VENEZUELA VENEZUELA NATIONAL RAILWAY NATIONAL RAILWAY PROJECTPROJECT

Venezuela National Railway Venezuela National Railway Project Project

Controlling Project Costs

and Risks

Summer 2008

Kugan Panchadsaram

Projecto La Torre Incorporated Raisa Spector, Omar Mahmoud, David Saavedra, Mark Sanbower,

Roberto Mosciovecchio, and Suzanne Smith

Project Background Project Background

Our company, Projecto La Torre Incorporated, has been contracted bythe ministry of infrastructure of the government of Venezuela to construct 5 miles of railway embankment at a remote location in the state of Guarico(8 hours Southwest of the capital city, Caracas).

This project is part of the initiative by the government of Venezuela to expand the national railway system as stated in Venezuela’s constitution of 1999.

Project Requirements and Project Requirements and CharacteristicsCharacteristics

5 miles of railway embankment constructed

Recruiting workers for the project Construction of temporary infrastructure

(dorms, cafeteria, office, and storage) 9 months to complete the project Financing the project $4,000,000 budget

Venezuela Venezuela

Republica Bolivariana de Venezuela Capital City: Caracas Language: Spanish Area: : 353,841 square miles Population: 28,199,822  GDP: $335 billion (30th in the world) Major Export: Oil Popular Sports: Baseball and Soccer

Railroads in the JungleRailroads in the Jungle

Team ContractTeam Contract

Our team contract states how we will work and communicate with eachother on the project. Allteam members helpedwrite the contract andall team members signed the contract.

Project Scope StatementProject Scope Statement

Scope statement is a

document that defines the

project and lists what must

be accomplished. It states the boundaries

of the project - what will

done and what won’t be

done on this specific

project.

Work Breakdown Structure (WBS) Work Breakdown Structure (WBS) and WBS Dictionaryand WBS Dictionary

The WBS divides major project deliverables into smaller, more manageable components.

The WBS was done to level 3. The WBS Dictionary explains all terms,

especially potentially confusing terms, to anyone reading the WBS.

The following slides contain excerpts from our WBS and WBS Dictionary

Work Breakdown Structure Work Breakdown Structure (excerpt)(excerpt)

WBS Dictionary - ExcerptWBS Dictionary - Excerpt

Excerpt of Project ScheduleExcerpt of Project Schedule

Risks on the Railway ProjectRisks on the Railway Project

Our project offered us a unique opportunity to learn about a variety of interesting risks. Here are some of the risks we faced: Business in Venezuela involves fraud and corruption. Venezuela has a strong rainy season that may vary in length. Natural disasters, including storms and mud slides, occur

frequently. The political, economic, and financial situation is unstable. Crime, particularly robbery and kidnapping, is common. Internet access is not reliable in remote parts of the

country. It may be difficult for us to obtain skilled workers.

Risk StrategyRisk Strategy

Our risk strategy consisted of the following: Create a preliminary Risk Checklist. Create a Risk Breakdown Structure. Built on the checklist using quantitative risk analysis

to create a more developed Risk Checklist with risk causes, probability and impact numbers, and risk scores.

Used the probability and impact numbers from the developed Risk Checklist to create a Probability Matrix.

Create Risk Ranking based on risk scores for each risk.

Risk Breakdown StructureRisk Breakdown Structure

•Similar to a WBS, the RBS provides a visual way of systematically identifying risks in detail. •Risks are organized into categories and sub-categories.•We used our developed Risk Checklist and the categories we identified to create our RBS.

Developed Risk ChecklistDeveloped Risk Checklist

Risk Probability MatrixRisk Probability Matrix

Using our risk scores, we developed a Risk Probability Matrix.The matrix serves as a visual tool for determining which risks fall into the low, medium, and high risk categories. We decided on the following ranges:

Low = < 23Medium = 24-44High = 45 <

Top 10 prioritizedTop 10 prioritized RisksRisks

Project Number Team # 3

Date 8/26/2008

Project Title National Railway System

Project Manager Raisa Spector

Risk Number Risk Category Risk Name Probability Impact Risk Score Risk CauseResponse Plan Y/N Responsible Party

33 External-Damage Fraud, embezzlement 7 8 56 financial Y20 External- Theft Equipment or material have been stolen 7 6 42 local people going through hard economic times Y21 External-Damage Major unexpected damage to Equipment 7 6 42 poor maintenance of equipment Y31 Project Management-Scope Requirements change 6 7 42 requirements creep Y29 Project Management-Scheduling Failure to meet project schedule 6 6 36 schedule delay Y38 Technical- Requirements Faulty electric system 4 8 32 electrical Y10 Organizational-Resources Kidnapping of staff 5 6 30 increasing number of kidnappings in the corporate world Y16 External- Weather Early start of the rainy season 5 6 30 bad judgment by weather forecasters Y17 External- Weather Rain season extends 5 6 30 bad judgment by weather forecasters Y23 External-Subcontractors and Suppliers Equipment not ready 5 6 30 schedule delay Y

Surveying task may not provide reliable mapping.

Risk Checklist

See You On The Railroad!See You On The Railroad!

The Members of Team 3The Members of Team 3

Raisa Spector – PM Roberto Mosciovecchio Mark Sanbower

Omar MahmoudDavid Saavedra Suzanne Smith