Introduction
Construction refers to the procedures used to create and maintain structures, infrastructure, industrial facilities, and related operations. And it is normally begins with planning, finance, and design and continues until the asset is finished and ready for use. It also includes any work to expand, extend, or improve the asset as well as any work to repair, maintain, or decommission it.
In a high valued construction project, risk management and value management can be seen as essential tools for the successful delivery of construction projects.
The purpose of the case study is to examine and identify where does risk management and value management applied especially for project that is done at underground level.
Case study selected for risk management is Klang Valley Mass Rapid Transit (KVMRT) Line 1 underground station. The KVMRT: Line 1 or SBK Line is around 51 km long, with 24 above-ground elevated stations along a 41.5 km viaduct track that connects to other existing railways at 7 stations and 7 underground stations in a 9.5 km tunnel. It took six years to build and cost 21 billion ringgit.
For value management, case study selected is Soekarno-Hatta Airport Rail Link (SHIARL). The Indonesian government launched the SHIARL, one of its major rail transportation infrastructure projects. Soekarno-hatta Airport, one of the busiest airports in the world, serves 44 million people annually and has had substantial increase in that number. During peak hours, traffic congestion and unpredictability of travel times are caused by access to the airports, which is mostly dependent on the intercity route and Toll Sediyatmo.
This report aims to focus on findings on risk management and value management that can be found in these both transportation project.
Findings on Risk Management
Construction risk management is the process of evaluating and implementing procedures to reducetheimpact ofrisks in construction projects. This riskmanagementprocess in a transportation project involves thorough planning to create a risk management plan that allows project managers to identify, monitor and mitigate risks as they arise. Due to the thick pipelines, dense population, and busy traffic, underground public transportation construction is riskier than building in urban and rural areas.
The KVMRT is a significant infrastructure project that is exposed to a variety of uncertain factors, including planning, design, construction difficulty, environmental factors, the presence of multiple stakeholders (owner, contractor, consultant, and supplier), the availability of resources, and even statutory regulations.
Several types of risk identified in underground construction of MRT line are:
Safety risk
Financial risk
Contractual and Legal risk
Project risk e.g sub-contractor
Environmental risk e.g force majeure
The above risk identified through a process as outlined by Project Management Institute (PMI, 2013)
Findings on Value Management
Value management aids the client in determining the most effective strategy to address companyneeds.Therisksconnectedtothesolution that provides the business with the best long-term value are managed through risk management. The management of risk and value is a connected task that must be done concurrently. Because it is known that poor risk management is a major factor in project failure, risk management is discussed first for the sake of convenience in this briefing. In actuality, value management activities are carried out first to pinpoint the precise benefits the organisation would receive from the project's completion.
Referring to (Berawi et al., 2015), PT Railink first put up a feasibility proposal in 2002, and it was later presented in 2005–2006 at the Infrastructure Summit. As a result, the SHIARL project's status was downgraded from "ready to offer" to "priority" in the Public Private Partnership (PPP) Book in 2014, indicating a decline in the project's merit.
A successful mega-project infrastructure depends on the feasibility of the project, which is assessed by the project's significant value for money (VfM). VfM has been developed through a variety of innovations, including the management of public funds for the project's infrastructure by private investors as well as engineering, financial, and investor involvement.
The value-engineering (VE) method is utilised in this study to increase value for money by suggesting that more functions be added to the project.
The value-benefit curve gets flatter as a project progresses. Therefore, making and implementing VM and VE decisions at the earliest possible stage of a building project will have the greatest impact. The ultimate objective of the two approaches is the same, and they are frequently combined under the same heading. This is to guarantee that the project is successful, not only by taking the long view in terms of managing and understanding VM, but also by utilising VE with the help of the project team's skills.
(Berawi et al., 2015) also stated that there should be additional value to SHIARL. A Function Analysis System Technique (FAST) diagram was utilised to combine the data used to generate concepts for additional project functions. The SHIARL project's innovative concepts were inspired by the numerous issues in the Jakarta area, including the government's 20-year development plan andtheproject's potential integrationoftransportationdevelopment.
By combining the three primary functions of MRT, the airport railway, and flood control in one tunnel, these functions were developed into the conceptual design of a multifunctional tunnel, a public railways and stormwater infrastructure (PRASTI) tunnel, to reduce flooding in the Jabodetabek area and increase accessibility to and from Soekarno- Hatta Airport. The tunnel is separated into three levels in the design: the first level controls flooding; the second level provides access to the airport through SHIARL; and the third level is anticipated to service the MRT line. Figure 3 depicts the cross-sectional view of the hypothetical multipurpose PRASTI Tunnel.
