Utility Corporation

Example Risk Management Plan

RISK MANAGEMENT PLAN

ALPHA TO OMEGA LINE TRANSMISSION LINE PROJECT

UTILITY CORPORATION ST. LOUIS, MO 63103

APRIL 10, 2013

Utility Corporation

Example Risk Management Plan

TABLE OF CONTENTS
Introduction ............................................................................................................1 Risk Management Approach ...................................................................................1 Risk Owners ...........................................................................................................1 Risk Identification...................................................................................................2 Risk Qualification and Prioritization .......................................................................2 Risk Monitoring......................................................................................................4 Risk Response Strategies ........................................................................................4 Risk Register ..........................................................................................................5 Contingency Management ......................................................................................5 Acceptance .............................................................................................................5

Utility Corporation
INTRODUCTION

Example Risk Management Plan

The purpose of this Risk Management Plan is to discuss how risks are identified, evaluated, ranked, monitored, and addressed as part of this project.

RISK MANAGEMENT APPROACH

The project team will undertake a methodical approach to risk management that will include the creation and maintenance of a risk register. Risk reviews will be incorporated into the routine project meetings as an agenda item to address risks with an approaching due date (two weeks) and into the construction meetings once they have begun to provide a more frequent review of the items that could affect project success. Owners will be identified and assigned to all risks where they will have the responsibility to develop triggers to monitor the risk and response plans appropriate for each item identified. Each risk owner may, at their discretion, assign someone to develop the response plans and monitor the triggers, but the owners will maintain the responsibility to monitor and report the status of all risk items back to the project team. At project completion, during the closing process, the project manager and team will assess the risk management process and will identify any improvements that can be made for future projects. Proposed improvements, as well as the final risk register, will be captured as part of the lessons learned knowledge base.

RISK OWNERS
The following individuals have been identified as the risk owners for the project. This list will be updated and maintained throughout the project in order to ensure the appropriate individual with the line-of-sight to the risks are named and aware of their roles. Role Risk Plan / Register Owner Risk Plan / Register Advisor Environmental Risks Real Estate Risks Transmission Line Design Risks Materials Transmission Line Construction Project Scheduling and Controls Contractor Selection Team Member Ringo Starr Darin Hendry David Bowie Michael Phelps Calvin Klien Paul Newman Robert Redford David Hasselhoff CDT (Sir Elton John)

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Utility Corporation
RISK IDENTIFICATION

Example Risk Management Plan

Risk identification will be done in several stages throughout the lifecycle of the project, but the following will be the most prevalent. Project Manager The project manager solicited team member and risk owner input into potential project risks and incorporated these into the project risk register. Risk registers from several other projects of similar scope were also reviewed to identify lessons learned and potential risks documented on those projects. Risk Assessment Meetings Regular risk assessment meetings have and will continue to be scheduled with key team members and stakeholders to review the risk register. The team will review all active risks and will ensure appropriate risk ranking, impact, and response strategies have been developed and owners assigned to each risk on the register. Any new risks identified during the meetings will be added to the project risk register along with the appropriate status updates to risks already being monitored. Expert Discussions The project manager will continue to meet with individual subject matter experts throughout the project lifecycle and will capture any new risks during those meetings and will assure they are added to the risk register for management.

RISK QUALIFICATION AND PRIORITIZATION

In order to determine the severity of the risks identified by the team, a probability and impact factor will be assigned to each risk. This process will allow the team to prioritize risks based upon the effect they may have on the project. A probability-impact matrix will be used to facilitate the team in moving each risk to the appropriate ranking on the risk register. Impacts will be assigned to several potential project areas including; Technical Performance, Schedule, Cost, and Safety.

