Risk Management of Central Artery/Tunnel Project

ABSTRACT

The importance of the application of risk management to all projects cannot be overemphasized because every project has its own risk. The Central Artery/Tunnel project (Big Dig), Boston, United States commenced in 1982 and was built to reduce the traffic rate, create more space thereby accommodating more cars, for decongestion reasons, for economic and financial benefits to the users. It was a challenging project as there were lots of threats and opportunities associated with it. This paper introduces the risk management approach to the project using M_O_R framework, principles, PESTLE analysis technique, and risk processes to identify (identify-context and identify risk), assess (estimate and evaluate), plan response, implement and communicate strategically on the issues associated with the project; The design risk, construction risk, environmental risk etc. Based on an extensive research and critical analysis from different journals and books, this paper will deliver an optimization-based methodology for a successful risk management application to the project. 

INTRODUCTION

According to M_O_R (2010), ‘risk is an uncertain events or set of events, should they occur, will have an effect on the realization of the objectives’  These uncertain events can be threats which will have a negative impact on the project or opportunities which will have a positive impact on the project if either one should occur. Risks have been defined and redefined by many authors and bodies, but one thing that remains constant is the uncertainty which can birth threats and opportunities.

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The Central Artery/Tunnel construction is among the most challenging highway megaproject with certain unique features evolving into threats and opportunities. The central artery/tunnel project also known as the Big Dig is located at the center of Boston, Massachusetts. The construction consisted of the: Central artery to be replaced by extending the subterranean highway and  the Charles river consisting of two bridges (called Leonard P. Zakim Bunker Hill Bridge) located at the north end of Boston and the extension of the Massachusetts Turnpike(interstate 90) from the South Boston which channels through Ted Williams tunnel in the south and harbour of Boston; this will meet Boston’s airport called Logan Airport( Mass.gov, 2018). The planning of the big dig started in 1982 with an initial cost of $2.8b and approved in 1987 for construction to commence by the Massachusetts Highway Department and Massachusetts Turnpike Authority (MTA). Bechtel/Parsons Brinckerhoff designed and managed the construction (the management consultant). The project was completed in 2007 with an estimated cost of $14.8b. The construction of the road systems and tunnels were dedicated to creating more space for cars and parks. To reduce the high traffic rate in Boston. For economic, financial and transportation purposes for the users as this will save cost, time and preserve life. The challenge was constructing a project in the heart of Boston and keeping it operational as any wrong shift would have crippled the city’s economy. Due to unforeseen risks in the design and construction, issues arose. Why were the risks not identified and mitigated before the commencement of the project?

 This research centers on critically answering the above question by identifying the threats and opportunities in the project using the M_O_R framework. The M_O_R framework is used because of its approach to risk which is much more detailed. The terminologies are defined followed by discussions, findings, and propositions well-articulated. 

BACKGROUND

The Central Artery was designed to contain about 75,000 vehicles per day when it was opened in 1959 (Barlette school of planning, 2014). Following the escalation traffic rate, it rose to 200,000 vehicles per day in the 1990s. This also affected the two tunnels under Boston Harbour and the Logan airport (Euchner, 2002). They commenced the planning for the Big Dig project in 1982 while the environmental impact assessment was done in 1983. The Joint Ventured operators and some subcontractors developed a design and the paperwork for the Environmental impact assessment (Bartlett, 2014). In 1997 the federal highway administration (FHWA) signed a management agreement with the Commonwealth of Massachusetts (COM), Massachusetts Executive Office of Transportation and Construction (EOTC), Massachusetts Highway Department (MHD) and Massachusetts Turnpike Authority (MTA) (Bartlett School of Planning, 2014).

B/PB reported to COM and in turn, the contractors would implement that direction throughout the designated phases of the project. MTA served as operator and collecting revenues from tolls, leasing of land and advertisement (Federal highway administration, 2012).

The project consisted of 2 major constructions namely:

Charles River bridges (now Leonard P. Zakim Bunker Hill Bridge) used an asymmetrical hybrid design (using steel and concrete) which estimated $100m is the underground Central Artery and is still one of the uniquely made bridges in the world (Road traffic technology, 2018).

Ted Williams Tunnel: The four-lane Ted Williams Tunnel forms part of the I-90 extension link and was built using a 12 steel sections sunk. It was estimated to cost $1.3bn. It commenced In 1991 and was the first major target of the Big Dig to be completed in 1995 (Road traffic technology, 2018).

