Project Risk Management at Delaney Tires Storage; the Combination
   between PMI Approach and PT Inco Project Management P...
1. PT Inco Profile; One of the World’s          potential and achieve outstanding results
Premier Nickel Producers        ...
concept, taking into account the equitable          In 2003, PT Inco created standardization of
balance between economic g...
The other program is Hydrocarbon
                                                Management which is ensuring that all the...
e. Effective and efficient maintenance
capable of transmitting diseases to           Project Monitoring and Controlling :
    humans. We ensure the storage area...
b. Other environmental factor to
                                                                    consider, many projec...
   List of materials equipments to be                   and Operability to ensure project
          purchased and who are...
f. Definitions of risk probability and          Engineer will need to specify the
      impact. PT Inco has risk ranking  ...
mechanical        piping      and         facility has met the objectives of
       grounding installation. The           ...
The source of funds for this project
      was      coming      from     Capital
      Appropriation Request (CAR)
Qualitative risk analysis includes methods
for prioritizing the identified risk for further

Risk ranking matrix w...

4.4. Final Product of Delaney Tires Storage

   The final products of this project are:

   2. New storage area 2.5 Ha com...
   Project Manager is not experienced in
       this case, to ensure risks are identified
       and resolved, He involve...
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Project Risk Management at Delaney Tires Storage; the Combination between PMI Approach and PT Inco Project Management Procedures


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This paper was accepted for Conference of Asean Federation of Engineering Organization (CAFEO26) at Bangkok, Thailand, 26 - 29 November 2008

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Project Risk Management at Delaney Tires Storage; the Combination between PMI Approach and PT Inco Project Management Procedures

  1. 1. Project Risk Management at Delaney Tires Storage; the Combination between PMI Approach and PT Inco Project Management Procedures Habibie, Ir., IP, Agung Setyawan, Ir PT Inco Central Engineering DP.08, Sorowako, South Sulawesi 92984, Indonesia Andi Erwin Syarif, Ir, IP., MT PT Inco Government Relation, DP.23, Sorowako, South Sulawesi 92984, Indonesia ABSTRACT: PT Inco Indonesia was established in July 25, 1968. Presently, PT Inco is in their way of the second contract of work with Indonesian Government up to 2025. The total area contract of work is 218,528.99 Ha, have been divided into three provinces, Central Sulawesi Province is 36,635.36 Ha, South Sulawesi Province is 118,387.45 Ha and South East Sulawesi province is 63,506.18 Ha. Our company vision is strive to provide a safe, healthy and stimulating work environment that maximizes opportunities to enhance PT Inco’s success as a high quality nickel producer. We take pride in promoting environmental responsibility and advancing safety in a whole company operation area. PT Inco is committed to ensuring that it will operate in a clean, healthy and safe work environment; will take necessary steps and invest approximately to meet its environmental obligation. PT Inco has been investing capital expenditures to support Nickel Mining production in achieving 200 million pounds production target at 2010 by constructing new Tires Shop and Tires Storage Facilities. These 2 facilities will be the world largest facilities in the world of Mining Industry. Tires Shop ownership is Mining Department and the new Tires Storage will be owned and operated by Warehousing and Logistic Department. Central Engineering section as the part of Support and Engineering Services Department at PT Inco has been doing development of these facilities for more than 2 years. Especially for Tires Storage facilities, Project Manager, the author of this abstract has been working for implementation of Project Risk Management throughout Project Life Cycle starting from Risk Management Planning, Risk Identification, Qualitative and Quantitative Risk Analysis, Risk response Planning and Risk Monitoring and Control. Currently, we are 95% in construction phase and will close out the project by early of July 2008. From this session, it is an opportunity to combine and compare Project Risk Management process between PMI approach and PT Inco Project Management Procedures, also presenting the complexity of project compared with the competency level of Project Manager who is the author of this abstract. The key performance of this project will be quality, quantity, time frame, resources usage, costs and safety performance during project life cycle. The lessons learned of this project will be conducted during project life cycle and ensured by the end of project phase this is recorded and presented to all project Managers and Management of PT Inco to ensure the same old mistakes won’t be repeated in the current and future projects. Key words: tires storage, risk management planning, risk identification, qualitative and quantitative risk analysis, risk response planning, risk monitoring and controlling, safety, and lessons learned. 1
