Abstract:
EPC Project conceals challenges for Proposal Mangers to
speculate the possible risks at the time of bidding. It is further
challenge for project managers to keep the project activities in control
within the limits set during bid process, without allowing any
risk factor to creep in. The challenges lie in identifying the risks,
breaking down risks to enable measurement and controls, estimating
realistic and probabilistic risk premiums to be wetted into bid
value. This paper expounds a simple and generic ways to characterize
EPC project risks into measurable entities and evaluates risk
impacts on costs and schedule using stochastic process of running
Monte Carlo simulations integrated with Markov dependency. Here
is a step by step approach in identifying the tangible, intangible and
macro level risk factors; evaluates their risk premiums, rank and prioritize
them; thus precipitating several decision points for optimal
risk cover strategies aligning with project execution philosophies.
Keywords:
EPC Risk Management,
EPC Risk characterization, EPC Bidding Strategies,
Wetting Risk Premium, Probabilistic Risk
Estimation, Monte Carlo Simulations, Bidding
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