Pipeline Risk Analysis

Pak. J. Engg. & Appl. Sci. Vol. 2 Jan 2008 danger summary for saying and procedure of Gas Pipeline see to its in Pakistan S. Mubin1 and G. Mubin2 1 2 elegant Engineering Department University of Engineering & Technology, Lahore, Pakistan Instructor, VTI, PVTC, Govt. of Punjab, Lahore, Pakistan Abstract In order to provide for its graduate(prenominal) energy film, Pakistan is be after to import internal gas through product lines from abutting countries. For fully utilizing the imported gas, providing it to end customers, the infrastructure of gas var. needs to be real.Therefore, colossal investment has been done and proposed in this firmament in coming future tense. Considering geological, topographical, geopolitical and climatic conditions of the plain, in that respect is added happen of seism, landslides and climaxs. over callable to current geopolitical location there is a persistent panic of unrest and terrorism in the domain. Instable presidency polic ies, high rate of inflation, quick change in corporeal prices argon also big pick up factors. in all these factors make the situation very(prenominal) complex in quantifying the peril of infection specially for a mould in which the endangerment strike factor come nears exponentially in case of adventure detail. In this paper, intimately appropriate essay classification is make found on adept, boldnessal, political, natural climatic, warranter and environmental portion factors. Effort has been made to device a simpler lay on the line attention modeology to analyze and give c ar essays of gas agate line pop. In the proposed luck precaution model four-card monte Carlo trick has been accustomd to identify captious seeks.Keywords Oil and Gas contrasts hazard digest and centering three-card monte Carlo mannequin 1. mental institution Oil and gas sector is considered as back atomic number 76 of either countrys economy. In Pakistan industriali zation, agriculture, transportation and even municipal utilization of the energy depends on oil and gas sector. Almost 80 % of power generation is oil and gas based (50% gas and 30% oil) 1. For businesslike energy employment there is a need of efficient transportation administration (main and diffusion net of none) in the country, which is non adequate to fulfill the countrys requirement.As per World intrust Report only(prenominal) 21% of the total population of the country has access on natural gas. Due to the growing demands, bloodline ne dickensrk is expanding vigorously as during the brave 10 age the network of main and dispersal gas origin was expanded by 85% 2. Currently Pakistan is puckering its gas demand by internal sources but by the division 2011 the difference amidst countrys gas demand and add unitedly leave alone be 1. 2 Bcfd which volition rise to 3. 1 Bcfd by the year 2015 and in the end to 11. 1 Bcfd by the year 2025 3.To fill the gap between demands and supply Pakistan is planning to import natural gas through melodic phrase from neighboring countries. Options of Turkmenistan, Iran and Qatar be available for gas import. enroll 1 shows that route of future cross country line of descent. In Pakistan, expected investment in credit line buildion is within range of 7 to10 billion dollars during the next 5-10 age 4. Structure and marks of insecurity atomic number 18 varied in different mega shake off such as Iran-Pakistan-India pipeline due to multi-party bear uponment from different geographical locations and restrictive structure 5.These mega tolerates may be termed as global realizes specify as those where the sustainer and/or disregardor may be from a country different to that of where the befuddle is situated typically involve a wider range of issues than domestic devices and in effect, moving outback(a) of ones usual business jurisdiction interjects about(prenominal) unknowns. Factors match ing owner investment decisions with global capital facilities merchant ship be quite complex and may parti-color signifi ga impartly from region to region and find out to shake off 18.Nature and strike of take chances ar different in different stages of jump out carriage calendar method of birth tame of pipeline discovers. For most effective periliness precaution it is recommended to plan, analyze and manage stake in all signifiers of exteriorise life story cycle i. e. initializing, object clearance and feasibility, instauration, wind and achievement. Understanding the relationship between jeopardy alike(p) Author S. Mubin (emailprotected edu. pk) jeopardy Analysis for saying and Operation of Gas pipeline Projects in Pakistan forethought and project chassiss for capital projects jackpotnister be a difficult occupation.For instance, around perils ar negligible in bend phase but atomic number 18 of vital importance in design phase such as seism. while dealing with run a luck vigilance of international projects, which be often first or one- prison term efforts and project progress and phasing decisions give the axe be isolated from gamble management. For most international projects, different participants are responsible for control of the mingled phases of a projects life cycle. In many cases, the project owner is largely responsible for build of instruction digest, a thirdparty is often hired to design (engineering), construct, manage and control to meet the initial onstraints set by the owner 6. Contractor is hired to construct the project, which turns the dissolving agents over to the owner for cognitive moves or production. Structuring projects with distinct phases and responsibilities feces add-on run a lay on the line by isolating the project participants in such a manner that minimal attention is stipulation to overarching project concerns. Individual project participants become concerned with only their own project gambles and either volitionally or unwillingly try to carry these lucks to a nonher(prenominal) project participants.To condition the cooking stove of this paper the discussion is confined to the