  2. 2. 1. PT Inco Profile; One of the World’s potential and achieve outstanding results Premier Nickel Producers for our Company. 1.1. General Overview We will strive to provide a safe, healthy and stimulating work environment that PT Inco for more than three decades, since maximizes opportunities to enhance PT the signing of its Contract of Work with the Inco’s success as a high quality nickel Indonesian Government in 1968, the producer. Company has provided skilled jobs, shown concern for the needs of the communities in We take pride in promoting environmental which it operates, benefited shareholders responsibility and advancing community and contributed positively to the Indonesian development. economy. 1.3. Mission PT Inco produces nickel in matte, an intermediate product, from lateritic ores at We will meet our commitment to: its integrated mining and processing facilities near Sorowako on the island of  Investors through sustainable and Sulawesi. Its entire production is sold in US consistent long-term earnings Dollars under long-term contracts for growth. refining in Japan. PT Inco’s competitive  Employees by ensuring safe, strengths include abundant ore reserves, a healthy and rewarding work. skilled, well-trained workforce, low-cost  Customers by meeting our hydroelectric power, modern production obligations with respect to the facilities and an assured market for its quality and timely delivery of our product. products.  Indonesia through responsible The Company is owned 60,80 percent corporate citizenship, fulfilling our owned by CVRD Inco, 20,1 percent owned Contract of Work commitments and by Sumitomo Metal Mining Co. Ltd, 17,9 community and environmental percent owned by publics and The others responsibilities. are owned by consortium of 4 Japanese Company. PT Inco is committed to ensuring that it will operate in a clean, healthy and safe Through the strength of our people and work environment; will take necessary resources, we strive to be a safe, reliable, steps and invest approximately to meet its and profitable growth-oriented primary environmental obligation nickel producer. 2. PT Inco’s Commitment in 1.2. Vision Environmental around Contract of Work PT Inco intends to remain a leader among multinational businesses based in Indonesia 2.1. Environmental Management in by consistently producing high returns on Mining Land Operation investment while adhering to strong corporate values. The commitment is spelled out in the Company policy relating to environment, We will realize our vision by enabling health and safety stating that PT Inco is employees to reach their full career committed to sustainable development 2
  3. 3. concept, taking into account the equitable In 2003, PT Inco created standardization of balance between economic growth and post mining area reclamation which has sound handling of human health and been certified by Directorate General of environmental protection Mining to meet the demand for an optimum result entirely. It consists of best practice of post mining area reclamation activities. Since then, the activities became an un- separated part of mining plan until execution level. Up to the end of 2005 PT Inco Tbk has re- vegetated 2.844 hectares of post mining areas. PT Inco Tbk has cooperated with PSl-UNHAS and The Biotechnological Forest Laboratorium IPB in doing repeated Figure 1 - Nursery Activities for Mining surveys and studying the reproduction of Rehabilitation many local endemic plants to support the local endemic revegetation program. The policy necessitates PT Inco not only to meet, but whenever possible, to surpass PT. Inco always tries to integrate the post environmental national standard established mining area reclamation program with the by existing regulation. community development program so people can take advantages from the PT Inco is committed to ensuring that it company. The company invited Mr. Zukri will operate in a healthy environment, by Saad (consultant, former Executive conducting continual improvement on the Director of WALHI), to evaluate the living environment performance, in the reclamation program and to give form of Post Mining Areas Rehabilitation, recommendation over reclamation program Sediment Control, Liquid Waste Control as which is integrated with community and well as Dust Emission Control. local government development program. Figure 2 - Plantation of Work in Post Mining Land Figure 3 - Areas Rehabilitation Status at the End of Since the post mining area reclamation was 2004 PT International Nickel Indonesia started on 1980, PT Inco has conducted Performance Monitoring Post Mining Areas continual improvement on their Re-vegetation Status Q4 - 2004 performance with sustainable development principle. When the post mining area reclamation was started, they focused on erosion control. Since then many efforts has been done to improve the performance. 3