Based on the projected number of prospective passengers, three scenarios were used to simulate the feasibility analysis of the PRASTI SHIARL project: Three possible outcomes are presented: an optimisticscenarioin which40%of passengers switch to the airport railway, a realistic situation in which 30% of passengers switch to the airport railway, and a pessimistic scenario in which 20% of passengers switch. According to the Life Cycle Cost research, additional features in SHIARL and the PRASTI tunnel will raise IRR's value. These findings validated the project's technical and economical viability. Additionally, by lowering flooding incidents in the Jakarta region, the new functions will help the community in addition to increasing the project's economic worth.
Discussion on Risk Management in KVMRT Line 1 Project
The risk findings are based on every station line erected in KVMRT Line 1. According to PMI (2013) there are four different risk response strategy on managing the positive and negative thread and risk. For negative risk, they are:
1) Risk avoidance
2) Risk transfer
3) Risk reduction
4) Risk retention
For the positive risk, PMI (2013) also have a plan in place to handle the opportunities and favourable risks as below:
1) Exploit - Make sure the chance materialises.
2) Enhance - The opportunity's likelihood and significance rose.
3) Share - The opportunity that we either totally or partially allocated for the project's advantage.
4) Accept - Although the prospect was acknowledged, it wasn't vigorously pursued.
The risk management plan describes the specific risk management strategy. Then, with the use of the quantitative risk analysis, the chosen final plan.
Discussion on Value Engineering in SHIARL
Value engineering (VE) has been widely used to provide the best outcomes possible during the project development process by ensuring that the required quality is met, cuttingedge technology is utilised, and new ideas are realised. The findings demonstrated that the SHIARL project, in particular, benefited from the deployment of VE in mega infrastructures. The following extra functions contributed to the SHIARL project's innovations: passenger MRT, airport passenger train, potential underground commercial space, fibre optics, and number one. The elevated SHIARL and the PRASTI tunnel were two components of calculation that were found by the life cycle cost study.
Discussion on Integrating Risk and Value Management
European Comission(1995)and MurphyP (2011) compileda list ofvalue management tools that presently used in the UK and EU. These are tools of value management that make it efficient for managing risk;
a. Conjoint analysis
b. Delphi
c. Design to Cost/Design to Life Cycle Cost/Design to Objective
d. Elementary Skills Gap Analysis
e. Facilitation
f. Function Analysis System Technique (FAST)
g. Function priority matrix
Othman e.t all (2008) emphasised the following advantages of integrating value and risk management for creating affordable housing, which may be adopted for different forms of building development:
a. Better understanding of the client’s needs and requirements: Understanding the goals and needs of the client is the focus of both value and risk management. Additionally, by examining the roles played by each component and providing feedback to the project for increased value, the client's brief could be changed.
b. Removing unnecessary cost: The goal of value engineering, a subset of value management, is to eliminate wasteful spending. This makes a significant contribution to lowering project abandonment rates and cost overruns.
c. Reducing project time: Value management facilitates the simplification of the project design and construction process; it is quite likely that this was carefully thought out during the workshops.
d. Enhancing communication and teamwork: Value and risk management, which bring together a variety of disciplines for a single goal, guarantee that each professional's viewpoint is properly understood and effectively reflected in the design and construction.
e. Creative and innovative ideas are generated and evaluated after value and risk management are carried out jointly on a project. The best alternatives are then chosen and implemented, forming a kind of research and development for the industry that produces new materials and construction techniques and replaces conventional construction methods.
Conclusion
The building of the KVMRT Line 1 demonstrates how operational risk, physical risk, safety and social risk, force majeure risk, and delay risk all play a significant role in project uncertainty. The risk-mitigation strategies are modified in accordance with the risk to lessen its effects on the project. For instance, new construction techniques and tools were used to reduce operational and physical risks.
In term of value engineering demonstrated in SHIARL project, application of VE produced added value for the project. The following extra features helped the SHIARL project innovate: 1) passenger MRT; 2) airport passenger train; 3) potential underground commercial sector; and 4)fibreoptics.TheelevatedSHIARLandthePRASTItunnelweretwocomponents of calculation that were found by the life cycle cost study. Subsequent to the life cycle cost analysis, this study produced a positive Nett Present Value and Internal Rate Return.
The value management workshop and structure's creativity is a helpful tool for managing risks and uncertainties that mayarise during the project and enhances the efficacy of risk responses. Value and risk management integration can improve project understandingand, as a result, aid in better decision-making. Thus, encouraging the fusion of value and risk management will produce a potent management tool and expand their use in the construction sector.
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