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  1. During today's webinar on Australian Capital Projects – Risk Management, Project Controls and COVID-19 Pedram Danesh-Mand mentioned some useful references for calculating contingency and escalation in projects. I've posted them here for easy reference. Risk Engineering Society Contingency Guideline: https://rebok.engineersaustralia.org.au/search/?q=contingency&quick=1 Australian Government Cost Estimation Guide: https://investment.infrastructure.gov.au/about/funding_and_finance/cost_estimation_guidance.aspx Pedram also mentioned some guidelines for escalation from the AACEI, which he recommended as a secondary reference for Australian projects. The full documents are only accessible to AACE members, but links to samples are below: http://web.aacei.org/docs/default-source/toc/toc_58r-10.pdf https://web.aacei.org/docs/default-source/toc/toc_68r-11.pdf?sfvrsn=4
  2. Introduction In order to effectively manage the risks associated with complex, high profile projects, project managers need a set of tools tailored to a project context. Project management decision-making, including the level of contingency set aside for budget and schedule overruns, can be affected by the cognitive biases of stakeholders. Several well-established project management frameworks have risk management modules which can provide project managers with guidance in this area. Elements of project risk management Typical elements of a project risk management framework include: Project governance Project assurance Cost risk management Schedule risk management Contingency risk management Scope risk management Change control Benefits management Many disciplines contribute to project risk management, including risk engineering and safety. Managing risks for individual projects also needs to take into account risks that may be introduced by related projects and areas within the project management organisation, and at the program and portfolio levels. Standards and Frameworks Some of the standards and frameworks specific to project risk management are: PMBOK - The US-based Project Management Institute’s (PMI) Project Management Body of Knowledge (PMBOK) framework includes a module on how risk management should be performed in a project context. This standard is used across a range of industries. PMI has also published a risk-specific standard: The Standard for Risk Management in Portfolios, Programs, and Projects PRINCE2 - Projects In Controlled Environments (PRINCE2) is a popular, UK-based project management standard. It was originally developed as a government standard for information systems projects and includes a risk management approach including a risk register COBIT 5 - Is a recent standard for project management which includes a risk management module. This standard links risk management to governance and insurance, where PRINCE2 and PMBOK treat them as individual modules. and is used extensively in projects to implement information technology solutions such as SAP and Oracle. Challenges A particular challenge for complex projects is building the maturity of internal control systems to increase resilience in the event of unpredictable risks. For this reason, momentum is building in emerging risk management methods including complexity sciences and organisation-wide resilience. Further reading Click this link for a list of related pages Sources: The content on this page was primarily sourced from: Webinar titled ‘Perspectives on Risk: Engineers, frameworks and new ways of thinking’, delivered to REBOK Community on 29 May 2018 by Warren Black, Principal and Founder, Complexus
  3. These two articles are examples of the application of Generative Techniques in innovative projects to help realise Opportunity Risks resulting in acceptable outcomes. University of Woolongong Researchers from the University of Wollongong (UOW)’s Translational Research Initiative for Cell Engineering and Printing (TRICEP), ARC Centre of Excellence for Electromaterials Science and UOW’s Makerspace worked together to design a face shield to protect medical workers. “We are looking at our capacity to do some of these more sophisticated things should that need arise ... It has been amazing how people have come together so quickly. That spirit of collaboration across the health service and university is really enabling us to move forward very quickly.” Ford Australia In a media statement, the boss of Ford Australia, Kay Hart, said: “We said from the beginning of COVID-19 that any way we could help, we would help. Producing face shields is certainly something new for us, but our innovation team and engineers were able to test a number of different designs in hospitals. With their input we have been able to get the face shield right for the people who will be wearing them.” Mr Mineo told CarAdvice: “It’s great to see so many of us back together again … it’s great to work with people you trust and who know production processes and who you know will do it right,” “Everyone is just so proud of what they’re doing, and so happy to be here.” https://www.caradvice.com.au/846416/ford-australia-donates-up-to-100000-medical-face-shields-for-covid-19/ "We really are all in this together – which is why Ford Australia is producing and will be donating up to 100,000 