You have been asked to write a risk management system for a new company. The company is setting up interstate rail passenger operations in Australia.
The railways are regarded efficient, safe, economic and efficient mode of transport (Janic, p. 491). However, there has been huge competition from other modes of transport including air, sea and road transport system. There is a need for a safety policy to ensure that the industry flourish in Australia. The current project is aimed at facilitating smooth movement of good and passengers while enabling the company to make profit. One major challenge in railway transport is the railway safety (Kyriakidis, Hirsch and Majumdar, p. 1538). There has been huge number of fatal accidents reported around the world associated with railway risks. This risk management system should focus on understanding various risks in the railway operations (Kecklund et al., p. 26). The risk has become a significant interest for many organizations dealing with huge projects (Silla and Kallberg, p. 739). Risk refers to a loss that can be incurred in case of occurrence of hazard and some of the loses that can be experienced in the railway sector include damage of the railway line, loss of life, infrastructure damage and financial loses. In this paper, I will highlight some of the risk issues in the new vehicle and how such risks can be controlled.
The two major risks that are prone to the new project include quantitative and qualitative treats (Cooper, p. 12). Qualitatively, these are risks that cause injury due to exposure to hazards. Quantitatively, the risks are determined in terms of degree of loss caused to people and environment due to failure of a system or the occurrence of hazard (Jonkman, p. 21). The external risk for railway project are risks associated with the activities of the organization while the external risks are outside organization’s control. Generally, the risks management system involves establishing the context and the system of railway line and operations. Initial stage involves identifying various source hazards followed by risk analysis that allows determining the likelihood of occurrence and its consequences. Risks are then evaluated and screened to enable project team to efficiently treat and control them.
Hazard identification is reported to be the critical stage of risk management (Van Aalst et al., p. 165). The successful identification of hazard allows elimination of potential hazard thus increasing benefits of the project to the owner and users. The main aim of hazard identification in railway project is to prevent loss of human life and severe damage to the infrastructure considering that these projects usually cost billions of dollars (Chan et al., p. 208). A number of hazard identification techniques have been developed for engineers, the main one being Preliminary Hazard Analysis (PHA) (Fell et al., p. 87). PHA involves analysis to identify all hazards including potential accidents that may be experienced during and after execution of the project. This technique identifies various risks and rank them according to severity. This method is chosen as it provides an initial overview of major risk associated with the whole system operations (Paté?Cornell, p. 1829). The PHA allows the project team to analyze the whole system components and as well as interactions in order to define various material, people or actors that are most exposed to risk. All accidental events are identified followed by determining their severity in terms of human injury, infrastructural damage or any other loss. The consequence of each risks are quantified based on previous experience. Finally, the hazards are classified and ranked based on frequency and severity of occurrence (Anthony, p. 498).
Risk identification involves listing potential treat that can probably affect the project. A large number of risks are identified at initiation phase especially those that may delay or lower the quality of the output (De Bakker, Boonstra and Wortmann, p. 494). However, it is important to note that it is challenging to identify all major risks at initiation phase. Since this a large complex project, it may require outsourcing external expert to work together with the project manager, stakeholders, project team members and steering committee to brainstorm and identify possible treats. Some of the risk that are identified during initiation phase include tight project schedule, unavailability of necessary technical skills, defective design, increase in material price, no past experience in similar projects, loss arising from fluctuation of prices, pollution and safety rules, accidents on employees, damage of equipment and theft of material on site.
The project planning phase offers opportunity for identification of more risks that were not identified during the initial phase. The project managers and the project teams are the ones that are mainly involved in identification of risk at this phase. The risk register is used to document risks identified including inadequate investigation of the site, tight project schedule, insufficient time to prepare bid for suppliers and lack of trained manpower. The implementation stage is the best phase for making adjustment for various risk that are prone to happen as the work progresses. The risks that are likely to occur during project implementation are enormous including excessive government approval procedures, contractor delaying payments for workers, low productive efficiency of employees, labor disputes, equipment failure, the designs being changed by engineers, lack of enforcement of legal requirement, increase in labor and material cost, change of top management and problems in internal management, increase in tax rates, shortage in funding and the changes in law and regulations. Similarly, the risks in project completion phase include equipment and facility fire, vehicle crashes workers, occurrence of natural disasters like earthquakes, loss incurred due to bribery, loss due to inflation and competition from similar projects.