  4. 4. The other program is Hydrocarbon Management which is ensuring that all the hydrocarbon use must comply with environmental regulation by Indonesian Law. The scopes of the program covered in Environmental Management Standard – EMS 01 produced by PT Inco with the purposes are: a. To ensure all Hydrocarbon facilities at PT Inco recorded in a Central PTI Hydrocarbon Management Register that will be accessible and kept up to date. b. To ensure all Hydrocarbon facilities are subject to a formal environmental risk assessment and that appropriate control are implemented. 3. Support and Engineering Services Department of PT Inco; Place for Managing the Capital Projects 3.1. General Overview Support and Engineering Services (SES) provides support to the entire PTI Figure 4 – ADITAMA Reward Gold Achievement from Energy and Mineral Resources Department, organization in the form of Capital Project Republic of Indonesia, year of 2007. Management, Engineering services, Construction Services, Fabrication, Maintenance System support and Shutdown 2.2. Environmental Management in Planning. There are approximately 500 PTI Processing Plant Area employees in the department, while approximately another 500 people are In the year of 2006, PT Inco also Achieve managed through contractors. the Gold of Aditama Reward from Energy and Mineral Resources Department, 3.2. Vision Republic of Indonesia due to the successful in controlling the erosion and managing the Excellence in selection, installation and sedimentation in during Mining maintenance of Assets required by PTI to exploration, operation and post mining meet is vision. A team of highly skilled, operation. energized professionals delivering this Support Safely, reliably and predictably. PT Inco also had been doing the installation of new high technology called Off Gas 3.3. Mission Cleaning System throughout all the Processing Plant System starting from Provide Asset Management Support to the Furnace System since year of 2004. The entire PTI organization in the form of objective of this project is to reduce the Capital Project Management, Engineering amount of gas emission produced by the services, Construction Services, process plant operation. Fabrication, Maintenance System support and Shutdown Planning. 4
  5. 5. e. Effective and efficient maintenance shutdowns every time. INCO CAPITAL PROJECT DEVELOPMENT PROCESS f. Effective People meeting personal and organizational goals. INCEPTION IDEA / OPPORTUNITY Q /A MANAGEMENT GATE 1 - OPPORTUNITY REVIEW NO - RISK RANKING 1 - BUSINESS PLAN FIT YES ( CAPITAL REVIEW TEAM / MANAGEMENT APPROVAL ) 4. Delaney Tires Storage Project PRELIMINARY NO MANAGEMENT GATE 2 FEASIBILITY STUDY Q /A PRELIMINARY REVIEW - EVALUATION OF ALTERNATIVES NO - RISK ASSESSMENT 2 4.1. The Background and Key Objectives - BUSINESS PLAN FIT - STRATEGIC PLAN FIT YES ( CAPITAL REVIEW TEAM / MANAGEMENT APPROVAL ) VIABILITY TECHNICAL FEASIBILITY STUDY MANAGEMENT GATE 3 Q /A FEASIBILITY REVIEW YES - PROJECT VIABILITY NO Anticipating the tires crisis for few years 3 - BUSINESS PLAN FIT - STRATEGIC PLAN FIT ( CAPITAL REVIEW TEAM ) YES CAR PREPARATION period, SCM needs to maintain the tires stock level until we get the long-term tires Q /A NO MANAGEMENT GATE 4 4 CAR APPROVAL YES supply contract. The desirable storage must ORGANIZE PROJECT Reject & File be able store more than 1,800 pieces of big, PROJECT KICK-OFF EXECUTION medium and light tires. The new tires ENGINEERING / PROCUREMENT Q/A PEER REVIEWS storage will be able to support 200 Mlbs production rate in year of 2011. The final / PROJECT QUALITY PLAN CONSTRUCTION desirable objective is to increase the tires COMMISSIONING Q /A life usage since the new area will provide MANAGEMENT GATE 5 OWNER ACCEPTANCE ( CARE, CUSTODY & CONTROL ) 5 shelters and pavements to protect the tires YES START-UP / RAMP-UP from direct sunrise, rain, and any spillage on that location. COMPLETION POST PROJECT REVIEW Q /A TURN-OVER NO Some critical items were considered in the YES design to meet the desirable Tires Storage facilities (Q&A): CLOSE-OUT QUALITY MANAGEMENT GATE 6 ASSURANCE OWNER FINAL ACCEPTANCE YES 6 Q /A PEER REVIEWS  The storage can store larger quantity of ARCHIVE PROJECT Q /A tires requires larger area of storages to MARCH 31, 2004 meet adequate storage and handling procedures. The storage and handling procedures have met the tires Figure 5 – Inco Capital Project Development manufacturer's recommendation. Process  Tires and rubber products are subject to ageing. The new storage will ensure 3.4. Goals and Objective this kind of product to be stored properly. a. Capital Projects delivered safely, on  Tires products must be protected from time, on budget and meeting the direct sunrise and extreme temperature. owner’s expectations. Therefore we designed covered shelter b. Safe, cost effective, timely and high for this purpose. quality delivery of construction  The location should be considered free projects. from wet, oily and greasily, humidity c. Installation of the Asset Management that can reduce the tires quality. We Framework. provided storage with proper pavements d. Support for the operating departments inside the shelters and impermeable to maintain PTI’s assets to fulfill the base entire access road. stakeholders’ sustainability  Tires storage may become breeding expectations. grounds for insects, rodents and other animals. Mosquitoes in particular are 5
