Risk Assessment for Various Similar Construction Projects

RISK ASSESSMENT FOR VARIOUS SIMILAR CONSTRUCTION PROJECTS1
Risk Assessment in Construction Projects
Name
Date

RISK ASSESSMENT FOR VARIOUS SIMILAR CONSTRUCTION PROJECTS2
Part 1: Executive Summary to the Board
To the Board,
This report, as ordered by the CEO, details the risks associated with undertaking road construction
projects and what it would cost to undertake a major road construction project. Road construction
projects are inherently complex, and face many risks as well as challenges that include delays,
political risks given they are publicly funded projects, payment delays, financing problems, delays,
design changes midway through the project , disputes between and among parties, poor project
planning, organization, and management, and changes that lead to late delivery of projects. Because
of their scale, complexity, and huge financial outlays, such projects are best bid for and undertaken
as joint ventures with other firms. Such projects face several risks that include under budgeting,
Failure to meet deadline, design changes midway, financing challenges, loss of project support,
personnel issues, poor quality work, poor materials quality, political risks, and solvency,
bankruptcy, where the company or one of the partners is forced to close down. Assuming the
company will bid for a project similar to either the Ipswich Motorway upgrading, Building of the
Hunter Expressway, and the Ballina Bypass projects located in NSW, for a contract worth $ 660
million, the following resources are required to prepare a bid for the project
Duration 5 months starting March 4th 2019, ending August 5th
2019
Total estimated cost $ 684 372.62 (about 0.10% of the total value of the
project)
Required staff 19 staff and seven departments
Cost estimates
Cost estimates Cost estimates by phase
# Department Cost in $ # Description Start Finish Cost
A Administration 0 1 Scope Definition 04-03-2019 17-04-2019 196300
B Marketing 140067 2 Estimation 20-03-2019 17-06-2019 479460
C Construction 36709 3 Review 1806-2019 23-07-2019 8412
D Engineering 242775 4 Submission 05-08-2019 05-08-2019 200
E Contracts 25783

RISK ASSESSMENT FOR VARIOUS SIMILAR CONSTRUCTION PROJECTS3
F Estimating 123287 Total estimated costs
G Planning 26487 Staff Costs 595106.63
Total Overheads 89265.99
Grand Total 684372.62
Percent of total project cost 0.1%

RISK ASSESSMENT FOR VARIOUS SIMILAR CONSTRUCTION PROJECTS4
Part 2: A risk assessment summarizing the major risks of contracting this work.
The three projects under consideration that the company can bid for include the upgrading of
the Ipswich Motorway, Building of the Hunter Expressway, and the Ballina Bypass project. A
detailed risk assessment for the projects also done
Ipswich Motorway Upgrade
Risk assessment
# Risk Description Probability Impact Mitigation
1 Under
budgeting
Preparing a contract cost
estimate that is way
below what the project
actually requires
High Very
High
Use effective and accurate
processes in cost
estimation and budgets.
Can be achieved by
getting quotations from
suppliers or using past
costs for similar projects
(Xenidis and Stavrakas
478-487)
Reserving 15% of total
project costs to cover
unexpected cost overruns
2 Failure to
meet
deadline
Delivering the project
later than the scheduled
completion dates
Very High High Use effective project
management
methodologies
Crush project schedule to
meet deadlines (Carr &
Tah, 2001)
3 Design
changes
midway
Necessity to make
design changes after
project execution starts
due to unexpected issues
High Very
High
Undertake a thorough
analysis and planning
during the design phase,
with detailed geodesic
data and simulations to
ensure no important issues