Risk analysis in railway projects

Abstract

Risk Analysis provides a technique for assessing the impact and severity of Risk factors on the Project values of time and costs and the possible range of variations that these values might take. This paper seeks to establish the need for a formal Risk Analysis practice in Project execution to ensure proper project selection and effective project management within the cost and time frames fixed at the outset. A formal mechanism of risk analysis and risk management will lead to the decision maker being presented with the broad range of values that the project variables such as completion schedules, cost etc. might take. This would lead to a more prudent and better project selection and adoption of suitable risk mitigation techniques for efficient project management. Based on interviews conducted with Railway personnel and contractual agencies involved in the execution of Railway projects, this paper seeks to identify the key factors that lead to different project risks and establish how a procedural and bureaucratic approach to project requirements further aggravate these risks. Further, a Risk Analysis Matrix has been proposed, for initiation of Project Risk analysis. Lastly, certain suggestive measures have been made for mitigating the various project risks that emerge. Tools for Risk Analysis and risk mitigation techniques, including certain suggestive measures that IR can adopt, are also specified, as the basis for policy initiative. The paper mentions certain best practices for Risk Analysis being followed by the World Bank, UK and Federal department of Transportation in USA , to highlight that Government of India in general and IR in particular is lagging behind in this critical activity and must play catch up. An adequate Risk Analysis mechanism, if adopted as a policy tool, will greatly improve the quality of projects selected, reduce the present subjective judgments exercised in initiating a new project, increase the accountability of the Project executing agency and establish the faith of the public at large in Government s ability to deliver quality products at least cost.