Project Risk, Financing, and Monitoring: Hudson Yards Analysis

This report provides a comprehensive risk analysis and mitigation plan for the Hudson Yards project, a large-scale real estate development in New York City. The analysis begins with an overview of the project, including its budget, social and economic rationale, key statistics, funding mechanisms, and i...Read More

Running head: PROJECT RISK, FINANCING AND MONITORING
Project Risk, Financing and Monitoring
Name of Student
Name of University
Author Note

1PROJECT RISK, FINANCING AND MONITORING
Table of Contents
Part A: Project Overview.....................................................................................................2
1.1. Overall Budget..........................................................................................................2
1.2. Social and Economic Rationale................................................................................2
1.3. Key Statistics............................................................................................................3
1.3.1. Scope and Size...................................................................................................4
1.3.2. Budget and Estimated Cost................................................................................4
1.3.3. Time Required to Complete the Project............................................................4
1.3.4. Key Construction Elements...............................................................................4
1.3.5. Environmental Costs or benefits........................................................................5
1.4. Funding Mechanism.....................................................................................................5
1.5. Identification of Key Stakeholders...............................................................................5
Part B: Risk Analysis...........................................................................................................6
2.1. PMBOK Risk Analysis.............................................................................................6
2.2. Risk Analysis............................................................................................................7
2.3. Risk Matrix...............................................................................................................9
Part C: Risk Mitigation Plan..............................................................................................11
References..........................................................................................................................15

2PROJECT RISK, FINANCING AND MONITORING
Part A: Project Overview
The chosen project “Building Hudson Yards” is an infrastructure project that is nestles at
the heart of one of the most exciting neighborhood of New York City. The project has
completely redefined that iconic skyline of the city (Hudsonyardsnewyork.com. 2019). The
Hudson yard is constructed on a 28 acres working rail yard. This project is home to more than
100 diverse shops and culinary experiences. Hudson yard has become one major cultural center
of Manhattan’s New west side (Capawana 2016). Nearby areas of Hudson Bay project includes
revitalized food and art scene, hardworking waterfront and hell’s kitchen. Hudson Yards is a
home to more than 100 diverse shops, offices, modern residences, gardens and public plazas.
1.1. Overall Budget
The project of “Hudson Yard” is a real estate development project. The project is
currently an ongoing project or partially completed project as first two phases of the project
opened in 2019. The size of the project is 26 to 28 acres (Riordan 2017.). The overall budget and
the cost estimation of this real estate project is nearly US$20 billion.
Top architects have been hired to implement this project. The first phase of the project
has been already completed and the second phase of the project is yet to start (Mattern 2016).
The project defines an effective use of rail yard. The project is associated with the development
of the office towers, residential spaces and high-end restaurants. The residential building that has
opened in Hudson yards in known as 15 Hudson yards. It is a 960,000 square foot building that is
situated right next to highline.
1.2. Social and Economic Rationale

3PROJECT RISK, FINANCING AND MONITORING
The chosen project is one of the largest private real estate project of New York.
Therefore, this particular project has huge social and economic rationale. It is the largest
development project in New York City. The project aims in expanding to the midtown
Manhattan business district as well (Cervilla Capawana 2016). The residential building
associated with the Hudson yards project offers 40,000 square feet of amenities. Furthermore, the
50th floor of the building is devoted to the wellness pursuits and a children imagination center.
This increases the social rationale of the project.
The project has high economic rationale. The project has economic benefits as well. The
project is associated with development of shopping complexes and residential building and
therefore the project has a high economic rationale as well. The Hudson Yard has become the
cultural center of the Manhattan’s new west side. The neighborhood has completely changed the
way New York looks to the world (Schofer 2014). The Hudson yard project is considered to be
the world’s most ambitious smart city project. This $20 billion project has a positive return of
investment and therefore, the project has high economic rationale. On completion the Hudson
yard project is expected to contribute $19 billion annually to the GDP of the New Work city and
therefore, is capable of generating more than $500 million of the tax revenue of the city. Hudson
Yards model is therefore considered as a cutting edge model for the future of smart city.
1.3. Key Statistics
The Hudson Yard project is a real estate development project and he cost of the project is
$20 billion. The primary developer of the project is Related companies (Kerzner and Kerzner
2017). The Hudson Yard project site was initially intended for other developments and the actual
plan for the Hudson yard was developed right after the failure of the west side stadium. The