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Utility Corporation

Example Risk Management Plan

Legend: Impact 1 - Negligible 2 - Marginal 3 - Significant 4 - Critical 5 - Catastrophic

Probability 1 - Rare 2 - Unlikely 3 - Possible 4 - Likely 5 - Certain

The following table assigns some measurable attributes to the probability and impact ratings that are used as part of the risk register (shown above).
Impact Legend: Negligible 1
Technical Performance Schedule Cost Safety Shop Repair 1 day $50,000 First Aid

Marginal 2
Field Repair 1 week $100,000 Doctor Visit

Significant 3
Field Re-Work 1 month $250,000 Recordable

Critical 4
Minor Failure 6 months $500,000 Lost Time

Catastrophic 5
Major Failure 1 year $1,000,000 Major Injury / Death

Probability Legend (p=probability of occurrence): Rare Unlikely 1 2

Probability
p < 5% 5% < p < 10%

Possible 3
10% < p < 50%

Likely 4
50% < p < 75%

Certain 5
p > 75%

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Utility Corporation
RISK MONITORING

Example Risk Management Plan

Once the risks are appropriately ranked, the highest risk items will have triggers identified by risk owners, or their designees, that will indicate a risk is about to occur. The triggers will enact the appropriate risk response strategy. Risks and their triggers will be reviewed (at a minimum) once a month during the design development process and more frequently during construction. If a risk trigger event is identified by anyone on the project team between meetings, they will contact the project manager immediately in order to begin the appropriate risk response measures.

RISK RESPONSE STRATEGIES

Risk response strategies will include the following: Avoidance A risk should be avoided if reasonable. Safety, Quality, Cost, and Schedule impacts will need to be evaluated to determine whether the cost of avoidance (in dollars or time) will support such a decision. Acceptance The project team may agree to accept some risks and take no further action with them. These would include risks where there is no way to predict or avoid when the risks might occur or what impact they would have to the project. These may also include risks with an impact small enough (in relation to Safety, Quality, Cost, or Schedule) such that other responses would not be justified. Mitigation If a risk is unavoidable, then reasonable efforts should be taken to minimize the impact to the project where warranted. Evaluation of the impact to Safety, Quality, Cost, and Schedule will drive what type of mitigation efforts would be warranted for each risk. Transference When an outside party is better prepared to manage a risk, a risk may be transferred to that party. The use of lump-sum contracts can be an effective method of risk transference as long as the scope of work is well developed and appropriate and adequate contract language is in place to protect Ameren and to treat the contractors or vendors fairly. Bonding and/or punitive language can also help to transfer the cost of risks, but often come with a base cost impact to the contract as it is implemented and should be evaluated closely before being included. Response If all attempts to avoid, mitigate, or transfer risks have failed (excluding risks the project team chooses to accept), a risk response plan will be developed to outline how the project team should react when the risk occurs. All risks will be evaluated against Safety, Quality, Cost, Schedule, and Technical performance in order to determine which response strategy outlined above is appropriate. Once the risks have

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Utility Corporation

Example Risk Management Plan

been ranked, the highest risk items will have detailed response plans written by the risk owners, or their designees.

RISK REGISTER
A project risk register has been developed for the project and will be the main repository for all significant project risks to be identified, ranked, and monitored. The risk register will also contain links to the appropriate risk response plans once they have been developed. The Risk Register will be maintained separately on the project SharePoint site and shall be considered part of this overall risk plan document. Upon project completion, the risk register will be copied to the lessons learned repository, and unique risks shared with other project teams.

CONTINGENCY MANAGEMENT
Estimates for both maximum exposure and expected exposure will be performed for each of the discrete risks identified in the risk register. The sum of the expected numbers for all of the discrete risks will become the value of contingency being forecasted and managed for the project. The sum of the expected exposure and the total project estimate (without contingency) will become the expected estimate for the total project. The sum of the maximum exposure numbers for all of the open discrete risk will become the maximum value of contingency. The sum of the maximum value of contingency with the total project estimate (without contingency) will become the high end estimate for the toal project. Throughout the project, the project team will closely monitor and manage project contingency. Once a project baseline is established at Gate 2 Gate Approval Board, all changes in project contingency will be tracked and managed in a contingency checkbook and updated in the project forecast in UIP. Changes in contingency may be a result of any of the following: Estimated exposure for any discrete risk item changes Contingency is utilized for the purposes of mitigating or transferring a risk Contingency is utilized as a result of issuing a Project Change Request (PCR) A discrete risk item is closed A new risk is identified Risk is reallocated from one risk to another risk

ACCEPTANCE
________________________________________ Ringo Starr Project Manager
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Date: __________________

Utility Corporation
________________________________________ Darin Hendry Risk Manager ________________________________________ Winston Churchill Project Sponsor

Example Risk Management Plan

Date: __________________

Date: __________________

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