Risk Analysis of the Hydroelectric Development and Irrigation Scheme Projects Hydroelectricity refers to electricity harnessed through hydropower. “Hydropower uses the energy of moving water to produce electricity. Also known as hydroelectric power, it’s been used to generate electricity for over 100 years and currently provides about 10 percent of the country’s electricity. ” (FERC, 2010) Irrigation is the artificial watering of land. It allows countries or regions who normally do not get enough rainfall to still successfully grow crops.
The similarity between the two case studies is that both revolve around water, using technology to harness its powers for good use. The difference is the scope of the project. The irrigation project is a much smaller undertaking than that of the hydroelectric development. Identifying Risks When analyzing risks for the hydroelectric development project, common considerations were the forefront and force majeure was lumped in as global risk.
According to the text (Cooper, Grey, Raymond, & Walker, page 266, 2005) , “abnormal or catastrophic sources of risks having the effect of force majeure were outside the scope of this cost analysis; they were treated as project conditions in the sense that the analysis and outcomes were conditional on them not arising. ” Cost estimates were the basis for the analysis. In contrast, the irrigation project included potential sources of risks in their work breakdown structure (WBS). The irrigation project did a better job of identifying risks because they were not limited to just the cost estimate as basis.
Unknown risks can be a major expense and can make or break a project; they should be thought out and planned for. Quantifying Risks Quantifying risks is an important part of risk management. It allows the owners (and the PM) of a project to understand and decide on what level of risk they are comfortable accepting or rejecting. Quantifying risks is not about eliminating risks, but rather, identifying and planning a course of action should a risk occur so as to minimize its impact on the project. The ydroelectric project used histogram distributions to assess each individual risks, this may be more accurate but it is very time consuming, also considering that whatever result they get is based on the stipulation that a catastrophe will not occur. Should one occur, it would throw off all the assessments made.
The irrigation project used a simpler approach, focusing on the “combined effects of all the risks that might affect an element either indirectly in terms of distributions of percentage changes or directly in terms of costs expressed in dollars. (Cooper, Grey, Raymond, & Walker, Page 271, 2005) Risk Assessment Risk Assessment for the irrigation project was easier to follow because the steps made sense. Appropriate risk assessments were taken into account and did not discount catastrophes, which to me makes it more realistic. Both projects deal with water, which is a natural resource and is not always predictable. After reading both analyses, it didn’t feel like the assessment for the hydroelectric project was well thought out in the contingency area. Due to this, the irrigation project seems to have a more compelling risk assessment. Perhaps due to it being a much smaller scale project, they are better able to represent possible risk scenarios and plan for them.
What is hydropower? (n. d. ) Retrieved from http://www. ferc. gov/students/energyweregulate/whatishydro. htm Cooper, D. , Grey, S. , Raymond, G. , & Walker, P. (2005). Page 266. Project risk management guidelines. West Sussex, England: John Wiley & Sons, Ltd. Cooper, D. , Grey, S. , Raymond, G. , & Walker, P. (2005). Page 271. Project risk management guidelines. West Sussex, England: John Wiley & Sons, Ltd.