Some of the hazards that prone to the project include noncompliance of railway standards, poor maintenance of railway line, vehicles crossing railway line while train is nearby, physical obstruction of railway signs, large turn angle that restrict visibility of incoming train, absence of road signal, failure of light signals to work, breakage of train brakes and inaudible train alarm. These hazards can be categorized as those relating to environment thus hampering visibility, hazards associated with human factors, hazards due to noncompliance of established guidelines for railways and the hazards related to the technical problems. There are special concerns regarding leasing the property. The major risk associated with leasing infrastructure, equipment and facilities is unpredictability of cost component due to inflation thus affecting profitability. Furthermore, the second hand trains are prone to breakage thus stalling operations.
Patil et al. (p. 1813-14) identified many other risk factors associated with railway including defective design, change in government legislation, dispute among parties of contract during leasing, poor communication among parties, lack of material or material not conforming with the specification, occurrence of accidents due to poor adherence to safety procedures by both pedestrians, passengers and train operators, security of equipment, varied productivity of labor, weather volatility, law and tax change.
Once the risk has been identifies as listed above, it is important to determine the extent to which it might affect project completion through impact analysis (Jafarian and Rezvani, p. 18). The risk for each phase is evaluated to determine its likelihood of occurrence and its impact in case it occurs. Some of the major consequence of risk occurrence that has been reported on large projects include reduced project outcomes, extended timeline, increase in overall cost of the project and the reduction in the quality of the project output. The matrix below is used for grading the risk based on the likelihood and seriousness of the risk. It is suggested that estimation of frequency of accident are efficient when based on historical data (Cheng and Washington, p. 72). It is important to include all accidents that are associated with company personnel, environment, passengers, economic impact and the reputation of the railway company. The loses due to occurrence or risk incidents can be estimated in terms of financial terms, loss of human lives and damage to the infrastructure (Leung and Olomolaiye, p. 75). The risks are scored based on frequency and consequences as indicated in the following table.
Table 1: Hazard frequency table
Score |
Frequency |
1 |
Very likely |
2 |
Likely |
3 |
Occasional |
4 |
Probable |
5 |
frequent |
Table 2: Consequence classification
Score |
Severity |
1 |
Minor |
2 |
Major |
3 |
Critical |
4 |
Catastrophic |
The two tables above can be combined to allow determine the tolerability of risk. The intolerable risk cannot be accepted unless under extraordinary circumstances while tolerable can be accepted if the cost of its reduction exceeds benefit. Generally, negligible risks are accepted thus no mitigation measures are initiated (Aven, p. 5). For this project, all the intolerable risks identified and mitigation measures taken to reduce it to tolerable level. The table below indicate risk classification matrix that is used to make decision on risk management strategies.
Table 3: Hazard categorization
Frequency/consequence |
Very likely |
Likely |
Occasional |
Probable |
Frequent |
Catastrophic |
|||||
Critical |
|||||
Major |
|||||
Minor |
Key: light green= negligible risk, yellow= tolerable risk and red= intolerable risk.
These are processes selecting measures and implementing them to reduce or remove the identified risks. However, risk management system requires that risk treatment actions are prioritized to high risk followed by low risk in order to maximize benefit of the project to the organization (Klinke and Renn, p. 273). Risk cost benefit analysis is carried to estimate cost of each control measure and weighed against benefit.
Managing internal risk
Risk of the site
The risk associated with leasing land, equipment and facilities can be mitigated by not starting project until payment is made and lease document handed over by the owner. There is need for the project manager and project team to visit site and ensure that the project daily report is installed properly. Visiting site helps in determining various source of power, labor and material for construction.
Material risk
Railway projects are known to face material risks due to availability, theft and specifications. To reduce risk of purchasing low quality materials, the engineers should familiarize themselves with the dealers or suppliers and ensure that they are approved by government through ISO certification. The supplier should further be required to provide quality certificate for each material. To reduce risk of running out of materials, the project department should identify at least two dealers that provide multiple options of obtaining materials. If one supply fails to deliver the materials on time, then the other could be contacted to avoid delay.
Contractual risk
The contractual liability is also one of the major risk affecting this project since major equipment and facilities are leased. If one consultancy firms fail to perform its duty, then breach of contract occurs forcing company start process of tendering and outsourcing new service provider. The breach of contact delays project implementation thus such contractual risk can be minimized through giving tight rules during tendering process.
Financial risk
The cash flow should be analyzed properly to allow effective management of the project. this requires effective management of cash flow.
Site safety
There are a number of risks that can occur in railway projects as to other construction industries. The employees in the project team should ensure that they wear safety equipment to mitigate risk of injuries. Organization can provide hand glows, googles, helmets and boots. The firm should be aware of employee workplace safety regulatory measures to prevent legal action by the government.
Organizational risk
The subcontracted organizations can easily fail to do their part, for example the government entity may delay issuing permit thus delating job execution. Furthermore, the materials on site should be well protected against adverse weather conditions, wasting or theft.
