School of Engineering, Design and Built Environment

Unit: BUSM7082 (Spring 2022) Risk Management & Decision Making

Assignment 3

Value Management & Risk Management

Weight: 60% (Report 40% and Presentation 20%)

 40 marks for Report = 20 marks for individual contribution + 20 marks for overall
team report (equally allocated from overall mark to all who have contributed to the
assignment)
 20 marks for Professional Presentation = 10 marks for individual presentation + 10
marks for overall team presentation
 Maximum 4 members in a group (minimum 3 members)
Type of Collaboration: Individual (50%), Group (50%)
Due: Refer to outline
Submission: Online via vUWS and a presentation
Format: A professional written report and a professional oral presentation
Length: 4000 words report (per group) and up to 15 minutes’ presentation (per group)
Curriculum Mode: Professional Task & Presentation
The Overview

A
B A
Figure 1 Snowy Hydro Schematic

Snowy 2.0 is the next chapter in the Snowy Scheme’s history. It is a nation-building renewable energy project that will provide on-demand
energy and large-scale storage for many generations to come. It is the largest committed renewable energy project in Australia and it will
underpin the nation’s secure and stable transition to a low-carbon emissions future at the lowest cost for consumers.

The project involves linking two existing dams, Tantangara and Talbingo, through 27km of tunnels and building a new underground power
station. Water will be pumped to the upper dam when there is surplus renewable energy production and the demand for energy is low,
and then released back to the lower dam to generate energy when electricity demand is high.

In this way, it will provide flexible, on-demand power while reusing or ‘recycling’ the water in a closed loop. It will also maximise the
efficiency of renewables by using excess solar and wind energy to pump water to the higher dam, to be stored for later use.

The key elements of the Facilities are:

1 Power Waterways - the various tunnels and tanks that convey water between the Tantangara and Talbingo Reservoirs to supply the
Power Station;
2 Power Station Complex - the underground facility comprising the Machine Hall, Transformer Hall and Gas-insulated Switchgear (GIS)
cavern;
3 Access tunnels - various tunnels providing efficient and safe access to permanent infrastructure; and
4 Project-wide systems and services - various systems and services such as security and CCTV, communications, control and
measurement and protection.

As part of the team working on the project’s Final Investment Decision (FID) for funding purposes, you have been assigned to carry out a
detailed Value and Risk Management exercise identifying the best alternative solution for a selected specific part of the Snowy 2.0 project.
You will be required to present the best value alternative solution considering both risk and value parameters.

You are required to research and find more details of this mega project in order to successfully complete the assignment.

From FOUR key elements of the Facilities, TWO parts (A and B as illustrated in Figure 1 above) have been selected here as the assignment
options. You are required to select only ONE part, i.e. A or B, and develop a solution for the selected part.

Option A – Power Waterways

The Power Waterway conveys water between the two reservoirs and comprises:

1 Tantangara Intake - the point of entry/exit to the Power Waterway for water entering/leaving Tantangara Reservoir. The Tantangara
intake structure will be located towards the southern end of Tantangara Reservoir, on its western shore, about 1 km northwest of
Tantangara Dam;

2. Headrace Tunnel - links the Tantangara Intake to the Distributor Tunnels;

3. Distributor Tunnels - the division of the single waterway (headrace) into three waterways so that separate waterways can service a pair
of machine units;

4. Headrace Surge Tanks - Provide free surface as close as possible to the turbine to attenuate transient pressures;

5. Pressure Shaft Structure - conveys the water vertically from the end of the Distributor Tunnel to the start of the Pressure Tunnels;

6. Pressure Tunnels - connect the bottom of the Pressure Shaft Structure to six Penstock Tunnels;

7. Penstock Tunnels - provide individual water supply to the six pump-turbines;

8. Draft Tube Tunnels - connect the draft tube elbow below the pump-turbines to the Collector Tunnels;

9. Collector Tunnels - combine flow from the Draft Tube Tunnels upstream of the Tailrace Surge Tank;
10. Tailrace Surge Tank - operates similarly to the Headrace Surge Tanks;

11. Tailrace Tunnel - links the Tailrace Surge Tank, to the Talbingo Intake; and

12. Talbingo Intake - the point of entry/exit to the Power Waterway for water entering/leaving Talbingo Reservoir. The Talbingo Intake
Structure is situated near the upstream end of Talbingo Reservoir on its eastern side, about 17 km south of Talbingo Dam, where the
Yarrangobilly River and Middle Creek flow into the storage.