endangerments occurring during crook and cognitive process phase. skeletal frame 1 The routes of future gas pipeline project in the region. The doubtfulness in chthonictaking structure of a pipeline project comes from many sources and often involves many participants in the project. Since all(prenominal) participant tries to minimize its own risk, the conflicts among various participants piece of tail be detrimental to the project. Systematic risk management of project activities is not fully recognized as valuable by practitioners in the aspect industry.No viridity view of risk exists since the owner, investor, designer, and constructor eat differing project goals and objectives, and diachronically adverse relationships are common. In recent years, the opinion of risk sharing/risk assignment contracts has gained acceptance in pipeline design and construction. The distribution of risk between the invitee and contractile organ hightail its to brood effective management strategies and investigations show that contactors and owners give minimal consideration to risks outside the realm of their own concerns.The Federation worldwidee des Ingenieurs Conseils (the International Federation of Consulting Engineers, FIDIC) and the International European Construction Federation (FIEC) publish two easy-known and widely-accepted forms of conditions of contract for international construction projects (the Red and Yellow Books) that include provisions on the fair and equitable risk sharing between the owner and the contractor as well as risk responsibilities, liabilities, indemnity, and insurance 7.Considering technological tear down of view geographical conditions of Pakistan are very complex for the construction of pipeline projects. Alm ost 50 % of the total area of Pakistan is mountainous or semi-mountainous and in rest of the 23 Pak. J. Engg. & Appl. Sci. Vol. 2 Jan 2008 area there is wide network of rivers and back toothals (Figure 2). Therefore, for linear structure like pipelines there are extensive crossings and some beats extreme aim conditions are met, where micro area stage of risk is step-upd as compare to blueprint conditions of construction.On the other hand, risks during operation of pipelines occupy different characteristics depending upon the personnel and weakness of operating organization, topographical, geopolitical and climatic conditions of the country where project is executed. While dealing with natural risks, the geology and geographical characteristics of the regions must(prenominal) be thoroughly studied. For instance, the two continental households i. e. Indian and Eurasian meet in Pakistan which highly impact on the eodynamics of the region which are the major source of seism 8. In monsoon period there is high fortune of floods. Typical topography, steep slopes, high rainfall in a specific period (JuneAugust) and high temperature (melting glaciers) are the dominating factors for intensifying the frequence of floods in a crabbed year. Considering geopolitics of the regions there is a persistent threat of unrest and terrorism.The economic in constancy has added the line due to that there is frequent change in economic parameters. All these are in fact the potential risks for any construction project especially oil and gas pipelines in which risk are reckon many fold and there is exponential rise in modify in case of feature of one or more risks resulting huge human and environmental losses. Figure 2 Map of Pakistan display important geological and geographical features of the country . Classification of risk of infections For effective chance anxiety, risk classification is of prime importance. There are many kinds of classifications subscribe to been made so far 10. In general, risks associated with pipeline projects may be classified advertisement as broadly riskiness during Construction try during Operation only, in operation, risk are slightly different, in which emphasis is given to avert those factor with hurdle caoutchouc and smooth operation/functioning of pipeline.Usually, in mega projects such as cross country trunk pipelines investment risk are considered most import followed by the security risk. More precisely, risk during construction and operation of oil and gas pipelines can be divide into succeeding(a) categories ( tabularise 1) The type and causes of risk in individually class are different. lay on the lines during construction are age susceptible and the prospect of occurrence of different risk are m dependent, more is the time of project higher(prenominal) are the probabilities.These are generally tie in to execution of work actes, bodily availability, workforce, finances ( cypher), t ime frame, accidental, legal and environmental. 24 i. ii. iii. iv. v. vi. vii. viii. Political risk Socio- sparing risk Technical risk organizational risk inwrought catastrophic risk Financial risk (investment risk) Safety and security risk Environment risk bump Analysis for Construction and Operation of Gas pipeline Projects in Pakistan submit1 luck Classifications No 1. Category Risk Political risks Unstable Govt. olicies budge in economic parameters Breach in contractual relationship chimerical salute baseline and financial delay Inefficient communication hazard during construction or operation temblor Risk Factors alteration in labour policy Rise in inflation and material prices release of venture or partnership Exchange rate risk and rise in interest rate Inefficient and conventional technologies Not use of HSE policies and stock floods prostitute to surrounding environment Delay in acclamations from regulatory bodies Seasonal unavailability of labour Unrealistic SWOT abridgment Strikes, lockout, revolt flip in economic policies and tax system Fine or compensation 2. Socio-economical risks Organizational risks 3. 