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Risk management
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7/17/2019 Fluor - Risk Management
http://slidepdf.com/reader/full/fluor-risk-management 1/37
PATRICK PURSERVice President Fluor Corporation
© 2015 Fluor Corporation.ML20150128-001.pptx
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Fluor Corporate Overview
ase u y
Why talk about Risk Management?
Benefits of a Risk Management Program
Fluor’s Approach to Risk Management
Risk Matrix Sample
Ke Take-Awa s
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© 2015 Fluor Corporation.
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One of the world’s leading publiclytraded engineering, procurement,
, ,
project management companies #109 on the FORTUNE® 500 list
Over 1,000 projects annually,
serving more than 600 clients in81 different countries
40,000+ employees executingprojects globally
Fluor Corporate Headquarters
ces n coun r es oncontinents
103-year company legacy
Dallas, Texas
3
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Americas Aliso Viejo, California
Europe/Africa/Middle East Aberdeen, Scotland
Asia/Australia Atyrau, Kazakhstan
nc orage, as a Arlington, Virginia
Baton Rouge, LouisianaBuenos Aires, ArgentinaCalgary, Alberta, CanadaCaracas, Venezuela
u a , . . . Ahmadi, Kuwait
Al Khobar, Saudi Arabia Amsterdam, The Netherlands Antwerp, Belgium Asturias, Spain
- -
ang o , a anBeijing, China
Brisbane, AustraliaCebu, PhilippinesJakarta, IndonesiaKuala Lumpur, Malaysia
,Clarksville, TennesseeDallas, TexasGreenville, South CarolinaHouston, Texas
Idaho Falls, IdahoLima, Peru
,Birmingham, EnglandDoha, Qatar Dublin, IrelandDurban, South Africa
Farnborough, EnglandGliwice, Poland
,Melbourne, AustraliaNew Delhi, IndiaPerth, AustraliaSeoul, South Korea
Shanghai, ChinaSingapore
Long Beach, CaliforniaMexico City, MexicoPort of Spain, TrinidadRichland, WashingtonSan Francisco, CaliforniaSan Juan, Puerto Rico
Johannesburg, South AfricaLondon, EnglandMadrid, SpainMaputo, MozambiqueMoscow, RussiaRotterdam, The Netherlands
Tokyo, Japan
,
Santiago, ChileVancouver, B.C., CanadaWashington, D.C.
,
Tarragona, Spain
Years of Experience in Region
North South Middle America America East
103 78 67 55 68 64 65
4
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EngineeringEngineering ProcurementProcurement ConstructionConstruction Start-upStart-up Operations &Maintenance
Operations &Maintenance
DesignDesign FabricationFabrication
ConstructionManagement
ContractorManagement
ConceptualDesign
Estimating
Feasibility
Cost Control Detailed
Engineering
Fabrication
Commissioning Engineering
Support
Initial Production
Asset PerformanceImprovement
Contract Staffing
Equipment, Tools,
Contract Staffing Contracts
Management
Equipment,
ContractorManagement
Material Control
Modular Craft Staffing &
Training
Equipment &Tools Supply
Field Mobilization
Studies
Permitting
Process
Simulation
Front-endEngineering
Modular
Construction Planning &
Plant Readiness
Precommissioning
Systems Checkout
Turnover
and Fleet Services
FacilityManagement
OperationalReadiness
Tools, and FleetServices
Expediting
Fabrication
Construction
Purchasing
Quality Control
Safety Programs
Material Control
ModularConstruction
Project & ProgramManagement
Routing
Scope Definition
Siting
Technolo /
Scheduling
ProcessSimulation
Safety Planning
Systems
Validation Plant Engineering
Plant Operations &Maintenance
Small CapitalProjects
Low CostCountrySourcing
MaterialsManagement
Self-PerformFabrication
Sourcing
Quality Control
Rigging
Safety Programs
Scaffolding
LicenseEvaluation
Integration
Turnarounds,Outages& Shutdowns
Purchasing
RequirementsPlanning
Sourcing
5
Self-PerformConstruction
Supplier Quality
Warehousing
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The Energy & Chemicals business l ineserves the global oil and gas
, ,petrochemicals industries.
Ranks No. 1 on ENR (EngineeringNews-Record) magazine’s list of TopDesign Firms in the Petroleum sector
Full range of services including design,engineering, fabrication, procurement,construction, and project management
Consulting services for feasibility studiesand project financing
Global office platform optimizesexecution of all sized projects includingmega-projects in remote locations with
6
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♦ Client: Reliance Industries Limited
♦ Project: Refinery & Petrochemical ProjectExpansion
♦Project Location: Jamnagar, India
♦ Scope of Work: PMC + Pet CokeGasification EP
♦ ro ec escr p on:
– PMC for addition of Petrochemical Plantsat existing Jamnagar refinery, including
world’s largest Coal / Petcoke, ,
Ethylene Cracker and multipledownstream units
– Engineering & Procurement Services for
♦ Completion Date: 2018
♦ Implemented Reliance’s Risk ManagementProgram
8
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► The Titanic
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Titanic - 14th April 1912
◦ Sea dotted with hundreds of iceflows…no extra lookouts osted
◦ Smith received up to 6 warnings ofice field from ships in area
’ nest …early warning nearlyimpossible
◦ Very hazy conditions…lookoutsconfused in what they saw ahead ofthem
◦ Titanic sped toward ice field at 22.5
Ref: ‘The Riddle of the Titanic’, Gardiner et. al. Orion, 1998
conditions)
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Sea dotted with hundreds of ice flows – This identifiedrisk would have had mitigation strategies such as extralook outs, better communication with other ships in thearea, etc…
No binoculars available in crow’s nest – Further to theabove risk, the mitigation strategy would have also
Titanic sped toward ice field at 22.5 knots (10 knotsrecommended for conditions) – Mitigation strategy would
have ensured proper speed for bad conditions as thebaseline plan for the voyage.
