4- Risk Management:

4-1 Definitions
A Risk is a potential event that can (badly) influence the objectives of a project. Those deviations (Risks) are considered as not acceptable, coming from contingencies and uncertainties.

4-2 Risks Types

1- Treatment Process / Technical Risks. 2- Contract's Conditions / Definitions Risks 3- Partnership Risks. 4- Financial Risks. 5-Guarantees/ Bonds Risks. 6- Taxation / Insurance Risks. 7- Construction Risks. 8- Accidental Risks.

4-3 Risk Management

4-3-1 It's not one man show. Each Team member will be involved within its specialty in appropriate meetings.
4-3-2 Identify the risks by your experience and project team ( during tender phase and update it during execution phase) as per the following

Risk occurrence

Project time

Risk Management Before Risk occurrece

Crisis Management After Risk occurrece

4-3-3 During Risk Management time you can make Preventive Plan And Contingences Plan. 4-3-4 Risk Management process: 1- Look for documented experience in previous projects. 2- Ask questions to the project team about ( Schedule, product, budget, environment, HR, client,) 3- Record the answers. 4-3-5 Risk Building Plans: * Ranking into Categories , Use (ifthen), Recording all decisions. Nature of Risk Probability Severity weight Action Plan Remaining

A- Prventive Plan Reducing the potential risk by including the necessary actions, Remaining risk must by capped. The plan steps are: 1- Mitigation ( by the project team) 2- Avoidance ( By others) 3- Transfer to others. ( transfer the risks to insurance co. or client). B- Contingency Plan ( Corrective ) It's corrective actions take place when triggering level reached. * Provision ( put money in IPAF to cover it) * Accept ( Accept to get the contract )

4-4 Risk Assessment (Ranking):

Risk ranking = Probability ranking * severity of the Impact R ( Risk ranking value from 1 to 25 ) = P ( From 1 to 5) * I ( From 1 to 5) R=P*I

1- Occurrence Ranking ( Likelihood/ Probability Ranking) - P Rank 1 2 Descriptor High Unlikely Possible In Long term Possible In Medium term Likely In Short Term Likely and Imminent Measure Has/will in next 10years Has/will in next / last 5 -10years Has/will in next / last 1 -5years Has/will in next / last 12 months Has/will Several times per year

2- Severity of the Impact- I Rank 1 2 Descriptor Minor Impact % Of total Tender Price les than 0.5 %

Probability ( P ) 5 4

Dangerous

Internal 0.5 - 1.0 % Impact Only Significant 1.0 - 2.0 % Impact Major 2.0 - 5.0 % Impact Catastrophi More than 5.0 c Impact %

3 4 5

3 2 1

Need Control

Quiet

Impact ( I )

INSTRUCTIONS DURING TENDER STAGE During TENDER STAGE, the filling-in of the Risk Analysis Form regarding RISKS is a 4 steps iterative process. 1 - From immediately after R2 milestone : Qualitative analysis o List possible risks on the project => Complete or modify as much as necessary the proposed Risk Description for o For each identified risk, list the owner and detail the impact of the risk. o Assess the likelihood of occurrence of the risk on a range of 1 to 5 (5 being the maximum likelihood) => Insert the o Assess the severity of the risk (i.e. its impact on the project on a financial, delay, image, point of view) on a range of Insert the given mark in the Severity column of the RISKS TABLE. o Multiply the Likelihood mark by the Severity mark to get the Risk Score of each risk.. Rank the risks from 1 (highest score) to N (lowest score) using the total Risk score of the RISKS TABLE. o For the most important risks, start to think about a possible Action Plan to mitigate the risk and about the Expected 2 - From R2 to R5 milestones : Iterate qualitative analysis Regularly update the Risk Analysis Form using the above methodology while risk elements are better known and 3 - Before R5 milestone : Quantitative analysis o Select the most important risks. o Assess the likelihood of occurrence of the risk on a % basis => Insert the given % in the Likelihood column of the o Assess the severity of the risk (i.e. its overall impact on the project on a financial, delay, image, point of view) on a o Multiply the Likelihood mark by the Severity mark to get the Risk Score of each risk, which is in fact its cost o For the most important risks, propose (when possible) an Action Plan (total or partial contractual treatment, necessary Draft all these elements in the Expected Results & Action Plan of the RISKS TABLE (do not forget to specify unit / 4 - Before R6 milestone (for the biggest projects ) : Integrate quantitative analysis to the Internal Price Analysis o Refine and finalize the analysis performed before R5. o For each risk, make a proposal of the risk cost to be integrate into the price, based on the following calculation : Risk Cost = [ Probable % of occurrence of the risk (with or without Action Plan) X Total risks severity (with or without Insert these risk costs in the Risk Cost : Project Manager column (specifycurrency). Include these risk costs in the Internal Price Analysis Form presented in the Closing Review. o After decision of the B.U. Management on each risk cost during Closing : Insert the risk costs agreed by your B.U. Management in the Risk Cost : In Budget column of the RISKS TABLE (do Include these risk costs in the Internal Price Analysis Form.