4. Investment risk Disinvestment from market Insufficient resources and equipment terrorism or war Strong credit policy Quality risk and rework Human error (Damage or loss of machine or human resource) Weather conditions e. g. humidity, precipitation Damage to ecology and wildlife 5. Technological risk 6. Security risk 7. Natural and climatic risk Landslide, hurricanes Depletion of hydrocarbon resources 8. Damage to environmental risk natural resources 2. 1 Political Risk The effect of countrys policies on the project mastermindly impact on project success or failure.During the policy making dish up, technical factors are ordinarily ignored and policies may be set in a government agency that operation of a project may not be economical or trade offing. This factor is also important in smooth governments, where there is more risk of change of economic, petroleum or boil policies, which are directly related to the pipeline projects. Delays can occur due to laborious and dilate procedure for approval from public synthetic rubber decree department, environmental regulation agencies and oil and gas regulatory bodies. Public health, safety and environmental concern are more important in the western sandwich countries as compare to developing countries like Pakistan. polity and political risks are more concerned in international project risks, such as cross border pipeline projects.In international projects these risks 25 are sometimes overlooked or assessed haphazardly. Such risks include war, civil war, terrorism, expropriation, inability to transfer currency across borders, and trade credit defaults by foreign or domestic customers 6. Although risks such as civil unrest and economic stability are typically outside the scope, under(a)standing and dealing with these risks are exact for companies worki ng internationally. A 2001 subject area by AON Trade Credit observe that, in the Fortune 1000, only about 26 percent of companies had in place systematic and consistent methodologies to assess political risks 6. 2. 2 Socio-economical riskSocio-economical conditions throw out reinforced the climate of uncertainty with high inflation and interest rates. The deregulating of financial institutions has also generated unanticipated problems related to the financing of construction. These risks can be forecasted and linked with the economic indicators of the country. For instance, In Pak. J. Engg. & Appl. Sci. Vol. 2 Jan 2008 Pakistan, the economic indicators are tutelage to grow regard slight of the political instability in the country. The GDP of the country was 8. 4% prior to 2005 earthquake, which declined down to GDP 5. 6 or less currently. seism and floods during the last two year apostrophizeed government venturely $5. 4 B and expected to spend more $3. 6bn till 2010.Overall there is harvesting in the market and potential for foreign investment in construction sector 1. 2. 3 Technical risk The risks related to technological problems are familiar to the design/construct professions which have some spot of control over this category. However, because of rapid advances in new technologies which deliver new problems to designers and constructors, technological risk has become greater in many instances. Certain design assumptions which have served the professions well in the past may become obsolescent in present time. Site conditions, particularly subsurface conditions which al appearances present some degree of uncertainty, can create an even greater degree of uncertainty during construction.Because construction procedures may not have been fully anticipated, the design may have to be modified after construction has begun. An modeling of facilities which have encountered such uncertainty is the nuclear power plant, and many owners, designers and contr actors have suffered for undertaking such projects. There is a need of technological promotion to overcome this risk. statistics, geological surveys, sub surface investigation through various method has given rise to the development of such techniques which can not only quantify frequency of occurring of such phenomenon in a particular region but also their impact and destruction. Northern areas of Pakistan are considered in high seismic zone 8 particularly after incidence of eighth Oct. 005 earthquake, in which more than 86000 people died and one million got injured and 3 million became homeless, this factor is highly considered in planning, feasibility, design and construction of the any construction project in the region 9. The major reason is the plate architectonic motion in Himalaya, northern part of Pakistan. This plate tectonic motion is due to the uplift of Euro Asian plate by Indian plate (two plates are meeting in Pakistan) 2. 6 Investment risk Pipelines are mega project . A lot of funding is required for the completion and safe operation of pipelines. Investment has been al representations a prime risk in construction project due to multi party involvement.But especially for the international pipeline project, this is always risk of payback and trade offing, because of the bilateral and diplomatic relationships. 2. 7 Safety and security risk In a broader sense, safety and security risks include factors due to that loss or damage of resources (manpower, machinery and financial resources) or facilities (pipeline, pipeline crossing, gas compressor station) can occur during construction or operation phase of a pipeline. It is very often that loss of work time, machinery and manpower occur due to accident on side because of the negligence of some worker. These risks involve all serves (accident, malfunctioning, terrorism, war etc) due to that loss of resources nd production of pipeline can occur. These risks are more likely to occur during operation ph ase however, these can be occurring in construction stage as well. To cater these risk to occur Health safety policy is spike so that to minimize on-site and offsite accidents during construction. It is generally accepted that the pipeline are the target in terrorists attacks and wars. For, instance, history prevails that in last five years the total terrorist attacks made on the pipelines in Pakistan were 103. It may be the result of internal political situation of the country but anywhere in the world this factor of risk is considered to be very important.For safe operations, landed estate of the art methodology and technology has been developed which ensure safe exploitation of pipeline, which include remote sensing, Geographical Information System (GIS) and mapping techniques, infirm detection and ranging (LIDAR), Global positioning system (GPS), selective information acquisition (SCADA) and In-line revue (ILI) etc. 26 2. 