SECTION I-COMMERCIAL L.A. Business Plan IlL. B Sourcing and suppl LAl. Business case Ill. Bl. Engineered equipment L A2. Economic model/feasibility material/tools LA3 Economic incentives/barriers III B2. Bulk materials L.A4. Market/product IIL B3 Subcontract L.A5. Standards and pra Ill. B4. Importing and customs L.A6. Operations I. B5. Logistics LA7. Tax and tariff IlL. C Design/engineering L B. Finance/funding Ill.C1. Design/engineering process I Bl. Sources form of funding II. C2. Liability III C3. Local design services 1. B3. Estimate uncertainty I. C4. Constructability LB4 Insurance II.D. Construction IIlDI. Workforce availability and skill SECTION II-COUNTRY I. D2. Workforce logistics and support IL.A. Tax/tariff IILD3. Climate LAL. Tariffs/duties Ill.D4. Construction delivery method ILA2. Value added tax Ill.D5. Construction permitting Il.A3. Legal entity establishment Ill. D6. General contractor availability IL.A4. Application of tax laws Ill. D7 Contractor payment IIL D8 Schedule IL.A5. Technology tax I D9. Insurance ILA6. Personal income tax Ill.DIO. Safety during construction Il A7. Corporate income tax IILDIL Communication and data transfer ILA8. Miscellaneous taxes Il DI2 Quality I.B. Political Ill. E. Start-up Il. Bl. Expropriation and nationalism Il B2. Political stability IILE2 turnover II. B3. Social unrest/violence Il.E3. Feedstock and utilities reliability 1. B5. Government participation and SECTION IV- PRODUCTION/OPERATIONS IV.A. Peopl IL. B6 IV Al. Operational safety B7. Intellectual property IV A2. Security IL C. Culture IVA3. Language IlCI. Traditions and business practices A4. Hiring/training/retaining IL. C2. Public .A5. Localizing operational workforce II.C3. Religious differences IV.B. Legal ILD. Legal B2. Permitt Il.D2. Legal standing nsurance Il. D3 Governing law/contract formalities IV B5. Environmental compliance Il. D4. Contract type and procedures I D5. Environmental permitting IV, C. Technical 1. D6. Corrupt business practices IV CI Logistics and warehousing IV C2. Facilities management and SECTION III-FACILITIES IIL.A Project IV C3 Infrastructure support II. Al Scope development process IVC4. Technical support Ill. A2. Technology C5. Quality assurance and contro Ill. A3. Hazardous material requirements IVC6. Operational shutdowns and startu Il. A4. Environmental, health, and safety Ill.A5. Utilities and basic infrastructure I. A6. Site selection and clear title Ill. A7. Approvals, permits and licensor Figure 1. pra structure
6 SECTION I – COMMERCIAL I.A. Business Plan I.A1. Business case I.A2. Economic model/feasibility I.A3. Economic incentives/barriers I.A4. Market/product I.A5. Standards and practices I.A6. Operations I.A7. Tax and tariff I.B. Finance/funding I.B1. Sources & form of funding I.B2. Currency I.B3. Estimate uncertainty I.B4. Insurance SECTION II – COUNTRY II.A. Tax/tariff II.A1. Tariffs/duties II.A2. Value added tax II.A3. Legal entity establishment II.A4. Application of tax laws and potential changes II.A5. Technology tax II.A6. Personal income tax II.A7. Corporate income tax II.A8. Miscellaneous taxes II.B. Political II.B1. Expropriation and nationalism II.B2. Political stability II.B3. Social unrest/violence II.B4. Repudiation II.B5. Government participation and control II.B6. Relationship with government/owner II.B7. Intellectual property II.C. Culture II.C1. Traditions and business practices II.C2. Public opinion II.C3. Religious differences II.D. Legal II.D1. Legal basis II.D2. Legal standing II.D3. Governing law/contract formalities and language II.D4. Contract type and procedures II.D5. Environmental permitting II.D6. Corrupt business practices SECTION III – FACILITIES III.A. Project scope III.A1. Scope development process III.A2. Technology III.A3. Hazardous material requirements III.A4. Environmental, health, and safety III.A5. Utilities and basic infrastructure III.A6. Site selection and clear title III.A7. Approvals, permits and licensing III.B. Sourcing and supply III.B1. Engineered equipment/ material/tools III.B2. Bulk materials III.B3. Subcontractors III.B4. Importing and customs III.B5. Logistics III.C Design/engineering III.C1. Design/engineering process III.C2. Liability III.C3. Local design services III.C4. Constructability III.D. Construction III.D1. Workforce availability and skill III.D2. Workforce logistics and support III.D3. Climate III.D4. Construction delivery method III.D5. Construction permitting III.D6. General contractor availability III.D7. Contractor payment III.D8. Schedule III.D9. Insurance III.D10. Safety during construction III.D11. Communication and data transfer III.D12. Quality III.E. Start-up III.E1. Trained workforce III.E2. Facility turnover III.E3. Feedstock and utilities reliability SECTION IV – PRODUCTION/OPERATIONS IV.A. People IV.A1. Operational safety IV.A2. Security IV.A3. Language IV.A4. Hiring/training/retaining IV.A5. Localizing operational workforce IV.B. Legal IV.B1. Governing law/operational liability IV.B2. Permitting IV.B3. Insurance IV.B4. Expatriates IV.B5. Environmental compliance IV.C. Technical IV.C1. Logistics and warehousing IV.C2. Facilities management and maintenance IV.C3. Infrastructure support IV.C4. Technical support IV.C5. Quality assurance and control IV.C6. Operational shutdowns and startup Figure 1. IPRA Structure
