GENERAL SIR JOHN KOTELAWALA

DEFENCE UNIVERSITY
FACULTY OF BUILT ENVIRONMENT AND
SPATIAL SCIENCE
DEPARTMENT OF QUANTITY SURVEYING
INTAKE 39

QS 28802 - RISK MANAGEMENT

HAMBANTOTA INTERNATIONAL PORT

GROUP 03
COURSE WORK BRIEF

Construction industry is a very competitive and challenging industry. Investors make massive
investments for construction projects. Correct decision making is essential for earning profits.
Objectives of the assignment
1. To improve students’ ability to different risk identification and analysis methods.
2. To improve students’ ability to identify different risks available for construction projects.
3. To give students an opportunity to analyze different construction projects.
4. To develop students’ understanding, analytical skill, decision making capacity and
creativity.
5. To develop team work and report writing skills of students.
Task
Students should select a construction project in Sri Lanka and get details of the project.
Students shall prepare a SWOT analysis for the selected project.
Students shall categorize the identified risks.
Students shall comment on success/failure of the project.
Methodology
This is a group assignment.
• There should be five (05) members per each group.
Students should produce a report.
The report shall be processed on one side of A4 paper, neatly presented as a bound document
limited to 4000 words and shall contain;
a) Coursework brief
b) An introduction to the report
c) The text (analytical comparison preferably under appropriate headings)
d) Conclusions and recommendations

Date of issue of the assignment: 05th September 2023

Deadline of the assignment: 11th October 2023

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Structure of marking
Introduction - 10 marks
Literature survey - 10 marks
Analysis - 50 marks
Conclusion and recommendation - 10 marks
Formatting - 10 marks
Meeting the deadline - 05 marks
Plagiarism - 05 marks

Course Title BSc. (Hons) Quantity Surveying

O/CDT C S Maliyadda - 6493

M M V L Mapa - D/BQS/22/0007
E A H N Elabadaarachchi - D/BQS/22/0011
Students’ Name
W T S De Alwis - D/BQS/22/0032
K M B Fernando - D/BQS/22/0037

Resource Person Mrs. NDI Vithana

Submission On 11th October 2023

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ACKNOWLEDGMENT

We would like to express our special thanks of gratitude to the Brigadier Rector of the Kotelawala
Defence University Southern Campus, Dr. S.D. Jayasooriy, (Head of Department) Department of
Quantity Surveying, Faculty of Built Environment & Spatial Science and Lecturer Mrs. N.D.I.
Vithana for giving us good guidelines for our assignment throughout numerous consultations. We
would also like to extend our deepest gratitude to all those who have directly and indirectly guided
us in making this assignment.

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CONTENT

01 - INTRODUCTION ................................................................................................................. 6

Risk Identification and Analysis Methods .............................................................................. 7

SWOT Analysis ......................................................................................................................... 7

Hambantota International Port ............................................................................................... 9

02 - SWOT ANALYSIS FOR HAMBANTOTA INTERNATIONAL PORT ....................... 11

Strength .................................................................................................................................... 11

Weakness .................................................................................................................................. 12

Opportunities ........................................................................................................................... 14

Threats...................................................................................................................................... 16

HOW TO MANAGE THEM AND COMMENT ON SUCCESS OR FAILURE ................. 18

CONCLUSION ........................................................................................................................... 19

REFERENCES............................................................................................................................ 20

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TABLE OF FIGURES

Figure 1-Masterplan of Hambantota International Port .................................................................. 9

Figure 2-Infrastructure of port ...................................................................................................... 10
Figure 3-Location of Hambantota International Port.................................................................... 11
Figure 4-Port development and competition between Colombo and Hambantota port................ 13

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01 - INTRODUCTION

Risk Identification and Analysis Methods

The process of identifying and characterizing possible risks that might affect the successful
execution of a project, program, or other activity is known as risk identification. The goal of this
initial phase in risk management is to systematically anticipate, evaluate, and manage possible
harm to the project. Various elements, such as internal procedures, outside circumstances, human
factors, technological advancements, and natural calamities, might pose risks. Organizations may
take proactive efforts to manage or prevent risks and guarantee the success of the project via early
risk identification. There are several techniques that the project can use to identify risks. They are
the following;

• Brainstorming - An expert panel of professionals may brainstorm themselves to identify

risks.
• Root cause analysis - A systematic approach to identifying the underlying causes of risks.
• Expert judgment - Consulting with experts who have experience with similar projects or in
relevant fields.
• SWOT analysis - Strengths, Weaknesses, Opportunities, and Threats is referred to as
SWOT. Project managers use it as a strategic planning tool to assist them in assessing the
strengths and weaknesses of their projects as well as any possibilities and dangers they may
encounter in the future.

