Week 7 and 8 - Project Risk

• What are the stages of a project?

  • Identify and Assess
  • Concept Select
  • Define
  • Execute
  • Operate
  • Close
• At what stages of a project do we require a risk register?


  Essentially during the planning stages (iteratively) all the way until the operation stages.

  This inclues:

  • Identify and assess
  • Concept Select
  • Define (FEED and Detailed Design)
  • Execute (Construction)
• Small process industry projects


  • Selecting and installing a more efficient pump
  • Testing the capabilities of different air-mist nozzles to cool a hot slab of metal
  • Various Maintenance projects (i.e. Hotworks on site, replacement of pipes or equipment)
• Medium process industry projects


  • Managing the shutdown, maintenance and recommissioning of an operating unit within a processing facility
  • Investigating and eliminating causes of process disturbances
  • Optimising energy use per operating hour or per tonne of product produced
• Mega process industry projects


  • Designing, building and operating a new processing plant (greenfield projects)
  • Undertaking a major expansion of an existing operation (e.g. expansion of the Pluto LNG project in Western Australia)
  • Decommissioning and repurposing industrial sites (e.g. decommissioning nuclear power facilities)
• What is the approximate failure rate for megaprojects?

  65%, 70% for resource sector projects and 78% for oil and gas sector projects
• We have seen that projects often fail to deliver the predicted value, why?

  • Lower demand for the product than expected
  • Cost and/or schedule overrun
  • The facility did not operate as expected
  • The risk of failure is greater for large projects
• Why is project definition important?

  It is critical for achieving optimum value. That's why sufficient and rigorous analysis is conducted in the early project stages.
• At what stage of a project is the ability to implement effective risk control significantly reduced?

  In the later project stages after the define stage.

  It is usually in the early project stages where the costs of change are low and the ability to implement effective risk controls is high.
• What does FID stand for?

  Final Investment Decision
• At what stage in the project life cycle is the FID?


  After the 'Define' phase