Modified Risk Analysis and Management Model for the Whole Project Life Cycle Risk presentation

1. Risk Analysis and Management
Model for the Whole Project Life
Cycle Risks
By Ahmed Nadeem
Presented to Prof. Moheeb El.Saied

2. Introduction
• What is Project Risk?
An uncertain event or condition if occurs, has a positive or a negative
effect on at least one project objectives, such as time, cost, scope or
quality.
Typically, we get more concerned about threats than opportunities
because they are what may prevent project managers from achieving
their goals.
• What is Risk Management?
Preparation, identification, analysis, response and management to
manage potential risks in the construction project.

3. Successful Project Objective
• Achieving project scope.
• Completing project on time.
• Finishing project within budget.
• Ensuring technical requirements.
So, construction managers need to be equipped with and efficient decision-
support tools in order to decide which project alternative should they go with
and which major action should be taken upon the occurrence of any of the
expected or unexpected risks.

4. Risk Analysis Techniques for
Construction Management
Risk Analysis Technique
Schedule
Risks
Budget Risks
(Cost)
Technical Risks
(Quality)
SRS: Schedule Risk System (Mulholland and
Christian 1999)
Yes No No
JRAP: Judgmental Risk Analysis Process
(Oztasand Okmen 2005)
Yes No No
PERT: Program Evaluation and Review Technique
(Malcom et al. 1959; Kerzner 2003)
Yes No No
ERA: Estimating using Risk Analysis (Mak and
Picken 2000)
No Yes No
Utility-Functions in Engineering Performance
Assessment (Georgy et al. 2005)
No No Yes
CASPAR: Computer Aided Simulation for Project
Appraisal and Review (Willmer 1991)
Yes Yes No
FMEA: Failure Modes and Effects Analysis (Bouti
and Kadi 1994)
Yes Yes Yes
APRAM: Advanced Programmatic Risk Analysis
model (Dillon and Pate-Cornell 2001)
Yes Yes Yes

5. APRAM
• APRAM: Advanced Programmatic Risk Analysis model.
• Used for risk analysis and management purposes considering schedule,
cost and quality risks simultaneously.
• This model takes into account only the design and construction phases
of the project.

6. Modification of APRAM and Management Model
for the Whole Project Life Cycle Risks
• APRAM was modified by Mehran Zeynalian, Bambang Trigunarsyah and H. R.
Ronagh, Australia in 2013.
• The modifications were made to use this method properly in covering not only
the initial costs of a project, but also its whole life cycle costs.

7. The Purpose of the Model
• These modifications are essential to specify whether the higher initial cost of a
project is economically justified by the reduction in future costs when
compared with another alternative that has a lower initial cost but higher future
costs.

8. Flow Chart of the APRAM model

9. Case Study
• A typical two-story, 384-m2 residential building.
• Location: Kerman (a high seismic region in Iran).
• Budget: $150,000 (D&C).

10. Implementation of the model
1. Identification of possible technical design alternatives.
We have either:
• Alternative 1: CCS (Conventional Construction System): masonry walls
combined with concrete anchors.
• Alternative 2: CFS (Cold Formed Steel).

11. Implementation of the model (cont.)
2. Identify components of both alternatives.
Components
Potential Construction Alternative
CCS CFS
Foundation Strip reinforced concrete anchors Mat foundation
Structural Frame Brick and reinforced concrete anchors Cold-formed steel studs
Floor Reinforced concrete joist and filler blocks CFS joists and lightweight compressed blocks
Roofing Roofing felt Slate/tin roofing
Façade Facing brick Fiber cement board panels
Internal Cladding Hollow brick and gypsum plaster Gypsum board
Utilities Multilayer plastic pipe Multilayer plastic pipe
Thermal Insulation Not applicable Rock wool

12. • RB = TB – Devcost
Residual Budget = Total Budget – Total Cost of Construction Development.
• The Residual Budget then should be allocated over the technical components of each
alternative and optimized.
• We assumed that the operational cost is equal to the development cost of the project.
Implementation of the model (cont.)
3. Determine the Residual Budgets.

13. RB and Devcost
• We will assume that the funds will be invested based on the effective usable area of the
building i.e. only the net area of the building’s floors should be taken into account.
• Hence, a cost modification factor ( ) is calculated:
=( − )/
where = cost modification factor
AG= gross area of the building
Aw= total x-sec. area of the walls.
Alternatives i Devcost Total Devcost Total Modified Devcost RB Total Opercost
CCS 0.87 285/m2 $109,440 $125,793 $24,207 $109,440
CFS 0.92 300/m2 $115,200 $125,217 $24783 $115,200

14. Implementation of the model (cont.)
• Managerial failure: are the factors
that lead to the project completion
behind schedule and/or over
budget.
• Technical failure: may occur either
before or after the completion of the
construction and can be
categorized as technical failure in
D&C or operation.
4. Identify technical and managerial risks.