SWOT Analysis
SWOT stands for Strength, Weakness, Opportunities and
Threats. It is a framework through which teams and
organizations evaluate the potential internal and external
variables that may have a good or negative impact on a
project, product, or institution. Professionals use a variety
of techniques and approaches to carry out the complicated
task of risk detection and management. There is no one
best method to approach things. Instead, project managers
must develop strategies based on the circumstances. Swot analysis is the most comprehensive tool
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that can be used to understand the overall strategic position of an organization. The aim of SWOT
is to identify the strengths and weaknesses that are relevant in meeting opportunities and threats in
particular situations. Capon affirms that a SWOT analysis helps the organization in terms of
strengths to match with opportunities, Weaknesses to turn into strengths, Opportunities to exploit
with strengths, and Threats- to turn into opportunities.

The purpose of the SWOT analysis is to identify external opportunities and threats that may have
the potential to affect the future of a port or the port sector as a whole. These opportunities and
challenges, if recognized, may provide possible corrective or mitigating actions that could be
appropriate in some circumstances. Alternatively, in order to highlight a port's strengths and flaws,
internal analysis tactics that the port can use, and in particular, to highlight specific methods that
the port may require correction. The four components of a SWOT analysis carried out as part of a
larger port strategic planning Presented in the following figure are many industries.

STRENGTH WEAKNESS
a resource or capacity the port a limitation, fault or defect in
(or port industry) may use the port preventing it to
effectively to achieve its achieve its objectives
objectives
INPUTS FOR
STRATERGY
OPPORTUNITY THREAT
any favourable situation in the any unfavourable situation in
port's environment the port’s environment

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Hambantota International Port

The Sri Lankan government was able to carry out its long-delayed ambition to construct a
significant seaport at Hambantota thanks to loans from China. However, a balance-of-payments
problem forced the Sri Lankan government to enter back into a leasing arrangement with a Chinese
company to lease the port in exchange for a foreign currency infusion before the port's construction
was even finished. This sparked debate over China's "debt-trap diplomacy" on a global scale. It is
promised that Hambantota will revolutionize Sri Lanka's economic future via China's
infrastructure investment-driven strategy, although it is unclear whether such claims can be
fulfilled. The domestic politics of Sri Lanka and the struggle for dominance on a global scale also
continue to influence this contentious enterprise.
Aligning with government policies to transform Sri Lanka into a strategically
important economic center in the world, the government of Sri Lanka has laid out a development
policy framework for short, medium and long-term macroeconomic policies to address challenges
and to make structural transformation of the economy for sustainable development. The
government is making pragmatic policy decisions to create the necessary economic conditions to
strategically position Sri Lanka as a Maritime, Aviation, Commercial, Energy, and knowledge hub.

Figure 1-masterplan of Hambantota International Port

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 Figure 2-infrastructure of port
Location: Hambantota District, Southern Province, Sri Lanka

Type of Project: Logistics; industrial.

Project Developer(s): Sri Lanka Ports Authority (SLPA); China Merchants Port Holdings
Company Limited (CMPort), a subsidiary of China Merchants Group; Fujian Transportation
Maritime Silk Road Investment and Management Company Limited (Fujian TMSR), an affiliate
of Fujian Provincial Communication Transportation Group.

Main Contractor(s): China Harbor Engineering Company (CHEC), a subsidiary of China

Communications Construction Company Limited.

Financier: Export–Import Bank of China (China Exim Bank).

Cost: 1.3 billion USD (Phase I: 508 million USD; Phase II: 808 million USD).

