ISER 2012 Working Paper No. 1

Large resource development projects take years to plan. During that planning time, the public frequently debates the potential benefits and risks of a project, but with incomplete information. In these debates, some people might assert that a project would have great benefits, while others might assert that it would certainly harm the environment. At the same time, the developer will be assessing different designs, before finally submitting one to the government permitting agencies for evaluation and public scrutiny. For large mines in Alaska, the government permitting process takes years, and often includes an ecological risk assessment. This assessment is a data-intensive, scientific evaluation of the project’s potential ecological risks, based on the specific details of the project. Recently, some organizations have tried to bring scientific rigor to the pre-design public discussions, especially for mining projects, through a pre-design risk ecological risk assessment. This is a scientific assessment of the environmental risks a project might pose, before the details of project design, risk-prevention, and risk-mitigation measures are known. It is important to know whether pre-design risk assessment is a viable method for drawing conclusions about risks of projects. If valid risk predictions can be made at that stage, then people or governments would not have to wait for either a design or for the detailed evaluation that is done during the permitting process. Such an approach could be used to short cut permitting. It could affect project financing; it could affect the schedule, priority, or even the resources that governments put toward evaluating a project. But perhaps most important: in an age where public perceptions are an important influence on a project’s viability and government permitting decisions, a realistic risk assessment can be used to focus public attention on the facts. But if the methodology is flawed and results in poor quality information and unsupportable conclusions, then a pre-design risk assessment could unjustifiably either inflame or calm the public, depending on what it predicts.Executive Summary / Section 1. Introduction / Section 2. Overview of Ecological Risk / Section 3. Ecological Risk Assessment Methodology / Section 4. Examples of Post-Design Ecological Risk Assessments / Section 5. Pre-Design Ecological Risk Assessment: Risks of Large Scale Mining in the Bristol Bay Watershed / Section 6. Conclusion / Bibliograph

Analysis and Evaluation on the Risks of the Construction Project

The thesis, starting from the characteristics of the construction project, deploys the combining method of normative and empirical research. According to integrated Risk Management Paradigm, the thesis sums up the overall framework of the construction project system and proposes the evaluation index system of the risk analysis based on the Analytic Hierarchy Process. In addition, the paper puts forward a comprehensive risk evaluation model and makes clear the relative importance of various risk factors. By so doing, it provides some thoughts for the construction projects’ management and evaluation. Key words: Construction Project; Risk Management; Risk Evaluation; Analytic Hierarchy Proces

Evaluating high risks in large-scale projects using an extended VIKOR method under a fuzzy environment

The complexity of large-scale projects has led to numerous risks in their life cycle. This paper presents a new risk evaluation approach in order to rank the high risks in large-scale projects and improve the performance of these projects. It is based on the fuzzy set theory that is an effective tool to handle uncertainty. It is also based on an extended VIKOR method that is one of the well-known multiple criteria decision-making (MCDM) methods. The proposed decision-making approach integrates knowledge and experience acquired from professional experts, since they perform the risk identification and also the subjective judgments of the performance rating for high risks in terms of conflicting criteria, including probability, impact, quickness of reaction toward risk, event measure quantity and event capability criteria. The most notable difference of the proposed VIKOR method with its traditional version is just the use of fuzzy decision-matrix data to calculate the ranking index without the need to ask the experts. Finally, the proposed approach is illustrated with a real-case study in an Iranian power plant project, and the associated results are compared with two well-known decision-making methods under a fuzzy environment

Approach to Implementing Health and Environmental Safety System in Construction Projects Using Fuzzy Logic

The present study's objective is the implementation of the general Health and Safety Executive(HSE) Plan in civil projects; at first, it is required to formulate the Work Breakdown Structure(WBS) in the relevant project with the aim of coming to a proper time plan. In this study, the scope of the implementation of this system includes two items in which the probability and risks of timing projects can come to light.The two substantial items in timing projects are activity and time itself which, in some projects, given the un-clarity of the scope of these two items, one is required to take into consideration the probable and approximate value of such scope with the analysis of the fuzzy expert method. And, one of the methods used for the analysis of the scope of timing probabilities is the use of the practical implications of fuzzy logic in engineering sciences; thus, in the essay at hand, the basic information required for risk assessment, fuzzy logic, the theory of fuzzy numbers, and the method used for analyzing, disintegrating, and composing them, with the purpose of applying them in projects' risk assessment, is presented.Fuzzy logic can be introduced as a powerful and flexible tool for analyzing the scope of risk of projects which is enabled to provide us with the mathematical formulation of the unclear or unspecific parameters and, eventually, represent the analysis and evaluation of data in a numerical format