  6. 6. capable of transmitting diseases to  Project Monitoring and Controlling : humans. We ensure the storage area has during project life cycles proper drainage and free from ponding.  Project Closeout : September 2008  The tires asset is US $ 20,000,000. The storage requires fire prevention system. The project has been handed over to operation (CCC) by middle of July 2008 and Closed out Memo by middle of August 4.2. Scope of Works and Status 2008. 4.2.1. Scope of Works Budget: The original scopes are to construct the Amended CAR was approved for proper Tires Storage Facilities in $1,270,000 accordance with standard storage and Expenditure + commitment to date: around handling design requirements. $1,330,000  Land clearing, excavation, haulage and backfilling work for more than 50,000 4.3. Project Risk Management at M3 Delaney Tires Storage Project  Civil/Structural: to provide tires storage shelter complete with tires backrest and Project risk is an uncertain event or proper pavement, drainage, fencing 800 condition that, if it occurs, has a positive or meters long. a negative effect on at least one project  Mechanical: to provide fire protection objective, such as time, cost, scope, or system in accordance of NFPA quality. A risk may have one or more requirements. The system will include causes and, if it occurs, one or more the fire storage tank, diesel engine impacts. pump, piping, separated fire block walls and other related facilities. Project Risk Management comprised of 5  Electrical: to provide grounding system phases that is classified to Planning Phase around the storage area Group. 4.2.2. Status Safety: Total man-hours = more than 90,000 hours  CV Mahalona = 90,000 hours (Delaney Tires Storage)  PT Lintech = 3,000 hours (Installation of 420 kL of Water Tanks at Delaney) DI = NIL MA = NIL RI = NIL Schedule:  Project Initiation : June 2006  Project Planning : July 2006  Project Execution : October 2006 Design phase : October 2006 Tendering/contract: January 2007 Construction : February 2007 Commissioning : July 2008 6
  7. 7. b. Other environmental factor to consider, many projects were running and also required special attentions to get it finished otherwise the number of resources such as manpower, materials, budget, equipment and tools were not sufficient. 2. Organizational Process Assets The existence of Project Manager’s department is only supporting department since PT Inco core business is focusing in on going operation to producing Nickel Matte product (Process Plant and Mining Department). 3. Project Scope Statement Described in 4.1 and 4.2 4. Project Management Plan Project management plan questioned and answered about:  Kinds of project management process selected by project team? The project scope management will Figure 6: Project Risk Management Overview be conducted by Central Engineering team after having 4.3.1. Risk Management Planning intensive meeting with project Risk Management Planning is the process sponsor regarding product of deciding how to approach and conduct descriptions, background and risk management activities for a project. project objectives. After having scope and WBS defined, the Project Inputs Tools and Outputs Techniques Manager moved to design and 1. Enterprise Planning meetings Risk drawing phase to accommodate all environmental and analysis management factors plan the scope requirements as per 2. Organizational project objectives. Tendering and process assets 3. Project scope contracting out to contractor were statement the next phase and project close out 4. Project management plan will be the last phase as per PT Inco Figure 7: Risk management Planning: Inputs, project management procedures. Tools and Techniques, and Outputs  How’s the technique of Risk Management Planning: communication among Inputs stakeholders? Communication is maintained via intensive meeting 1. Enterprise Environmental Factors (daily, weekly and monthly), a. The existing organization is communication can be continued categorized as composite via email, extension phone or via organization. The staffs who written (site query, if it occurs worked for Project Manager of this between Project Manager and project were also working for other Contractors). projects that were led by other  The model of project organization Project Managers. structure? It is defined in figure 7. 7
  8. 8.  List of materials equipments to be and Operability to ensure project purchased and who are going to phases and end of products to comply supply? Project Manager listed all with PTI EHS policy and Major materials and equipments for Hazard Standard (EHS). purchase and addressed it to SCM – Procurement Departments. Risk Management Planning: Tools and Technique 1. Planning Meetings and Analysis Project Manager and team hold planning meetings to develop risk management plan. Attendees at these meetings may include selected project team members and stakeholders, anyone in the organization with responsibility to manage risk planning and execution activities, and others, as needed. Risk Management Planning: Outputs Figure 8 - Failure to Communicate Scope 1. Risk Management Plan The risk management plan will discuss Owner: J. Rusdadi GM of Warehousing and Logistics about: a. Methodology of doing the project starting from scope development Sponsor: Ichsan