Project Status: Operational

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02 - SWOT ANALYSIS FOR HAMBANTOTA INTERNATIONAL
PORT

In general, factors affecting to be a hub port have been identified through analyzing the
corresponding strengths, weaknesses, opportunities and threats of a port. Therefore, this study was
also being developed through a SWOT analysis in order to identify most significant factors that
are possible to make Sri Lanka, especially Hambantota port a vehicle transshipment hub in the
region. Here the special attention is paid to the Hambantota port since all the vehicle transshipment
activities in Sri Lanka are done there currently. Following other scholars and referring literature
articles this study is initially recognized twelve factors that need to be there for a creation of hub
port. Those are location, Infrastructure, costs, Manpower, Services provided, Industrial zone,
Connectivity, Safety, Efficiency, Hinterland accessibility, International relationships and
government policies.

Strength

Good location and geographical advantage

Strategically situated along one of the busiest international shipping lanes, which links Asia with
Europe, Africa, and the Middle East, lies Hambantota Port. As a prospective hub for transshipment,
this provides an important
advantage. Hambantota port
is located along the Southern
coast of Sri Lanka and
nineteen nautical miles
(16km) away from the main
East-West shipping route
which connects Asia and
Europe through the Malacca
Straits and Suez Canal. It has
been estimated that around
Figure 3-Location of Hambantota International Port
36000 ships including 4500

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oil tankers use this particular shipping route annually. It has been estimated that ships traveling via
Hambantota would be able to save about three days of sailing time. The port is located 10 nautical
miles from the busiest sea route, the east-west trade route and is located on the traditional silk
route.

Modern standards and infrastructure

Modern infrastructure and cutting-edge facilities at the port allow it to accommodate huge boats
and a variety of container kinds. Due to this, shipping businesses may find it to be an appealing
choice. The ports of Hambantota are extensively developed, offer excellent and modern
infrastructure standards, and have intermodal terminals with significant capacities built.

Economic growth and development

The port has the ability to spur economic development in the neighborhood by bringing in
investment, fostering employment creation, and advancing regional shipping and logistics sectors.
The port can help the local economy grow by attracting investment, promoting job growth, and
expanding the shipping and logistics industries in the area. A big port requires the hiring and
upkeep of a significant crew. This includes any employment that is indirectly created in related
industries like transportation, warehousing, and logistics in addition to the direct employees of the
port. The economic activity of the port may increase the income of local residents and businesses.
As a result, the general standard of living and quality of life for the local population may improve.

Weakness

Low Utilization Rates

Low utilization rates have always been one of the main issues that Hambantota Port has had to
deal with. The project faced financial challenges as a result of the port's inability to draw in a
sizable amount of maritime traffic.

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Debt Burden

Loans were a major source of funding for the construction of Hambantota Port, and the Sri Lankan
government had difficulty paying back these obligations. The result was a contentious agreement
that gave China Merchants Port Holdings a long-term lease and a controlling interest in the port.
Large Chinese loans, the Sri Lankan government's incapacity to pay back the debts, and the
ensuing 99-year Chinese lease on the port have also sparked charges that China was engaging in
debt-trap diplomacy, however, the veracity of these claims is contested.

Competition with Colombo Port

One of the busiest ports in South Asia is the Colombo Port, which is situated on the other side of
the island. It benefits from a competitive edge in terms of location, a well-established
infrastructure, and logistical links. It may be quite difficult to persuade shipping firms to change
their routes to pass through Hambantota.

Figure 4-port development and competition between Colombo and Hambantota port

Hambantota fared so badly, mostly ignored by thousands of ships passing it by daily, that it
eventually defaulted on its debts and the Sri Lankan Government had little choice but to hand over
80% of the port’s ownership to China, as well as a large swathe of surrounding land on a 99 year-
long lease. With many feasibility studies demonstrating that it couldn't compete with the
prospering Port of Colombo, the largest in Sri Lanka, which also has a lot of development potential,

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Hambantota Port, which had been in the works for thirty years, was repeatedly dismissed by
experts.

Environmental concerns
Environmental effects from the development and operation of a large port may include possible
harm to regional ecosystems, water quality, and air quality. The port's long-term profitability
depends critically on ensuring sustainable and ecologically friendly practices. It has been reported
that animal habitats were affected by the dredging of 40,000 m3 of sand from the Karagan Lewaya
Lagoon for the Hambantota port's construction,90 and that this dredging destroyed the ecology of
the lagoon and surrounding habitats. Less than 40 kilometers from the Hambantota port, the 4,000-
hectare Bundala National Park92 is home to elephants and migratory birds. The emission of
chemical and physical waste, oil pollution, ballast water, and other pollutants by cargo ships
endangers the local maritime ecology.