The Joint Venture of Bechtel and Parson Brinckerhoff managed the project and prepared Environmental Impact Assessments (EIS) (Bechtel/Parsons Brinckerhoff,2006). According to Huges (1998), they were hired to provide designs and manage the construction contractors. The design consultants were responsible for the designing. The construction contractors on the project included Jay Cashman, Modern Continental, Gannett Fleming Inc, Obayashi Corporation, Perini Corporation, Peter Kiewit Sons’ Incorporated, J.F. White and the Slattery division of Skanska USA (Modern Continental was awarded the largest value of contracts) and Power Fastners that supplied the concrete to hold roof panels (Road traffic technology, 2018). In conjunction with the management of the project, B/PB was also responsible for monitoring the contractors’ compliance with the terms and conditions of each of their construction contracts. Between 1999 and 2001, most parts of the construction were completed (Misic & Radujkovic, 2015).

LITERATURE REVIEW

According to PMBOK 5^th edition (2017), a risk is managed by processes such as risk management plan, risk identification, qualitative analysis, quantitative analysis, qualitative analysis, risk response plan, risk implementation response, risk monitoring. According to Deloitte, (2017) project risks can be managed by identification and assessment, measurement and mitigation, monitoring and reporting. According to Larson & Gray 7^th edition (2017), risk management can be done through identification of risk, assessing risk, risk response development, and risk response control. Although in the Big Dig project, risks were managed by identification, assess, allocate, respond, control and communicate.

Li et al (2001) proposed a 3level risk factor classification for PPPs projects which are macro (ecological, political, economic, social, natural environment, etc) risks, meso (project-engineering) risks, and soft (micro level) risks. So due to uniqueness in the risk management of p3 projects, an exhaustive identification of risk is mandatory.  The first step in the MOR framework is the management of risk principles which consist of Alignment with of risk management with the project objectives, fitting of risk management with the current context, engagement of stakeholders with their perception of risks and to be aware of all relevant risks. The risk management approach which comprises of Risk management policy for communicating the reasons and the processes risks management will be implemented in accordance with the objectives of the project company. The risk management process guide helps to describe how the processes embedded in the framework will be carried out throughout the project. Risk management strategy is about outlining the strategic importance of risk management to the project company and asserting the risk appetite and tolerance the organization is willing to take. The risk process: Identify- risk identification is recognizing what risks might affect the project which is aimed at minimizing the threats while maximizing the opportunities. the techniques might be SWOT analysis, PESTLE analysis etc, checklist and building a risk register. Appropriate risk assessment process plays a major role in the proper allocation of risk which is associated with p3 and help in decision making. The assessment and estimation of risk is to prioritize individual risks in other to classify risks according to their level and time of impact. Using techniques such as probability assessment, impact assessment etc to estimate the risk and probability trees, summary risk profiles generated from the estimation of risk, sensitivity analysis etc and finally allocating risk. According to Han & Diekmann (2004), decision trees, sensitivity analysis are the most common method of risk assessment. The assessed risk is further planned ways to respond to the opportunities and threats identified and assessed. Responding to risks helps strategies to be considered using techniques like cost-benefit analysis and decision trees generated from the evaluation of risks. When the risks have been responded to and planned, the implementation commences which ensures that the response planned are implemented, monitored and corrective actions are taken where necessary. the MOR framework was uniquely made in the sense that it gathers all the risk management models, techniques and approach into a single framework and the risk implemented is communicated.