face shields for frontline healthcare workers in response to the COVID-19 pandemic. We’ve been working with the Victorian Government to develop a prototype face shield and have refined the design of the shields following input from medical professionals across hospitals in Melbourne. We’re now ramping up production and will be distributing the face shields to medical facilities. We will also continue to work with the Government to help address any ongoing supply needs resulting from the global shortage of Personal Protective Equipment." https://www.linkedin.com/company/ford-australia/?miniCompanyUrn=urn%3Ali%3Afs_miniCompany%3A30673559 Australian engineers are 3D printing protective equipment for hospital workers - Create.pdf Ford Australia donates up to 100,000 medical face shields for COVID-19 | CarAdvice.pdf
  4. Introduction Strategic maintenance management is essential to maintain the integrity of physical assets and ensure business survival and success. An effective way to support strategic maintenance management is through a risk-based approach. Risk-based maintenance originated in the 1980s and 1990s and has received a recent boost in interest from companies putting in place robust performance standards to avoid catastrophic equipment failures. An additional driver is that many companies are adopting asset management standards ISO 55000:2014, 55001:2014 and 55002:2014. These standards require companies to develop a set of structured documents which cover the maintenance of assets including data, information, costs and people throughout their lifecycle. They must also use risk as a basis for decision making and continuously improve their processes. Risk-based maintenance management vs reliability centred maintenance (RCM) Another way that risk can be used to regulate maintenance is using reliability centred maintenance (RCM). RCM can be used to choose which method is best-suited to a particular asset, while risk-based maintenance management is used to select which assets a maintenance program should target. What is risk-based maintenance management? Maintaining assets, rather than simply waiting for them to break down, delivers significant cost savings, as the cost of repairing an equipment breakdown is three to five times the cost of the same repair done in a planned manner, prior to failure. But maintenance budgets are limited, and engineers and managers need tools to help them allocate resources for the best results. Risk-based maintenance management prioritises the maintenance of assets that carry the most risk if they were to fail. This approach allows engineers and maintenance managers to determine the most economical use of limited maintenance resources to minimise the total risk of failure across a facility. The main phases are: criticality assessment development of risk-based maintenance program and strategies risk-based maintenance planning risk-based allocation of spares and repairs The risk-based maintenance system is set up during the project phase of establishing a facility, then continued into the operation phase. A diagram of the risk-based management process is shown below. Diagram courtesy of David Finch, Maintenance Integrity Solutions Criticality assessment The goal of maintenance is to deliver a proper balance of maintenance activities to identify and prevent impending failures. By understanding which assets are the most important through a criticality assessment, engineers and maintenance managers can determine how to most effectively schedule maintenance activities of the right equipment at the right time to reduce risk over the whole facility. Criticality of equipment is based on the consequence of failure (CoF). Higher consequences lead to higher criticalities. Consequences can include impacts on safety, environment, reputation and production. One approach to evaluating the criticality of failure consequences is summarised below. Diagram courtesy of David Finch, Maintenance Integrity Solutions The criticality evaluation score can then be used to allocated a criticality ranking to equipment as shown below. Diagram courtesy of David Finch, Maintenance Integrity Solutions Criticality assessment should not be confused with assessing the risk of equipment failure, which is the product of the probability of equipment failure and the consequence of that failure. Risk-based maintenance program and planning After completing a criticality assessment, facilities can set up a risk-based maintenance program based on the criticality ranking of assets. An example is shown below. Diagram courtesy of David Finch, Maintenance Integrity Solutions Principles for the maintenance program are: assets with a greater risk and consequence of failure are maintained and monitored more frequently to achieve tolerable risk criteria assets with a lower risk have a less stringent maintenance program This means that the total risk of failure is minimised over the facility. It is important to keep the maintenance program flexible, and develop it through a dynamic process of collecting information on operating conditions and revisiting the frequency of inspection and testing. The next stage is maintenance planning for both preventative and corrective maintenance. This includes allocating maintenance resources , sourcing parts and properly training