284 Chapter 7 • Risk Management

Key Terms
Analysis of probability and Control and documenta- Liquidated damages Risk Breakdown Structure
consequences (p. 268) tion (p. 268) (p. 275) (p. 271)
Change management Cross-training (p. 277) Managerial contingency Risk identification (p. 268)
(p. 278) Execution risk (p. 269) (p. 276) Risk management (p. 265)
Commercial risk (p. 269) Financial risk (p. 268) Mentoring (p. 277) Risk mitigation strategies
Contingency reserves Fixed-price contract Project risk (p. 265) (p. 268)
(p. 276) (p. 275) Project Risk Analysis and Task contingency (p. 276)
Contractual or legal risk Insurance (p. 277) Management (PRAM) Technical risk (p. 268)
(p. 269) (p. 281) Workaround (p. 277)

Solved Problem
7.1 QUANTITATIVE RISK ASSESSMENT You wish to determine the overall project risk using a quanti-
tative method. Following the formulas shown in Table 7.2, we
Refer to the risk factors shown in Table 7.1. Assume your project can calculate both the probability of project risk score and the
team has decided upon the following risk values: consequences of project risk score, as follows:
Pm = .1 Cc = .7 Pf = (.1 + .5 + .9)/3 = .5
Pc = .5 Cs = .5 Cf = (.7 + .5 + .3 + .1)/4 = .4
Pd = .9 Cr = .3 RF = .5 + .4 - (.5)(.4) = .70
Cp = .1
Conclusion: Medium risk to overall project.

Discussion Questions
7.1 Do you agree with the following statement: “With proper 7.6 What are the benefits and drawbacks of using a quanti-
planning, it is possible to eliminate most/all risks from a tative risk assessment tool such as the one shown in the
project”? Why or why not? chapter?
7.2 In evaluating projects across industries, it is sometimes 7.7 Discuss and provide some examples of how a project man-
possible to detect patterns in terms of the more common ager can transfer risk on a project. Are there any drawbacks
types of risks they routinely face. Consider the develop- to this response?
ment of a new software product and compare it to coordi- 7.8 Explain the difference between managerial contingency
nating an event, such as a school dance. What likely forms and task contingency.
of risk would your project team face in either of these 7.9 Why is it important for the risk management report form
circumstances? to include who is directly responsible for the risk?
7.3 Analyze Figure 7.2 (degree of risk over the project life 7.10 Consider the following observation: “The problem with
cycle). What is the practical significance of this model? risk analysis is that it is possible to imagine virtually any-
What implications does it suggest for managing risk? thing going wrong on a project. Where do you draw the
7.4 What are the benefits and drawbacks of using the various line? In other words, how far do you take risk analysis
forms of risk identification mentioned in the chapter (e.g., before it becomes overkill?” How would you respond?
brainstorming meetings, expert opinion, etc.)?
7.5 Discuss the advantages of using the risk breakdown struc-
ture as a tool to organize risks on a project.

Problems
7.11 Assessing Risk Factors. Consider the planned construction related to the creation of this office building. How would
of a new office building in downtown Houston at a time your analysis change if office space were in high demand?
when office space is in surplus demand (more office space 7.12 Qualitative Risk Assessment. Imagine that you are a mem-
than users). Construct a risk analysis that examines the ber of a project team that has been charged with developing
various forms of risk (technical, commercial, financial, etc.) a new product for the residential building industry. Using a
 Case Study 7.1 285

