Project Risk Reduction – Expecting The Unexpected

The typical project lifecycle is ­composed of solid financial ­decision-making, superior ­technical design concepts, rigorous construction ­programs, planning, and execution. ­However, project teams often underestimate the ­impact of decision-making during ­development ­phases in terms of how project risk is ­significantly increased and pre-operational value is lost.

It is suggested that the transition from ­construction to commissioning and finally into operations is where the lion’s share of ­overall project risk occurs. Considering the relatively short duration of most ramp-up periods in comparison to the overall project lifecycle, the transition phase is considered to be critical to retaining intended or planned value and in reducing operational startup risk.

The importance of understanding ­potential business threats through the ­systematic ­evaluation of project hazards and ­potential negative events ensures that the ­operational readiness process is adequately ­prepared. Without a tactical approach to the ­operational readiness plan ensuring the succinct ­integration of design, construction, ­commissioning, and ramp-up phases—the risk to employees, the environment, the ­assets of the community, and prime stakeholders ­increases dramatically.

The high degree of uncertainty that often ­accompanies the operational readiness phase can often be mitigated, simply by identifying the top risks that the project can experience, the impact that these hazards could have on components or elements of the project, and the actions necessary to mitigate these threats prior to final commissioning and startup.

Understanding these unique risks ­associated with people, processes, compliance, ­procurement, asset readiness, and their ­potential impacts on the successful ­startup of a project provides an indication of the ­preventative measures required in order to ensure that the project risk line is ­consistently managed to ALARA. Often, however, these ­potential business risks are not considered in regard to the operational planning ­process during the development phase, which ­increases the risk of negative results and a reduction on return in initial investment.

By not proactively applying strong risk ­management methodologies and ­operational readiness focus from the concept stages of a project, decision-making during the ­lifecycle has the potential to be ­misinterpreted or ­reactively managed. When not pre-considered, it has a strong potential to have an ­undesirable impact on the overall ramp-up profile of the project.

There is no magic solution to operational readiness planning or how risk is ­identified and effectively managed. Large capital works projects, by their very nature, exhibit unique complexities, and these should be ­individually considered when planning for an efficient ramp-up and operational steady state. ­Essentially, operational readiness ­planning ­requires consideration, planning, and, most importantly, strong leadership ­­through ­effective consideration of risk management.

The successful integration of effective ­operational readiness planning will reduce the overall likelihood and consequence of ­bottom-line project risks, improving the ­realisable value of large capital projects and ultimately increasing shareholder value.