staff. Emergency management circumvents the planning process, but all other maintenance should be planned. In order to prioritise work orders for risk-based maintenance planning, a work order priority matrix (as shown below) can be used. Diagram courtesy of David Finch, Maintenance Integrity Solutions Other methods, such as a ranking index for maintenance expenditures (RIME) can also be used. However RIME is complicated, and based on criticality rather than risk. If implemented correctly, risk-based maintenance planning should lead to a shift from corrective or reactive maintenance to condition-based maintenance, which is economical and provides evidence to back up maintenance budgets. Risk-based spares and repairs Finally, risk-based categorisation of spares and repairs can be put in place. Critical spares should be kept on site. An example of a risk-based spares matrix is shown below. Diagram courtesy of David Finch, Maintenance Integrity Solutions For effective risk-based spares stocking, engineers and maintenance managers should understand that a critical machine part is not necessarily a critical spare part. The time needed to obtain parts is also a consideration, as parts that can be obtained quickly can be ordered as required. Another factor to take into account is connection between the failure mode and the maintenance response, as some parts fail unexpectedly and catastrophically, while other failures can be predicted through condition monitoring or other maintenance activities. Benefits and limitations of risk-based maintenance The benefits of risk-based maintenance are summarised below: provides a systematic approach to determine the most appropriate asset maintenance plans reduces the risk of asset failures to an acceptably low level supports decision-making about how best to allocate limited maintenance budgets provides opportunities to identify and eliminate low-value maintenance tasks A limitation is that a highly sophisticated team is needed to quantify the risks of different maintenance tasks. Sources: The content on this page was primarily drawn from the following sources: Webinar titled ‘Risk-Based Maintenance Revisited’ by David Finch, Maintenance Integrity Solutions
  5. Introduction Resilience can be defined as the ability of a system to respond to rapid changes in a positive manner. A particular challenge for complex projects is building the maturity of internal control systems to increase resilience in the event of uncertainty and unpredictable risks. Challenges As the world becomes more dynamic and volatile, proponents of a resilience approach to risk management maintain that rather than finding ways to predict risks, risk practitioners need to focus on innovating in the area of building organisation-wide resilience to unpredictable risks. Challenges include designing internal management systems with the ability to weather rapid changes, disruption to operations, unexpected changes in government and trade alliances, as well as market shocks. Standards One standard relevant to processes for building resilience is AS/NZ 5050:2010 Business continuity - Managing disruption-related risk. This standard outlines a process of identifying critical business functions and protecting them to increase resilience. Sources: The content on this page was primarily sourced from: Webinar titled ‘Perspectives on Risk: Engineers, frameworks and new ways of thinking’, delivered to REBOK Community on 29 May 2018 by Warren Black, Principal and Founder, Complexus
  6. Introduction Project teams can be subject to different kinds of cognitive biases, including: optimistic estimates of budgets and timelines, or social or political pressure to meet particular targets. This can lead to setting aside unrealistically low project contingencies, or allocations of budgetary or time resources in addition to the base estimate or schedule, to allow for inherent or contingent risks at the desired confidence level. Cognitive bias can be defined as peoples’ deviation from rational judgement to draw illogical conclusions. In some cases, cognitive biases may lead to more effective decisions or actions, especially where speed is more important than accuracy (as demonstrated by heuristics in decision making). Engineers may have an unconscious bias toward systems, processes and data as effective tools for problem solving. These tools are effective when problems are reasonably linear, but many problems are complex, especially those with a strong human element. Therefore, it is important to select appropriate models and assumptions to simplify complex problems to assess risk in order to make the right decisions. Lessening effect on project contingency setting To improve project risk management and contingency calculations, project teams should be aware of possible cognitive biases that may affect decision making. The diagram below shows some common forms of cognitive bias. Diagram courtesy of Pedram Danesh-Mand, Risk Engineering Society Accuracy of contingency allowances can also be improved by identifying and assessing possible causes of cost or schedule overruns and holding regular review meetings. Sources: The information on this page was primarily sourced from: Risk Engineering Society Contingency Guideline, 2016
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