4PROJECT RISK, FINANCING AND MONITORING
project was proposed as early as in 2003. The Hudson Yards is the largest development project
in the United State history that deals with a grove skyscraper, which is capable of hosting 55,752
New Yorkers daily. The developer of Hudson Yard project is related companies that had
developed New York’s time warner center as well.
1.3.1. Scope and Size
The project of Hudson yard is large scale project and the completed building is capable of
hosting over 55,752 workers. The construction cost of the building is $20 billion.
The in-scope of the project is to generate high revenue as it is expected to contribute to
$19 billion annually. The Hudson Yards project have been estimated to provide roughly $1
billion an acre. Experienced architects are hired to work on the project and development of the
master plan. Upon completion, the project will prove to be a project of high revenue and profit.
1.3.2. Budget and Estimated Cost
The set budget of the project is $20 billion. This is the construction cost of the Hudson
Yards project. The ultra-complex platform weighs more than 35,000 tons and it has made use of
25,000 tons of steel.
1.3.3. Time Required to Complete the Project
The chosen project is an ongoing project. However, some parts of the project is already
completed. 10 Hudson Yards, a part of the Hudson yards project is already opened in the year
2016. The office building and residences are now open to the tenants only. The Hudson Yard is
expected to be the home for publicly accessible space.
1.3.4. Key Construction Elements

5PROJECT RISK, FINANCING AND MONITORING
The area of construction of the project is dominated by mainly rail yards. The Hudson
Yards was needed to be constructed above 30 Rail Road tracks. In order to implement such a
complex project, the associated engineers devised a ten acre platform in order to support the
development of the Hudson yards.
1.3.5. Environmental Costs or benefits
The project has made use of modern techniques to reduce the negative effect of the
construction works on the environment. In order to reduce the environmental issues related to
construction of Hudson Yards on 30 rail road tracks, a platform was built in order to device ten
acre platform that helped in supporting the development and reduction of the environmental
issues.
1.4. Funding Mechanism
It is one of the largest private infrastructure project. The project is associated with both
public and private financing. Additional revenues might come from the bonuses that is paid by
the developers to ensure a successful implementation of the project. However, the Hudson Yard
project is considered to be a self-financing project.
1.5. Identification of Key Stakeholders
The key stakeholders associated with this project are as follows-
1. project Manager
2. Engineers
3. Architects

6PROJECT RISK, FINANCING AND MONITORING
4. Contractors
5. Customers
6. Tenants
Part B: Risk Analysis
This section of the report will be identifying the major risks and issues in the Hudson
Yards project. The risks in Hudson Yards project is analyzed by making use of both qualitative
and Quantitative risk analysis framework. Hudson Yards project is the largest infrastructure
project of New York. The New York’s most talked project has the capability to host more than
55,752 workers on a daily basis (Larson and Gray 2017). The PMBOK risk analysis and the risk
matrix of the Hudson Yard project is indicated in the following section.
2.1. PMBOK Risk Analysis
The risk analysis process is subset of project management. The project manager is usually
focused on cost, schedule and delivery of projects on time (Fleming and Koppelman, 2016). In
this section of the report, the PMBOK risk management framework will be discussed. There are
seven specific knowledge area in PMBOK risk analysis process. The PMBOK risk analysis
framework mainly contains seven processes which are as follows-
1. Planning the Risk Management process
2. Identification of the major risks in the system
3. Performing the qualitative risk analysis process
4. Performing the Quantitative Risk Analysis

7PROJECT RISK, FINANCING AND MONITORING
5. Planning the Risk Responses
6. Implementing the Risk Response
7. Monitoring of the identified risks.
The above discussed points indicates the major processes that are followed in risk
management of a project by making use of PMBOK risk management framework. The very first
step of risk analysis involve development of a risk management plan. A risk management plan
helps in determining the procedures for accessing and defining the risks (Walker 2015). The risk
management plan helps in better identification of the risks and issues associated with the project.
The next stage of PMBOK risk management process is Risk identification (Pritchard and PMP
2014). Identification of the potential risks and opportunities in the project is needed to prioritize
the risk on basis of the risk probability and severity.
There are a number of tools and techniques that can be used to identify and analyze the
major risks and issues associated with the project. These tools and techniques include
brainstorming, interviews and document analysis (Heagney 2016). As an output of the risk
management and assessment process risk register is delivered. The next part of PMBOK risk
analysis framework involves performing qualitative and quantitative risk analysis. As an output
of both these phases, a risk register is developed. After risk identification, it is quite necessary to
plan and implement the risk response process of the identified risk. The risk response is designed
in accordance to the severity of the identified risk and its impact on the ongoing project. The
analysis of the risk associated with the Hudson Yards project is indicated in the following
section.
2.2. Risk Analysis