Azis phase, budget submission, design Manager of Warehousing and drawing phase, construction phase, commissioning, hand over to operation until project close out. Project Manager b. Roles and responsibilities. Every Ir. Habibie, IP team members have their own type of activity, assign people and his/her roles, and clarifies their Project Engineer responsibilities. Construction Manager c. Budgeting. Assigned resources and Agung Setyawan, Ir Yusri Yusuf accurate estimate as per project scope, schedule and risk during project life cycles should be Design Engineer: Contractor: factored. Agung Setyawan (Civil) PT. Mahalona d. Timing. Defined when risk Oesman Reza (Mechanical), PT. Lintech Duta Pratama management process will be Dahlan (Electrical) performed throughout project life cycles, and established risk management activities to be Figure 9 - Simple Project Organization Chart of included in project schedule. Delaney Tires Storage Project e. Risk categories. Risk breakdown structure was provided to ensure a  What are the Environmental, Health comprehensive process of and Safety Impact? Project Manager systematically identifying risk to a established HSE Evaluation/Hazard consistent level of details. 8
  9. 9. f. Definitions of risk probability and Engineer will need to specify the impact. PT Inco has risk ranking specification of diesel engine fire matrix to be used for analyzing the pump since the mechanical and rate of risk in every activities instrument part should follow the throughout project life cycle. latest technology so we can obtain the engine and pump spare parts easily. c. Complexity and interfaces  Project Manager worked together to specify the requirements of each scope of works consist civil/structural, mechanical and electrical discipline. Also required to establish the sequence of construction to ensure the work can be done properly to meet quality and schedule.  Excavation, haulage, backfilling and compaction work more than 50,000 M3 was a huge major earth work and required special attention since land sliding has been happening few decades at Figure 10: Risk Breakdown Structure PT Inco area. Required to establish proper planning of 4.3.2. Risk Identification execution and geotechnical Risk identification determines which risks investigation before then to might affect the project and documents identify the characteristic of their characteristics. soils. d. Performance and reliability From Risk Breakdown Structure (RBS) we Required to ensure the performance can identify the risk in each category as and reliability of all related follows: equipments and materials which were purchased comprehensively to 1. Technical ensure the new storage facilities a. Requirements will achieve 25 years design life. The requirement can be defined as e. Quality per scope of work as described in Quality assurance and quality 4.2.1. Special requirement was to control should be established during provide complete fire protection procurement and construction system comprised of 420 kL of phase. The specification of steel water tank, fire pump and hydrant structure, concrete specifications, were the requirement to ensure the piping, fire pump were reviewed new facilities covered by closely. insurances. 2. External b. Technology a. Subcontractors and Suppliers The new Delaney Tires Storage will The construction contracts were have complete fire protection divided in two contracts: system as per NFPA requirements.  PT Mahalona (Local Project Manager and Mechanical Contractor) worked for Earth works, civil/structural, 9
  10. 10. mechanical piping and facility has met the objectives of grounding installation. The business case and has been operated erection of structural work with for PT Inco long term objectives in 200 tons total erection and term of tires stock management and 50,000 M3 earth work were tires quality maintenance. really big challenge for local e. Weather contractor since this was Weather was also a significant risk categorized a high risk work. which was taken in to account. Project Manager took a risk to During earth work and construction, get this work done utilizing the contractor had factored the local contractor rather than weather since it was rainy season on experienced national contractor that time. Especially for earth work  PT Lintech Duta Pratama (compaction work), it was difficult worked for 420 kL of water tank to get optimum compaction if the fabrication and installation. The water content of soil was very high. contractor is specialist in doing Also the risk of having the tank so there’s no significant equipments did excavations while challenge for this kind of work. the area was very slippery and b. Regulatory unstable. PT Inco was committed to improve 3. Organizational safety regulation throughout all a. Project dependencies operation activities in contract of Project Manager must factor the work area. Major Hazard Standard sustainability of PTI business (MHS) and General EHS Standard operation as the number one was developed and socialized for priority. In addition, there were also implementation for all design, so many operating and capital construction and operation projects were running and need activities. Here are listed the MHS equal attentions to finish