Opportunities
Infrastructure Maintenance

Hambantota Port is an important resource for Sri Lanka's growing economy. It can open up local
infrastructure development that benefits the port and neighboring communities.

Mainly, Hambantota can gain knowledge and access by developing highways, railways and
industrial area which can improve the connectivity of other important centers of the country.
Exploiting ports as gateways to domestic and international markets can save both businesses and
time. In addition, it can boost local economic growth and job development.

Transshipment Hub

Within the Indian Ocean region, the Port of Hambantota has enormous potential to grow into a
major transshipment hub. As international trade grows, there is a strong demand for transshipment
services. Ports can provide shipping lines and cargo carriers with a convenient place to refuel,
allowing them to optimize their routes and save time and fuel. Because of this, they can have an
advantage over their rivals in the market.

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For example, using Hambantota as an interchange point could be advantageous for a shipping line
running between Europe and Southeast Asian countries. Its goods can be delivered quickly and
efficiently, avoiding long, expensive routes.

Tourism Potential

Hambantota's attractive environment offers enormous potential for the growth of tourism. The
port area can be developed into a water area with multiple uses such as cruise terminals, leisure
areas and waterfront attractions. With this strategy, the port can attract visitors, make money and
diversify its revenue streams.

For example, a waterfront location with good architecture can attract cruise ships and provide an
interesting and attractive harbor for tourists. In addition, the construction of hotels, restaurants
and entertainment venues can accommodate tourists and local residents.

Belt and Road Initiative (BRI)

Hambantota International Port will greatly benefit from Sri Lanka's active involvement in
China's Belt and Road Initiative (BRI). A massive infrastructure and connectivity initiative
called the BRI seeks to improve economic links between Asia, Europe, and Africa. By acting as
a critical hub in the BRI network, Hambantota can play a critical part in the effort.

For example, BRI's objectives of improving connectivity and trade are closely aligned with
Hambantota's deep-water port and important trade routes. It can act as a key link between China
and other BRI partner countries, boosting trade and promoting economic cooperation.

Diversification of Cargo Handling

Hambantota has the potential to increase its revenue by providing a range of cargo-handling
services. In addition to the primary focus of container handling, the port can handle several types
of bulk cargo, including solid bulk cargo (grain, coal, minerals), liquid bulk cargo (petroleum,
chemicals) and other bulk cargo.

Hambantota can generate more revenue by expanding its cargo-handling business and avoiding
being dependent on only one type of cargo. For example, bulk cargo can be profitable, especially
when there is a large demand for local commodities such as coal or iron ore.

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Threats
Competition is affected by regional ports

Other well-established ports in the region, including Sri Lanka's Colombo, Singapore and India,
pose a constant threat to Hambantota Port. These ports are well known and have a significant
market share in the international shipping sector. They provide their clients with many advantages
including high productivity, connectivity, and trading services.

For example, the port of Colombo has established a large network of transport, logistics and trade
services over the years, serving as a major shipping hub. To compete against these ports,
Hambantota needs to emphasize its unique benefits such as low costs and quick turnaround time.

Regulatory Challenges

Hambantota Port is a strategic transshipment hub connecting many geographies and markets.
However, it faces a number of barriers and ambiguities in the context of global trade. Some
factors that can affect its effectiveness and profitability are:

• Trade agreements or tax changes that may change the relative advantages and disadvantages
of using the port as a gateway to other locations.
• Changes in export-import laws and customs practices may hinder or facilitate efficient and
effective trade through the port.
• Global supply and demand trends that may impact the volume and composition of cargo
handled by the port.

Natural Disasters

Located on the southern coast of Sri Lanka, Hambantota Port is exposed to a number of natural
hazards that can compromise its safety and functionality. Hazards that can disrupt operations,
damage infrastructure, and harm people and the environment include tsunamis, storm surges, and
coastal erosion. The port is particularly vulnerable to tsunamis as Sri Lanka has a long record of
experiencing these deadly waves. To protect the port and its stakeholders, it is critical to implement
comprehensive disaster prevention and management techniques.

