SQA

1. Nepal Engineering College
Center for PostGraduate Studies (nec-CPS)
Lagankhel, Lalitpur
M.Sc in Construction Management
Final defence Presentation
On
Risk Management in Hydropower Construction Projects in Nepal
1
Presented By:
Sunil Regmi
(013-1024)
Supervisor: Asst. Prof. Anjay K. Mishra

2. Outline
• INTRODUCTION
 Background
 Statement of the Problem
 Research Questions
 Research Objectives
 Significance of the Study
 Scope and Limitations of the Study
• LITERATURE REVIEW
• METHODOLOGY
 Research Design
 Research Flowchart
 Study Area
 Case study I-Sanjen Hydroelectric Project-42.5 MW
 Case study II-Rasuwagadhi Hydroelectric Project
 Study Population
 Sample Selection
 Sample Size
 Methods of Data collections
 Data Analysis
 Data Presentation
2

3. Outline
• RESULTS AND DISCUSSION
 Risk factors
 Overall Risk Significance and allocation, Contractor’s Perspective
 Overall Risk Significance and allocation, Client’s Perspective
 Risk Management actions
 Risk significance, allocation, impact of Risk on project performance for
selected projects
• CONCLUSION AND RECOMMENDATIONS
• REFERENCES
3

4. Introduction
Background
Nepal is rich in hydropower
 Total theoretical potential-83,000MW, Techno-economically viable
capacity- 42,000 MW
 First Hydropower project 105 years back
 Current Generated Capacity-846 MW till 2016
Management of risk
 Constructing a hydropower project is very heavily dependent on
management of various types of risk.
 Financing power system is the function of risk management. Besides the
investor, the project proponent, energy off-taker, project implementer,
government and even financier need to manage their own risks (Baral,
2009).
 Management of risk involves identification of various risks associated with
a project and assessment thereof. Simply put, risk management entails
shifting and/or sharing risks.
4

5. Statement of the Problem
 Risk management in Hydropower - object of attention because
of time, cost overruns and power deficit all over the country.
 The management of risks is a central issue in the planning and
management of any venture.
 The construction risks in hydropower project may be force
majeure risk, socioeconomic/environmental risk, foreign
exchange risk, Repatriation risk, Legislative change risk,
Market risk, Revenue risk, hydrological risk, geological risk,
performance risk, design risk.
5

6. Statement of the Problem
 Hydropower Construction industry in Nepal is suffering from
the misunderstanding of risk management including risk
identification, analysis and assessment, and that is why this
research is important, to discover the risk factors in the
hydropower construction industry in Nepal and determine the
importance of each factors in terms of severity and allocation.
6

7. Research Questions
• What are the risk factors with severity and allocation
based on clients and contractor's perspective along
with detail study of Sanjen and Rasuwagadhi
Hydroelectric projects?
• What are the risk importance and allocation among
client's and contractor's and estimate the impact on
time, cost and quality of selected projects?
• What are the risk management actions in client's and
contractor's perspective and selected projects?
7

8. Research Objectives
General Objective
• The general objective of the study is to analyze the risk management in
hydropower construction projects in terms of clients and contractor’s
perspective along with detail study of Sanjen and Rasuwagadhi
Hydroelectric projects.
• Specific objective:
• To analyze the risk factors with their severity and allocation based on
clients and contractor's perspective along with detail study of Sanjen and
Rasuwagadhi Hydroelectric projects.
• To compare risk importance and allocation among client's and contractor's
and estimate the impact on time and cost of selected projects.
• To analyze the risk management actions in client's and contractor's
perspective and selected projects.
8

9. Significance of the Study
• This study discovered the risk factors in hydropower construction projects and
determine the importance of each factor in terms of severity and allocation along
with impacts and actions of Risk Management.
• It is significant for all stakeholders of the industry to improve their performance to
ensure success by adopting mitigative strategy.
Scope
• This research sets sights on introducing the risk management in hydropower
projects from the contractor's and client's perspectives and identifies key risk
variables and their effects on the projects.
• The contractors and the clients who are constructing Hydropower Project more than
25 MW up to 456 MW were addressed by the study.
Limitation
• Sanjen Hydroelectric Project (42.5 MW) and Rasuwagadhi Hydroelectric Project
(111 MW) were analyzed in depth from 15 projects which were studied best on
response from contractor's and clients personnel.
• Only client’s and contractor’s perception were considered for the study as
consultants were considered client’s representative.
9

10. Literature Review
Risk
 Risk can be defined as an uncertain event or condition that, if
it occurs, has a positive or a negative effect on a project
objective
 Jaafari (2001) defined risk as the exposure to loss/gain, or the
probability of occurrence of loss/gain multiplied by its
respective magnitude.
Civil Engineering Projects
 several stages: inception/briefing, designing, tendering,
construction and commissioning
 the parties for construction are clients, consultants/designers,
contractors, public authorities, financers and users
10

