ABSTRACT

To analyse risk associated in infrastructure projects

along with creation of risk matrix to provide various
mitigation strategies.

Aritra Kesh
PROVIDING 18020342007 MBA(IM)

MITIGATION
STARTEGIES ARISING
IN INFRASTRUCTURE
PROJECTS
Executive Summary
Relevance - Infrastructure assumes a central job in the financial development of a nation.
Infrastructure interests in India have been developing consistently. In every plan the administration
sets an aspiring target which is higher than the last one. Despite the fact that the division is viewed
as a key driver of monetary development, various risks undermine to restrain the area's capability to
help accomplish the ideal development and guarantee effective capital use.

Objective - The research features the size and real purposes behind the risks arising over significant
infrastructure projects. While a few undertakings are affected because of external factors which are
outside the ability to control of the actualizing organizations, for example, land procurement,
administrative endorsements etc. dominant part of ventures are postponed by variables which can
be controlled at the task level through appropriate arranging and undertaking the executives. The
examination likewise features the serious expertise deficiency and the developing interest supply
hole for qualified development experts influencing the infrastructure area in India.

Conclusion - Identifying key threats arising from the internal and external environment of
stakeholder’s organization during construction of infrastructure projects. The methodology of the
research includes a literature review of infrastructure challenges, followed by identification and
classification of risk factors using risk breakdown structure. Furthermore, a check list analysis of key
risks was performed. Finally, the research generated a full risk register that presents identified
challenges.

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Table of Contents

Part-1: Introduction
Chapter1: Current Scenario……………………………………………………………………………………………………………….5

Part-2: Risk associated with infrastructure projects

Chapter1: Introduction………………………………………………………………………………………………………………………9
Chapter2: Methodology………. …………………………………………………………………………………………………………..9
2.1 Identifying key risks in infrastructure…………………………………………………………………………….10

2.2 Additional risks identified in construction…………………………………………………………………..…11

2.3 Risk breakdown structure………………………….………………………………………………………………….12

2.4 Checklist technique……………………………………………………………………………………………………….14

2.5 Checklist Analysis…………………………………………………………………………………………………………..14

2.6 Risk identification output……………………………………………………………………………………………...15

Part-3: Case Studies

Chapter1: NTPC Vindhyachal Stage IV …………………………………………………………………………………………….17

Part-4: Analysis

Chapter 1. Categorization of risk………………………………………………………………………………………………………18

Chapter 2. Risk mitigation strategy………………………. ………………………………………………………………………..19

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 Introduction

Part-1

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1. Current Scenario
The World Bank appraises that a 10 percent ascend in infrastructure resources straightforwardly
expands GDP by up to 1 rate point. Deficient or immature infrastructure presents perhaps the
greatest obstruction for monetary development and social advancement around the world. In India,
for instance, advancement is compelled by restricted streets, an absence of railroads in the new
farming wildernesses, and bottlenecked ports, which are all incapable to meet the vehicle needs of a
recently rich customer mass.

Infrastructure projects are high on governments' motivation, and the infrastructure advancement
and speculation pipeline is tremendous. The current worldwide undertaking pipeline is evaluated at
$9 trillion, 33% of it in Asia. India is relied upon to go through some $550 billion on huge scale
extends throughout the following five years, half of which will be in the vitality and utility divisions.
Created economies additionally have huge infrastructure plans. The United Kingdom, for instance,
has recognized a infrastructure pipeline of more than 500 tasks that is worth more than £250 billion.

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Be that as it may, real infrastructure tasks have a background marked by issues. Cost invades, delays,
bombed procurement, or inaccessibility of private financing are normal. The last cost of the eagerly
awaited Eurotunnel between the United Kingdom and France, for instance, out of 651 undertakings,
neither the time of dispatching nor the contingent development time frame has been accounted for.
Out of 366 deferred ventures, 100 have by and large delay in the extent of 1 to a year, 69 have 13 to
two years, 91 endeavours reflect deferral of 25 to 60 months and 106 exercises show 61 months or
more deferral.

In our view, most overruns are predictable and avoidable. A considerable lot of the problems we
watch are because of an absence of expert, forward-looking risk management. Direct esteem
misfortunes due to under administration of risks for the present pipeline of enormous scale ventures
may surpass $1.5 trillion in the following five years, also the misfortune in GDP development, just as
reputational and cultural impacts.

