W15.0_Ary_General Risk in Remote Area Mining Construction Projects


Problem Recognition and Definition

Remote construction sites are facing higher risks than average construction sites in well located area. Some risks have significant impacts to project execution schedule and therefore identifying major general risks are important before the project is executed. All identified risks shall be registered in risk register document and become a baseline to develop schedule and cost contingency plan.

Possible Alternatives (Risks Possibilities)

There are several major general risks that need to be considered into this study according to Ernst & Young latest study in 2011 for mining & metals industry risks. They are:

  • Skilled labor shortage
  • Infrastructure access
  • Social license
  • Capital project execution
  • Price and currency volatility
  • Interruption to supply
  • Fraud and corruption

All above risks will be registered and assessed include impact analysis if the risk occurs and ranked according to risk level.

Analysis and Criteria

The above seven risks shall be assessed and evaluate the impact to project schedule as well as develop risk mitigation plan. Risk register table used adopted from US Army corps of engineers is considered appropriate in this study. Variance of distribution is not shown at this time to simplify the table but it is considered important especially if the process is complex and organization supported with a specific risk assessment tools. In this blog, author put indicative data information based on self assessment in order to give illustration and to help in defining priority of risk mitigation.

Table 15-1. Generic risks register in remote construction site (click on the picture and save for the best visualization)

Assessment Result

Based on the above table, priority or attention must be focused on below risks:

  1. Skilled labor shortage
  2. Social licenses
  3. Infrastructure access
  4. Capital project process

Consequences if those risks above occur are significant to the project schedule and therefore risk mitigation plan shall be developed in more detailed.

Post Evaluation

A “what if” action plan need to be developed in more detail based on the above general risk register before execution of project construction as the above register is more generic and applied more appropriate application for pre-feasibility study purpose.

References:

  1. Hamilton, Allen, C, CCE (2007). Risk Management, Chapter 31 of Skill & Knowledge of Cost Engineering, 5th Edition. AACE International. WV 26501.USA.
  2. US Army Corps of Engineers. (May 2009). Cost and Schedule Risk Analysis Guidance.USA.
  3. Ernst & Young. (2011). Business Risk Facing Mining & Metals 2011-2012. EYGM Limited.
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1 thought on “W15.0_Ary_General Risk in Remote Area Mining Construction Projects

  1. Excellent topic, Pak Ary and an acceptable posting, but your risk register seems to me to be very weak. You fail to differentiate between “Internal” risks (those you have control over) and “External” risks or those you have no control over. You also don’t have any risk triggers nor do you identify who is the owner of that risk (who is responsible to track and manage it) Without someone responsible, you will never have any accountability for the risk. Also, where is the link between the risk and the WBS?

    Also, why did you only do schedule risk? What about Scope? Cost? and Quality?

    I would urge you to look over the risk template I provided to you during our face to face session (see handouts from Day 3, Slides #51-53) and compare that to the risk template you are using. Even for a feasibility (hi level risk analysis) I don’t think this is a complete or professional level risk analysis.

    BR,
    Dr. PDG, Jakarta

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