11. Contd…
Management in Construction
According to Raftery(1997),
 Construction projects are unique
 Construction projects involve many skills largely non-repetitive
in nature
 Projects are constructed under local conditions of weather,
location, transportation and labor that are more or less beyond the
contractor's control.
 Construction firms, the management decisions being made by one
or two persons
 Construction is a high-risk business.
11

12. Risks in Construction
 Physical works
 Delay and disputes
 Direction and supervision
 Damage and injury to persons and property
 External factors
 Payment
 Law and arbitration (Sears et al., 2010)
12

13. Contd…
Risk Management Process Two main phases:
 Risk assessment, which includes identification, analysis and
prioritization,
 Risk control, which includes risk management planning, risk resolution
and risk monitoring planning, tracking and corrective action (Boehm
cited in(Michael, 2001))
Risk Identification
 Controllable and uncontrollable risks
 Controllable risks-whose outcome is, in part, within direct control
 Uncontrollable risks as those risks which cannot be influenced
 Risk identification should address both internal and external risks.
(Norman, 1993)
13

14. Contd…
Risk Analysis
According to Estate Management Manual; Risk Management, 2001
 The aim is to analysis a precise and objective calculation of risk.
 It allows the decision making process to be more certain
 It involves assessing the identified risks
Methods of Risk Analysis
 Qualitative analysis focuses on identification together with
assessment of risk- Direct judgment, Ranking options, Comparing
options and Descriptive analysis
 Quantitative analysis focuses on the evaluation of risk-Probability
analysis, Sensitivity analysis, Scenario analysis, Simulation analysis
(Ward, 1997)
14

15. Contd…
Risk Response Practices
(Project Management Institute UK, 2004)suggested three ways of
responding to risk in projects, they are as follows:
 Avoidance: usually by eliminating the cause.
 Mitigation: by reducing the probability of occurrence. e.g. using
new technology, buying insurance, etc.
 Acceptance: accepting the consequences. e.g. by accepting a lower
profit if some activities overrun.
15

16. Estate Management Manual Wales, 2001 argued that there are
distinct ways of responding to risks in a construction
 Risk Avoidance-referred to as risk elimination. For e.g.
• tendering a very high bid; placing conditions on the bid;
• pre-contract negotiations as to which party takes certain risks;
• not binding on the high risk portion of the contract
 Risk Transfer-trying to transfer the risk to another party. For e.g.
• insurance premium, it gives some benefits as a potential loss is
covered by fixed costs
• hire a Subcontractor to work on a hazardous process;
 Risk Retention- method of reducing controlling risks by internal
management
• are controlled and financed by the company or contractor
16
Contd..

17. Methodology
17
Research Design
 This research tends to find out the different risks, problems
and difficulties faced during construction of hydropower
projects by the client's and contractors
 Literature review, case studies and close end questionnaire
survey were conducted.
 The case of Sanjen Hydroelectric Project (42.5 MW) and
Rasuwagadhi Hydroelectric Project (111 MW) were also
studied, in order to get in-depth information about the actual
risk factors influences in a real case

18. Research Design
• There are different types of risks associated with the construction activities. These
are physical, environmental, design, logistics, financial, legal, political, construction
and management risk groups.
• The questionnaires were made as per the above types of risks. A set of
questionnaire was delivered to 15 contracting companies and 15 clients
representatives.
• The questionnaire is provided in annex 1 and analysis in annex 2. Below is the table
which shows the rank (1-10) of the 30 risk factors which were filled by the
respondents from clients and contractors. These risk factors were also allocated on
the basis of acceptance, transferred, shared and avoided during analysis.
18
Symbol Meaning
1--3 Low risks
4--7 Medium risks
8--10 High risks
A Risk Acceptable
T Risk Transferred
S Risk Shared
I Risk Avoided

19. Contd..
Study Area
 The hydropower Projects of more than 25 MW which are under construction were
taken for research.
 The case studies of Sanjen Hydroelectric Project (42.5 MW) and Rasuwagadhi
Hydroelectric Project (111 MW) were also done.
Study Area for Case Study 1-Sanjen HEP (42.5 MW)
 Location: Sanjen River, Chilime VDC, Rasuwa
 Project Type: Run of River
 Starting date: March 05,2013
 Contract Type: Unit rate Contract under FIDIC Red Book, Conditions of Contract
 Contract Price: NRs. 1529 Million for Lot 2-Civil Works
 Contract Period: 1190 days from Agreement date. Extended till November 30,2018.
Study Area for Case Study 2-Rasuwagadhi HEP (111 MW)
 Location: Bhotekoshi River, Timure and Thuman VDC, Rasuwa
 Project Type: Run of River
 Starting date: February 05,2014
 Contract Type: EPC Contract under FIDIC Silver Book, Conditions of Contract
 Contract Price: NRs. 2,960 Million for Lot 1-Civil & HM Works
 Contract Period: 1275 days from Agreement date
19