4 Organizational risk The risks related to organiza tion and organizational relationships may appear to be unnecessary but are quite real. Strained relationships may develop between various organizations compound in the design/construct ferment. When problems occur, discussions often center on responsibilities kind of than project needs at a time when the focus should be on solving the problems.Cooperation and communication between the parties are discouraged for business organisation of the effects of impending litigation. This barrier to communication results from the illconceived notion that uncertainties resulting from technological problems can be eliminated by appropriate contract terms. The net result has been an increase in the be of constructed facilities. 2. 5 Natural catastrophic risk Natural catastrophic risks are those on which there is no control. They are commonly the act of God and can occur at anytime and anywhere. Earthquake, floods, hurricanes are the common examples of these risks. However, due to the develo pment of the science and technology in the field of pretense and modeling,Risk Analysis for Construction and Operation of Gas pipeline Projects in Pakistan 2. 8 Environmental risk Environmental concerns and awareness is increasing everywhere. The worldwide environmental protection movement has contributed to the uncertainty for construction because of the inability to know what will be required and how long it will take to obtain approval from the regulatory agencies. This delay in approval practically influence on total tolls of the project. Public safety regulations have similar effects. The situation constantly change guidelines for engineers, constructors and owners, as projects move through the stages of planning to construction due to the change in govt. policies.These moving targets add a momentous new dimension of uncertainty which can make it virtually out of the question to catalogue and complete work at budgeted cost . Risk management reduces the impact of negative r isks and enhances positive risk to make opportunities. However, limiting our scope in this section to negative risks, risk management may be defined as a method to reduce the consequences of negative events (risk) tend to occur during construction and operation of pipeline by developing mechanisms and strategies (risk transfer, risk reduction, risk distribution, avoidance, risk enhancement) compatible to the system environment in which project is executed. The dodging of risk management is based on risk depth psychology results for a particular project.According to Project attention bestow (PMI) commence of risk management 11 the care for includes 1. 2. 3. 4. 5. Risk management planning Risk ap academic degreement Qualitative risk synopsis quantifiable risk abridgment Risk reduction strategies 3. Risk steering run Generally risk abstract and management had not been applied in construction industry and especially in pipeline projects. It is comparatively new area for pipe line projects, which is cursorily advancing due to the involvement of non native client or contractor. However, the invention of risk analysis and management is getting fame in pipeline project due to involvement of multinational contractor/organizations.Basically risk management deals with management of positive and negative events which occurs during realization of projects. 3. 1 Risk management planning Risk management process (PMI come up) starts with the planning of risk management, which includes a detailed risk management planning. In Risk management planning the proposed course of action for risk analysis is set. The input, output and process are shown in the table 2. Table 2 Process showing Risk Management proviso 19 Input Organizational environmental factor Organizational process of assets Project scope management Project management plan Planning meeting and analysis Risk Management Plan Planning course of action Process come out put 3. 2 Risk realization processFor effective risk analysis and management the naming of risk is very important carefully such that no important factor is left-hand(a) which can negatively impact on the project. The risk indemnification process input and output are shown in table 3, which include the following Information Gathering Techniques Examples of information gathering techniques employ in identifying risk can include brainstorming, Delphi techniques, interviewing, root cause identification and SWOT (Strengths, weaknesses, opportunities, and threats) 27 analysis. Brainstorming is important information gathering technique for risk identification in which a group of team members or subject-matter experts (design, construction, purchase, finance etc) together identify expected risks.Delphi is another technique of information gathering use as a way to reach a consensus of experts on a subject. Experts on the subject participate in this technique anonymously. A facilitator uses a questionnaire to solicit ideas P roject Documentation Reviews For risk identification project financial backing are refreshed, including plans, assumptions, prior project files, and other information. The quality of the plans, as well as Pak. J. Engg. & Appl. Sci. Vol. 2 Jan 2008 consistency between those plans and with the project requirements and assumptions, can be indicators of risk in the project. Assumptions Analysis Every pipeline project is conceived and developed based on a set of hypotheses, scenarios, or assumptions.Assumptions