Option B – Power Station Complex

The Power Station Complex is a drained, underground facility comprising:

1. Machine Hall (approx. 190m (long) x 55m (high) x 30m (wide)) - a machine hall cavern housing six pump-turbine units. Each unit consists
of a 340 MW Francis pump-turbine and a 375/425 MVA motor-generator and their ancillary systems. Three of the units are variable-speed
(asynchronous) and three are fixed-speed (synchronous), arranged in a way that the three pressure tunnels are connected to one variable-
speed and one fixed-speed unit. The Machine Hall includes various control rooms and space for communication and power equipment,
amenities and drainage and dewatering equipment;

2. Transformer Hall (approx. 180m (long) x 29m (high) x 20m (wide)) - a transformer hall cavern housing six transformers. The Transformer
Hall contains the main transformers with one three-phase transformer per unit provided in the Reference Design; and

3. Gas-Insulated Switchgear (GIS) cavern - a cavern for housing GIS will be incorporated into the Power Station Complex. The Reference
Design has located the GIS into an extension of the Transformer Hall, however placing the GIS directly over the main transformers has not
been specifically precluded.

Project Cost Estimate

The table below provides a ball park cost estimate for the scheme. The greatest uncertainty is the cost of the steel pipes, tunnel lining,
power station and ‘Allowance for Other’. World experience is that hydro projects cost about US$2,000/kW to US$4,000/kW. The Electricity
Storage Association gives a range of costs for Pumped-Hydro of US$500/kW to US$1500/kW.

Item Base Estimate Base Schedule Uncertainty

Best Case Most Likely Worst Case
Access Road $50,000,000 3 months Might be 10% Current Might be 20%
less assumptions more
Tunnels, $2,000,000,000 3 years, four TBM’s Might be 10% Current Current
about 13m (TBM’s construction less assumptions assumptions are
diameter, costs) plus conservative
40km $500,000,000 design
cost
Surge Shafts $200,000,000 1 year Might be 15% Current Might be 25%
less assumptions more
Steel Tunnel $250,000,000 Completion 1 year post No further Current Might be 30%
Lining completion of tunnels opportunity assumptions more
Surface Pipes $500,000,000 2 years No further Very unlikely to Likely to pay 10%
opportunity source these mote, WC might
pipes with this be 20% more
price.
Power $100,000,000 2.5 years No further Optimistic Might be 30%
Station opportunity assumptions – more
might be 10%
more
Generators $70,000,000 1 year procurement Benchmarking is recommended.
Turbines $75,000,000 1 year procurement Benchmarking is recommended.
Pumps $65,000,000 1 year procurement Benchmarking is recommended.
Transformers $30,000,000 1 year procurement Benchmarking is recommended.
Project $384,000,000 NA Current Current Might be 50%
Management assumptions assumptions more
(10%)
TOTAL excl. $4,224,000,000 About 5 years
Contingency
Contingency ????? ????? QRA is recommended to calculate the required schedule
and cost contingency allowances for P70 and P90
confidence levels.
TOTAL incl. ????? ?????
Contingency

Further details about the project can be found at: https://www.snowyhydro.com.au/snowy-20/

Requirements for Assignment 3

This assignment has two parts, a report (40%) and a presentation (20%). You can select either Option A or Option B for the assignment.

You are then required to improve value profile of the selected project option by developing the best alternative solution through applying
the five stages of Value Management Job Plan (as given below).

