NOTE: This case study has been superseded by a more detailed description of the project and what we did that is available here.

Purpose

Background

This case concerns the upgrade of a large sewer serving hundreds of thousands of people across a catchment covering suburban areas and a central business district. It was built 75 years ago for a much smaller population. It had become heavily overloaded as the city developed, with a history of overflows in peak periods.

Several options for augmenting the system had been considered. The preferred option was the construction of a relief sewer in a tunnel of just under 5 km, with a finished diameter of nearly 2.5 metres. The proposed tunnel alignment would pass through mixed ground conditions, including variable and soft ground in one section.

Required outcomes

The objectives in this case study were to identify and set priorities for the risks associated with the project and to develop action plans for treating the most important ones.

The outcomes required from the risk assessment were:

• A list of the main risks to the project
• An analysis of the consequences and likelihood of each risk
• An assessment of the importance or priority of each risk for management attention
• A list of responsibilities for addressing the high-priority risks.

These outcomes would allow the main participants to identify the practical actions required to minimise their exposures and maximise the achievement of the project success criteria. They would also provide a preliminary list of risks for the Project Risk Management Plan.

Process

The risk assessment followed the process described in ISO 31000 Risk management -- Principles and guidelines. The participants were members of the project team and specialist advisers from the water and wastewater authority, the municipal authorities for the catchment (the clients who were also the project sponsors) and external organisations.

Establishing the context

Criteria

The objectives of the main stakeholders for the project were reviewed and condensed to a set of success criteria for the project. These were used when considering the consequences of risks during the assessment process.

Key elements

The key elements were linked to the main activities of the project. A set of 17 key elements was prepared. An ‘Other items’ category was included to cover other items and processes not included elsewhere. The key elements provided the principal structure for the risk identification task in the main workshop.

Risk assessment

Overview

The risk assessment workshop had several purposes:

• To identify the relevant risks and associated controls for each key element of the project
• To rate the consequences of the risk for the project’s critical success factors
• To rate the likelihood of that level of consequence arising
• To derive initial risk priorities from the consequence and likelihood ratings
• To review each identified risk and confirm its final priority
• To identify the person with prime responsibility for managing the risk, at least initially.

Risk identification

For each key element, risks were identified in a structured brainstorming workshop. Risks were defined as events that could arise and affect the success criteria for the project. Relevant controls were outlined for each risk. In total 146 risks were identified during the workshop and the subsequent review.

Risk analysis and evaluation

Of the 146 risks analysed, 16 had agreed priorities of Major. Effective management of the Major risks was recognised as important if the project was to avoid potential problems or unpleasant surprises. Initial groupings of the Major risks for the design and tender stage of the project are noted below.

• Approvals (5 risks)
• Community relations (2)
• Procurement processes and contractor selection (2)
• Construction processes and acceptance (4); these were grouped because they were likely to require attention when preparing the contract documents; they could be disaggregated later as they involved different kinds of issues, but it was useful to consider them as a group at this stage of the project
• Risks associated with the the TBM (2)
• Access restrictions (1).

Risk treatment

The major risks and the main options for treating them were discussed in detail during a second workshop a week after the first. Outline risk treatment plans had been developed in the interval between the workshops. The second workshop considered the plans in detail, recommended additional options where appropriate and assessed the remaining risk to the project if the new controls were to be implemented as planned.

It was anticipated that implementing the preferred options arising from the treatment workshop would reduce the level of risk significantly. However, more treatment work was needed, as four risks were expected to remain as Major unless additional controls were put in place. Three of these risks involved approval processes that could not be resolved immediately:

• They would each require a great deal of consultation with stakeholders
• Some important constraints were embedded in existing organisational processes, particularly if an alliance arrangement or another non-standard delivery mode were to be selected.

Lessons

This was a relatively straightforward risk assessment. The project had a few special features but, with good project management, there were no obvious fatal flaws.

Like many projects that are concerned with the delivery or upgrade of physical assets, success would be determined not just by the outcomes of the delivery phase but by the benefits achieved by the asset itself after it was handed over to the operators. The criteria for success in Table 1, which underpinned the measures of consequences used in the risk analysis, reflected what would be considered ‘good outcomes’ for the operating sewer as well as for project delivery.

For any risk assessment, the development of a comprehensive set of key elements is fundamental to the efficiency and effectiveness of the risk identification activity. With too few elements, risks tend to be stated in quite general terms and it is often difficult to be precise enough to develop treatment plans that are specific and targeted. With too many elements, discussion is usually very detailed too, and not always related to important matters, so time is not used as fruitfully as it might be. In this case the elements in Table 2 were sufficiently detailed to provide a good structure for brainstorming and effective use of time in a one-day workshop.

The value of the risk assessment in setting priorities for risk treatment was clear to the project team. They were able to focus on the important matters first and develop plans that were expected to achieve appropriate benefits quickly. After the first treatment workshop they conducted further work to develop plans for treating the risks classified as Medium, as well as for the four Major risks that still warranted attention.

It is pleasing to note that the new sewer tunnel is now in operation and achieving the outcomes that were desired by the stakeholders.