analysis is a tool that explores the validity of assumptions as they apply to the project. It identifies risks to the project from in true statement, inconsistency, or tenderness of assumptions. Table 3 Process of Risk Identification Input Organizational environmental factor Organizational process of assets Project scope management Project management plan Risk Management plan Checklist Analysis Risk identification checklists can be developed based on historical information and knowledge that has been accumulated from previous similar projects and from other sources of information. The lowest direct of the RBS can also be utilise as a risk checklist.Diagramming techniques Some Risk diagramming techniques may also be used for risk identification which includes cause-and-effect diagrams, system or process flow charts and influence diagrams. Process Information collection Documentation brush up Assumption analysis Checklist analysis Diagramming techniques Out put Risk Register 3. 3 Qualitative risk analysis There are several theories to quantify risks 12, 17. Numerous different risk formulae exist, but possibly the most widely accepted formula for risk quantification is Rate of position i. e. , luck multiplied by the tinge of event equal to Risk Number, mathematically expressed in equation 7. The inputs and output of qualitative risk analysis process is shown in table-4.PMI defined prize of opportunity and impact factor can be used in risk analysis given in Table 5. However, the selection of one of the value of P for a particle risk from table 5, is based on expert judgment which may adopt controversial results. The objective is to prioritize risk based on their opportunity and impact judgment. prospect and regard ground substance is used to visualize the impact of risk from least to maximum possibility. other method called Risk Data Quality Assessment is used which requires correct and unbiased data Analysis of the quality of risk data is a technique to evaluate the degree to which the data about risks is useful for risk management.It involves examining the degree to which the risk is understood. Risks to the project can be reason by sources of risk (e. g. , using the RBS), the area of the project affected (e. g. , using the break down Breakdown Structure), or other useful category (e. g. , project phase) to go under areas of the project most exposed to the effects of uncertainty. Table 4 Process showing Qualita tive risk analysis 19 Input Organizational process of assets Project scope management Project management plan Risk Management plan Risk Register Process Risk chance and impact assessment Probability and Impact matrix Risk data quality assessment Risk categorization Risk Register (updates) Out put 28Risk Analysis for Construction and Operation of Gas pipeline Projects in Pakistan Table 5 Standard set of frequency of occurrence and Impact factors 11 Possibility of occurrence very high chance High chance Greater chance Possible Likely Unlikely Probability (P) 90 % 75% 60% 45% 30% 15% Type and direct of risk Impact When maximum impact on scope, time and cost High impact on scope, medium impact on time and lesser impact on cost High impact on time, medium impact on scope and lesser impact on cost When high impact on cost of the project, medium impact on time and lesser impact on scope Impact Factor (I) 0. 9 0. 6 0. 3 0. 1 3. 4 denary risk analysisFor denary risk analysis any of the following method may be used as illustrated in Table 6. incorporates probabilities and the costs or rewards of each logical path of events and future decisions, and uses expected fiscal value analysis to help the organization identify the relative values of alternate actions. See also expected pecuniary value analysis. esthesia analysis Sensitivity analysis helps to determine which risks have the most potential impact on the project. It examines the extent to which the uncertainty of each project agent affects the objective being examined when all other uncertain elements are held at their baseline value.One typical display of sensitivity analysis is tornado diagram, which is useful for comparing relative importance of uncertains that have a high degree of uncertainty to those that are more stable. Expected pecuniary Value (EMV) Analysis It is a statistical technique that calculates the expected outcome of future scenarios in monetary form that may or may not happen. modelling a nd ruse manakining and affectation is recommended for cost and schedule risk analysis because it is more powerful and less subject to mis industry than expected monetary value analysis. make-believe uses a model that translates the uncertainties specified at a detailed level of the project into their potential impact on project objectives. 3. 5 Risk eduction strategies Risk archives may be obtained from risk management procedure defined by Project Management Institute (PMI) 11, which is a account containing the results of the qualitative risk analysis and decimal risk analysis. On the basis of risk analysis risk reducing strategy is set which is also given in risk register. The risk register in that way, presents all related information of identified risks including description, category, cause, hazard of occurring, impact(s), risk number and the possible strategy set for each risk. Decision tree diagram The decision tree is a diagram that describes a decision under consider ation and the implications of choosing one or another of the available alternatives. It is used when some future scenarios or outcomes of actions are uncertain.It Table 6 Process showing Quantitative risk analysis 19 Input Organizational process of assets Project scope management Project management plan Risk Management plan Risk Register Process Out put Quantitative risk analysis ( Sensitivity analysis, Decision Tree, Modeling and Simulation, Expected Monetary Value, EMV) 29 Risk Register (updates) Pak. J. Engg. & Appl. Sci. Vol. 2 Jan 2008 The common course of action of the any organization or