INSTRUCTIONS DURING EXECUTION STAGE During EXECUTION STAGE, the filling-in of the Risk Analysis Form is a permanent process, both for RISKS and for OPPORTUNITIES. 1 - For RISKS : o List all possible risks on the project. o Assess or re-assess the likelihood of occurrence of the risk on a % basis. o Assess or re-assess the severity of the risk (i.e. its overall impact on the project on a financial, delay, image, point o Multiply the Likelihood mark by the Severity mark to get the Risk Score of each risk, which is in fact its cost o For the most important risks, propose (when possible) an Action Plan (total or partial contractual treatment, necessary Draft all these elements in the Expected Results & Action Plan column. o For each risk, make a proposal of the risk cost to integrate to the forecast, based on the following calculation : Risk Cost = [ Probable % of occurrence of the risk (with or without Action Plan) X Total risks severity (with or without o Insert these risks costs in the Risk Cost : Project Manager of the RISKS TABLE (do not forget to specify unit / o After decision of the B.U. Management on each risk cost during the final forecast assessment at each budget review : Insert the risk costs agreed by your B.U. Management in the Risk Cost : In Budget column of the RISKS TABLE (do Include these risk costs in your Forecast. 2 - For OPPORTUNITIES: o List all possible opportunities on the project., and for each identified opportunity, detail the cause (additional works, ), o Assess the likelihood of success of your claim or discussion on a % basis. o Assess the total possible gain that could be expected from the opportunity. o Insert the total amount in the Possible Gain OPPORTUNITIES TABLE (do not forget to specify unit / currency). o Multiply the Success Likelihood mark by the Possible Impact mark to get the Opportunity Gain of each o After decision of the B.U. Management on each opportunity gain during the final forecast assessment at each budget Insert the opportunity gains agreed by your B.U. Management in the Opportunity Gain: In Budget of the Include these opportunity gains in your Forecast, only if duly approved

RISK ASSESSEMENT MATRIX

This is an example to be modified and validated by BU management, Increasing Probabililty 2 (L) 3 (M) 4 (H) Occurs Has several Has occurred Never heard times a occurred in of in industry year in in industry Business Business Unit Unit 1 (VL) 5 (VH) Occurs several times a year location

Estimated Estimate of likely environneme injuries ntal effect Severity

Estimate loss of reputation

Estimate cost

Estimated schedule delay

1 (VL)

Slight Injury (FAC, MTC)

Slight cost (< 6,000 Slight effect Slight & no Slight delays (within fence impact disruption (less than 1 line - no (public to week) breach) awareness) operation s)

Increasing Severity

2 (L)

Minor effect Minor cost Limited Limited (temporary (< Minor Injury (LTI impact delays (> 1 contaminatio 60,000 & 4 days or less) (local public week, 1 n slight brief / media) month) breach) disruption) Local effect Local Considerabl (recoverable damage Major delays e impact Major Injury (LTI, environneme (< (> 1 (region PPD >4 days) ntal 300,000 & months<2 state public loss/repeated partial months) / media) breach) shutdown) Major effect (severe damage recoverable / Extended breach) National Impact (Extensive adverse media) Major damage Major delays (< 3M (> 2 & partial months<4 operation months) loss)

10

3 (M)

12

15

4 (H)

Single fatality

12

16

20

5 (VH)

Multiple Fatalities

Massive Extensive effect International damage (widespread impact Extensive (> 3M & chronic (extensive delays ( > 4 substantia effects / adverse months) l operation constant high media) loss) breach)

10

15

20

25

Legend :

FAC - First Aid Case MTC - Medical Treatement Case

LTI - Loss Time Injury PPD - Permanent Partial Disability