Regional Rail Fleet (NSW) Case Study

Regional Rail Fleet (NSW) Case Study
Table of Contents
Introduction................................................................................................................................2
Key project risks........................................................................................................................2
Risk treatments...........................................................................................................................4
risk management plan................................................................................................................4
Conclusions and Recommendations........................................................................................11
References................................................................................................................................12
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Regional Rail Fleet (NSW) Case Study
Introduction
The NSW Government has planned to replace its 36-year-old NSW Rail fleet consisting of
three trains including XPLORER, XPT, and Endeavour. The new facility would be
constructed in Dubbo which would help creating new job opportunities in the region. The
facility would include new trains that are safer, more comfortable, better in accessibility, and
reliability. The trains would take passengers from Sydney to other regions in NSW such as
Brisbane, Melbourne, and Canberra. The delivery contract has been awarded to Momentum
Trains which is an international consortium between CAF, Pacific Partnerships, UGL Rail
services, CAF Investments, and DIF infrastructure. The contract scope includes designing,
construction, maintenance, and finance for the new fleet and the new facility. This report
explores the key risks that the project could be encountering and proposes a risk management
plan to ensure that risks scenarios are well taken care of.
This report explores different types of risks that the current project and along these categories
are identified specific risks. The level of severity that each of these risks would have are
noted and based on the same, a plan is made for the mitigation. The mitigation plan presents
the appropriate strategy for response that can be avoiding , acceptance, transfer, or mitigation.
Key project risks
On railway construction projects, a number of different types of risks can occur and these can
be financial, safety related, commercial risks, technical risks, or project related such as cost
overruns or project delays, and so on. This section lists down all kinds of and instances of
project risks that NSW rail fleet project can face. The risks include:
Technical Risks: Technical risks can result from design inconsistencies, construction issues,
technology obsolesce, and location challenges. Specific risks that can occur on the current
project include:
 There can be defects and deficiencies in the construction of the fleet that can cause
product failure in performance which would affect the project deliverables
 The condition of the soil boring and other geospatial constraints can cause difficulties
in the construction work and can also pose additional risks to the project (Friedlander,
2003)
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Regional Rail Fleet (NSW) Case Study
 There can also be problems with the fleet that is delivered if it is not as per the desired
specification and it can affect the whole project as it would affect the performance of
the whole system (Caltrans, 2007)
Commercial Procurement Risks: These risks can arise due to complications in project size,
contract types, buying constraints, and timescales. Specific risks that can occur on the current
project include:
 As the company has taken design build contractual approach to the development of
the fleet, it can have a risk of failure if the project owner is unsophisticated and is
looking for a quick build solution and thus, pushing the collaborating parties to
deliver or is trying to get the cheapest deals and thus, compromising on the quality of
delivery
 In DB projects, there are many people involved at work and thus, there is possibility
of blurring of the lines of responsibilities that can create confusion causing design
discrepancies. If there is a design discrepancy then it can affect the whole
construction of the project (Friedlander, 2003).
Financial risks: These risks can occur due to constraints in budget or finance, taxation and
public perceptions. Specific financial risks that can occur on the current project include:
 If there are changes in the orders then there would be associated claims added which
would also add the project cost and if not controlled then it can lead to a budget
overrun
 The project can also run into budget overruns due to problems of prices increasing for
raw materials or contract work (Galway, 2004)
Contractual risks: Contracts are a major part of any construction or production project
where third parties are majorly involved in deliveries. With these also come certain risks that
have to be taken care of . Specific risks that can occur on the current project include:
 If the owner is unable to make the architect and the contractor join on the same
dispute resolution forum when they are having a problem between them then it can
result into inconsistencies in adjudication such that different claims have to be
pursued against the two parties to contract separately
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Regional Rail Fleet (NSW) Case Study
 If there is no provision made for the warranty of the quality when developing
contracts with the designers, if design faults occur later, the project owner would not
be safeguarded against the risk that can occur due to design faults
Project Risks: Project risks can occur due to several factors that can affect the triple
constraints including cost, scope, and time. Specific risks that can occur on the current project
include:
 If there are changes in the scope during the project execution then it can result into
additional costs as well as delays in deliveries
 If there is a communication gap in the project team then it can result into delivery
inconsistencies and even conflicts
 If there are conflicts in the requirements of the stakeholders then it can result into
disruption in approvals and other procedures as well as can cause difficulties in
acceptance if not taken care of at the beginning (GALWAY, 2004).
Risk treatments
Risks can be treated in different ways such as through elimination of causes that can result
into a risk, reduction of risk by taking appropriate mitigation measures, transferring of risk to
another party such as contractor or insurance service provider, and retention of risk if its
resolution steps would be more costly while the risk would not make a major difference to the
outcome of the project. The measures are chosen based on the level of severity and the
condition of the risk (Kendrick, 2003).
risk management plan
Risk management majorly involves identification, assessment, allocation, and mitigation of
risks.
Identification: Risk identification involves identification of the categories of risks and then
identifying specific risks that can occur on the current project. A risk identification has been
done for the current case considering risk categories like financial, technical, contractual,
project management, and commercial.
Assessment: The risks are assessed on the basis of the likelihood of facing them and the level
of impact they would create on the project. This would help in understanding the level of
severity of the risk and based on it, a decisions can be taken on the resolution and mitigation
plan (Kärri, 2014).
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