to meeting and General EHS as mandatory to cost, schedule and safety. In this follow during project life cycle situation, Project Manager looked at  MHS 03 Road Condition bigger picture and integrated  MHS 05 Electrical thinking to be more tolerant to other  MHS 06 Working at Height projects if those were required to finish based on the urgency and  MHS 07 Confined Spaces importance of the project related to  MHS 08 Lifting and Supporting PTI business need. Loads c. Resources  MHS 10 Slope Stability PT Inco is a composite project  MHS 12 Boilers and Pressure organization model. Project Vessels Managers are having multiple  MHS 15 Rotating and Moving projects and also other resources Equipments such as Engineers, Designer,  EHS 01 Hydrocarbon Procurement Analyst have different Management projects. Project Managers must be c. Market agile to adapt with all project team Not applicable members if they want to succeed d. Customer their projects. Equipments and The customer or Project Sponsor of materials were also major factors this project was Warehousing since they were also used by other section and owned by PT Inco projects. Warehousing and Logistics d. Funding Department. The new storage 10
  11. 11. The source of funds for this project was coming from Capital Appropriation Request (CAR) approved by PT Inco Management. Project Manager. Project Manager did second CAR Amendment due to location moved from Palapa Area to Delaney area which was the new area was green field (re-vegetated area) and out of utilities services. The extensive scopes of works and rate of settlements (geotechnical matter) in this new area were very significant to revised budget addition. e. Prioritization Described in organizational, project dependencies. 4. Project Management a. Estimating The level of estimate was very Figure 11 : Hazop Deviation Matrix important to project successful. Project Manager did estimate three times due to change of proposed storage location caused additional c. Controlling scope of works increased Project monitoring and controlling significantly. There were more than is defined as phase to monitor and 200% increased cost from original control all activities in each project budget. phase to ensure everything is b. Planning meeting planning process. Change Planning process comprised of of project location (from Palapa project scoping phase, sequence of area to Delaney area) as requested activities, estimating, procurement by PTI Management decision was plan, Hazard and operability recorded to integrated change (HAZOP) and risk ranking review. control, scope verification due to Risk of each design and additional works, schedule construction activities can be adjustment and cost impact were identified using Hazard and documented properly in this process Operability (HAZOP) form as a group. Poor project documentation technique to identify and rank the will lead Project Manager into big risk during planning process. problem since the company also has been auditing the improper procedures or lack of implementation project delivery system around PT Inco. d. Communication Described in Risk Management Planning: Inputs 4.3.3. Qualitative Risk Analysis 11
  12. 12. Qualitative risk analysis includes methods for prioritizing the identified risk for further action. Risk ranking matrix will show the risk score in every design or construction parameters. If the level of consequence is 3 or 4 and frequency is 3 or 4 then this parameter should be prioritized for further action or recommendation. 4.3.4. Quantitative Risk Analysis Quantitative risk analyzes the effect of those risk events and assigns a numerical rating to those risks. It also presents a quantitative approach to making decisions in the presence of uncertainty. The Project Manager didn’t use this process in the project since all risks are certain and could be predicted. 4.3.5. Risk Response Planning Risk response planning is the process of Figure 12: Risk Ranking Matrix developing options, and determining actions to enhance opportunities and reduce threats to the project’s objectives. Risk response planning addresses the risk by their priority, inserting resources and activities into the Implementation of risk response planning budget, schedule, and project management during planning process group of the project plan, as needed. as follows: 1. Avoid. Risk avoidance involves changing the project management plan to eliminate the threat posed by an adverse risk, to isolate the project objectives from the risk impact, or to relax the objective that is in jeopardy, such as extending the schedules or reducing scope. 12