Lifeboat count reduced from 64 to 22 to enable moreexpansive promenades – Mitigation strategy would have
.
Officers not trained in li feboat use and were unsure oflifeboat capacity – Mitigation strategy would have ensuredproper training for officers
Risk Mitigation is about being proactive in addressing theserisks before they occur
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In a 2014 survey of companies withsignificant capital investments (greater than
, a pro ec s over run cos
and/or schedule targets Projects are becoming more complex
Not identifying risks up front can lead toundesirable outcomes
- hoc judgment
Risk management is a proactive approach in
success
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Better execution resulting in increasedawareness and self confidence
Vehicle to focus attention, resulting in better
resource allocation
Visible indicator of the roblems, challen esand issues
Documentation of management agreement
Provides basis for communicating key projectissues
na es essons earne o e cap ure anshared
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Improved decision making through clarifyingresponsibilities, authorities and ranges ofaccep a e ou comes a a eve s
Disciplined framework for systematicallyguiding the process of managing risk
Thought stimulator to proactively identify andmanage risks that may not otherwise beconsidered
Reduced large losses as well as thefrequency of small losses
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Improved allocation of resources
More fact-based decisions through the entireproject cycle
Improved confidence of various stakeholders,includin anal sts and ratin a encies
Corporations make money by taking risk andlose money by not effectively managing risk
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Risk Management becomes an integralcomponent of the “Baseline Documents”
Provides Framework for “Managing the Risks”
Identifies potential risks
Document strate ies and actions re uired formitigation
Quantifies Event Contingency
Risk review / communication reducessurprises
esu s n ncrease pro ec successes or astakeholders
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Integrated
Positive
Fragmented
Negative Proactive
Continuous
-
Reactive
Ad hoc
-
Broadly-focused
Process-driven
Narrowly-focused
Functionally-driven
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ss gn…rea ng ma er a
Brainstorm…risks and opportunities
Consolidate…ideas Develop…risk / opportunities details
Evaluate…risk / opportunities importance
… enhancement strategies
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Following slides address the identificationand riorit ization of otential risks
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► Equipment type
►
► Plant layouts
► Project Site Location
►
Electrical facilities► Routing of major underground systems
► Controls systems and configurations
► Hazops reviews
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Select most appropriate contractor toperform the work
rov e me y an cos e ec ve
decisions and execution Freeze design basis as early as possible
Ensure high level of alignment, motivationand teamwork with Engineering
Contractor and Owner Ensure periodic independent assessment
of execution
Estimate)
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Tight project schedule
Desi n variations
Incomplete or inaccurateestimate
Excessive approval procedures(client & or government)
Lack of coordination between
project participants (Engineering Construction)
Inadequate program scheduling
Unsuitable construction planning
Unavailability of sufficientprofessionals and managers
Unavailability of sufficient skilled
Low management competency ofsubcontractors
labor
Accident occurrence (safety)
Occurrence of disputes
Price inflation of constructiona or an ma er a s
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o ow ng es ress ow o
Prioritize Risks
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Secondary Risks Key Risks
High
• ,significant adverse impact onbusiness objectives
• threaten the achievement ofbusiness objectives
e n c e
s
• Significant monitoring not
necessary unless changes in
Low Priority Risks Secondary Risks
• Lesser significance, but more
likely to occur o n
s e q u
classification
• Periodically reassess• Consider cost/benefit trade-off
• Reassess often to ensurechanging conditions (move to high
C
significance)Low
Low HighLikelihood
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LIKELIHOOD OF OCCURANCE
Rating Likelihood Criteria
5 Almost Certain 91-100%, It is expected to occur in most ci rcumstances
4 Likely 76-90%, Will probably occur in most circumstances3 Possible 26-75%, Might occur at some time
- ,
1 Rare 0-10%, May occur only in exceptional circumstances
Rating Severity Financial Schedule
5 Critical >$1MM One Month
3 Serious $500k One Week
2 Moderate $250k Three Days
1 Minor $10k One Day
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RiskNo.
Risk Severity Likelihood Priority Remarks Mitigation Strategy
1ro ec e
Location has PoorSoil Conditions
4 4 4May Require ExcessivePiling Increasing Cost
Perform GeoTech Survey
2Skilled Personnel
Risk4 3 4
Proper Leadership maynot be available to
mana e ro ect
Review personnelrequirements with HR andbusiness line mana ement
3 Arch itectural Risk 3 3 3Risk of unknown
conditions to the existingbuilding
Perform site survey tovalidate current conditions
Additional loads to Review existing designdrawin s4
Piperack "A"
4 3 4 existing piperacks couldcause damage Perform site survey to
validate current conditions
5Schedule Impacts
due to bad weather4 1 2
Abnormal weather coulddisrupt schedule
Geographic location hasmild weather year round
6Delay in Decisions
Risk 4 4 4
epresen a ves w
only be assigned on apart time basis
ose coor na on an
advance notice ofapprovals
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Engage Risk Management Process early in theproject phase
Engage all necessary Functional disciplines in the
Risk Review process
Utilize Risk Mana ement rocess & tools tosupport organized and subsequent projectalignment
identification and mitigation
Instill discipline to maintain risk management
to close-out
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QUESTIONS/COMMENTS