qualitative risk analysis matrix, develop a risk assessment

for a project based on the following information: Probability of Failure Consequences of Failure
Maturity = .7 Cost = .9
Identified Risk Factors Likelihood Complexity = .7 Schedule = .7
1. Key team members pulled off project 1. High Dependency = .5 Performance = .3
2. Chance of economic downturn 2. Low Client Concerns = .5 Future Business = .5
3. Project funding cut 3. Medium Programmer Skill = .3
4. Project scope changes 4. High
Calculate the overall risk factor for this project. Would you
5. Poor spec. performance 5. Low assess this level of risk as low, moderate, or high? Why?
7.16 Developing Risk Mitigation Strategies. Assume that you
Based on this information, how would you rate the conse- are a project team member for a highly complex project based
quences of each of the identified risk factors? Why? Con- on a new technology that has never been directly proven in
struct the risk matrix and classify each of the risk factors the marketplace. Further, you require the services of several
in the matrix. subcontractors to complete the design and development of
7.13 Developing Risk Mitigation Strategies. Develop a pre- this project. Because you are facing severe penalties in the
liminary risk mitigation strategy for each of the risk fac- event the project is late to market, your boss has asked you
tors identified in Problem 2. If you were to prioritize your and your project team to develop risk mitigation strategies
efforts, which risk factors would you address first? Why? to minimize your company’s exposure. Discuss the types
7.14 Quantitative Risk Assessment. Assume the following of risk that you are likely to encounter. How should your
information: company deal with them (accept them, share them, transfer
Probability of Failure Consequences of Failure them, or minimize them)? Justify your answers.
7.17 Assessing Risk and Benefits. Suppose you are a member
Maturity = .3 Cost = .1 of a project team that is evaluating the bids of potential con-
Complexity = .3 Schedule = .7 tractors for developing some subassemblies for your proj-
ect. Your boss makes it clear that any successful bid must
Dependency = .5 Performance = .5
demonstrate a balance between risk and price. Explain how
Calculate the overall risk factor for this project. Would you this is so; specifically, why are price and risk seen as equally
assess this level of risk as low, moderate, or high? Why? important but opposite issues in determining the winner of
7.15 Quantitative Risk Assessment. Assume the following the contract? Is a low-price/high-risk bid acceptable? Is a
information for an IT project: high-price/low-risk bid acceptable? Why or why not?

CASE STUDY 7.1

Classic Case: de Havilland’s Falling Comet

The Development of the Comet For overseas flight, in particular, this advantage was
The de Havilland Aircraft Company of Great Britain important. It could reduce the length of long flights
had long been respected in the aircraft manufactur- from a mind-numbing two or three days to mere hours,
ing industry for its innovative and high-performance encouraging more and more businesspeople and tour-
designs. Coming off its excellent work during World ists to use airplanes as their primary method for travel.
War II, the company believed that it stood poised on Further, jets tended to be quieter than propeller-driven
the brink of success in the commercial airframe indus- aircraft, giving a more comfortable interior sound level
try. The de Havilland designers and executives accu- and ride to passengers.
rately perceived that the next generation of airplane De Havilland engineers sought to create a stream-
would be jet-powered. Consequently, they decreed that lined airplane that could simultaneously carry up to 50
their newest commercial airframe, tentatively called the passengers in comfort, while maintaining aerodynamics
Comet, would employ jet power and other leading-edge and high speed. After working with several design alter-
technology. natives, the Comet began to take shape. Its design was
Jets offered several advantages over propeller- indeed distinctive: the four jet engines were embed-
driven airplanes, the most obvious of which was speed. ded in pairs in the wing roots, at the point where they
Jets could cruise at nearly 450 miles per hour compared joined the fuselage. From the front, the aircraft looked
with the 300 miles per hour a propeller could generate. as though its wings were held in place by the engines.
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286 Chapter 7 • Risk Management