20. Research Approach
20

21. Contd..
Study Population
 The respondent were both contractors and clients including the personnel from Sanjen
Hydroelectric Project-42.5 MW and Rasuwagadhi Hydroelectric Project-111 MW for
Case studies. The projects who have got generation license above 25 MW are found to be
26 in numbers as per Department of Electricity Development(DoED) 2016. So the
population size for this study is 26.
Sample Selection
 A list of contractors were obtained from Federations of Contractor's Association Nepal
including few number of clients.
 A list of clients were obtained from DoED
 Sample for case study-Sanjen Hydroelectric Project-42.5 MW and Rasuwagadhi
Hydroelectric Project-111 MW.
Sample Size
 The sample size formulas for small (hyper geometric) populations are shown below.
n= Nʓ2pq/(E2(N-1)+ʓ2pq)
• n is the required sample size
• N is the population size
• p and q are the population proportions. (set them each to 0.5).
• z is the value that specifies the level of confidence. Typical levels of confidence for
surveys shall be taken as 90%, in which case z is set to 1.64.
• E sets the accuracy of sample proportions. Taken as 3%
• Calculating the sample size by using above formula,
Sample(n)=15
 Convenient sampling. 21

22. Contd…
Data Collection
 Primary data: Collected through case studies, questionnaire and
interviews with the contractors and clients. The questionnaire were
made as per the risks incurred from physical, environmental, design,
logistics, financial, legal, political, construction and management
risks. A set of questionnaire was delivered to 15 contracting
companies and 15 clients representatives.
 Secondary data: The collections of secondary data were taken from
Literature review, publications, journals, internets.
Data Analysis
 Quantitative statistical analysis for questionnaire was done by using
through MS-Excel.
 The analysis of data was done to rank the severity of causes of
contractor's and client's failure in hydropower construction in
Nepal.
 Ranking was followed by comparison of mean values within groups
and for the overall sub-factors. 22

23. Contd…
The following analysis steps were done:
• Coding and defining each variable
• Entering data to a work sheet and finding mean and ranking of each risk factors
• Finding out highest and lowest severity of risk factors from ranking from contractor's and
client's perspectives
• Finding out effects of risk factor for selected projects
• Comparison of risk importance and allocation for criteria of Acceptance, Transferred and
Shared form contractor Vs. clients perspectives
• Comparison of risk factors severity and allocation for low, medium and high risks by
contractor Vs. clients perspectives
• Summarizing the risk severity concurrence between contractors and clients for low, medium
and high risks
• Summarizing the risk allocation concurrence between contractors and clients for criteria of
acceptance, transferred, shared and ignored
• Finding out the effects of time, cost and quality for selected projects due to the risk factors
• Analyzing the Risk management action for preventive methods applied by contractors and
clients in their respective projects and comparison between them and for selected projects
• Analyzing the Risk management action for mitigative methods applied by contractors and
clients in their respective projects and comparison between them and for selected projects
Data Presentation
 All the collected data and results were tabulated and presented in Tables and Graphs, and
other appropriate methods.
23

24. Summary of Methodology
S.N. Objectives Variables Data Collection Data Analysis
1 To analyze the risk factors
with their severity and
allocation based on clients
and contractor's
perspective along with
detail study of Sanjen and
Rasuwagadhi
Hydroelectric projects.
Risk factors like
Physical,
environmental, design,
logistics,
financial, legal,
political, construction
and management
secondary data
through literature
review,
journals, publications
including reference
taken from project
documents interview
with In charge and
Project Managers
Severity analysis, allocation
of risk factors, effect of risk
on selected projects
2 To compare risk
importance and allocation
among client's and
contractor's and estimate
the impact on time and
cost of selected projects
Allocation of risks as
retention, transfer,
shared and ignored.
Probability range of
risks, concurrencies of
risks and allocation
Questionnaire survey
with clients and
contractors including
reference taken from
project documents,
interview with In charge
and Project Managers
Overall Ranking of risk
factors, comparison and
allocation of risk factors
among parties, Impact
analysis
3 To analyze the risk
management actions in
clients and contractors
perspective and selected
projects
Preventive and
mitigative methods for
identified risks and
selected projects
Questionnaire survey
with project team of
clients and contractors,
interview and reference
taken from project
documents with Project
In charge and Project
Manager of selected
projects
Documentation of
Preventive and mitigative
methods of identified risk
24

25. Results and Discussion
Risk factor
The questionnaire included 30 risk factors provided in Annex
1, which consists nine main groups: physical group,
environmental group, design group, logistics group, financial
group, legal group, construction group, political group and
management group.
The factors of each group were demonstrated in the terms of
severity and allocation according to the response.
Similarly, the effects of risk factors were separately identified
in order to get in-depth information about the actual risk
factors influenced in a real case for selected projects.
25

26. Results and Discussions
• Physical Group(Contractor’s perspective)
• In this group physical risk factors and their severity and allocation were
analyzed from contractor's and client's perspective followed by the case.
• Severity
26
No. Physical group Risks Weight Severity
1 Supplies of defective materials 123 8.2
2 Varied labor and equipment productivity 110 7.33
3
Occurrence of accidents because of poor
safety procedures
95 6.33

27. Allocation
• The criterion for a risk to appropriated to a particular category
(accepted, transferred, shared and ignored), was that it
should get 9 nos. (60%) response rate to achieve the
mainstream of the rates. Those that failed to get such
response rate in favor of any category were listed as
undecided.
27