8PROJECT RISK, FINANCING AND MONITORING
The identified risk and issues associated with the Hudson Yard project is indicated in the
table below-
Risks Description Probability/
Likelihood of
Occurrence
Impact/Severity
Design Constrain This particular project
had a major design
constraint as it was to
be built on 30 active
long island rail road
tracks.
High High
Operational Issues There are certain
operational issues
associated with Hudson
Yard project. It is one
of largest infrastructure
project and therefore the
project has certain
operational issues.
Medium High
Scope Change Since this is a large
scale infrastructure
project, any operational
issues in the project can
Low Low

9PROJECT RISK, FINANCING AND MONITORING
result in scope change
and project going out of
schedule
Schedule Risk This is a high scale and
complex project and
therefore the project is
associated with
schedule risk.
High High`
Budget Risk The construction cost of
the project is calculated
to be $20 billion.
Change in the scope of
project can increase the
budget risk of the
project.
Medium High
The above table indicates the risk associated identified in the project through qualitative
risk analysis method (Leach 2014). The PMBOK identifies the need of quantitative risk
identification as well. As a part of quantitative risk analysis, an interview with the two managers
associated with the project has been done, which reveals that the major risk associated with this
project is design Risk. Based on the identified risks, a risk matrix is developed in the following
section.
2.3. Risk Matrix

10PROJECT RISK, FINANCING AND MONITORING
The figure below indicates a standard risk assessment matrix-
Risk Assessment Matrix
ACCEPTABLE TOLERABLE GENERALLY UNACCEPTABLE
NOT LIKELY LOW MEDIUM MEDIUM
POSSIBLE LOW MEDIUM HIGH
PROBABLE MEDIUM HIGH HIGH
SCALE OF SEVERITY
SCALE OF LIKELIHOOD
A risk matrix is generally designed on basis of the scale of likelihood of occurrence of
project risk scale of severity of the identified risk (Harrison and Lock 2017). The identified risks
are plotted in the risk matrix on basis of their severity and likelihood of occurrence.

11PROJECT RISK, FINANCING AND MONITORING
ACCEPTABLE TOLERABLE GENERALLY UNACCEPTABLE
NOT LIKELY Scope Change
POSSIBLE Budget Risk Design Risks
PROBABLE Schedule Risk Operational Issues
SCALE OF SEVERITY
SCALE OF LIKELIHOOD
The above risk matrix indicates the severity and likelihood of the identified risks. The
following section identifies the processes by which the identified risks can be mitigated.
Part C: Risk Mitigation Plan
Identification of the risk mitigation approaches is quite essential to ensure that the
identified risks are mitigated. The previous section of the report has identified the major risks
associated with the system. The major risks associated with the Hudson yard project was
identified by following the PMBOK risk assessment framework (Mir and Pinnington 2014). The
PMBOK risk analysis framework is a planned risk management process that helps in
identification of the critical risks associated with a project. In order to address the major risks
associated with the project and rank it according to their severity and probability of occurrence, a

12PROJECT RISK, FINANCING AND MONITORING
risk matrix is developed (Kliem and Ludin 2019). The chosen project of Hudson Yard is an
ongoing project nearing its completing, addressing the identified risk related to the project
becomes essential. The risk mitigation plan for the risks identified in the Hudson Yard project
are to be addressed in an effective manner in order to ensure successful execution and
completion (Hopkinson 2017). The qualitative and quantitative risk analysis framework has
helped in identification of the most critical risks associated with the project (Kliem and Ludin
2019). Effective management of the identified risks can contribute to successful opening of the
Hudson Yard Project. The mitigation approach of the identified risks in the Hudson Yard project
are as follows-
Design Constraints: As obtained from both qualitative and quantitative risk analysis process,
the design risks is found to be one of the most prominent risk associated with the Hudson yard
project. This large scale project is associated with the delivery of largest private infrastructure
project of Australia. The design constraint is a major risks associated with the Hudson Yard
project mainly because the area on which the project is being developed is mainly dominated by
rail yards. It was therefore quite critical to design an infrastructure project on 30 active Long
Island Rail Road Track. Experienced engineers are hired in order to address the design risks
associate with the project. Therefore, design risk is found to be one of the most prominent risk
associated with the chosen project.
As the mitigation approach of the identified risk, it is recommended that experienced
architects and engineers could be hired to manage the design risk. This is an approach of Risk
transfer (Bowers and Khorakian 2014). In this approach the identified risk is transfer to a third
party, who is capable of managing this particular risk (Kliem and Ludin 2019). The choice of this