FIGURE 7.10 The de Havilland Comet

Source: Heanly Mirrorpix/Newscom

The result of these innovative engineering designs was Troubles

an aircraft that had remarkable stability in flight, was In early May of 1953, a brand-new Comet operated by
sleek in appearance, and was very fast. BOAC left Calcutta, India, and flew off into the after-
Another distinctive feature of the aircraft was the noon sky. Six minutes later and only 22 miles from Cal-
pressurized cabin, intended to maintain passenger com- cutta’s Dum Dum Airport, the aircraft exploded and
fort at cruising altitudes of up to 30,000 feet. In its original plunged to earth, killing all 43 passengers and crew on
testing for safety, de Havilland engineers had pressurized board. There had been no indication of problems and
the airframe to more than five times the recommended no warning from the pilots of technical difficulties.
air density to ensure that there was a clean seal. Con- Investigators from Great Britain and India tended to
sequently, they were confident that the pressurization believe the crash came about due to pilot error coupled
system would perform well at its lower, standardized set- with weather conditions. Evidence from the wreckage,
tings. Finally, in an effort to add some flair to the design, including the tail section, seemed to indicate that the
each window in the passenger cabin was square, rather aircraft had been struck by something heavy, but with-
than the small, round or oval shapes so commonly used. out any additional information forthcoming, both the
Knowing that it was facing competition from Boe- authorities and de Havilland engineers laid the blame
ing Corporation to be first to market with a commercial on external causes.
jet, de Havilland’s goal was to introduce its new aircraft January 10, 1954 was a mild, clear day in Rome
as quickly as possible in order to establish the standard as passengers boarded their BOAC aircraft for the final
for the commercial airline industry. At first it appeared leg of their flight from Singapore to London. When the
the company had succeeded: BOAC (British Overseas airplane reached its cruising altitude and speed, it dis-
Airways Corporation) ordered several Comets, as did integrated over the Mediterranean Sea, near the island
Air France and the British military. De Havilland also of Elba. Most of the airplane was lost at the bottom of
received some queries from interested American airline the sea, but amid the flotsam 15 bodies of passengers
companies, notably Pan American Airlines. It looked and crew were recovered. A local physician who exam-
as though de Havilland’s strategy was working; the ined the remains noted: “They showed no look of terror.
company was first to market with a radical new design, Death must have come without warning.” As a safety
using several state-of-the-art technologies. BOAC’s first precaution, BOAC instituted a ban on the use of Comets
nine Comet 1s entered service with the airline on May 2, until the airplanes had been thoroughly checked over.
1952. The future looked bright. Technicians could find nothing wrong with the new
 Case Study 7.1 287

aircraft and, following recertification, the airplanes were after the equivalent of only 3,000 flight hours. Experts
again brought back into service. argued that even when fatigue levels were revised
Alas, it was too soon. On April 8, only 16 days after downward to less than 3,000 hours, Comets would not
the Comet was reintroduced into service, a third air- be safe beyond 1,000 flying hours, a ludicrously low fig-
craft, operated by South African Airways, departed from ure in terms of the amount of use a commercial airliner
Rome’s Ciampino airport for Cairo, one of the legs of its is expected to receive. In addition, testing of the fuselage
regular flight from London to Johannesburg. Under per- offered disturbing indications of the cause of failure.
fect flying weather, the airplane rapidly gained its cruis- Specifically, cracks began developing in the corners of
ing altitude of 26,000 feet and its airspeed of almost 500 the cabin windows, and these cracks were exacerbated
miles an hour. Suddenly, the flight radio went silent and by repeated pressurization and depressurization of
failed to answer repeated calls. A search of the ocean off the cabin. The investigators noted that this result was
the island of Stromboli, Italy, turned up an oil slick and most pronounced along the rivet lines near the fuselage
some debris. Because of the depth of the water and the windows.
time necessary to arrive at the crash site, there was little to Testing also demonstrated that the wings had a
be found by search crews. Five bodies were all that were low resistance to fatigue. At several stages in the tests,
recovered this time, though with an eerie similarity to the serious cracks appeared, starting at the rivet holes near
victims of the second disaster: Facial expressions showed the wheel wells and finally resulting in rivet heads in
no fear, as though death had come upon them suddenly. the top wing surface actually shearing off. Engineers
and investigators were finding incontrovertible evi-
What Went Wrong? dence in the pieces of recovered wreckage that the cause
Investigators swarmed over the recovered wreckage of the sudden disintegration of the aircraft could only
of the aircraft and reexamined the pieces from the first have been due to cabin pressure blowout. Engineers
Calcutta accident while also conducting underwater suspected that the critical failure of the aircraft occurred
searches at the sight of the second crash near the island following sudden depressurization, when one or more
of Elba. Guided by underwater cameras, investigators windows were literally blown out of the aircraft. This
could collect sufficient aircraft fragments (in fact, they led to a sudden “gyroscopic moment” as the aircraft
finally recovered nearly 70% of the airframe) to make nosed down and began its plunge to earth.
some startling discoveries. The foremost finding, from Although at the time no one would admit it, the
the recovery of the entire, intact tail section, was that handwriting was on the wall. After two years, in which
the fuselage of the aircraft had exploded. Second, it Comets carried more than 55,000 passengers over 7 mil-
appeared that engine failure was not the cause of the lion air miles, the Comet 1 was never to fly again. De
accidents. Another finding was equally important: the Havilland had indeed won the race to be first to market
wings and fuselage showed unmistakable signs of metal with a commercial jet—a race that it would have been
fatigue, later shown to be the cause of failure in all three better to never run at all.17
aircraft. This point was important, because it advanced
the theory that the problem was one of structural design Questions
rather than simple part failure. 1. How could risk management have aided in the
Britain’s Civil Aviation Board immediately development of the Comet?
grounded the entire Comet fleet pending extensive 2. Discuss the various types of risk (technical, finan-
reviews and airworthiness certification. For the next five cial, commercial, etc.) in relation to the Comet.
months, the CAB set out on an extensive series of tests Develop a qualitative risk matrix for these risk fac-
to isolate the exact causes of the mysterious crashes. tors and assess them in terms of probability and
Before testing was complete, one Comet had been tested consequences.
to destruction, another had its fuel tanks ruptured, more 3. Given that a modified version of the Comet (the
than 70 complete test flights were made in a third, and Comet IV) was used until recently by the British
between 50 and 100 test models were broken up. The government as an antisubmarine warfare aircraft,
results of the extensive tests indicated several structural it is clear that the design flaws could have been
and design flaws. corrected, given enough time. What, then, do you
Although the aircraft’s designers were convinced see as de Havilland’s critical error in the develop-
that the structure would remain sound for 10,000 flight ment of the Comet?
hours before requiring major structural overhauling, 4. Comment on this statement: “Failure is the price
simulations showed unmistakable signs of metal fatigue we pay for technological advancement.”
288 Chapter 7 • Risk Management