- Information Phase: evaluate objectives (do a SMART or FAST analysis)

- Creativity Phase: generate minimum of three alternative solutions

- Evaluation Phase: do a judgement matrix

- Development Phase: develop one solution in bit more detail

- Recommendation Phase: Make final recommendations (including Cost & Schedule Risk Analysis to recommend the required
cost and schedule contingency for P70 and P90 Confidence Level – noting that a probabilistic method should be used for
contingency calculation)

Your risk analysis of the selected option should include:

- Identification of top 10 risks with possible time and cost impacts due to residual risks

- Quantification of residual risks, including probability of occurrence and range of possible schedule and cost impacts

- Schedule Risk Analysis (SRA), by using Palisade @Risk or similar software e.g. Oracle Primavera Risk Analysis (PRA), Deltek
Acumen Risk, Safran Risk, etc.

- Cost Risk Analysis (CRA), by using Palisade @Risk or similar software

- Overall recommendation on contingency allowances for different confidence levels

The assignment comprises two components, including a group written professional report (Part 1; 40 marks for Report, i.e. 20 marks for
individual contribution + 20 marks for overall team report which will be equally allocated to all contributed to the assignment) and an oral
presentation (Part 2; 20 marks; i.e. 10 marks for individual presentation + 10 marks for overall team presentation).

The sources of information that you use for your presentation and your written professional report needs to be clearly identified and
appropriately cited and referenced.

Professional Report (40 marks)

The submission must be a professionally written report. The report should be prepared jointly by all team members. Your team is required
to write a fully referenced and well-structured professional report on your assigned topic and to make an oral presentation on your report.
The contributions of each individual within the report should be clearly highlighted and documented at the cover page of report,
otherwise the whole allocated 40 marks for the report will be assessed for the team and will be equally allocated between the team.

The report should be 4,000 words, in length (excluding references and appendices). Page numbers are mandatory. You are encouraged to
discuss the assignment with the teaching staff and other team members.

The use of illustrations such as figures and tables, and other graphical information is encouraged to aid in your explanation and improving
your writing as well as to aid in the assessors understanding of the report. You should also use headings (including main and sub-headings)
where appropriate to effectively structure and organise the various sections of your report. The words you choose for the main and sub-
headings should be able to succinctly reflect what you are trying to express in the various sections of the report. Remember, the report
must be written in a logical and systemic format, which can be easily understood for assessment.

Oral PowerPoint Presentation (20 marks)

Presentations are in PowerPoint format. The presentation should be prepared and delivered as a team and will be assessed both
individually and as a group. Each group member will have set number of minutes to present. The Unit Coordinator will inform you about
specific timings well in advance of presentations.

The PowerPoint file should be submitted electronically on vUWS by the due date and time. Each group only needs to lodge one
submission. The scripts used for your presentation should be included in your submission as note embedded in the PowerPoint file.
Student names, student IDs, assignment team number, and report topic should be on the first slide.

Because of the different time slots for the presentations by different groups, the submission of the PowerPoint file is more for the purpose
of a progress check than marking by the teaching staff. You will be able to make minor amendments to your PowerPoint file and
presentation after the submission. However, late submissions may incur penalties (refer to General Assessment Requirements).

Note: all facts, figures and names mentioned above for this assignment are hypothetical for the purpose of discussion, analysis and
formulation of this assignment.
Resources:

Refer to Learning Resources as well as documents below.