Economic Evaluation for Oil and Gas Exploration Drilling Project

The mechanism of selecting and evaluating exploration prospects for oil and gas exploration drilling projects is usually done individually with considerations on the technical and economical aspects. The technical aspect of the prospect is focused on to how far a chance of oil and gas exists, and this aspect is also referred to as risk aspect of the prospect. On the other side, economic evaluation is done based on predicted resource recovery, an evaluation of the level of prospect using general investment indicators. Technical aspects used to be assessed as a standard procedure in the exploration projects, but economic aspects will still need to be intensively explored. In the condition where the availability of drilling sites are getting scarcer as well as the very limited budget, this research proposes the tools of analyses for optimizing the selection and planning of exploration projects, namely the Discounted Cash Flow and the Decision Tree of Timing Option. Analyses have been conducted in this research, by inputting a three-year REPA(Region Risk Factors) Index. The result from those analyses is an index of investment called the RI3 index. Comparing it with the application of Zero-One Programming method in portfolio analyses, it was shown that the ranks of investment from both analyses are different

Risk management for build, operate and transfer projects within Kuwait

Infrastructure projects, based on the Build-Operate-Transfer, (BOT), method, have been of interest to governments of developed and developing countries for some time, resulting in their worldwide use. Using the BOT method enables governments to reallocate risks and rewards to the private sector for larger infrastructure projects throughout the projects' operating life. In order to implement a BOT infrastructure project successfully, one of the essential requirements is to carry out a thorough analysis of risks relating to the project including the social, economic, environmental, political, legal, and the financial aspects. Due to the fact that the type of risk study required for large-scale projects is so sophisticated, and therefore expensive and time consuming, the government, due to lack of expertise and time, often obtains a project viability study from the private sector. This can cause problems in that the private sector may incur financial losses or even bankruptcy, unless the host government guarantees compensation to the losers of the bid. Because all parties have different targets which they wish to achieve from the project, a may conflict arise and cause lengthy negotiations, sometimes lasting for years which often result in the death of the project. The greatest opportunity for a successful outcome for a BOT project is obtained when the extensive efforts and costs involved in the risk study process are shared by all parties. The responsibility of the decision maker is to identify, understand and analyze the many risk factors both, qualitative, (linguistic in nature) and quantitative, that will affect funding, procurement, developing, construction and operation, before proceeding with the build stage of the project. Firstly, it is necessary to evaluate the quantitative Risk Factors subjectively, and list them in order of importance. Secondly, conduct an evaluation of the qualitative factors and since the consideration of qualitative factors is subjective, the decision maker will often limit the number of factors being evaluated possibly resulting in inconsistent results. This study proposes a decision framework, which would be useful in determining the influence of the qualitative Risk Factors on the project management of BOT infrastructure projects. A methodology is provided to enable the identification of interrelationships between the Risk Factors and their influence on the project. Using Analytical Hierarchy Process (AHP) techniques, which model the relationships between the Risk Factors, a validation of this approach will be sought using a decomposed evaluation method and also information obtained from three existing case studies, (the Channel Tunnel, Sulaibiya Wastewater Treatment and Reclamation Plant and Marsa Allam Airport). The results of the decomposed approach were compared to experts' holistic evaluations for the same case studies mentioned above. The findings indicate that the decomposed approach showed a strong correlation to the holistic approach. An evaluation of the risks for the Sulaibiya Wastewater Treatment and Reclamation Plant study is provided and suggestions made to highlight risks attached to such a project before it is actually undertaken. Using the decomposed approach enables the decision maker to see the contribution of each risk compared to all of the risks in the total project and will help to determine and subsequently minimize or preventing any risk factors and so considerably improving the risk management of the project

Cash Flow Valuation in an Inflationary World. The Case of World Bank for Regulated Firms

We show that project evaluation should be based on free cash flows at nominal prices. We present a case where the results from the constant price method are biased upwards and there is a risk to accept bad projects. It is a widespread practice to evaluate projects at constant prices. With an example presented in the training on economic regulation of public utilities developed by the World Bank Institute we asses that methodology. We show an overvaluation of 21% when compared with the current prices methodology and using a correct Weighted Average Cost of Capital, WACC.World Bank; regulatory policy for infrastructure; developing countries; project evaluation; project appraisal; firm valuation; cost of capital; cash flows; free cash flow; capital cash flow