CASE STUDY 7.2

The Building that Melted Cars

Driving a car in London just got a lot more dangerous. onto the swimming pool deck that are hot enough to
A soon-to-be-completed skyscraper in the downtown melt plastic and singe people’s hair. The technical term
area is having an impact that no one could have imag- for the phenomenon is a solar convergence, but the
ined: it is starting fires and melting cars. The building— hotspot soon became known as the “Vdara death ray.”
designed by internationally renowned architect Rafael The Vdara resolved the death ray effect with larger sun
Viñoly—is a dramatic edifice with curved exterior walls. umbrellas, but fixing the problem in London might
Built at 20 Fenchurch Street in London’s financial center, take a lot more work. “There are examples in the past
the 38-story skyscraper is known locally as “the Walkie- where an architect has had to rebuild the façade,” said
Talkie” for its unusual shape. Philip Oldfield, an expert in tall buildings at the Uni-
But that curvilinear shape is exactly what’s causing versity of Nottingham’s Department of Architecture.
the problem. The south-facing exterior wall is covered “If this is serious, then I dread to think how expensive
in reflective glass, and because it’s concave, it focuses it will be.”
the sun’s rays onto a small area, not unlike a magnify- Architectural critic Jonathan Glancey says the
ing glass directing sunbeams into a superhot pinpoint story is not unprecedented. In 2003, the opening of the
of light. Walt Disney Concert Hall in Los Angeles, designed
The beam caused by the curved skyscraper con- by architect Frank Gehry, had a similar problem. The
centrating the sun’s rays was measured at more than 110 building is covered in stainless steel panels and includes
degrees Celsius (230 degrees Fahrenheit) in September. many graceful, curvy ripples along its surface. Unfortu-
So far, the building has been responsible for partially nately, that design also meant that certain angles of the
destroying a parked Jaguar XJ luxury car, catching car- sun shining on the building refocused the sun’s rays and
pets on fire in nearby shops, and shattering slate tiles at caused hotspots on the sidewalk, with reflected temper-
local restaurants. This is likely to be a recurring prob- atures measuring up to 140F (60C).Blinding glare also
lem for any structure built within range of the powerful affected drivers passing the building. After computer
reflected light coming from the building. models and sensor equipment identified the panels
Because the effect is caused by the sun’s eleva- causing the problem, they were sanded down to break
tion in the sky at certain times of the day and during up the sun’s rays.
a specific time of the year, experts expect the intense In the case of the London Walkie-Talkie building,
light and dangerous heating effect will last about two developers could employ several possible solutions.
hours a day over a period of three weeks. To help in the One suggestion is to coat the windows to reduce the
short term, the building’s owners have contracted with harshness of the reflection, although this would have
local authorities to block off a limited number of park- the side-effect of reducing the amount of light that could
ing spaces that are right in the reflected beam’s path. enter the building. A much more expensive solution
Longer-term solutions are more problematic; the design would be to deliberately misalign the window frames,
of the building will not change and of course, the sun’s altering them little more than a millimeter, just enough
path is not likely to alter in the near future! to offset the solar concentrating effects of the building’s
Melting cars and causing fires are not the only windows. Whatever solution the building’s owners
problems that have been reported because of the unique ultimately adopt, it will prove an expensive solution to
building design. In fact, it appears that the Walkie-Talkie an unexpected problem that gives the “Walkie-Talkie”
building has a residual feature—the ability to blow peo- building one more nickname – “the building that
ple away. The 37-story building has a downdraft wind melted cars.”18
problem caused by its shape, and during breezy days,
it has almost blown pedestrians into the road and has
regularly toppled food carts parked along the street. In Questions
fact, this phenomenon has led city planners to revise 1. Search “London Walkie-Talkie Building” on the
the guidelines for building design and insist that inde- internet, then click through pictures of the structure
pendent wind studies be conducted on future building and read some of the articles posted. For example,
projects during their planning phase. note that the building won the “Carbuncle Cup”
This isn’t the first time Viñoly’s architecture has by the Building Design Magazine for “Worst Build-
been the subject of similar controversy. His Vdara Hotel ing of the Year” in 2015. What are some of the rea-
in Las Vegas has been criticized for directing sunbeams sons the building has been so ridiculed?
 Case Study 7.3 289