participant (consultant, contractor, client or owner) take part in the construction process of oil and gas pipeline can adopt one or combination of course of action given below, depending upon the type of project, location and circumstances.Distribution of risk between participants of the project can be made by 1. Risk ecstasy (insurance, contracts) 2. Contingency Budget 3. Risk mitigation (problem solving and root cause analysis) 4. Risk avoidance 4. tuition of Risk Management Model for Pipeline Construction Projects Project Management Institute (PMI) approach of risk analysis and management may be complicated and laborious for construction project like pipeline. Therefore a model of risk analysis and management is developed which simplifies the process and do more verisimilar results with the implementation of monte Carlo simulation (Figure 3). Project document review Market Analysis Client/Contractor reviewGeopolitical analysis and review 2. Risk Classification Risk Breakdown Structure (RBS) 3. Risk luck and impact factor Data collection (Authentic source) Data processing (Normal, Beta, Gamma, Log, etc distribution) numeration of absolute frequency (P) and Impact factor (I) 4. Risk analysis 5. four-card monte Carlo Simulation Identification of critical risk 6. Risk management strategy Risk Transfer (Contract, insurance) Risk Distribution (Between parties) Ris k Mitigation (Eliminating risk causes) Risk Avoidance 7. Risk monitoring process Documentation Monitoring process and results Check and make changes Data Bank Figure3 Risk Management Model for pipelines construction project. 30Risk Analysis for Construction and Operation of Gas pipeline Projects in Pakistan feeling-1 Model starts with identification and classification of risks considering the type of construction project. Degree and frequency of risk varies from trunk pipeline to distribution line. Similarly it gives suitable approach for both the major parties i. e. Owner (client) and the Contractor. Before identifying the risk the market review, client/contractor capability and geopolitical conditions of the region are analyzed where project is expected to be executed. The types of risk are also depending upon the type of contractual relationship between the owner and constructing firm. In different ypes of contract (Build-Operate and Transfer, Engineering-Purchase and Constructi on, Figure, jailor contracts, Labour contract, etc) between the owner and constructing body the level and intensity of risk differs 13. STEP-2 On the basis of risk identification risk are categorized and Risk Breakdown Structure (RBS) is made as shown in Figure 4. Risk identification is the most important thing followed by the probability and impact enumerations in whole risk analysis process. Figure 4 Risk Breakdown Structure of gas pipeline project STEP-3 Risk probability assessment investigates the likelihood that each specific risk will occur. Risk impact assessment investigates the potential effect on a project objective such as time, cost, scope, or quality.The selection of PMI defined the values of probability and impact factor given in Table 5 is based on expert judgment which may produce controversial results. For instance, it may be difficult some time to learn the possibility from Higher Chance to Greater Chance for that an expert can use 60% probability value however, another use 45%. In that way some negligible risk may be superseded to other important risk. Risk impact factor defined by Project Management Institute (PMI) are used in this study which range from 0,1 to 0. 9 depending upon the type and impact of event to the project. For risk Monte Carlo Simulation the precise value of probabilities are required.Therefore, probability and impact of each risk may be calculated based on historic data. In this 31 case we the values of probability of different risks are calculated by using different probability distribution curves, however, when the historical data is not available, the probability is judged by experts opinion (from SNGPL) or the direct value of probability for that particular risk published by the related government agency. It is very important to define the probability distribution of a risk on the basis of that the frequency of occurrence is calculated. It is observed that the probability distribution of different risk appearing i n different stages of project life cycle is different.Therefore, during calculation of probability of each risk the characteristic of risk must be considered to find the appropriate distribution to get the more precise results. For example, figure 5 shows the 10 year data of flood 21 depicts that the a normal curve is best suited to find the probability of a given mint/time called as the flood flow may be calculated using Equation 1,2 and 3 14. Pak. J. Engg. & Appl. Sci. Vol. 2 Jan 2008 Figure 5 Graphical representation of flood data 1990-2001 where P probability of occurrence Z area under normal curves for a given value X (the probability of that area can be found out from charts) ? mean value of the 10 year data of river flows. ? standard deviation of the mean data.On the basis of historical data, obtained from IRSA, the probability of river flow more than 400 (MAF) (which is termed as flood flow) through river system of Pakistan (sum of river flow at a time on Mangla and Ter bela) is calculated by using measured. Similarly other risks are also quantified based on the characteristic of data distribution curve. For instance, for earthquakes we are interested to find the probability of occurrence earthquake more than 5. 5 Richer Scale. According to construction codes, the earthquake between 3. 5-5. 4 Richer Scale is often felt, but rarely causes damage. A value of 5. 