Large infrastructure projects experience the ill effects of critical under administration of risks in
essentially all phases of the worth chain and for the duration of the existence cycle of an
undertaking. Specifically, poor risks evaluation and risks allotment, for instance, through contracts
with the developers and agents, at an opportune time in the idea and configuration stage lead to
higher appeared risks and private-financing deficiencies later on.

Risk is additionally undermanaged in the later phases of infrastructure projects, wrecking a

noteworthy portion of their worth. Critically, venture proprietors regularly neglect to see that risks
produced in one phase of the undertaking can have a huge thump on effect all through its later
organizes.

The organizing and conveyance of present day infrastructure projects are very unpredictable. The
long haul character of such tasks requires a system that suitably mirrors the vulnerability and
tremendous assortment of risks they are presented to over their life cycles. Infrastructure extends
additionally include countless various partners entering the undertaking life cycle at various stages
with various jobs, obligations, risk management capabilities and risk bearing limits, and regularly
clashing interests. While the multifaceted nature of these ventures requires division of jobs and
duties among profoundly particular players, (for example, contractual workers and administrators),
this prompts critical interface risks among the different partners that emerge for the duration of the
existence cycle of the task, and these must be envisioned and oversaw from the start.

Since infrastructure projects have moved toward becoming and will keep on winding up
fundamentally bigger and increasingly unpredictable, misfortunes because of the expense of

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undermanaged risks will keep on expanding. This will be exacerbated by a continuous lack of ability
and experience—in addition to the fact that projects are progressively perplexing, however there are
additionally a greater amount of them, which will make interest for increasingly powerful and
increasingly precise methodologies and arrangements.

Shockingly, the risks of huge infrastructure extends frequently don't get appropriately distributed to
the gatherings that are the best "risks proprietors"— those that have a better capacity than retain
these risks. This can result from a misconception or dismissal with respect to administrations of the
risks craving, for example, of private speculators who are delicate to the sorts of risks they
acknowledge and under what terms. Suppliers of account will regularly be the quick failures from
inadequately allotted or undermanaged risks. Indeed, even in open private-association (PPP)
structures, private-daring individuals and their administration methods are acquainted past the
point of no return with the procedure to impact chance administration and assignment, and
consequently they can't fix the mix-ups effectively installed in the tasks. One essential result is an
expansion in the expense of financing PPP ventures and a more noteworthy requirement for
sovereign certifications or multilateral-office support. At last, be that as it may, society everywhere
bears the expenses of disappointments or overwhelms, not least as missed or eased back
development.

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 Risk associated with
infrastructure projects

Part-2

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1. Introduction
The advancement of infrastructure is one of the most significant exercises that can lift up the matter
of different industries, consequently expanding the (GDP) of the nation. Infrastructure projects have
turned out to be increasingly mind boggling, and bigger in scale, because of the advances in
innovation and tasks. These industries are normally re-appropriated to different contractual workers
and sub-temporary workers. Most infrastructure activities are being over running as far as either
time or sum. Vulnerability related with human execution in development of infrastructure tasks is an
unavoidable wellspring of risk during the activity stage.

This research displays the risk recognizable proof procedure as the primary period of risk the board
forms, where this procedure is viewed as an iterative one, where new risks may emerge during the
task progress, through its life cycle. The recurrence of cycle and who partakes changes starting with
one case then onto the next. The risk distinguishing proof procedure utilized in this paper on the
other hand prompts chance examination forms, where risk elements are dissected subjectively.

2. Methodology
This research shows the principal phase of risk management procedure, in particular 'The Risk
Identification Process'. The contribution of the risk recognizable proof procedure incorporates risk
components affecting contractual worker's goals during development.

As represented in Figure, risks are first accumulated. Risk elements are then classified utilizing the
risk breakdown structure (RBS) system. Besides, organized risks are planned into an agenda
structure so as to acquire the understanding of infrastructure experts. Further examinations would
then be able to assist us with identifying whether the risk really affects infrastructure ventures
exercises or not. Results are then broke down to have the option to rank the recognized risks as per
their rates. The Risk register is acquired as the primary yield of the risk distinguishing proof
procedure.

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2.1 Identifying key risks in infrastructure
The initial step to play out the risk identification process procedure is to assemble risk factors. Risk
classes perceived in the wake of taking accord considering an example populace of eighty two
individuals appeared there were four classifications. Figure underneath presents an outline of the
Risk Categories on the x-pivot and their comparing level of understanding among different
individuals on every one of the infrastructure risks classification on the y-axis. In light of the
conclusions, the for the most part perceived risks classification is considered to exhibit the no doubt
risks to happen during development of universal infrastructure projects.