2. What are some of the challenges with assessing account for it in your plans.” Pick either the “pro”
risk when constructing a building. In other words, or the “con” side of this debate and develop an
what risks can be assessed up front, and what risks argument supporting your position. Is risk a natu-
are examples of “unknown-unknowns”? ral result of creativity?
3. Consider this statement: “With construction, risk is
simply the residue of creative designs. You cannot

CASE STUDY 7.3

Classic Case: Nicoll Highway Collapse

On April 20, 2004, six lanes of the Nicoll Highway in Apportioning Blame
Singapore disappeared into a 100-foot hole when a tun- An inquiry committee in May 2005 was told that the
nel being constructed underneath the highway collapsed. disaster was caused by a failure of a connection between
Incredibly, no one was driving on the usually congested horizontal struts and waling beams, which supported
highway. The tunnel was part of the underground Circle the diaphragm walls. The general causes of the collapse
MRT (Mass Rapid Transit) Line, and the supporting struc- had already been agreed upon by the Land Transport
ture for the excavation work had failed. Four workers Authority (LTA) and Nishimatsu-Lum Chang (NLC),
were killed in the incident and three others were injured. who were the main contractors in the joint venture; the
Rescuers hunted in vain for survivors for three days NLC lead designer Maunsell Asia; the project engineer
before efforts were called off; by this stage, it was clear that Paul Broome; and L&M and Kori (subcontractors).
the danger to the rescue teams far outweighed the likeli-
hood of finding any survivors. The other concern was the The LTA’s View
need to stabilize the ground around the collapse in order
According to the LTA, NLC was negligent, reckless, and
to ensure that no further collapses would occur.19
dishonest during the design and construction. The LTA
The immediate reason for the collapse was that
stated that the design errors had begun with the soil
the retaining wall holding up the evacuation work was
analysis at the earliest stages of the project. According to
insufficient to hold up the tunnel. Two construction
K. Shanmugam, the LTA’s counsel, analysis of the ground
cranes had fallen into the hole, and there was evidence
conditions had been based on the use of “Method A,”
of twisted steel support beams.
which looked at the mechanical properties of drained soil.
The soil encountered in the deep excavation was, in fact,
Initial Response
highly plastic marine clay, and NLC should have used
Authorities in Singapore instituted an inquiry into the data for undrained soils. By using the wrong method,
incident. They also suspended 20 other ongoing excava- NLC under-predicted the forces that would act on the
tion projects at great expense and delay while new best work being carried out. This led to an under-design in the
practice codes were put in place. Meanwhile, experts from temporary supports. As a result of this, the system being
across the world were brought in to investigate the acci- installed did not have the capacity required. The incorrect
dent and determine exactly what had happened. It became soil analysis also meant that, as the excavations got deeper,
clear that a number of factors had contributed to the col- the errors and potential failures became more acute. The
lapse. Most significant was the fact that geological findings strut connections were under-strength by a factor of two.
had been misinterpreted. The structure of the tunnel had NLC also substituted C channel shaped steel sec-
been under-designed as the engineers had assumed that tions for plate stiffeners in an attempt to strengthen the
the soil’s shear strength was greater than it actually was. connections. However, NLC had tried to cut costs by
There were also issues with the structural bracing system using scrap material to replace the stiffener plates when
being used. The collapse had taken place at a point where they had run out of supplies. The LTA went on to claim
the bracing was overloaded, and the system lacked the that NLC had ignored its own risk assessments. Some
capacity to redistribute the load between the other sup- of the stiffener plates were already buckling, but NLC
ports if this part of the bracing failed. The engineers had had hidden this from the LTA in order to keep them
underestimated the strut loads. from insisting on additional work.

