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(RISK-823) Quantifying Risks Related to the Execution of Mega Projects

Primary Author: Mr Rashad Zahi Zein CCE PSP BP
Co-author(s): Mr. Luc Heymans BP

Audience Focus: Basic
Application Type: Experience-Based
Venue: 2012 AACE International Annual Meeting, San Antonio, TX, USA

Abstract: 'Mega' projects are characterized by their scale, complexity, and their inherent risks, combined with a limited number of resources who are truly skilled in 'mega' projects. As a result, the opportunity exists for the limited completion of detailed project planning and scope definition which often leads to cost and schedule overruns. During the planning stages of the project, teams are always challenged to quantify risks related to the execution of the project work. This paper presents a case study where the project team was faced with the question on how to best execute a program with multiple major projects. The case study quantitatively assessed the advantages/disadvantages of two scenarios: 1) Execute the projects concurrently or 2) Phase the execution. Even when the economic analysis net present value (NPV) - supports the "concurrent" execution, could the project team demonstrate quantitative disadvantages of this approach? The cost analysis model presented in this paper evaluated detailed engineering, procurement and construction costs in the above two scenarios and the potential impact on the program selection criteria.