NATURE OF RISKS IN TRANSPORTATION CONSTRUCTION OF MEGAPROJECTS

Construction projects are among the unique features with complications, high financial implications and most times, a prolonged life cycle. Cost overruns mostly occur, and traffic is either underestimated or overestimated. In 2003 (Flyvbjerg et al) wrote an article and case studies identifying the causes of cost overruns and he concluded that traffic forecasts were part of it, with rail projects generating an average of 35% less traffic than forecast while highway projects averaged a 10% under-estimate of traffic. Flyvbjerg et al (2003) quoted that the “cost estimates used in public debates, media coverage, and decision making for transport infrastructure are high, systematically, and significantly deceptive. So are the cost-benefit analyses” Flyvbjerg went further to explain that the incentives involved makes the project managers and promoters very optimistic and this is because of lack of share of risk and ownership, not technical know-how. He further analyzed that this happens in PPPs projects where the government is the promoter and financier while private firms produce designs, operate and maintain. Asking why risk is disregarded leads Flyvbjerg to question the conventional approach to project development, in which government is the project promoter and financier, and private firms only design, operate, build and maintain (public-private partnership). The impact of this is largely on the taxpayers. According to trio Zou & Jiayuan (2008), Project time delay risks can be caused by poor project scope definition, project complexity, improper planning, project schedule, design errors and inaccurate engineering estimate. In some cases, inaccuracy of materials and equipment can cause a shortage, and this causes delay. Risks may arise due to lack of quality materials or supplying of under- specified materials.  Another huge problem is design risks. Design risk can be caused by inappropriate design, using an inexperienced design personnel Project environmental risks is another factor which includes improper environmental risk assessment etc. A year after in the big dig construction, the Leonard P. Zakim bunker hill bridge was completed. By 2007, Boston’s city was restored back as smaller construction continues. Unfortunately, according to reports, On July 10, 2006, one of the newly constructed tunnels) a part of one of the newly constructed tunnels’ (the I-90 connector tunnel) detached from the tunnel roof and fell onto the vehicle killing the passenger NTSB, (2007) and this could be attributed to statement above.

RESEARCH METHOD

The M_O_R framework will be used to analyze the central artery/tunnel. This is used because Proper risk management will reduce the likelihood of a negative event occurring and the magnitude of its impact; the MOR serves as a holistic approach in the management of risk.

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                                                                                M.O.R Risk management

The central artery /tunnel megaproject was chosen because of it is one of the first mega construction projects in the United States dealing with diverse contractors and private companies.  This research delivers its objectives by understanding the risks associated with the big dig and P3. Data will be collected from online journals, books, megaprojects articles, federal Highway administration, the Bechtel/Parsons Brinckerhoff websites, Boston’s website etc.

ANALYSIS

Risk objective of the Central Artery/tunnel mission was to build a standard risk management program for construction focusing on opportunities and threats.  The Principles of risk management is to develop a shared vision of risk which aligns with the strategic management goals of the organization. To Implement a risk management practice that will fit into the context both internally or externally. To Engage the public and the stakeholders at every step of the risk management process using effective communication channels and Provision of clear guidance for risk management practices to be clearly stated in other for stakeholders to see how the risks are identified, assessed, planned, implemented and controlled. As well as Inform the decision makers to be knowledgeable in the threats and opportunities that lie in the project, so they can make appropriate decisions. In summary, to Manage risk from the conception stage to the completion stage ( Greiman, 2013).

Risk identification

Techniques used to identify risks in the big dig was the brainstorming. the big dig involved expert advice and technical judgment. This commenced by assembling a team of experts which were the risk management organization, project company, technical experts, internal and external stakeholders, and insurers and brokers, as well as construction safety representatives. Historical data was used to gather environmental impacts reports, design risks, construction risks associated with similar projects. Also, PESTLE analysis was done. The risks identified included:

Table 1

They went further to identify the train collision that can be caused by a derailed train, bridge collapse, signaling error, malfunctions. A gas explosion and collapsing of the bridge while still under construction which can be caused by design risk. Airport disruption due to ongoing construction and a major production activity due to malfunction of the water system. The identified risks on the big dig were ones with high level of impact if they occurred. Following the identification of the above risks, the probability and impact of the identified risks were carried through the risk assessment process. 

Risk Assessment

The purpose of assessing risk is to analyze and evaluate the risks associated with that hazards. A probability assessment technique was used to classify these risks as high, low, medium. The probability matrix was used in the classification of these likewise its impact. 

Table 2

PROBABILITY

                                                                                                    IMPACT

                                                            Analysis extracted from Greiman W, (2013).

A Qualitative and quantitative analysis was done for estimating the risks and primarily focusing on the highest impact if they occurred. Several factors were used to assess risks based on historical events. Quantitatively, decision trees, influence diagrams, and sensitivity diagrams were used to assess risks. 

The response was implemented using avoidance and loss prevention method as project managers were advised to shut down a construction area with identified hazards. Loss reduction served as a mitigation method. Separation method was used to prevent the impact of flooding caused by construction which happened to be near the water. Barricades were erected at this site as well.  Duplication of records, materials, equipment was used to mitigate losses.  Transfer of risks was done through the OWNER -CONTROLLED INSURANCE PROGRAM(OCIP) to the responsible parties. The CIP the owner, construction company, designer, contractors, and consultants were protected by a one bonded insurance scheme.  Additionally, contractual risks were transferred to the contractors.  The table below shows the response and transfer of risks ( Greiman, 2013).