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290 Chapter 7 • Risk Management

NLC was already behind schedule in April 2004 this triggered a gradual and progressive collapse of the
and had incurred late penalties of some $25 million. The tunnel walls. Just one hour elapsed between the failure
LTA would have undoubtedly ordered NLC to cease of the first strut connection and the complete collapse,
work had it known about the problems, and NLC would which triggered devastating damage to the highway.
have had to bear the cost of the extra delays to the work NLC admitted that there had been a failure in the tem-
schedule. Similar struts had failed on two other NLC porary works. They put this down to under-design
sites, but it had insisted that the problem was in hand and inappropriate detail of the connections. They also
and pressured the LTA to allow work to continue. It admitted that their own engineers had misinterpreted
was therefore the LTA’s contention that NLC had failed the relevant building code, which had resulted in the
to reveal enough information for the LTA to make an use of smaller steel beams than were actually needed
informed judgment. for the struts.
The greatest engineering disaster of the decade?
NLC’s View Although the general causes for the collapse of the
NLC was certain that the reason for the collapse was highway were agreed upon between all parties in 2005,
unforeseen downward movement of the diaphragm by May 2012, just one person had been prosecuted for
walls. According to NLC: their part in the disaster. Nonetheless, many lessons had
been learned. Work on the MRT commenced once more,
• There was a sudden drop in the height of the wall but this time, far more heavy-duty temporary supports
relative to the posts that were supporting the tem- were demanded. Additional robustness in design is now
porary struts. demanded of contractors.
• This changed the angle at which the struts were From the outset, braced excavations were used for
connected. transport construction projects in Singapore, and each of
• In turn, this caused the walls to deform and fail. the MRT stations were constructed using the “bottom-
NLC blamed sway failure, which occurs when violent up” method. This meant excavating and propping up
forces act on diaphragm walls. The phenomenon had the excavations with steel struts. These were supported
been seen in other parts of the Circle Line, but not at the at their mid-span by king posts and beams across the
Nicoll Highway. NLC maintained that the collapse of face of the diaphragm walls. The struts were placed at
the tunnel was not inevitable but was probably caused 3-meter intervals. Today, the “top-down” method is pre-
because the forced sway accelerated the failure. NLC ferred. This involves constructing the station with a per-
admitted that the struts were close to the limit of their manent reinforced concrete roof slab. The slab operates
performance, but maintained that the loads did not rather like a huge strut, which means that struts are not
exceed the capacity of the temporary work they had necessary. At a stroke, the time-consuming installation
carried out. Furthermore, NLC expressly countered of struts has been eliminated, and the safety risks are
the LTA’s suggestion that the soil analysis was the root far lower.
cause of the disaster, contending that
Government Response
• It was appropriate to use drained soil data, as it
In the immediate aftermath of the inquiry, the Singa-
provides a more conservative analysis.
pore government accepted the findings in full and was
• Although Method A had not been used for deeper
quick to announce a series of new legislation that would
excavations in Singapore before, the LTA was
improve safety standards in the construction industry.
aware of the method being used and generally
The Joint Review Committee, made up of members
agreed with the findings.
from various government departments, announced
• The LTA had been specifically briefed about the
that there would be far stiffer penalties for profession-
soil analysis as early as May 2002.
als who had shown dereliction of duty and care. A new
• At that time, the LTA’s own engineer had stated
licensing scheme was introduced for specialist contrac-
that other soil analysis types were too conservative.
tors. Additional training and the development of a code
of practice for deep excavation work were all part of a
NLC’s Admissions raft of new legislation. The Singapore government was
The failure took place at the ninth-level strut connec- convinced that the failures that led to the collapse of
tions, which was around 30 meters below the ground the highway and the deaths had been entirely avoid-
and just 3 meters above formation level. As the connec- able and were unacceptable. From this point, all major
tions failed, the diaphragm wall deformed. This over- construction projects would be audited in terms of their
loaded the struts, which caused them to buckle. In turn, safety. The government was determined to point out
 Internet Exercises 291