15. Estimated Failure Risks Probabilities
Probabilities of Technical Failure Events of
CCS during the D&C Life Cycle
Alternative 1: Conventional construction system
# Technical failure risk Probability
1 Weak cast-in-place foundation concrete 0.25
2 Spalling of frame concrete 0.10
3
Lack of appropriate vertical and horizontal
anchors to brick wall connections
0.15
4 Use of poor cement mortar 0.35
5 Poor floor concreting 0.20
6 Poor shuttering 0.10
7 Lack of appropriate insulation 0.20
8 Facade distortion 0.35
9 Poor utilities performance 0.20
10 Improper design 0.05
Probabilities of Managerial Failure Events of
CCS during the D&C Life Cycle
Alternative 1: Conventional construction system
# Managerial failure risk Probability
1 High reworks and change orders 0.15
2 Late delivery of cement 0.05
3 Late delivery of reinforcement bars 0.05
4 Increase in the price of cement 0.25
5 Increase in the price of reinforcement bars 0.25
6 Inclement weather 0.20
7
Using additive material or extra protection
facilities due to climate changes
0.45

16. Estimated Failure Risks Probabilities
Probabilities of Technical Failure Events of
CFS during the D&C Life Cycle
Alternative 2: Cold-formed steel frame
# Technical failure risk Probability
1 Weak cast-in-place foundation concrete 0.25
2 Improper manufacture of CFS members 0.10
3 Improper erection of connections 0.15
4 Lack of appropriate insulation 0.35
5 Facade distortion 0.20
6 Poor utilities performance 0.10
7 Improper design 0.20
8 Improper galvanizing 0.35
Probabilities of Managerial Failure Events of
CFS during the D&C Life Cycle
Alternative 2: Cold-formed steel frame
# Managerial failure risk Probability
1 High reworks and change orders 0.05
2 Late delivery of cement 0.05
3 Late delivery of reinforcement bars 0.05
4 Increase in the price of cement 0.10
5 Increase in the price of reinforcement bars 0.10
6 Inclement weather 0.05
7
Using additive material or extra protection
facilities due to climate changes
0.10
8
Increase in the price of cold-formed steel
sheets
0.10
9 High cost of skilled professionals 0.20
10 Excessive essential in-site galvanizing 0.05

17. Estimated Failure Risks Probabilities
Probabilities of Technical Failure Events of
CCS during the Operating Life Cycle
Alternative 1: Conventional construction system
# Technical failure risk Probability
1 Waterproof roofing failure 0.02
2 Facade faulty 0.05
3 Utilities faulty 0.05
Probabilities of Technical Failure Events of
CFS during the Operating Life Cycle
Alternative 2: Cold-formed steel frame
# Technical failure risk Probability
1 Waterproof roofing failure 0.01
2 Facade faulty 0.02
3 Utilities faulty 0.03

18. Types of failures
• Technical and managerial risks are divided into two parts—total and
partial risks.
• Total technical failures (TTFs): the possibilities that might cause the
building to be classified as unusable according to the specifications.
• Partial technical failures (PTFs): failures that render the building usable,
but only at a degraded level of functionality.
• Managerial risks (PMF): the probabilities for which the project cannot be
completed within the assigned budget and provided timetable. timetable.
Residential buildings in the target area are usually built with
considerable cost and time overruns. Therefore, all identified managerial
failure risks are categorized as partial managerial failures.

19. Implementation of the model (cont.)
•

20. Implementation of the model (cont.)
6. Assign a portion of the RB to each possible failure.
Alternative 1: Conventional construction system
# Technical failure risk Probability p(Fi | Techrein)
1 Weak cast-in-place foundation concrete 0.25 0.25 × Exp[−4.621 ∝]
2 Spalling of frame concrete 0.10 0.10 × Exp[−3.151 ∝]
3
Lack of appropriate vertical and horizontal anchors to
brick wall connections
0.15 0.15 × Exp[−5.776 ∝]
4 Use of poor cement mortar 0.35 0.35 × Exp[−8.664 ∝]
5 Poor floor concreting 0.20 0.20 × Exp[−11.55 ∝]
6 Poor shuttering 0.10 0.10 × Exp[−4.951 ∝]
7 Lack of appropriate insulation 0.20 0.20 × Exp[−9.902 ∝]
8 Facade distortion 0.35 0.35 × Exp[−6.931 ∝]
9 Poor utilities performance 0.20 0.20 × Exp[−13.86 ∝]
10 Improper design 0.05 0.05 × Exp[−34.66 ∝]
• The model uses a
risk/cost function that
assumes that the
probabilities of failures of
a system diminish
exponentially as the
residual budget is spent
to increase the
robustness and
performance of the
system.
where is the portion of
the RB used as an
investment to improve the
failure probability of the
event Fi.
Ks is an assessable
constant.

21. Variation of Risk Probability w.r.t.
the RB investment
Probabilities of different technical failure states
during the D&C life cycle versus fractions of
RB for CFS
Probabilities of different technical failure states
during the D&C life cycle versus fractions of
RB for CCS

22. Allocation and Optimization of
allocated RB
•

23. Allocation and Optimization of
allocated RB
•

24. Technical Failures of CCS and CFS
Probabilities of technical failures Costs of technical failures

25. Managerial Failures of CCS and CFS
Probabilities of managerial failures Costs of managerial failures

26. Implementation of the model (cont.)
7. Choice of Optimum Alternative and Corresponding Residual Budget
The minimum expected
failure costs for each
allocation of the residual
budgets to technical and
managerial reserves is
evaluated using the eqn.

27. Result
Probabilities of failures Cost of failures

28. Thank you!
• QUESTIONS?