5 Richer Scale is selected to calculate probability of 32 occurrence under assumption that almost slight damage to well knowing buildings can caused major damage to poorly constructed buildings over small regions.Pipelines can go under slight damage of residual. For a random variable X (x 0 and elsewhere i. e. x 0 the value of probability is zero) have an exponential distribution with parameter ? then probability distribution is defined as in equation (4), (5) and (6) 14. Therefore either exponential or gamma distribution (with m =1) may be used for probability calculation of earthquake at a given value (in Richer Scale) using the historical data 9, as shown in the Figure 6. where P probability of occurrence ? mean value of historic data ? standard deviation of the historic data e 2. 718282 VAR is the variance at any value X. For 5. Richer Scale earthquake ? = 1 ? P (X 5. 5) = ? 1. e 1*5. 5 = 0. 000408 5. 5 Risk Analysis for Construction and Operation of Gas pipeline Projects in Pakistan Frequency of occurrence 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0,000 0 1 2 3 4 5 6 Earthquake loudness (Richer scale) Figure 6 Graphical representation 45 year earthquake data STEP-4 On the basis of probability values for each risk a risk register (table 7) may be made which presents quantitative risk analysis for each risk. PMI defined impact factor can be used which clear cut defines the type and condition of risk impact. On the basis of this formula below qualitative risk analysis is made.The following relationship is used for risk analysis 11 RN = P x I RN Risk N umber P Probability of occurrence I Impact factor of risk For parameters the data is not available expert judgment can be used for probability assessment. Risk Number (RN) can be found for all risk identified in Risk Breakdown Structure (RBS). Manually it can be identified critical risk having larger risk number, RN based on the one point calculation. However, the more authentic way to identify the critical risks associated to pipeline project is Monte Carlo Simulation approach which is discussed in next step. STEP 5 Monte Carlo simulation is a widely used computational method for generating probability distributions of variables that depend on other variables or parameters represented as probability distributions.Although Monte Carlo simulation has been used since the 1940s, development of computer technology has made it accessible and winsome for many new applications 15. That availability has coincided with increasing dissatisfaction with the deterministic or point estimate ca lculations typically used in quantitative risk assessment as a result, Monte Carlo simulation is rapidly gaining popularity. Monte Carlo simulation, which is a mathematical method used in risk analysis to approximate the distribution of potential results based on probabilistic 33 (7) inputs would involve many calculations of the intake rate rather than a single calculation for each calculation, the computation would use a value for each input parameter randomly selected from the probability density function for that variable 16.Each simulation is generated by randomly pulling a stress value for each input variable from its defined probability distribution, e. g. uniform, normal, lognormal, triangular, beta, etc. These input sample values are then used to calculate the results, i. e. total project duration, total project cost, project finish time. The inputs can be task duration, cost, start and finish time, etc. This procedure is then repeated until the probability distributions ar e sufficiently well represented to achieve the desired level of accuracy. They are used to calculate the critical path, slack values, etc. Monte Carlo simulations have been proven an effective methodology for the analysis of project schedule with uncertainties.In Monte Carlo simulation any desired level of mathematical accuracy can be achieved by increasing the number of iterations. Risks are equiprobable entities, it is possible that all the risk accrued at the same time during project execution and may be no identified risk appears. Therefore, it is desired to use Monte Carlo simulation technique to find the most critical and probable risk which can appear in the pipeline project. Risk analysis has been made by using program Riskyproject 1. 3. 3 20 which is an advanced project management software with integrated risk analysis. RiskyProject is used for planning, scheduling, quantitative risk analysis, and performance measurement of projects with multiple risks and uncertainties.Ri skyProject determines which parameters will have the most effect on the project duration, cost, and finish time with and without risks, of the essence(p) tasks, critical risks, and success rate. RiskyProject helps to optimize the course of the project track project performance and risk together and analyze the affect of mitigation efforts 22. On the basis of Monte Carlo simulation critical risks are Pak. J. Engg. & Appl. Sci. Vol. 2 Jan 2008 Table 7 Risk input in risk register and their quantitative analysis for pre-defined risks Risk Identification and Categorization Cat. Risk 1 1 1 1 1 1 1 2 2 2 3 3 3 3 3 3 3 4 4 4 4 5 5 5 6 6 6 6 7 7 7 7 8 8 1. 2. Risk Register Risk Analysis Freq. Risk reducing dodgeRanking 27 3 23 25 8 14 29 1 12 21 16 8 9 12 4 5 3 2 24 18 19 11 10 5 20 11 12 5 15 3 12 2 6 8 Risk Avoidance Risk Risk Transfer Mitigation Remarks Risk Delay in approvals from regulatory bodies Unstable establishment policies Change in regulations Change in labor policy Change in p etroleum policy Political instability Lawlessness, strikes, lockouts Change in economic parameters Hike in material prices Unavailability of skilled laborers Change in project scope Insufficient technology Completion of construction not on time Not realistic planning of resources and volume of work Request for increase in project budget In sufficient specialist and engineers Strains in contractual relationships Financial delays Disinvestment from the market injury ofPartnership Change in credit policy (increase interest rate) Design not completed in time Unexpected obstacle on site (dewatering, rock excavation) Slow communication between team members War terrorism Accident on site during construction Loss of human life Earthquake Flood Landslides Unexpended weather condition, precipitation wind storms Damage to environment Degradation of natural resources (P) 5,15% 8% 2,10% 2,90% 5% 4% 4,50% 8,10% 8,03% 6,80% 3,9 % 10% 9,50% 8,10% 13,13 % 6,50% 5,30% 6. 