28. Overall risk significance and allocation, Contractor’s Perspective
Significance
28
S.N. Risk factors Weight Severity(1-10) Group
Most Important risk
categories
1 Strike 134 8.93 Political
2 Inflation 126 8.4 Financial
3 Supply of defective materials 123 8.2
Physical
4 Financial failure 121 8.07 Financial
5 Delayed dispute resolution 121 8.07
Legal
Least Important Risk categories
1 Information unavailability 78 5.2
Management
2 Changes in work 73 4.87 Construction
3 Acts and regulations 72 4.8 Political
4 Permits and regulations 70 4.67
Legal
5
Awarded the design to
unqualified designer 68 4.53
Design
The results show that contractors considered 27% (risk factors which got
more than 7 out of 10) of the risk factors as highly important risks and
73%(risk factors which got 3-7 out of 10) of them as medium risks.

29. Overall risk allocation, Contractor’s Perspective
Allocation
• The criterion for a risk to be appropriated to a particular category
(accepted, transferred, shared and ignored), was that it should get at least a
(60%) response rate. Those that failed to get such response rate in favor of
any category were listed as undecided.
• Contractors have allocated eight risks onto themselves, that means
contractors accept (27%) of the risk factors,
• They have allocated twelve risks onto clients, which signifies that (40%) of
the risk factors the client should handle.
• The contractors also considered seven risks as shared risks, i.e. (23%) of
the risk factors should be shared.
• On the other hand, they ignored only three risks, that means the contractors
failed to allocate (10%) of the risk factors.
29

30. Allocation Risk Description Group
Accepted(Contractor)
(27%)
High Competition in Bids Logistic
Accuracy of Project Program Logistic
Inflation Financial
Financial failure Financial
Permits and regulations Legal
Change order negotiations Construction
Resource management Management
Poor Communication Management
Transferred(CLients)
(40%)
Defective design Design
Not coordinated design structural, mechanical, electrical, etc Design
Inaccurate quantities Design
Undefined scope of works Logistic
Delayed payment on contract Financial
Legal disputes among parties of the contract Legal
Delayed dispute resolution Legal
Quality of work and time constraints Construction
Changes in work Construction
Rush bidding Construction
Ambiguous planning Management
Information unavailability Management
Shared
(23%)
Occurrence of accidents and poor safety procedures Physical
Varied labor and equipment productivity Physical
Difficulty to access the site Environment
Adverse weather conditions Environment
Acts and regulations Political
Strike Political
Blockade Political
Ignored
(10%)
Supplies of defective materials Physical
Acts of God Environment
Awarded the design to unqualified designer Design 30
Risk allocation, Contractors’ perspective

31. Overall risk significance and allocation, Clients’ perspective
Significance
S.N. Risk factors Weight Severity(1-10)
Group
Most Important Risk Factors
1 Strike 135 9 Political
2
Occurrence of accidents and poor safety
procedures 124 8.27
Physical
3 Defective design 121 8.07 Design
4 Inflation 121 8.07 Financial
5 Financial failure 120 8 Financial
Least Important Risk Factors
1 Adverse weather conditions 80 5.33
Environment
2 Accuracy of project program 72 4.8 Logistic
3 Change order negotiations 71 4.73 Construction
4 Delayed payment on contract 62 4.13 Financial
5 Information unavailability 61 4.07
Management
31
Clients consider Strike-most important construction risk (score-135.)It was followed by
Occurrence of accidents and poor safety procedures, with a score of (124).
The least important risk, from the clients’ perspective is the risk of Information Unavailability,
with a score of (61) followed by the risk of Delayed payment on Contract with a score of (62).
The results show that clients considered only 17% of the risk factors as highly important risks
and 83% of them as medium risks.

32. Overall risk allocation, Clients' Perspective
(including comparison with Contractors)
• Contractors accept (27%) of the risk factors, they have
allocated (40%) of the risk factors onto clients,
contractors also considered that (23%) of the risk
factors should be shared and were undecided about
(10%) of the risk factors.
• On the other hand, clients accepted (27%) of the risk
factors, also allocated (27%) of the risk factors onto
contractors, considered (33%) of the risk factors as
shared risk and failed to allocate (13%) of the risk
factors.
• These findings show the leakage of implemented
contract systems regarding risk identification and
allocation. Moreover, they could indicate the clients'
desire to keep risk factors away of contractual issues.
32

33. Risk Allocation ,Client’s Perspective
Allocation Risk Description Group
Accepted (Clients)
27%
Defective design Design
Inaccurate quantities Design
Awarding the design to unqualified designer Design
High competition in bids Logistic
Delayed payment on contract Financial
Changes in work Construction
Ambiguous planning Management
Transferred(Contractor)
27%
Occurrence of accidents and poor safety procedures Physical
Supply of defective materials Physical
Difficulty to access to site Environment
Accuracy of project program Logistic
Financial failure Financial
Change order negotiations Construction
Quality of work and time constraints Construction
Acts and regulations Legal
Strike Political
Blockade Political
Resource management Management
Information unavailability Management
Shared 33% Varied labor and equipment productivity Physical
Acts of God Environment
Adverse weather conditions Environment
Inflation Financial
Permits and regulations Legal
Legal disputes among parties Legal
Delayed dispute resolution Legal
Poor Communication Management
Ignored 13% Not coordinated design Design
Undefined scope of works Logistic
Rush bidding 33