It very well may be seen from the investigation that 80% of the example populace perceived both
specialized risks and task the board risks as the most settled upon infrastructure classes.
Infrastructure specialized risks incorporate risks occasions towards infrastructure exercises executed
nearby, though, venture the board risks are worried about top administration risks towards the
board of infrastructure assets and basic leadership. Money related risks incorporate risks towards
the accessibility of reasonable assets to best fund contractual workers' income dependent on
recently assessed spending plan, those risks were featured by 70% of the example. The least settled
upon risks as per the example were outer risks, which were displayed in 40%. External risks
incorporate infrastructure risks emerging from the partners' outer condition that has a likelihood to
happen and can affect fruitful conveyance of worldwide infrastructure development.

Risk Category Risk Factors Code % Agreed

Technology Changes and Complexity A.1 50
HR Productivity A.2 30
Technical Risks(A) Material Selection A.3 40
Quality Control A.4 20
Sewer Location A.5 20

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 Poor planning design errors A.6 20
Changes in shop drawings during construction A.7 20
Delay in approval and preparation of shop
drawings A.8 20
Soil Corrosively B.1 20
Soil Fracture Potential B.2 20
Unforeseen weather geotechnical condition B.3 20
External Risks(B) Inflation B.4 20
Change in Market demand B.5 20
Poor public decision-making process B.6 20
Government corruption B.7 20
Unsupportive Policy C.1 30
Delay in contractor payment by owner C.2 30
Financial Risks©
Change orders C.3 10
Conflicting contract C.4 10
Management Focus D.1 10
Contractor Internal coordination deficiencies D.2 20
Excessive bureaucracy by owner organization D.3 10
Market Competition D.4 10
Labour non-availability D.5 20
Project Management
Organization and coordination risk D.6 10
Risks(D)
Inexperience of client D.7 20
Poor performance of subcontractors D.8 20
Owner slow Decision D.9 20
Owner interference D.10 20
Poor site management D.11 20

In light of the audits, these risks can happen and affect any infrastructure ventures destinations. The
table audited test accord, their comparing perceived risks, and the level of concession to every one
of the infrastructure development risks factor. Figure underneath presents a bar outline by which
infrastructure risks components are represented on the x-axis and their relating level of
understanding.

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2.2 Additional Risks identified in construction

Risk Category Risk Factors Code % Agreed

Consultant missing details A.1 34

Inaccurate material estimation A.2 17

Technical Risks(A) Consultant related A.3 50

Owner related A.4 50

Subcontractor related A.5 50

Risk premium support by government B.1 50

Strikes B.2 34
External Risks(B)
Poor Weather B.3 34

Revolutions B.4 34

Financial Risks© Cash flow problems during construction C.1 67

Contract related D.1 50

Project Management Risks(D) Utilized computerized approaches D.2 34

Training courses D.3 50

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 Specialized subcontractor D.4 84

Hiring specialized staff D.5 50

Procurement method D.6 34

Quantity variations D.7 84

Contractor cash flow calculation D.8 67

Dependency on bank loans D.9 67

Figure underneath speaks to a bar graph by which extra infrastructure risk variables are shown on
the x-axis and their relating % of understanding among the example information is exhibited on the
y-axis.

2.3 Risk break down structure

The Risk Breakdown Structure (RBS) is viewed as a "progressively sorted out portrayal of the
recognized task risks orchestrated by risks classification". Coding the data empowers us to effectively
think about the data per principle class and sub-classification. The RBS will assist us with
understanding, and thusly recognize and evaluate the risks, where risks classes give a structure that
guarantees the thorough procedure of methodically distinguishing risks to a reliable degree of detail
and adds to the viability and nature of risks process ID. Moreover, the strategy of survey was
connected to order risks components perceived in the above figures. The investigation of the

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undertaking depended on gathering information through both, study survey and direct perception of
the task.