13PROJECT RISK, FINANCING AND MONITORING
risk response is justified since in the project, experienced engineers and designers were hired to
address the design constraints associated with the execution of the Hudson Yards project.
Operational Issues: Another significant risk associated with Hudson Yards project is
operational risks. The operational risks include technical issues that the project has faced during
its execution. Since it is a large scale infrastructure project, presence of the operational risks in
the project is justified. Along with the design issues, there are high chances of operational risks
in the project as the project is based on an ultra-complex platform (Pritchard and PMP 2014). A
ten acre platform was used to implement the project on 30 active railway tracks. The mitigation
approach for mitigation of the major operational risks associated with the project is to ensure
through supervision of the project activities (Crawford 2014). Effective supervision of the
project activities has the possibility of eliminating the major operational issues associated with
the project. The risk response for this particular risk is risk control.
Scope Change: The scope change is identified to be one of the major risks associated with the
Hudson Yards project. Since it is a large scale construction project, any change in the scope of
the project can result in increase of the operational issues, increase in the project budget and the
schedule of the project. Although the probability of occurrence of scope change is quite low at
this stage of the project, identification of the mitigation approach of the same is necessary as
well. As a mitigation approach, it is suggested that the implementation of the project should
follow a planned approach (Cleden 2017). The project activities should relate to the project plan
prepared, which can help in easier management of the project scope. The risk response that is
chosen for the identified risk is risk avoidance. The particular risk of scope change can be
avoided by ensuring no activities are performed in the project, which are not a part of the project
plan.

14PROJECT RISK, FINANCING AND MONITORING
Schedule Risk: Another significant risk associated with the Hudson Yard project is schedule
risk. The schedule risk is quite common in this project as this project is a high complexity project
and project of large scale. Mitigation of the schedule risk in Hudson Yard project is quite
essential to ensure that the project is completed as per schedule. Appropriate scheduling of the
project activities involves effective management of the risks and issues associated with the
project. In the Hudson Yard project, every activity is completed as per the project plan and
therefore the project is not associated with any major schedule issues. The risk response strategy
of this risk is therefore risk control.
Budget Risk: Budget risk in a large scale construction project is quite common. Hudson Yards
project is a self-financed project that is associated with development of one of the largest
infrastructure in the New York City. The budget risk of a construction project is mainly
mitigated by ensuring that there are no scope creep in the project. The risk response for this
particular risk is risk control.

15PROJECT RISK, FINANCING AND MONITORING
References
Bowers, J. and Khorakian, A., 2014. Integrating risk management in the innovation
project. European Journal of innovation management, 17(1), pp.25-40.
Capawana, R.D.C., 2016. A HISTORICAL AND CONTEXTUAL PERSPECTIVE OF LAND
USE MANAGEMENT OF THE HUDSON YARDS, NEW YORK CITY.
Cervilla Capawana, R.D., 2016. A historical and contextual perspective of land use management
of the Hudson Yards, New York City: considerations for a first approach to choice modeling
experiments in urban design projects (Master's thesis, Universitat Politècnica de Catalunya).
Cleden, D., 2017. Managing project uncertainty. Routledge.
Crawford, J.K., 2014. Project management maturity model. Auerbach Publications.
Fleming, Q.W. and Koppelman, J.M., 2016, December. Earned value project management.
Project Management Institute.
Harrison, F. and Lock, D., 2017. Advanced project management: a structured approach.
Routledge.
Heagney, J., 2016. Fundamentals of project management. Amacom.
Hopkinson, M., 2017. The project risk maturity model: Measuring and improving risk
management capability. Routledge.
Hudsonyardsnewyork.com. (2019). About Hudson Yards New York | Hudson Yards. [online]
Available at: https://www.hudsonyardsnewyork.com/about [Accessed 20 Apr. 2019].

16PROJECT RISK, FINANCING AND MONITORING
Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
Kliem, R.L. and Ludin, I.S., 2019. Reducing project risk. Routledge.
Larson, E.W. and Gray, C.F., 2017. Project management: The managerial process. McGraw-Hill
Education.
Leach, L.P., 2014. Critical chain project management. Artech House.
Mattern, S., 2016. Instrumental city: The view from Hudson Yards, circa 2019. Places Journal.
Mir, F.A. and Pinnington, A.H., 2014. Exploring the value of project management: linking
project management performance and project success. International journal of project
management, 32(2), pp.202-217.
Pritchard, C.L. and PMP, P.R., 2014. Risk management: concepts and guidance. Auerbach
Publications.
Riordan, C., 2017. The New West Side: A Neighborhood Assessment of the Hudson
Yards. MUP Capstone.
Schofer, J.L., 2014. Moving the Goods: Performance Measures and the Value Proposition for
Transportation Projects. Transportation Research Record, 2460(1), pp.1-11.
Walker, A., 2015. Project management in construction. John Wiley & Sons.