Table 3

Other risks were implemented and transferred like the operational risk, scope risk, construction risks etc. the monitoring and controlling by done by providing methods for safety and accident prevention. Loss control and claims management for determining investigation, assessment, damage and to evaluate claims.

These are most of the risks identified, assessed, response planned, response implemented and monitored and communicated through directives, policy memorandums and lesson learned manual.

DISCUSSIONS OF FINDINGS

According to the National transportation safety board (2018), the above findings are very clear that megaprojects and projects have its unique risks.  There was high uncertainty associated with the Big Dig. The construction risks led to the collapsing of the one side of the tunnel which cost a life. According to the that, the cause was the use of an inappropriate epoxy formulation. This could have been caused by a lack of monitoring and controlling and quality assessment by the management and design as the specifications and design were approved by them. The project was said to be failed due to the cost overrun and delay. These and more made the Massachusetts attorney general request for contractors to refund taxpayers $108million for inappropriate work. The court also demanded the project management company to pay $407million. As seen, lots of losses were incurred due to the lack of thorough work done. Like every project, the project requires a risk register as part of the risk management procedures. From the foregoing, construction projects are a high-risk venture, especially if not handle accurately. The project organization must have professionals and experts in handling risks. Nevertheless, the Big Dig achieved part of its aim by improving the neighborhood and delays. It was an economic and transportation benefits. reduction in carbon monoxide was achieved; the quality of life was improved by a great percentage and an estimated amount of $170million was achieved yearly. 

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furthermore, It is no surprise that megaprojects face similar issues like cost overrun, delays, design risks, scope creep etc as can be seen In the Seville metro line that is one of the world most advanced subway railway networks started in 1974 but after some years of constructing some tunnels, it was stooped due to fears of possible damage to historical buildings and questionable population raise forecasts (Misic & Radujvkovic, 2015). The project was reopened in 1999 and the construction commenced again in 2003 with an initial budget of about £36 billion and a planned completion in 2006. Due to uncalculated risks and complexity found in megaprojects, construction problems such as groundwater and coarse gravel all led to a cost overrun of £658billion which is a massive overbudget (Littau, 2015).

There’s an imbalance in understanding the success or failure of construction projects especially megaprojects. This begets the question, what makes a project a failure?

CONCLUSION AND RECOMMENDATION 

This research has achieved its objective of identifying, assessing, planning, implementing and communicating risks in the big dig project. It also identified the risks associated with PPP megaprojects. Using the MOR framework, risks were identified and transferred accordingly. Although from the analysis, the appropriate ways of dealing with such complex projects are yet to be achieved. Project promoters, public agencies, broad scope, inaccurate estimates, environmental surprises, high certainty, lack of competence and more contribute to the failure of such projects. As gathered from several journals, articles and books, the management of risks were poorly done and even though the designers and contractors paid a substantial amount, the public users are at the weaker end.

However, it is advisable for similar projects to be thoroughly estimated and planned before execution. Also, some risks should be allocated to promoters and every party who has interest in the project so that they will be held accountable. As seen in the similar projects, continuous attention is not usually on the quality or specifications of materials after the contract has been awarded. All these lies on the complexity and poor management of construction projects especially megaprojects. Another factor to be treated is the optimism bias that occurs in megaprojects.

It is uncertain what the major causes of failure in projects are as each project risks are unique; threats and opportunities might present its own newness.  So, it is recommended that for accurate management of this project, the project company should consider all the risks, cover every area of risk management and the project owners should involve high skilled professionals and technical experts to verify and be part of the monitoring team from the start of the project to the finish. If scope creep occurs which is most likely, a change control system should be applied.

REFERENCES

• Bartlett School of Planning, (2014). The central Artery/third harbour Tunnel project. http://www.omegacentre.bartlett.ucl.ac.uk/wp-content/uploads/2014/12/USA_BIGDIG_PROFILE.pdf.
• Bechtel/Parsons Brinckerhoff, (2006). Key facts. The big Dig. https://www.bechtel.com/getmedia/0202bc86-abaa-42ab-8d90-db5224d31f4f/BigDig
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