Advanced Risk And Uncertainty Management Essay

Question:

Describe about the "Melbourne Metro Rail Project".

Answer:

Introduction:

The “Melbourne Metro Rail Project” which is commonly known as the “Metro Rail Capacity Project” was a planned infrastructure assignment in Melbourne. The project involves the designing of the twin tunnel to make a way from “South Kensington railway station” to “South Yarra.” This project was a master piece out of several infrastructure projects which were designed to increase the pool capacity and also transforming the suburban computer based system to “metro style rapid transport system.” The project would deliver two rail tunnels of nine kilometres each. In the year 2014, the “Andrews Government” revived the main “Melbourne Metro Rail Project.” In this literature review various risk models, the risk associated with the project and its management have been discussed (Hale, 2015).

Risk definition:

As stated by Carey (2013), every project revolves around d certain risks. Risk related to the financial crisis, human resource, management, material resources, communal risk, ethical issues, etc. Risk can be defined as assess the probability, exposure to all the different hazards and severity of all the activities. For any infrastructure project there exists a chance of risk since everything might not give the same outcome as planned. In this metro project, there is a risk of an architect or design of the project. This risk should be identified, analysed and managed based on certain models and techniques (Drehmann & Nikolaou, 2013).

Risk analysis models:

In order to assess the risk use of certain models are important. According to the Ayyub (2014), the models have the potential to give rise to poor design, disaster due to uncertainty flexibility or inappropriate interpretation. There are various models associated with risk analysis. The first model is the “Risk Management model.” It is an approach for systematic recognition, analysis and response to the risk of the project. This model suggests the way to deal with the risk associated with the project. Risk control is a part of this plan. Monitor and review of the height of risk and capability to manage the risk is a part of the model plan. Firstly, the context needs to be defined involving the client’s need and stakeholder’s analysis. Secondly, the risk needs to be identified and also the constraints that might affect the project must be recognised. Thirdly, the risk needs to be assessed and the impact and rate of occurrence need to be quantified. Lastly, the responses based on the risk assessed needs to be defined and also the implementation (McNeil et al. 2015).

The second model is the "Simulation modelling." Whenever iterative simulation is used the “Monte Carlo technique” is often used along with software programme. The simulation involves the input that reflects the possible risks with proper distribution. The model randomly produces a value in reference to the risk and accumulates them if multiple risks are included in the model. The whole system is computerised. The output refers to the distribution of the grand cost, period and the measurement used to qualify and safety associated with the risk. The result obtained from the output could be used to schedule the durations and complement the budget so that risk associated with the project could be reduced (Fishman 2013).

As stated by Gueudr? et al. (2014), the “Generic Model” is associated with six modules which involve project definition, identification of the risk, quantification of the risk, risk evaluation, implementation as a risk response, and monitoring linked with controlling.

Figure: Model-based on risk assessment

Types of risks in railway Projects:

A literature review states a rail project is associated with several risk generally the financial and safety risk involved with the construction of the projects. The risk potentially prevents the project from functioning leading to uncertainty in the cost overruns, delay of the project, issues associated with the safety, system reliability and integrity (Kendrick, 2015).

The various risks associated are as follows:

  • Technical risks
  • Commercial and procurement risk
  • Interface risk
  • Financial risk
  • Legal and political risk

According to Kendrick (2015), the technical risk involves the risk of completeness of the design. If the design is not according to the client’s requirement, then there might be complications and problems. Moreover, if the designing lacks integration and is not according to the intellectual property rights, there might remain a risk. In any constructional project there always remains a risk of communal and labour safety. Even the use of unapproved or outdated technology might cause risk. Geographical location or climatic condition can also sometimes cause hindrance in the project (McNeil et al., 2015).

The size of the project if it is long, if there are budget constraints or type of contract, dispute resolution, etc. might cause risk associated with the project. Interface risks are also a significant issue that is associated with the railways. As discussed by Kendrick (2015), the financial risks such as budget constraints and funding can also be a big issue. The funding given by the government should not be restricted or the project might get hampered due to an elevation of the budget that was not predicted. Inflation of the currency and modifications in the exchange rate can also be reasons for risk. The political corruptions and uncertain regulatory atmosphere could be a significant constraint in the railway project. Moreover, literature review reflects that taxation can bring about huge loss to an organisation funding the project. Huge tax charged can, therefore, be a hindrance (McNeil et al., 2015).

