“Politics, Institutions, and Project Finance: the Dabhol Power Project.”
Assignment 3: “Politics, Institutions, and Project Finance: The Dabhol Power Project.”
Patricia Peele
Dr. Hammad Elbedour
Project Risk Management BUS 519
November 18, 2012
“Politics, Institutions, and Project Finance: The Dabhol Power Project.”
Risk Breakdown Structure Prepare a risk Breakdown Structure assessing the main categories of risks. The risk breakdown structure is a hierarchical framework presenting possible sources of risk, used to structure risk identification and qualitative assessment. [ (Simon, 2007) ] Risk Categories are a common listing of sources of risk. Depending on the size of the project, one might employ a Risk Breakdown Structure (RBS). The main categories of risks assessed for the Dabhol Power Project are: technical, management, commercial and external risks.
Risk Breakdown Structure (Simon, 2007)
Prioritizing Risks From this RBS, develop a prioritized list of the top three (3) risks (potentially most critical). There are several quantitative techniques exist. The sensitivity analysis, decision tree analysis and the simulation techniques are a few means prioritizing risks. The first step is to determine the probability and impact of the risks. Qualitative and quantitative risk analysis are means to rate the risks. Qualitative risk analysis is a process that determines what impact the identified risks will have on the project and the probability that they will occur. Rank orders risks in priority order according to their effect on the project objectives. (Kim Heldman, 2005) The Probability scales are created by using high for critical risk, medium for significant risks and low for negligible risks. For example, high score on the probability or impact scale would be considered critical. This means the risk will occur frequently, has occurred on past project, and conditions exist for it to recur. (Kim Heldman, 2005) The Monte Carlo analysis is the most common simulation technique and requires the use of a computer and
Patricia Peele
Dr. Hammad Elbedour
Project Risk Management BUS 519
November 18, 2012
“Politics, Institutions, and Project Finance: The Dabhol Power Project.”
Risk Breakdown Structure Prepare a risk Breakdown Structure assessing the main categories of risks. The risk breakdown structure is a hierarchical framework presenting possible sources of risk, used to structure risk identification and qualitative assessment. [ (Simon, 2007) ] Risk Categories are a common listing of sources of risk. Depending on the size of the project, one might employ a Risk Breakdown Structure (RBS). The main categories of risks assessed for the Dabhol Power Project are: technical, management, commercial and external risks.
Risk Breakdown Structure (Simon, 2007)
Prioritizing Risks From this RBS, develop a prioritized list of the top three (3) risks (potentially most critical). There are several quantitative techniques exist. The sensitivity analysis, decision tree analysis and the simulation techniques are a few means prioritizing risks. The first step is to determine the probability and impact of the risks. Qualitative and quantitative risk analysis are means to rate the risks. Qualitative risk analysis is a process that determines what impact the identified risks will have on the project and the probability that they will occur. Rank orders risks in priority order according to their effect on the project objectives. (Kim Heldman, 2005) The Probability scales are created by using high for critical risk, medium for significant risks and low for negligible risks. For example, high score on the probability or impact scale would be considered critical. This means the risk will occur frequently, has occurred on past project, and conditions exist for it to recur. (Kim Heldman, 2005) The Monte Carlo analysis is the most common simulation technique and requires the use of a computer and
References: Kim Heldman, P. (2005). Project Manager 's Spotlight on Risk Management. San Francisco: Jossey-Bass. Simon, D. H. (2007). Practical Project Risk Management; The ATOM Methodology. Vienna: Management Concepts, Inc. TenStep, I. (n.d.). TenStep. Retrieved Nov. 18, 2012, from 7.0 Manage Risk: http://www.tenstep.com/open/7.0Managerisk.htm1