34. Risk severity concurrence between contractors and clients (High)
No. Risk Description Severity Group
1
Defective design
(inaccurate) High Design
2 Inflation High Financial
3 Financial failure High Financial
4 Strikes High Political
34
The result shows that both clients and contractors consider the
above listed risk factors as high severe which is 13% out of 30
ricks

35. Risk severity concurrence between contractors and clients
(Medium)
No. Risk Description Severity Group
1 Varied labor and equipment productivity Medium Physical
2 Acts of God Medium Environment
3
Difficulty to access the site (very far,
settlements) Medium Environment
4 Adverse weather conditions Medium Environment
5
Not coordinated design structural, mechanical,
electrical, etc Medium Design
6 Inaccurate quantities Medium Design
7 Awarding the design to unqualified designer Medium Design
8 High Competition in Bids Medium Logistic
9 Undefined Scope of work Medium Logistic
10 Accuracy of project program Medium Logistic
11 Permits and regulations Medium Legal
12
Legal disputes among parties of the contract
during construction Medium Legal
13 Change order negotiations Medium Construction
14 Quality of work and time constraints Medium Construction
15 Changes in work Medium Construction
16 Rush Bidding Medium Construction
17 Acts and regulations Medium Legal
18 Blockade Medium Political
19 Ambiguous planning Medium Management
20 Resource management Medium Management
21 Information unavailability Medium Management
35
The result
shows that
both clients
and
contractors
consider 26
risk factors
as medium
risk which is
87% out of
30 risk
factors.

36. No. Risk Description Allocation Group
1
Occurrence of accidents and
poor safety procedures Contractor Physical
2
Supplies of defective
materials Contractor Physical
3 Financial failure Contractor Financial
4
Quality of work and time
constraints Contractor Construction
5 Resource management Contractor Management
36
Risk allocation concurrence between contractors and clients (Contractor)
Risk allocation concurrence between contractors and clients (Client)
No. Risk Description Allocation Group
1 Defective design (inaccurate) Owner Design
2 Inaccurate quantities Owner Design
3
Awarding the design to unqualified
designer Owner Design
4 Delayed payment on contract Owner Financial
5 Changes in work Owner Construction
6 Ambiguous planning Owner Management
The result shows that
clients allocated these 5
risk factors onto
contractors and
contractor allocated
these 5 risk factors onto
themselves.
The result shows that
clients allocated these 6
risk factors onto
themselves and
contractor allocated
these risk factors onto
clients.

37. Risk allocation concurrence between contractors and clients (Shared)
Risk allocation concurrence between contractors and clients (undecided)
37
No. Risk Description Allocation Group
1
Legal disputes among parties of the contract
during construction Shared Legal
2 Delayed dispute resolution Shared Financial
3 Acts and regulations Shared Legal
4 Closures Owner Political
5 Blockade Shared Political
No. Risk Description Allocation Group
1
Not coordinated design structural,
mechanical, electrical, etc Undecided Design
2 Undefined Scope of work Undecided Logistic
The result shows that both clients and contractors shared these 5 risk
factors.
The result shows that both clients and contractors were undecided these 2
risk factors.

38. Impact of Risk on Project Performance for selected projects
Time, Cost and Quality are considered a performance indicator
of a construction project.
The impact of risk on time and cost was quantified based on
project reports. For quality and safety qualitative assessment
were done based on project report and information provided by
Project In charge.
38

39.  Estimation of delay For Sanjen Hydroelectric Project
From the analysis, the duration of the project is estimated to increase by 80% of the
contract period; i.e. 952 days.
The most five important risk factors that seriously caused the project to delay are:
• Financial failure
• Inflation (Client seriously got affected due high increment in Foreign currency for
payment under Dollar portion and also payment of Price Adjustment to the
Contractor for increased of construction materials)
• Poor communications between the home and field offices (contractor side)
• Varied labor and equipment productivity (due to political and environmental
Circumstances)
• Blockade (Delayed the project for six months and financial loss to the contractor as
well energy loss to the Employer)
The most risk factors that triggered the cost overrun (or the contractor loss) are in a
descending order:
• Strike( Clients rank-1(severity-9), Contractors rank-1(severity-8.93)
• Inflation (Clients rank-4( severity-8.07), Contractor’s rank-2(severity-8.4)
• Supply of defective materials( Clients rank-5(severity-6.53),Contractor’s
rank-3(severity-8.2)
• Financial failure(Clients rank-5(severity-8), Contractor’s rank-4(severity-8.07)
39