Time-Uncertainty Analysis by Using Simulation in Project Scheduling Networks

Risks are inherently present In all construction projects. Quite often, construction projects fail to achieve their time quality and budget goals. Risk management is a subject, which has grown in popularity during the last decade. It is a formal orderly process for systematically identifying, analysing and responding to risks associated with construction projects so as to reduce the effects of these risks to an acceptable level. Risk analysis is primarily concerned with evaluating uncertainties. The purpose of risk analysis is to enable a decision-maker to take an appropriate response in advance against a possible occurrence of a problem. In this study, Monte Carlo simulation as a tool of risk analysis was used. The merge event bias as one of the essential problems associated with PERT is discussed, along with models and approaches developed by other researchers, namely, Probabilistic Network Evaluation Technique (PNET algorithm), Modified PNET, Back-Forward Uncertainly Estimation procedure (BFUE) and concept based on the robust reliability idea. These developed approaches are more reliable in planning construction projects compared to PERT because they attempt to handle the merge event bias problem. In addition, this study demonstrates a number of benefits. the most significant among them being that: (1) Formal risk management tec1miques are rarely used in construction. Dealing with risk management in construction is now essential for minimizing losses and to enhance profitability. (2) It is very dangerous to rely only on PERT/CPM conventional techniques in scheduling projects. (3) To use floats, as stated by traditional resource allocation method, is not practicable. (4) For a project network, the likelihood completion date of a project is exactly equal to the product of the probabilities of each path, separately, with respect to a project completion date. Using simulation now validates this statement. (5) The\ud computation error of a project likelihood completion date is less than 10 percent if a path of a float greater than twice the larger standard deviation of this mentioned path and the critical path is dropped from the calculation, and (6) An effective risk response framework is introduced to help contractors systematically manage the risk in scheduling their projects

A Review on Fuzzy - AHP technique in Environmental Impact Assessment of Construction Projects, India

There are several countries today using procedures for Environmental impact assessment (EIA) is based on a series of mathematical techniques which attempt to localize, describe and assess the positive and negative effects that any human activity has on our environment, generally causing it to deteriorate. The environmental impact assessment (EIA) of projects requires the evaluation of the effects of very diverse actions on a number of different environmental factors, the uncertainty and inaccuracy being inherent in the process of allocating values to environmental impacts carried out by a panel of experts, stakeholders and affected population. The application of the fuzzy Logic and AHP technique can be helpful in identification of the risk associated with construction or developing project and improves the study of EIA. Fuzzy is one of the characteristics of human thoughts for which fuzzy sets theory is an effective tool for fuzziness. A fuzzy logic knowledge-based approach can be used for the environmental impact assessment study of the different construction projects. The review article highlights the role of Fuzzy AHP logic method in EIA of different construction projects, fuzzy logic modeling - software for fuzzy EIA, fuzzy numbers and steps of fuzzy methods as well as reveals that how fuzziness can be determined by applying fuzzy logic method in construction projects

A revised perspective on the evaluation of IT/IS investments using an evolutionary approach

On-going research into the evaluation of Information Technology (IT) / Information Systems (IS) projects has shown that aerospace and supply chain industries are needing to address the issue of effective project investment in order to gain technological and competitive advantage. The evaluative nature of the justification process requires a mapping of interrelated quantities to be optimised. Earlier work by the authors (Irani and Sharif 1997) has presented a theoretical functional model that describes these relationships in turn. By applying a fuzzy mapping to these variables, the optimisation of intangible relationships in the form of a Genetic Algorithm (GA) is proposed as a method for investment justification. This paper revises and reviews these key concepts and provides a recapitulation of this optimisation problem in terms of long-term strategy options and cost implications. Glossary of terms : DC = Direct Costs, FA = Financial Appraisal, FR = Financial Risks, FUR = Functional Risks, HC = Human Costs, IC = Indirect Costs, IR = Infrastructural Risks, OB = Operational Benefits, OC = Organisational Costs, PB = Project Benefits, PC = Project Costs, RF = Risk Factor, SB = Strategic Benefits, SM = Strategic medium-term benefit, SR = Systemic Risks, TB = Tangible Benefits, TC = Tangible Costs, TL = project lead time, TR = Technological Risks, V= Project Value