Managing external risks
Dependence of one client
The customer and other stakeholders might be unsupportive during project implementation. Such risks can be mitigated by holding frequent meeting and discussing any rising issues. Working closely with the major stakeholders allows project them know and work in harmony towars their aspirations.
Environmental
Pollution is the major environmental impact that can be caused when the railway is not properly designed. There is a need to follow government environmental agencies particularly in providing social amenities. All environmental acts must be followed to avoid risk of legal actions.
Political and cultural risks
Political risk arises from change in government or introduction of new legislation. Furthermore, the politicians with self-interests may sabotage project. it is important to carryout public participation at initial stage to prevent public objection.
The plan can easily be implemented whenever each actor is provided with clear responsibilities. The project manager is responsible for ensuring that the requirements of this plan are implemented. He/she is responsible for ensuring that all the licenses and permits are obtained on time. This is because regulatory risk can negatively impact the project when disregarded. The certificate for site impact analysis and transport impact statement should be obtained. Manager should also organize meeting with local people to increase its acceptance (Kerzner and Kerzner, p. 12). The project manager and project team must conduct project feasibility.
Conclusion
This project risk management system offers great potential for the railway organization to have firsthand information regarding potential risk. According to above risk analysis, it is evident that there are huge internal and external risk that may pose challenge to the implementation of the project if not controlled. According to this study, the material risk and the site risk stood the major risk that should be managed. I would recommend the project team to work closely with all stakeholders to promote efficient execution of the project.
References
Anthony Tony Cox, L., 2008. What’s wrong with risk matrices?. Risk analysis, 28(2), pp.497-512.
Aven, T., 2010. Risk management. In Risk Management and Governance (pp. 121-158). Springer Berlin Heidelberg.
Chan, A.P., Chan, D.W., Fan, L.C., Lam, P.T. and Yeung, J.F., 2008. Achieving partnering success through an incentive agreement: lessons learned from an underground railway extension project in Hong Kong. Journal of Management in Engineering, 24(3), pp.128-137.
Cheng, W. and Washington, S., 2008. New criteria for evaluating methods of identifying hot spots. Transportation Research Record: Journal of the Transportation Research Board, (2083), pp.76-85.
Cooper, D.F., 2005. Project risk management guidelines: Managing risk in large projects and complex procurements. John Wiley & Sons, Inc..
De Bakker, K., Boonstra, A. and Wortmann, H., 2010. Does risk management contribute to IT project success? A meta-analysis of empirical evidence. International Journal of Project Management, 28(5), pp.493-503.
Fell, R., Corominas, J., Bonnard, C., Cascini, L., Leroi, E. and Savage, W.Z., 2008. Guidelines for landslide susceptibility, hazard and risk zoning for land use planning. Engineering Geology, 102(3), pp.85-98.
Janic, M., 2003. Multicriteria evaluation of high-speed rail, transrapid maglev and air passenger transport in Europe. Transportation Planning and Technology, 26(6), pp.491-512.
Jonkman, S.N., Van Gelder, P.H.A.J.M. and Vrijling, J.K., 2003. An overview of quantitative risk measures for loss of life and economic damage. Journal of Hazardous Materials, 99(1), pp.1-30.
Kecklund, L., Ingre, M., Kecklund, G., Söderström, M., Åkerstedt, T., Lindberg, E., Jansson, A., Olsson, E., Sandblad, B. and Almqvist, P., 2001. The TRAIN-project: Railway safety and the train driver information environment and work situation-A summary of the main results. Signalling safety, pp.26-27.
Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
Klinke, A. and Renn, O., 2012. Adaptive and integrative governance on risk and uncertainty. Journal of Risk Research, 15(3), pp.273-292.
Kyriakidis, M., Hirsch, R. and Majumdar, A., 2012. Metro railway safety: An analysis of accident precursors. Safety science, 50(7), pp.1535-1548.
Leung, M.Y. and Olomolaiye, P., 2010. Risk and construction stakeholder management (pp. 75-98). Wiley?Blackwell.
Paté?Cornell, E., 2012. On “Black Swans” and “Perfect Storms”: risk analysis and management when statistics are not enough. Risk analysis, 32(11), pp.1823-1833.
Patil, M., Shinde, R.D. and Hailkar, S.S., 2017. Risk Management in Railway Projects. International Research Journal of Engineering and Technology, 4, 1811-1817.
Silla, A. and Kallberg, V.P., 2012. The development of railway safety in Finland. Accident Analysis & Prevention, 45, pp.737-744.
Van Aalst, M.K., Cannon, T. and Burton, I., 2008. Community level adaptation to climate change: the potential role of participatory community risk assessment. Global environmental change, 18(1), pp.165-179.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order formOnce we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignmentAs soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download