- AS/NZS ISO 31000

- Project Management Institute (PMI) Risk Management Standard

- Risk Engineering Society (RES) Contingency Guideline, 2016

- Value management guidelines provided

 Marking Criteria – Part 1 (Report: 40 marks for Report = 20 marks for individual contribution + 20 marks for overall team
report (equally allocated from overall mark to all who have contributed to the assignment)):

Deliverable Score HD D C P F
(800-100) (70-80) (60-70) (50-60) (0-49)
Demonstration of 25% well-defined well-explained good problem acceptable low-quality
level of problem problem specification and problem problem
understanding of specification and specification and alternative design specification and specification and
the design option alternative design alternative design options alternative design alternative design
(Information & options options (16.25) options options
Creativity Phases (25) (18.75) (13.75) (7.5)
of VM Job Plan)
Evaluation of 15% Comprehensive Well explained Good level of Basic evaluation low-quality
solutions and and systematic evaluation of evaluation of of alternative evaluation of
solution evaluation of alternative alternative solutions and alternative
development alternative solutions and solutions and basic definition of solutions and
(Evaluation and solutions and well-explained reasonably solution poorly-defined
Development well-defined solution defined solution development and solution
Phases of the VM solution development and development and recommendation development and
development and recommendation recommendation (8.25) recommendation
Job Plan)
recommendation (11.25) (9.75) (4.5)
(15)
Identification, 10% well-defined well-explained useful definitions acceptable low-quality
analysis and likelihood and likelihood table, of four levels, definitions and likelihood table or
evaluation of top probability ranges a couple of risk good method of reasonable inaccurate levels
10 risks with for different analysis and analysis and method of and definitions,
possible time and applications, evaluation evaluation analysis and poor analysis and
cost impacts due multiple methods methods (6.5) evaluation evaluation
to residual risks of analysis and (7.5) (5.5) (3)
evaluation
(10)
Undertaking 15% probabilistic probabilistic probabilistic probabilistic probabilistic
Schedule Risk schedule schedule schedule schedule schedule
Analysis (SRA) by contingency contingency contingency contingency contingency
using Primavera determination, determination, determination, determination, determination,
Risk Analysis (PRA) well-developed sound developed good developed reasonably poor-developed
conclusions and conclusions and conclusions and developed conclusions and
recommendations recommendations recommendations conclusions and recommendations
(15) (11.25) (9.75) recommendations (4.5)
(8.25)
Undertaking Cost 15% probabilistic cost probabilistic cost probabilistic cost probabilistic cost probabilistic cost
Risk Analysis (CRA) contingency contingency contingency contingency contingency
by using Palisade determination, determination, determination, determination, determination,
@Risk or well-developed sound developed good developed reasonably poor-developed
Primavera Risk conclusions and conclusions and conclusions and developed conclusions and
Analysis (PRA) recommendations recommendations recommendations conclusions and recommendations
(15) (11.25) (9.75) recommendations (4.5)
(8.25)
Final 10% well-defined well-explained good acceptable low-quality
Recommendations demonstration demonstration demonstration demonstration demonstration
(covers both risk (10) (7.5) (6.5) (5.5) (3)
analysis and value
management
considerations)
Presentation of the 10% well-defined well-explained good acceptable low-quality
report (general demonstration demonstration demonstration demonstration demonstration
presentation, (10) (7.5) (6.5) (5.5) (3)
referencing, use of
language)
TOTAL 100% 100 75 65 55 30
  Marking Criteria – Part 2 (Presentation: 50% for group presentation and 50% for individual presentation - 20 marks for
Professional Presentation = 10 marks for individual presentation + 10 marks for overall team presentation):

Deliverable Score HD D C P F
(800-100) (70-80) (60-70) (50-60) (0-49)
General presentation 30% well-defined well-explained good acceptable low-quality
skills demonstration demonstration demonstration demonstration demonstration
(30) (22.5) (19.5) (16.5) (9)
Quality of content 25% well-defined well-explained good acceptable low-quality
demonstration demonstration demonstration demonstration demonstration
(25) (18.75) (16.25) (13.75) (7.5)
Structure and logic of 25% well-defined well-explained good acceptable low-quality
the presentation demonstration demonstration demonstration demonstration demonstration
(25) (18.75) (16.25) (13.75) (7.5)
Results and 20% well-defined well-explained good acceptable low-quality
recommendations demonstration demonstration demonstration demonstration demonstration
(20) (15) (13) (11) (6)
TOTAL 100% 100 75 65 55 30