by: ________________ Date: ___________ Reviewed by: ________________ Detailed Risk Analysis Worksheet Risk Category: __________________________ Risk Level: _____________ Risk Description: Risk Impact (Cost, Schedule, Technical):

11. Risk Assessment Process Risk Analysis Documentation • Work in Small Teams • Prepare Risk Analysis Sheets • Document Risk: High, Medium, or Low • Determine Potential Impact

12. Risk Assessment Process • Feasibility Documentation • Design Drawings • Main Contracts • Specifications • Subcontract Documents • Meeting Minutes and Notes • Correspondence and Emails • Government Regulations Information Sources Include

13. Risk Assessment Process Risk Analysis Results Discussion • Contract Type and Structure Among Project Contractors • New Technology: Longer Installation & Testing. Quality Control • New Governmental Regulations, Environmental Concerns, Safety • Design Not Completed, Only Conceptual Design • Confusion - Design/Construction Requirements – Many Contractors • Geological Constraints and Weather

14. Management Control Response to Risk Identification • Contracting Strategy • Organizational Approach • Systems and Procedures Implementation

15. Management Control Contracting Response • Fixed-Price Contracts – Lump Sum Contracts • Unit Price Contracts • Cost Reimbursable Contracts • Time and Materials Contracts • Incentives and Penalties Provisions

16. Management Control Project Organization Response Owner/ Operator Design Contractor Owner Management Contractors Contractors Contractors Contractors

17. Management Control Owner/ Operator Project Organization Response Design Contractor Procurement Contractor Construction Contractor Civil Contractor Equipment Contractor Electrical Contractor Sub- Contractors Sub- Contractors

18. Management Control Owner/ Operator Project Organization Response Design Contractor Management Contractor Prime Contractor Sub- Contractors Sub- Contractors Sub- Contractors Sub- Contractors

19. Management Control Systems and Procedures Response • Scheduling Control Systems • Procedures and Policy Manuals • Training for Project Resources • Cost Control Systems • Monitoring and Reporting

20. Management Control Systems/Procedures Response Owner Design Contractor Construction Contractor Electrical Engineer Mechanical Engineer Project Manager Civil Engineer Mechanical Supt Electrical Supt Civil Supt A P R A R R P A P R P = Perform R = Review A = Approve

21. Identify Activities with High Probability of Delay Management Control Systems/Procedures Response 2 4 Activity Risk Add Extra Time Based on Best Collective Judgment

22. C S T Project Management Three Project Components CostBaseline ScheduleBaseline Technical Baseline

23. O Project Management Three Responses to Risk C Contract Strategy Systems & Procedures S Organizational Structure

24. GEC Proprietary

25. Questions & Answers Thank You for the Opportunity to Speak to You