that small, incremental improvements would not bring Questions

about the level of safety that is expected of such proj- 1. In what ways were the project’s planning and
ects. As a result, it was necessary for several govern- scope management appropriate? When did the
ment departments to prioritize safety issues and bring planners begin to knowingly take unnecessary
in sweeping reforms. risks? Discuss the issue of project constraints and
With the reforms in place, the pace of work to other unique aspects of the tunnel in the risk man-
extend the MRT system was as rapid as before, but far agement process. Were these issues taken into con-
safer. For the Downtown Line, seen as the key to the sideration? Why or why not?
development of the Marina Bay area, excavations were 2. Conduct either a qualitative or quantitative risk
planned at 24 meters. In order to counter the weak soil, assessment of this project. Identify the risk factors
thick diaphragm walls were used, and these were stiff- that you consider most important for underground
ened by cross walls and slabs. Even the cut and cover tunnel construction. How would you assess the
tunnels (just like the one that caused the collapse at riskiness of the project? Why?
Nicholl Highway) had up to seven levels of strutting 3. What forms of risk mitigation would you consider
to support them. Lessons were learned, and legislation appropriate for this project?
was enacted to back them up.20

Internet Exercises
7.18 Go to www.informationweek.com/whitepaper/Manage- PMP CERTIFICATION SAMPLE QUESTIONS
ment/ROI-TCO/managing-risk-an-integrated-approac-
wp1229549889607?articleID=54000027 and access the 7.23 The project manager has just met with her team to brain-
article on “Managing Risk: An Integrated Approach.” Con- storm some of the problems that could occur on the upcom-
sider the importance of proactive risk management in light ing project. Today’s session was intended to generate
of one of the cases at the end of this chapter. How were possible issues that could arise and get everyone to start
these guidelines violated by de Havilland or the Tacoma thinking in terms of what they should be looking for once
Narrows construction project organization? Support your the project kicks off. This meeting would be an example of
arguments with information either from the case or from what element in the risk management process?
other Web sites. a. Risk mitigation
7.19 FEMA, the Federal Emergency Management Agency, is b. Control and documentation
responsible for mitigating or responding to natural disas- c. Risk identification
ters within the United States. Go to https://www.fema. d. Analysis of probability and consequences
gov/mitigation-best-practices-portfolio. Look around the 7.24 Todd is working on resource scheduling in preparation for
site and click on “Risk Management” and “Case Studies” the start of a project. There is a potential problem in the
to see examples of projects in which the agency is involved. works, however, as the new collective bargaining agree-
How does FEMA apply the various mitigation strategies ment with the company’s union has not been concluded.
(e.g., accept, minimize, share, and transfer) in its approach Todd decides to continue working on the resource schedule
to risk management? in anticipation of a satisfactory settlement. Todd’s approach
7.20 Go to www.mindtools.com/pages/article/newTMC_07. would be an example of which method for dealing with risk?
htm and read the article on managing risks. What does the a. Accept it
article say about creating a systematic methodology for b. Minimize it
managing project risks? How does this methodology com- c. Transfer it
pare with the qualitative risk assessment approach taken in d. Share it
this chapter? How does it diverge from our approach? 7.25 A small manufacturer has won a major contract with the
7.21 Using the keyword phrase “cases on project risk manage- U.S. Army to develop a new generation of satellite phone
ment,” search the Internet to identify and report on a recent for battlefield applications. Because of the significant
example of a project facing significant risks. What steps did technological challenges involved in this project and the
the project organization take to first identify and then miti- company’s own size limitations and lack of experience in
gate the risk factors in this case? dealing with the Army on these kinds of contracts, the com-
7.22 Go to www.project-management-podcast.com/index. pany has decided to partner with another firm to collabo-
php/podcast-episodes/episode-details/109-episode-063- rate on developing the technology. This decision would be
how-do-risk-attitudes-affect-your-project to access the an example of what kind of response to the risk?
podcast on risk attitudes on projects. What does the a. Accept it
speaker, Cornelius Fichtner, PMP, suggest about the b. Minimize it
causes of project failures as they relate to issues of risk c. Transfer it
management? d. Share it