40.  Estimation of delay For Rasuwagadhi Hydroelectric Project
• Act of God(Construction stopped for 1.5 years after April 25,2015
by which Mobilization, demobilization loss to Contractor and Energy
loss to Client)
• Awarding the design to unqualified designer(Poor design team
from the Contractor during initial stage by which Client was
suffered)
• Blockade (Delayed the project for six months and financial loss to
the contractor as well energy loss to the Employer)
• Strikes-affected the Client to extend project duration for 30 days till
date
• Supply of defective materials-do not comply with Technical
Specification( Loss to Contractor)
According to the above factors the duration of the project is estimated
to increase by around 60% of the contract period; i.e. 780 days.
However, this is yet to finalize.
40

41.  Calculation of estimated cost overrun 2016 for SHEP
• Total cost overrun for salary till December,2016 for SHEP=
NRs. 4,56,74,000.00
 Calculation of estimated cost overrun till 2016 for RGHEP
• The Project Contract duration has not been finished till date.
To complete the project it will take more 26 months than
contract duration.
• As the project duration may extend for 26 months, significant
impact in cost overrun to the Client and Contractor is
predicted till the completion of the Project.
41

42.  Quality of the works For Sanjen Hydroelectric Project
• The Contractor has developed a Quality Assurance Program
(QAP) defining quality control activities such as safety plan and
procedures, testing, inspection and procedures for scheduling
and managing submittals and reporting in accordance with the
Contract
• The Contractor have designated a Quality Control Manager.
• The existing of high qualified staffs at the client/consultant
there were no significant negative effect in design and
supervision and quality related issues.
 Quality of the works For Rasuwagadhi Hydroelectric Project
• A proper Quality Assurance Plan have been implemented.
There is no such an issue of quality non-compliances till 2016.
42

43. Risk Management Actions from Contractor’s Perspective
Preventive actions
 Plan alternative method standby(80%)- most effective risk preventive actions-
 Contractors also preferred Transfer or share risk to/with other parties and
Judgment and experience gained from previous contracts ( 73%) so as the
risks could be minimized or mitigated by many preventive methods.
 Consequently, contractors considered getting updated project information
and Use quantitative risk analysis techniques (66% and 60%) to be less
effective risk preventive method..
43
73.3
60.0
73.3
66.7
80.0
0
10
20
30
40
50
60
70
80
90
Use quantitative
risk analyses
techniques
Depend on
subjective
judgement to
produce a proper
program
Produce a proper
schedule by
getting updated
project
information
Plan alternative
methods as
standby
Transfer or share
risk to/with other
parties
Response
rate
(%)

44. Mitigative actions from Contractor’s Perspective
 The first mitigative method recommended by the respondents is close
supervision to subordinates for minimizing abortive work (80%) as well
as Increase manpower and/or equipment(80%), and the last
recommended mitigative method is change the construction
method(60%).
 Change the sequence of work was the second most effective mitigative
methods for minimizing the impacts of delay while Change the
construction method was rarely used as a mitigative method
44
73.3
80.0
60.0
80.0
66.7
0
10
20
30
40
50
60
70
80
90
Increase
manpower and/or
equipment
Increase the
working hours
Change the
construction
method
Change the
sequence of work
Closed
supervision
Response
rate
(%)

45. Risk Management Actions from Client’s Perspective
Preventive actions
 Clients considered the subjective judgment is the most effective method used
to produce a proper program.
 Next, clients considered getting updated project information and use
comparative estimates are effective preventive methods.
 Clients also decided not to consider make more accurate time estimation
through quantitative risk analyses techniques and plan alternative plans as
effective preventive methods for reducing the effects of risk.
 Clients did not recommend sharing risks with other parties.
45
73.3
80.0
60.0
80.0
66.7
0
10
20
30
40
50
60
70
80
90
Increase
manpower and/or
equipment
Increase the
working hours
Change the
construction
method
Change the
sequence of work
Closed
supervision
Response
rate
(%)

46. Mitigative actions for Client’s perspective
 The first mitigative method recommended by the respondents is close
supervision to subordinates for minimizing abortive work and the last
recommended mitigative method is change the sequence of work.
 Increase in manpower and/or equipment's was the second most effective
mitigative methods for minimizing the impacts of delay while Change the
construction method was rarely used as a mitigative method.
46
60.0
80.0
73.3
86.7
73.3
0
10
20
30
40
50
60
70
80
90
100
Increase
manpower
and/or
equipment
Increase the
working hours
Change the
construction
method
Change the
sequence of
work
Closed
supervision
Response
rate
(%)

47. Preventive and mitigative actions applied for SHEP
 The revised working program - approved by the
Employer on November 2016
 New Completion date -November 30, 2018.
 Based on this revised working program the contractor
added
 a good experienced technical team as well as
 skilled manpower for tunnel works of the project to
increase the project progress.
 Now, the technical team composed of
 a project manager, two senior geologist, four civil
engineers, one electrical engineer, a mechanical
engineer, 25 foreman, 48 skilled labors and 69 unskilled
labor.
47