  13. 13. Management Project Organization External Technical 1. Transfer. Risk transference requires shifting the negative impact of a threat, along with ownership of the response, to a third party. 2. Mitigate. Risk mitigation implies a reduction in the probability and/or maintainable. communication stakeholders of the project to ensure Improved location. didn’t take responsibility on changing the services and green area. The Project Manager Delaney Area which was the area out of utilities decision on moving from Palapa Area to Asked Owner and Project Sponsor to take and base of access road and storage base organization ) to do haulage process for sub base Asked location due to the location was disposal area Engineer to assess existing land for storage work and earth work. 2. Asked Geotechnical 1. Selected contractor that is qualified in erection Risk Avoidance impact of an adverse risk event to an acceptable threshold. 3. Acceptance. A strategy that is adopted because it is seldom to Mining operation (internal PTI communication eliminate all risks from a project. This strategy indicates that the and project team has decided not to change the project management plan to deal with risk. information between 4.3.6. Risk Monitoring and Controlling Risk Monitoring and Control is the process of identifying, analyze and planning for are all newly arising risks, keeping track of identified risks and those on the watchlist, resources to do the have since PT Inco didn’t work to contractor Released construction requirement system for insurance design of fire protection consultants to review the Asked Risk Transfer reanalyzing existing risks, monitoring trigger conditions for contingency plans, monitoring residual risks, and reviewing the execution of independent adequate risk responses while evaluating their effectiveness. Project Manager did some tools and purchasing team, port, shipment, etc didn’t have adequate resources such as equipments and materials since contractor section) to provide procurement of Let internal organization (procurement completely defined. engineering to ensure all requirements are Performed in-house scope development and Risk Mitigation technique to ensure the project risks could be resolved during project execution consisted of: 1. Weekly Progress Meeting Project Manager and team conducted weekly project meeting to discuss the progress of the project including discussion about risks, particularly threats, how to deal with it and better solution so the risks didn’t impact the deliverables of the project (schedule delay, cost, or poor quality of works). construction phase. additional scope during the budget estimate to allow To establish contingency in around PTI contract of work prevent social conflicts To utilize local labour to Risk Acceptance 2. Risk Audits Project Manager and team established and maintained Safety Layer Audit (SLA) Program during construction phase to ensure the project complied with Major Hazard Standard (MHS) which are the highest commitment of PT Inco in safety policy and procedures. This audit was conducted once a Figure 13: Risk response Strategy versus Risk Breakdown Structure week by Project Manager and Team. 13
  14. 14. 4.4. Final Product of Delaney Tires Storage The final products of this project are: 2. New storage area 2.5 Ha comprised of access road, storage compartments, fencing around storage. The total volume of excavation and backfilling work for this area were around 50,000 M3. 3. Storage compartments made from structural steel and paving block pavement which are able to store more than 1,800 each of big and medium tires for heavy and medium equipments. The maximum size of tires diameter 2600 mm outside diameter. The total weight of structural steel works are around 200 tons. Every storage compartments to be grounded by loop system. 4. Fire protection system consisted of:  Fire piping (above ground used 50 meters long carbon steel pipe and underground used 300 meters long ductile iron pipe with mechanical joint connection).  420,000 liters of cylinder water tank made from mild steel plate (8 meters diameter and 8.5 meters high).  Fire pumps which are able to give 1850 g-pm during an hour of duration.  Fire hydrant (4 units). Each unit consisted of 2 wye valve hydrant (given pressure: 500 g-pm/each for primary hydrant and 250 g-pm/each for secondary hydrants).  Portable Fire Extinguisher are available in every 2 bays of storage compartments.  Fire separated walls installed in every 3 bays of compartments (installed fire block walls for every 120 each of tires). Figure 14: Delaney Tires Storage Layout and Cross Section 4.5. Lessons Learned Obtained from Project Life Cycles 14
  15. 15.  Project Manager is not experienced in this case, to ensure risks are identified and resolved, He involved Technical Experts, Senior Project Manager and Engineering Manager during project life cycles as places for advices and suggestions.  The changes of scope of work and change of location had increased the costs significantly. In this case, PTI Management should be having proper planning on where they were going to put these facilities to meet company business need. Project Manager and Team were victims of improper planning.  Required to determine or identify the risks since early beginning to ensure the risks can be controlled and monitored that can impact schedule, quality, scope addition and cost. Project Manager has utilized PMBOK Third Edition as guidance for proper Project Risk Management combined with PT Inco Project Management Procedures. Reference: 1 Project Management Body of Knowledge, 3rd Edition. Project Management Institute, Four Campus Boulevard, Newton Square, USA, 2004 2 Capital Project Owner’s and Sponsor’s Handbook. PT International Nickel Indonesia, 2005 3 Engineering Procedures Manual. PT International Nickel Indonesia, 2006 4 PT Inco website:, 2006. 15