2.4 Checklist technique

The Sample appeared beneath table presents different risks components and their relating classes.
The goal of this agenda is to acquire the key risks elements to be broke down subjectively. Each risks
class was given a code by which risks components are arranged by their risks breakdown structure
(RBS). The codes used in this paper are as follows: A- Technical Risks, B- External Risks, C- Financial
risks, D- Project management risks. The assessment segment reflects assessment of the member
shrink concurs or can't help contradicting the significance of each risks. Risks variables can happen
during development of infrastructure ventures, in this way responding to the inquiry "Does it lead to
a risks?" section mirrors the seriousness of risks in the event that it happens. The last remarks
segment enables the member to include additional data. Such data may incorporate the gathering in
charge of this risks factor and its effect on expense as well as time.

2.5 Checklist analysis

As per the respondents of the poll, the most and least settled upon risks that happened for the
situation study venture are appeared in beneath figure. These risks albeit connected to Indian
infrastructure ventures, be that as it may, they depended on the discoveries of writing sources either
broadly or universally. Along these lines, considering the conclusions accumulated, infrastructure
risks is said to precisely recognize the most dependable risks of the execution of infrastructure
ventures. Figure beneath shows every one of infrastructure risk components and their relating

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codes. The complete number of concurred members, just as the risk factor concurred rate.

Opinions are classified into: most concurred infrastructure risks, concurred gathering of
infrastructure risks, and the least concurred infrastructure risks. The most risk settled upon by 75%
of the experts was income lacks, this could be clear in light of the way that if the contractual
worker's income is one-sided it will be conceivably difficult for temporary workers to adapt to the
evaluated infrastructure task spending plan.

2.6 Risk identification output

The primary yield from risks distinguishing proof procedure is the underlying section into the risk
register. The risk register at last contains the results of the other risk forms as they are directed,
bringing about an expansion in the level and the sort of data contained in the risk register. Table
underneath speaks to the risk register of each risk factor and its comparing code. Risk variables are
viewed as dangers, as appeared subsequent to being conceded to by sewage system ventures
master members. Each classified gathering is additionally shown relating to each risk factor. The risk
register, as a yield of risk identification proof procedure, is utilized as a contribution to chance
investigation stage.

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 Case Studies
Part-3

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1. NTPC Vindhyachal Stage IV
Vindhyachal power project is the largest thermal power station of NTPC and is located in Sidhi
district Madhya Pradesh. The plant has an existing capacity of 3760 MW thermal with 6*210 MW
and 5*500 MW units. NTPC was executing a brown expansion project at Vindhyachal plant with
addition of 2*500 MW thermal power plants. The boiler-turbine-generator contract was given to
BHEL while BOP was being executed by various contractors in split package mode. There was a delay
of project by two months.

Reasons for project delay:

Material Delivery from BHEL: Delayed supply of BTG material by BHEL had been a noteworthy
bottleneck and brought about deferral of basic achievements. Because of constrained assembling
limit BHEL couldn't meet the supply timetable of different simultaneous tasks under execution by
NTPC.

Site connectivity: The site isn't associated with real urban areas which opens the venture to
coordination’s and transport related issues.

Contractor Default: NTPC is executing the undertaking by spilt bundle mode and there are a few
little and enormous temporary workers that are giving material and administrations to the task.
There is dependably a danger of default by one contractual worker that can prompt in general
postponement in task.

Measures taken by NTPC to de-bottleneck project:

 NTPC helped their contractual workers in backing out their interior income positions, by
either making instalments straightforwardly to their sub-temporary workers or on occasion
giving development instalments.
 To conquer strategic issues identified with street transport NTPC depended on railroads to
transport its material.

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 Analysis
Part-4

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 1. Categorization of Risks

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2. Risk Mitigation Strategy
 The life-cycle chance administration approach and early centre around ideal hazard
possession assignment are as significant for spending plan financed open acquisition extends
as they are for PPPs including private speculators. Since governments go out on a limb in
open acquisition structures, they should structure their speculation and deal with their
dangers as private speculators do. Proprietors need to configuration suitable measurements
and procedures to quantify contractual worker execution.
 Proper documentation and log framework for following advancement that enables the
proprietor to get the data they have to deal with the temporary worker adequately.
 Detailed month to month plan, with quantifiable key execution markers (KPIs) connected to
the agreement.
 Financial hazard ought to be overseen and a motivator framework set up through
achievement instalments and day by day temporary worker consistence checking.
 Dedicated task hazard administrator and group with general hazard obligation.
 State-of-the-craftsmanship gauging procedures ought to be connected and KPIs arranged
under unfavourable situations, including pressure testing.
 Streamlined chance administration model headed by a larger hazard board of trustees or
divisional hazard advisory groups.

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