48. Preventive and mitigative actions applied for RGHEP
• Works stopped for about 1.5 years due to earthquake and
major landslides occurring in that region.
• The contractor-China Water Corporation deployed
 a good experienced technical team from November 2016 after they
stopped the works since 2071 Earthquake.
 The Contractor also mobilized skilled manpower for tunnel works of the
project to increase the project progress.
• Before earthquake there were about 200 manpower
including technicians and managers to conduct the works.
• Now after remobilization , the technical team composed of
 a project manager, three senior geologist, 8 civil engineers, two electrical
engineers, two mechanical engineers, 45 foreman, 96 skilled labors and
260 unskilled labor.
48

49. Conclusions and Recommendations
Conclusions
• Based on Contractor's perspective, Strike-shared with
Client, Inflation-Accepted by Contractor, Supply of
defective materials-Ignored, Financial failure- Accepted
by Contractor and Delayed dispute resolution-
Transferred to Client are identified as high risk factors
with allocation
• On the other hand, clients had a different opinion about
the most severe risks and their allocation are Strike-
transferred to Contractor, Occurrence of accidents and
poor safety procedures-transferred to Contractor,
Defective design-accepted by Client, Inflation-Shared
with Contractor and Financial failure-transferred to
Contractor.
49

50. Conclusions
• The results show that contractors considered (27%) of the
risk factors as highly important risks and (73%) of them as
medium risks. However, clients considered only (17%) of
the risk factors as highly important risks and (83%) of them
as medium risks. That reflects the high concern of
contractors about such issues.
• Contractors were more specific in allocating risks and were
more likely to transfer these risks to clients who were
undecided about 13% of risks, contractors were also
undecided about 10% of risks.
• Contractors allocated 27% of risks on themselves, 40% on
clients and 23% to be shared. Clients allocated on
themselves 27% of risks, 27% on contractors and allotted
33% of risks as shared.
50

51. Conclusions
• From case study of Sanjen Hydrolectric Project,
the duration of the project is estimated to
increase by 80% of the contract period; i.e. 952
days.
• The total cost overrun for salary till 2016 for this
Project, it is found Nrs. 45,674,000.00.00 .
•
• The existing of high qualified staffs at the
client/consultant there were no negative effect
in design and supervision related issues
51

52. Conclusions
• The Project Contract duration for Rasuwagadhi Hydroelectric
Project has not been finished till date. To complete, it will take
more 26 months than contract duration.
• As the Project Contract EPC, there will be only time extension
for the Contractor provided that no significant change in
scope of works.
• A proper Quality Assurance Plan have been implemented.
There was no such an issue of quality non-compliances till
2016
• The contractor-China Water Corporation(CWE) deployed a
good experienced technical team for Rasuwagadhi HEP from
November 2016 after they stopped the works since 2015
Earthquake
52

53. Recommendations
 Recommendations
• Contracting companies should compute and consider risks by adding a risk
premium to quotation and time estimation.
• Risk should be managed by the one who is capable of managing the particular risk
by managing contractual obligation with proper contract administration practices
for ensuring the project objectives.
• There should be a risk register at site and frequent meetings should be conducted
to identify the risks. This identified risk should be documented properly to ensure
expertise for future projects.
• Effective cash flow management should be enforced based on schedule and
resource planning with agreements including suppliers
• The contract clauses should be modified and improved to meet the impact of
strike and blockade and not to allocate the whole impacts on the contracting
companies.
• Clients and contractors should conduct continuous training programs to advance
managerial and financial practices to explain the internal and external risk
affecting the construction industry and to initiate the proper ways to deal with
such factors.
53

54. Proposed Future Studies
• There are many large hydropower projects which are
going to be constructed very soon like Budhigandaki,
West Seti, Upper Karnali etc., this study could be a
reference for those projects.
• It is necessary to repeat this research every 2 years
by an authorized institute to survey the new risk
factors and their allocation, and publish the results
for clients and contractors.
54

55. References
• Abrahamsson, M., 2002. Uncertainity in Quantitive Risk Analysis-
Characterization and Methods of Treatment. s.l.:Department of Fire and
Safety Engineering, Lund University, Sweden.
• Association for Project Management UK, 2002. Project Management Body
of Knowledge. Fourth Edition ed. s.l.:s.n.
• Ayyub, W. B. &. B., 2001. Risk-Based Cost control for Construction.
s.l.:Construction Management Department, Central Washington University.
• Baral, S., 2009. Role of Construction Industry in National Economy.
• Berger, M., 2012. Developing Nepal's Hydroelectric sources; Policy
Alternatives.
• Berg, H.-P., 2010. Risk Management: Procedures, methods and
experiences. Volume Volume 1.
• Burchett, V. T. a. J., 1999. Applying a risk management process(RPM) to
manage cost risk for an EHV transmission line project. International
Journal of Project Management 17, pp. 223-235.
• Chapman, R., 1998. The effectiveness of working group risk identification
and assessment techniques. International Journal of Project Management,
pp. 333-343.
• Darby, J. K. &. J., 2000. Risk factor Analysis-A new qualitative risk
management tool. s.l., s.n.
• Estate Management Manual; Risk Management, 2001. Education and
Learning Wales, s.l.: Wales Government. 55

