Risk Management in three Nepali Projects

Projects consume time and resources so as to convert the input into output; in the meanwhile, the
processes involved can come across various uncertainties that has capacity to overrun both cost and
period of the project. So, it is very much vital to imagine and calculate all the risks involved in a project,
devise a plan to manage those risks according to their impact assessment and the frequency of their
occurrence. Only then, the project can complete within stipulated budget and time period. So, looking at
the three projects (Melamchi Water Supply project, Upper Tamakoshi Hydropower project and Madya
Pahadi Lok Marga) gave us the following learning regarding the inherent risks and its mitigation
strategies:

 As per the report, Melamchi water project had the least of the risk management among these
three projects. Problem with contractors, socio-political reasons, privatization, conflict with
locals, lack of materials, lack of monitoring and evaluation and vested interest along with
earthquake are cited as the major causes of overruns. However, there seems to be major lacking
in proactiveness so as to dig out the possibility of these scenarios beforehand; no wonder, this
lack of alertness and ignorance of various project management techniques led to the delays and
cost overruns in the project.
 Comparatively, Madhya Pahadi Lok marga had few provisions for the risk management that can
occur in the projects.
 The financial risk is covered through the risk transfer strategy of shifting the portion of the
financial risk to the insurance company so that the company has the risk coverage on the behalf
of the project.
 Non performance risk of contractors is mitigated through the provision of Liquidated Damage
Liability of 10% on contractors for unfair delays in projects.
 Ownership risk is mitigated through risk avoidance while cutting the forests and acquiring land.
 Similarly, in the case of Upper Tamakoshi Project, various risks like climate change, natural
disasters, share ownership disputes, technical issues, foreign exchange risk, inflation changes,
resource constraints are posed as the risk for the project. However, the report lacks substantial
risk management strategies that can specifically tackle these issues; instead, it contains the
vague, theoretical strategies that might not have worked for the Upper Tamakoshi Project.

On the thorough review of the risk management dimension of the given three projects, I could see the
bleak scenario of the national projects. The projects either lack the proactiveness to dig out the risk
factors or even in the delineation of the risk factors, there has been lack of active involvement of the
management to devise effective risk management strategies so as to mitigate underlying risk factors.
Madhya Pahadi Lok Marga is satisfactory in terms of its risk management, compared to two; however,
Melamchi water project and Upper Tamakoshi reports have poor risk management strategies.

Risk Management of Hydropower Development in China

Similarly, Risk Management in hydropower development article has two objectives in mind. With the
quantitative questionnaire and survey results, it tries to find out the possible risks factors in hydropower
development in China from the perspective of clients, contractors, supervisors and designers; then, the
Three Gorges Project is taken as a case study to find out where there are risk mitigation strategies used
for these risk factors. There were following learnings from the article;
 Depending upon the perspective, whether the party is client, supervisor, designer or
contractors, there can be different perceived risk factors in the project. So, for the integrated
approach and the multi-dimensional view for the risk management strategies, a project manager
must view the project from different perspective with empathising the existing stakeholders’
viewpoints. With the definition of the problem, can there be any solution; so, this analysis can
bring solutions in the form of risk management strategies for existing risk factors.
 Any project manager must consult the existing researches in the literature, and in case there are
no any researches available, they must conduct surveys and researches through scientific
research methodologies to dig out the risk factors.
 These researches can shed light to the weightage of the particular risk factors and this can be
very essential while devising strategies as the factors with high weightage and high occurrence
frequency needs high prioritization and this scientific approach can mitigate risk factors
significantly.
 Although, different stakeholders view project differently, there can be few consensuses as well;
safety, quality of work and environmental impacts are the major risk factors that hold true for
every stakeholder.
 Combined incentive-based scheme can be very much be helpful as this can bring collaborative
approach to the project completion where with mitigation of risk factors, the particular
stakeholder gets the incentive for mitigating those factors.
 For instance, there can be reward mechanism for timely and correct exchange of information
through project management systems; this brings the culture of communication between
parties and as a result, the risk factors can be searched and managed in real time without the
unnecessary delays for mitigation.
 Similarly, with the enhancement of the skill of workers, the project can complete with the
operational risks with much more quality and safety as this can contain the project within
budget and time.
 Any projects must consider interactions between project delivery, environmental and social
processes, so that there can be sustainable and responsible impact assessment on the local
ecology, culture and social climate.
 With these mitigation strategies, Three Gorges Project completed within time, with 15% less
budgeted cost; so, we can use this models to the Nepali projects so that projects have no cost
overruns and delay issues.