Risk management in railway project:

As stated by Teller et al. (2014), the risk associated with the infrastructure projects should be managed in order to complete the project successfully. This can be done by using risk management which is an ongoing process which is continuous throughout the project and include identification, evaluation, allocation, mitigation and review after monitoring.

According to Williams et al. (1997), methods were developed by which risk management was practised. The methods were “software intensive programs” based on these “specific road maps” were designed. Such approached helped in conducting the project and make the practices. In a literature review, it was stated that due to the dynamic environments of the designing of the project and the complexity results in high degree of risk and uncertainty.

In one of the literature review regarding the “Korean high-speed railway” states that after eight years of the railway construction, a new “Korean train Express” was planned. The project was complex thus requires proper planning and management. As stated by Bhattacharya et al. (2012), the risk management involves “new high-speed railway system,” new technologies, etc. The risk management involved in the project was technical management related to engineering and construction risk management, financial management, social and also political management (Teller et al., 2014).

“Project risk management" chiefly comprises expenditure and "schedule uncertainties" and risks linked with every activity of the "project network." It has been recognised the main "risk sources" and "quantified the risks" in stipulations to probability, impact and rigorousness in a "complex infrastructure project" for the creation of new and innovative designs related to railways (Bhattacharya et al., 2012).

Conclusion:

The "Melbourne Metro Rail Project" involves the designing of the twin tunnel to make a way from "South Kensington railway station" to "South Yarra." For any infrastructure project there exists a chance of risk since everything might not give the same outcome as planned. In this metro project, there is a risk of an architect or design of the project. The models have the potential to give rise to poor design, disaster due to uncertainty flexibility or inappropriate interpretation. In terms of the "Melbourne Metro Rail Project," the "Simulation modelling" can be applied. The reason behind this is that the project aims at developing a high-tech metro station with modern amenities which could be fulfilled by the use of computer system analysis and system generated outputs. The output would offer the estimation of the budget, time management and quantify the safety associated with the project. The risks associated with this project can be checked by using risk management which is an ongoing process which is continuous throughout the project and include identification, evaluation, allocation, mitigation and review after monitoring. Such activities and regulations can lead to the success of the “Melbourne Metro Rail project.”

References:

Ayyub, B. M. (2014). Risk analysis in engineering and economics. CRC Press.

Bhattacharya, A., Romani, M., & Stern, N. (2012, May). Infrastructure for development: meeting the challenge. In Centre for Climate Change Economics and Policy, Londres. www. cccep. ac. uk/Publications/Policy/docs/PP-infrastructure-for-development-meeting-the-challenge. pdf. Consultado el (Vol. 15).

Carey, A. (2013). Is road or rail the answer to Melbourne's congestion problems?. Geodate, 26(4), 2.

Drehmann, M., & Nikolaou, K. (2013). Funding liquidity risk: definition and measurement. Journal of Banking & Finance, 37(7), 2173-2182.

Fishman, G. (2013). Discrete-event simulation: modeling, programming, and analysis. Springer Science & Business Media.

Gueudr?, T., Dobrinevski, A., & Bouchaud, J. P. (2014). Explore or exploit? a generic model and an exactly solvable case. Physical review letters, 112(5), 050602.

Hale, C. (2015). Planning Melbourne metro: Why every centimetre and every dollar counts. Planning News, 41(11), 16.

Kendrick, T. (2015). Identifying and managing project risk: essential tools for failure-proofing your project. AMACOM Div American Mgmt Assn.

McNeil, A. J., Frey, R., & Embrechts, P. (2015). Quantitative risk management: Concepts, techniques and tools. Princeton university press.

McNeil, A. J., Frey, R., & Embrechts, P. (2015). Quantitative risk management: Concepts, techniques and tools. Princeton university press.

Teller, J., Kock, A., & Gem?nden, H. G. (2014). Risk management in project portfolios is more than managing project risks: a contingency perspective on risk management. Project Management Journal, 45(4), 67-80.

Williams, R. C., Walker, J. A., & Dorofee, A. J. (1997). Putting risk management into practice. IEEE Software, 14(3), 75.

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