Summary of learning points from three Case Studies
1. Project Life Cycle Risk Management Plan In An Urban Railway Development Project
1) All kinds of urban rail construction projects involve huge investments and a big number of potential risks. One of the peculiarities of such projects being held in Vietnam is the absence of corresponding legal regulation that brings additional investment risks. However, most of the risks can be identified in the planning stage by issuing preliminary legal documents and having all points discussed and agreed by the contractor and the customer.
2) Preliminary documentation of risks serves as first stage of risk management plan. During the construction stage, all processes must be continuously examined for uncertainties to identify occurring risks and for their further treatment. Many of the occurring risks have legal and political nature.
3) One of the main legal risks is the increase in cost of the project due to new design, safety, traffic and taxation requirements provided by the government. This may result in significant delays of the project with further cost increases. Among some other reasons of the project’s cost increases are: exchange rate fluctuations; increase in demand; increase of the price for materials, labor and equipment; unplanned improvements of safety, reliability and convenience etc. Technical risks are not considered to be critical because they can be managed by continuous risk management and constant verification.
4) To reduce uncertainties, it is necessary to clearly define the scope of work, responsibility and obligation of parties, time frame, payment conditions and budget in the planning stage. Both parties are expected to share the same goal in the project, so minimizing risks and discussing all points beforehand are for their mutual sake.
5) Consultants, contractors, suppliers and other parties involved should be chosen using the tendering method that is held in five steps: request for proposal, proposal, assessment of proposal, contract negotiation, and contract signing.
6) Allocating too little financial resources by the employer will result in the low quality output that may result in bad reputation, losing employment and bankruptcy. During the construction stage such situation can cause cash flow problems, increase of total project life cycle cost, increase of construction costs and further redesigning required. The budget must be also flexible enough to follow all kinds of unexpected circumstances appearing.
7) After the completion of the projects it is strictly recommended to use the services of a third-party independent auditor who will assess the project in terms of the basic financial indexes and make his/her conclusion concerning whether all pre-discussed parties’ requirements were met.
8) Besides the financial aspects of the urban rail construction project, there are a number of socially important issues that must be also taken into consideration: improvement of public services, increase in the life quality of the local population, revitalization of the region, emerging employment opportunities, increasing the safety on the roads and environmental benefits.
9) To make the project more transparent for all parties, a website page should be designed to disclose design requirements, tender …