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Unformatted text preview: dance or mitigation Infrastructure World LLC 30 Scope and structure of work Work Breakdown Structure and Organizational Breakdown Structure OBS STATEMENT OF OBJECTIVES W BS OB JE CT IVE S Infrastructure World LLC POINTS OF ACCOUNTABILITY WBS DISTRIBUTION OF ACTUAL ORGANIZATIONAL COSTS 32 Work Levels Project I II Site Work IV Forms Facility 2 Concrete Foundations III Facility 1 Structural Frame Reinforcing Steel Concrete Etc. 33 Work Breakdown Structure WBS Code of Accounts y Facility y Commodity Work Packages y Engineering y Construction y Turnover Code of Accounts Scope Definition Work Packages Execution Vehicle 34 Code of Accounts y Plot/Area y Facility/Sub-facility y Process y Non-Process y Yard y Off-Plot y Indirect y Construction Temporary Facilities and Services y Engineering and Other Services 100% of Scope by WBS y Commodity y General Civil y Earthwork y Concrete y Steel y Building Finish y Mechanical Bulks y Mechanical Equipment y Pipe y Electrical Equipment y Raceway y Wire and Cable y Instrumentation 100% of Scope by Commodity 35 Characteristics, risks and mitigation LSTK Unique Characteristics y Owner gives up substantial control to contractor (usually just provides a performance spec) y Project acceptance is based on demonstrated plant performance (or physical completion) perhaps with an operating period obligation y Schedule and performance are guaranteed (usually capped at a percentage of LSTK price, perhaps with sub-caps for each element guaranteed) y Schedules of liquidated damages and bonus provisions are usually associated with the guarantees Infrastructure World LLC 37 Associated Risks y y y y y y y y y y y Project team capability Budget over-run Schedule over-run Vendor performance Shortfalls relative to guarantees Availability and cost of insurance Timely payment, especially since LSTK execution tends to be schedule driven Scope changes Force Majeure Joint venture partner disputes or default Delay in getting decisions form Owner Infrastructure World LLC 38 Risk Mitigation y Develop clear contracting guidelines (e.g. accept no consequential damages) y Clearly define the scope of each project bid and make sure it’s clear in the proposal y Develop excellent EPC estimating talent. y Develop Business Development staff who can negotiate limits to risk and fair reward for risks undertaken y Assign “A-players” to the project team and make it easy for them to get all the support they need. Where possible, assign them during the proposal phase. Infrastructure World LLC 39 Risk Mitigation (Continued) y Analyze risks as to expected and maximum values. Add the expected value to the bid price. Some others might be covered in contingency y Flow down risks undertaken to suppliers, subcontractors and project specific insurance. Consider paying the premiums. It’s often a good investment y Plan, Plan Plan. Review, Review, Review. Use experts, experienced consultants etc to help in this process Infrastructure World LLC 40 Three Tier Program General Management Program for Sr. PMs Tier III Business Management Tier II Project Manager’s Work Processes, Procedures and Tools Tier I Suggested Tier II Modules 1. EPC Leadership /Team Building 2. Execution Planning/Project Controls 3. Baseline/Change Management 4. Prime Contract Management 5. Risk Management 6. EPC Joint Venture Management 7. Financial Management 8. Quality Assurance Management 9. Engineering Management 10. Procurement and Supply Chain Management EPC Organization and Operations Project Management Workshop: Introduction to Functions and Services Infrastructure World LLC 42 MIT OpenCourseWare http://ocw.mit.edu 1.040 Project Management Spring 2009 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms. Presentation by: Professor Fred Moavenzadeh Managing Construction Risk 1. 2. 3. 4. An Integrated Approach Identifying Project Risks Allocation of Risk Economical Solutions to Risk Key Point #1 A Method for Managing Construction Project Risks Integrated Project Risk Management Risk Financing •Self Funded •Owner Control •Incentive Bonus Dispute Resolution •On-Site Resolution •Mediation/Arbitration •Contractual Loss Prevention •Risk Identification •Contract Formation •Scheduling Integrated Project Risk Management – Builders’ Risk Risk Financing •Owner Buys? •Cont. Buys? •Build Risk? •Delay of Opening •Force Majeure Dispute Resolution •Allocation of Deductible •How Does Claim Get Resolved? Loss Prevention •Risk ID •Contract Wording •Site Security •Disaster Planning Key Point #2 Identifying Project Risks Risk Identification y y y y y y y Project Type & Site Project Participants Project Delivery Method Budget & Financing Scheduling Legal Political By Project Delivery Methods Agency CM or PM At-Risk CM or PM CM or PM CM or PM Owner Owner Owner Owner At Risk CM or PM At Risk CM or PM A/E A/E Contractor Contractor A/E A/E Sub Sub Sub Sub Sub Sub Sub Sub Sub Sub Desi...
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