In practice, the likelihood of occurrence for a particular risk is usually not known with absolute precision because of a lack of information or uncertainty of the situation. As a result, we decided that looking back to the time of contract formation(i. e, the point in time when the facility owner contracted for detailed design and/or construction) on completed projects would be the most useful strategic point to determine the level of risk that existed When taking a retrospective view of risk at a given point in time, uncertainty is no longer an issue because the event has either taken place or not occurred, and the likelihood of occurrence component of risk assessment is no longer an unknown being assessed in a predictive manner. In essence, the retrospective look at risk leads to a determination of relative impact to the project. With adequate input from experts across a multitude of international projects, an aggregate baseline impact factor could be developed for each IPRA element. Then, as a predictive tool, likelihood of occurrence would al ways have to be assessed and the impact component of risk would be either this predetermined aggregate baseline level or a self-determined level by project participants Workshops We decided that the best way to develop reasonable and credible relative impact values for each element was to rely on the expertise of a broad range of construction industry experts. From September 2002 to January 2003, we hosted four risk assessment workshops. Held in various locations in North America, a total of 44 industry executives with extensive international experience reporting results on approximately $23 billion worth of projects from 20 different countries were involved. Participants represented 25 organizations and were made up of 26 contractor and 18 owner representatives. In addition to having an owner/contractor balance, a fairly equitable distribution of project types and locations was achieved Each participant completed a series of documents at the workshops. In addition to personal history, participants were asked to consider and document a typical international project that they had cently completed for the organization they represented. The details regarding the workshops and the projects used for this effort are provided in Cll Research Report 181-11(CII 2003) Workshop participants proceeded in order through the 82 elements with each IPRA element description reviewed in the context of their project. An analysis of the data created a rank-order of the IPRA elements by their relative impact and these were sorted from 1 to 82. Relative Impact designations were developed for the 82 IPRA elements. The overall rankings were broken into five levels of corresponding Relative Impact that were given letter designations ranging from A to E, with A Negligible, B- Minor, C= Moderate, D= Significant, and E= Extreme, corresponding to degrees of impact as defined in Figure 2. The Baseline Relative Impact values of the significant and extreme elements are given in Appendix B of this article. A detailed discussion of this development effort is beyond the scope of this paper; for more information on how these values were developed, please see Cll Research report 181-1l
7 In practice, the likelihood of occurrence for a particular risk is usually not known with absolute precision because of a lack of information or uncertainty of the situation. As a result, we decided that looking back to the time of contract formation (i.e., the point in time when the facility owner contracted for detailed design and/or construction) on completed projects would be the most useful strategic point to determine the level of risk that existed. When taking a retrospective view of risk at a given point in time, uncertainty is no longer an issue because the event has either taken place or not occurred, and the likelihood of occurrence component of risk assessment is no longer an unknown being assessed in a predictive manner. In essence, the retrospective look at risk leads to a determination of relative impact to the project. With adequate input from experts across a multitude of international projects, an aggregate baseline impact factor could be developed for each IPRA element. Then, as a predictive tool, likelihood of occurrence would always have to be assessed and the impact component of risk would be either this predetermined aggregate baseline level or a self-determined level by project participants. Workshops We decided that the best way to develop reasonable and credible relative impact values for each element was to rely on the expertise of a broad range of construction industry experts. From September 2002 to January 2003, we hosted four risk assessment workshops. Held in various locations in North America, a total of 44 industry executives with extensive international experience reporting results on approximately $23 billion worth of projects from 20 different countries were involved. Participants represented 25 organizations and were made up of 26 contractor and 18 owner representatives. In addition to having an owner/contractor balance, a fairly equitable distribution of project types and locations was achieved. Each participant completed a series of documents at the workshops. In addition to personal history, participants were asked to consider and document a typical international project that they had recently completed for the organization they represented. The details regarding the workshops and the projects used for this effort are provided in CII Research Report 181-11 (CII 2003). Workshop participants proceeded in order through the 82 elements with each IPRA element description reviewed in the context of their project. An analysis of the data created a rank-order of the IPRA elements by their relative impact and these were sorted from 1 to 82. Relative Impact designations were developed for the 82 IPRA elements. The overall rankings were broken into five levels of corresponding Relative Impact that were given letter designations ranging from A to E, with A = Negligible, B = Minor, C = Moderate, D = Significant, and E = Extreme, corresponding to degrees of impact as defined in Figure 2. The Baseline Relative Impact values of the significant and extreme elements are given in Appendix B of this article. A detailed discussion of this development effort is beyond the scope of this paper; for more information on how these values were developed, please see CII Research Report 181-11