56. References
• Federation of Contractor's Association of Nepal, 2008. Challenges and
Opportunities:Nepalese Construction Industry, s.l.: s.n.
• Forum, N. E., 2014. Hydroelectric Development in Nepal, s.l.: s.n.
• Greene, A., 2001. A Process approach to Project Risk Management. London:
Department of Civil and Building Engineering, Loughborough University.
• Jaafari, A., 2001. Management of risks, uncertanities and opportunities on projects:time
for a fundamental shift. International Journal of Project Management 19, pp. 89-101.
• Kartam, N. K. &. S., 2001. Risk and its management in the Kuwaiti construction
industry: a contractor's perspective. International Journal of Project Management 19,
pp. 325-335.
• Koirala, B., 2011. Hydropower Development in Nepal;Opportunities and Challenges.
• L.A.Kelly, 2003. Quantitative Risk Analysis, Lectures' notes. s.l.:University of
StrathClyde.
• Lowe, J., 2002. Construction and Development Risks, s.l.: s.n.
• MacLeod, A. A. a. M. M., 1997. Risk Analysis and Construction in construction.
International Journal of Project Management 15, pp. 31-38.
• Mayer, A. E. &. P., 2001. Managing Risk in construction projects. Ludwig, Germany,
s.n.
• Michael, T. R. &. E., 2001. Use and Benefits of tools for project risk management.
International Journal of Project Management, pp. 9-17.
• Nepal Economic Forum, 2014. Hydropower Development in Nepal. Perceptions and
Reality: An Analysis on Hydropower Financing in Nepal.
• Norman, R. F. &. G., 1993. Risk Management and Construction. 2nd ed. s.l.:Blackwell
Science. 56

57. References
• O. Kuismanen, P. &. B., 2001. Risk interrelation management-contrlling the
snowball effets. s.l., s.n.
• Office of Project Management Process Improvement UK, 2003. Project Risk
Management Handbook. First ed. s.l.:s.n.
• Okema, C., 2001. Risk and uncertainity management of Projects: challenges of
construction industry. s.l.:Department of Architecture, Makerere University.
• Pandey, B., 2011. Status of Hydroelectricity in nepal: Potential and Challlenges.
[Online]
Available at: www.binodpandey.wordpress.com
• Price, D. B. &. A., 2003. Modelling global risk factors affecting construction cost
performance. Internationl Journal of Project Management 21, pp. 261-269.
• Project Management Institute UK, 2004. Project management Body of Knowledge.
2001 ed. s.l.:s.n.
• Project, R. H., 2016. Quarterly Progress report, s.l.: s.n.
• R.Ahmed, S. T. P., 1999. Risk management trends in the Hongkong construction
industry. In: Engineering, Construction and Architectural Managemant 6/3. s.l.:s.n.,
pp. 225-234.
• Raftery, J., 1997. Risk Analysis in Project Management. s.l.:The Hongkong
Polytechnic University.
• Rasuwagadhi Hydroelectric Project, 2012. Detailed Project Report, s.l.: s.n.
• Rizk, S. A., 2003. Risk Analysis and Management. [Online]
Available at: http://www.websrv.construction.ualberta.ca
[Accessed 2016].
57

58. References
• Rwelamila, L. C. a. P., 2000. Risk Management and Procurement Systems-an
Imperative Approach. South Africa: Department of Construction Economics and
Management, University of Cape Town.
• Sanjen Hydroelectric Project, 2012. Bid Evaluation Report, s.l.: s.n.
• Sanjen Hydroelectric Project, 2012. Detailled Project report, s.l.: s.n.
• Sanjen Hydroelectric Project, March 2017. Quarterly progress Report, s.l.: s.n.
• Sears S. K., G. A. &. C. R. H., 2010. Construction Project Management: A guide to
Field Construction Management. Fifth ed. s.l.:s.n.
• Sept., C. S. &., 2002. Risk Management (Managing standards). [Online]
Available at: http://www.airtime.co.uk
[Accessed 2016].
• Shrestha, R. S., 2015. Investment in Hydropower Sector; Opportunities and Risk.
• The World Bank, 2014. IEA Statistics, s.l.: s.n.
• Titarenko, B., 1997. Robust technology in risk management. International Journal
of Project Management 15, pp. 11-14.
• Ward, C. C. &. S., 1997. Project Risk Management:Processes, Techniques and
Insights. s.l.:s.n.
• Yoe, C., 2000. Risk Analysis Frame Work for Cost Estimation, s.l.: s.n.
• Zhi, H., 1995. Risk management for overseas construction projects. International
Journal of Project Management 13, pp. 231-237.
58

59. Project Photographs
59
Picture1: Headworks under construction for Rasuwagadhi HEP-111 MW

60. Project Photographs
60
Picture 2: Intake construction for SANJEN HEP-42.5 MW

61. Project Photographs
61
Picture 3: Headworks construction for Trishuli 3A HEP-60 MW

62. Thank You
62