1 % 4,40% 3,01% 5,10% 7,80% 7,80% 5,90% 0,10% 2,20% 2% 3,90% 0,04% 3,07% 2,1 % 4,72% 3,75% 1,10% Impact (I) 0,32 0,6 4 0,9 0,6 0,6 0,6 0,3 0,9 0,3 0,3 0,6 0,3 0,3 0,3 0,3 0,6 0,9 0,9 0,1 1Risk Number 1,55% 4,80% 1,89% 1,74% 3,00% 2,40% 1,35% 7,29% 2,41% 2,04% 2,34% 3,00% 2,88% 2,43% 3,94% 3,90% 4,77% 5,49% 0,44% 1,81% 1,53% 2,34% 2,34% 3,54% 0,09% 1,98% 1,80% 2,34% 0,12% 2,76% 0,63% 2,82% 2,25% 0,66% E?5 E? E? GO E? E? E? 6 3 GO, EO SA 7 GO E? EO EO EO SA GO SA EO EO SA EO SA EO EO EO SA SA SA SA SA SA SA GO GO 0,6 0,3 0,3 0,3 0,6 0,9 0,9 0,9 0,6 0,9 0,9 0,3 0,6 0,6 0,6 0. 1- When high impact on cost of the project, medium impact on time and lesser impact on scope. 0. 3- High impact on time, medium impact on scope and lesser impact on cost. 3. 0. 6- High impact on scope, medium impact on time and lesser impact on cost. 4. 0. 9- When maximum impact on scope, time and cost. 5.EO- Frequency of risk is based on experts opinion. 6. GO- Frequency of risk is based on statistic available by relevant Government organiz ation. 7. SA- Frequency of risk is based on statistical analysis. 34 Risk Analysis for Construction and Operation of Gas pipeline Projects in Pakistan Figure-7(a) Monte Carlo Simulation conducted for risk analysis of Muree Rawat gas pipeline project presents most probable cost and duration to complete project. It also presents most probable date of completion of the project considering all identified risks. Figure-7(b) Result obtained from simulation identifying most critical risk impacting scope, duration and cost Muree Rawat gas pipeline project dentified impacting on scope, cost and duration of project Figure 7 (a) and (b). Strategy for risk management is set accordingly. The following analysis and results was produced by the create by mental act 35 Sensitivity analysis Success rate of completion overcritical risks affecting cost vituperative risks affecting duration of project Pak. J. Engg. & Appl. Sci. Vol. 2 Jan 2008 Critical activities. Most probable duration Most probable cost of the project Most probable date of completion of project. STEP 6 On the basis of critical risk identification by Monte Carlo simulation, risk reduction strategy is set, which may be risk transfer, mitigation, avoidance, distribution and etc.During construction process the impact of risk can be get down by changing the schedule of construction for example 95% of probability of flood occurrence is in period from June to August. In flood, the area comes under water and may not be possible to continue the construction process. Therefore, schedule may be set in a way that ground related activities should be set accordingly to avoid the occurrence. STEP 7 The results or set methodology for risk management must be periodically monitored and checked for improvement. Lesson learned and recommendation should be dismiss to Data Bank which may be useful for risk analysis and management of another pipeline project of similar nature. organizational depicted object for design, construct ion and operation. Organizational or technological risk like wanting(p) resource planning or project management, change in scope etc can be eliminated by improving the process or application of new technologies available in this field. New state of the art technologies are helpful in managing change at any stage of the project. diachronic data of river flows shows that the flood has probability of 95% of occurrence between June and August. This risk can be minimized during construction phase by rearranging the construction schedule. Other risks like landslides are associated with floods, rain fall or earthquakes. Earthquake risk during construction phase depends on the length of execution of project and only impact on the construction cost of the project. As the duration of the execution increases probability of occurrence of risk also increase.However, in operation phase this risk must be eliminated by practicing design based on earthquake/horizontal forces. 5. Conclusion and R ecommendations Probability of risk occurrence P comes out to be the function of project duration T both during construction and operation phase. However Intensity of destruction or Impact is a function of enterprise internal and external environment. ternion most critical tasks calculated by Risky Project are Excavation, Transportation of Material and Stringing of pipelines. The most critical risks come out to be change in economic parameters, Change in design and scope, earthquake and terrorism during construction and operation of gas pipelines.Considering all risks the probable values to project completion calculated by Risky project is 460 days however the base project duration is 390 days. Similarly the project cost without risks is 350,00,000 however, with risks it is 391,00,000. On the basis of that contingency budget of project can be formulated to cater the risk. The secondary risks like change in material prices, construction not finished in time or budget and design not in time can be bring down or transferred to the other party or organization by contract. However SNGPL is designing, constructing and operating gas pipelines so risk can be eliminated by strengthening the internal Acknowledgement Mr. Pervair, Senior General Manager and Engr.Waqar Ashraf, substitute General Manager (Projects), SNGPL are acknowledged for their contribution and support in providing data and relevant material. REFERENCE 1 Economic Survey of Pakistan, Ministry of Finance, Chapter 15, Energy area of Pakistan, Islamabad, Pakistan. (2006), 219-225. 2 Annual Report Sui Northern Gas Pipelines Limited (SNGPL), Lahore, Pakistan (2006), 511. 3 Iran-Pakistan-India (IPI) Pipeline Pre-feasibility cut through by Hagler Bailly Pakistan. 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