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Debt Repayment Burden
As a result of the Hambantota port project, Sri Lanka is now in significant debt, jeopardizing the
country's ability to maintain its financial stability. The government must repay a large amount of
debt, which limits its ability to invest in the port's infrastructure and ongoing maintenance and
development.

A 99-year lease with China Merchants Port Holdings Co., designed to reduce debt, raised concerns
about sovereignty and long-term economic impacts. Sri Lanka's situation in terms of trade port
debt shows the difficulties associated with such a huge business.

Geopolitical Tensions
In the Indian Ocean competing for access and influence, Hambantota International Port is a critical
strategic asset. Sri Lanka's ports are a critical hub for international trade and commerce. However,
the region's geopolitical dynamics present a number of dangers and obstacles to the port. Major
nations such as China, India, and the United States of America frequently engage in conflict and
rivalry with each other in the Indian Ocean. These nations have different agendas and interests in
the area, and are often fighting or trying to control territory, resources, or influence. Any conflict,
disagreement or military action in the area could severely affect port operations and security.

For example, if China and India engage in a naval battle in the Indian Ocean, shipping lanes and
trade flows through the port could be affected. Likewise, if the United States steps up its military
involvement or operations in the area, it will provoke retaliation from other nations or actors,
resulting in instability and unpredictability for the port. Geopolitical conflicts in the Indian Ocean
region pose a serious threat to the operation and future of the Hambantota International Port, so it
is essential to be aware of it and prepare for it.

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HOW TO MANAGE THEM AND COMMENT ON SUCCESS OR
FAILURE

Hambantota International Port in Sri Lanka is a major port that faces challenges in managing
success and failure. To manage success, the port should focus on operational efficiency, financial
performance, customer satisfaction, infrastructure development, and environmental sustainability.
The port has achieved significant improvements in operational efficiency, reduced vessel waiting
times, and enhanced cargo handling capabilities.

Financial performance has shown remarkable growth, with increased revenue and prudent cost
management positioning the port for long-term success. Customer satisfaction remains a top
priority, and infrastructure development milestones signify dedication to meeting growing
demands. Managing failure involves addressing operational issues promptly, assessing financial
setbacks, addressing customer complaints, addressing infrastructure delays, and reevaluating
sustainability practices. The port acknowledges recent operational challenges and is actively
working to rectify them to enhance efficiency. Effectively managing success and failure at
Hambantota International Port requires a proactive approach, transparency, and a commitment to
continuous improvement.

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CONCLUSION

Hambantota Port, a deep-water seaport in Sri Lanka, opened in 2010 to boost trade and economic
development. However, it faces financial and debt issues. In 2017, the Sri Lankan government
leased the port to China Merchants Port Holdings for 99 years, raising geopolitical and security
concerns. The port's development and management remain a subject of debate.

Hambantota Port in Sri Lanka has strengths such as its strategic location, modern infrastructure,
and special economic zone. However, it has weaknesses such as heavy debt burden, low utilization
rates, and political controversy. Opportunities include association with China's Belt and Road
Initiative (BRI), economic development, and trade expansion. Threats include geopolitical
tensions, environmental concerns, and competition from other ports. It is recommended to seek
more recent information for a current SWOT analysis of Hambantota Port. The port's strategic
location and environmental concerns may lead to conflicts and instability.

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REFERENCES

ship.nridigital.com. (n.d.). The story of Hambantota Port: a flunking token of political corruption
- Ship Technology Global | Issue 59 | October 2018. [online] Available at:
https://ship.nridigital.com/ship_oct18/the_story_of_hambantota_port_a_flunking_token_of_polit
ical_corruption.

Chatham House – International Affairs Think Tank. (n.d.). 2. Labour and the Environment.
[online] Available at: https://www.chathamhouse.org/2020/03/chinese-investment-and-bri-sri-
lanka-0/2-labour-and-environment.

HAMBANTOTA INTERNATIONAL PORT GROUP (PVT) LTD. (n.d.). HIPG | Hambantota

International Port Group (Private) Limited. [online] Available at: http://www.hipg.lk/.

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