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Risk Management Model in Rock Tunnelling Constructions

Teresa Lopes Serra Ramalhão Fortunato

Extended abstract of thesis submitted to obtain the Degree of Master in

Civil Engineering

Jury

President: Prof. Luís Manuel Alves Dias

Supervisor: Prof. Pedro Miguel Dias Vaz Paulo

Vowel: Prof. Fernando António Baptista Branco

January 2013

Risk Management Model in Tunnelling Constructions

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1. Introduction

All companies and organizations regardless of size or industry face in their daily operations

influences both from internal and external factors, which increase the degree of uncertainty

endangering both the objectives and deadlines of their projects. One can therefore define risk as the

effect that the above-mentioned uncertainty has on the company objectives. Nowadays, the

competitive environment in which Civil Engineering companies operate, the technology evolution in

this industry, the economic and legal swings and environmental concerns led these companies to

search for lean processes, new materials and new construction techniques. As such, Risk

Management started to increase in prominence in companies in order to decrease gradually deviations

in objectives derived from risky events.

Henceforth, the following objectives were defined for this Master’s thesis:

The development of a bibliographic research that would allow to understand the main concepts

related with the Risk Management field of study;

To provide a comprehensive study of the fundamental concepts found in the bibliographic

research;

To provide an insight of several Risk Management methodologies such as COSO, PMBOK and

ISO 31000;

The development of a risk evaluation methodology applied to construction engineering;

Applying the proposed methodology to a real case study, evaluating the risks related to a specific

tunnelling construction;

Understanding the limitations and gains of the developed methodology.

2. State of the Art

2.1. Definitions

2.1.1. Defining Risk

The concept of risk in the Civil Engineering sector has been gaining prominence in risk

management studies. Nevertheless, there is not a clear and generally accepted concept of risk in the

academic universe. Due to the endandering factors associated with costs and deadlines overruns and

the consequences of accidents in human lifes, Civil Engineering is within the industries where Risk

Management practices are more developed.

Since the 1970s and 1980s that the concept of risk was either commonly associated with

danger events or alternatively with a beneficial event associated wth uncertainty. The latter is

supported by Akintoye and MacLeod (1997) that argue that the concept of risk has embedded more

than simply the notion of danger or loss.


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The Project Management Institute - PMI (2008) defines risk as an event or uncertain condition,

which if it occurs, would have either a negative or positive effect in at least one objective of the project

such as time, cost or quality.

2.1.2. Defining Constructing Risk

Nowadays, with the cemented awareness of project management practices, they became to

grow in importance in all sectors of industrial activity and particularly to Civil Engineering. Yet, the

application of concepts and procedures drawn by the modern management theories has been

struggling and suffering mutations in order to allow its implementation in the Civil Engineering sector,

mainly due to its specific set of characteristics, nature of production process and specificity of the

market.

According to Mladen Radujkovic (1996), the following risks are the most threatening for the risk

management practice:

Failure to comply with the stipulated budget;

Failure to meet the deadline of the project;

Failure in the quality of the final product.

With the aim of avoiding that the above-mentioned events emerge one should consider studying

the likely impacts of risks in the initial phase of the project. This approach would allow a correct risk

identification and secondly to define strategies to mitigate them. Furthermore, as mentioned in the

PMBOK Guide, while risk is higher in the first phases of a project, it will gradually decrease as time

goes by.

2.1.3. Defining Risk Management

All projects have embedded uncertainty. The main goal of Risk Management is to overcome

the latter uncertainty so as to deal and understand the influence of risks in the project outcome.

Project risks can be interpreted as threats – situation in which one should define mitigation strategies -

or opportunities, case in which controlling risk can boost competitive advantages for a product and

enterprise, with embedded benefits in costs and duration of activities (Estrela, 2008).

During the Risk Management process, although the establishment of the phases is not

unanimous among academic literature, all authors maintain certain coherence. Virtually all authors

divide the process of risk management in three stages: risk identification, analysis and assessment of

risks, identification of alternative actions to promote their treatment.


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2.2. Chronology of Reference Models

The following reference models (table 1) were without a doubt strong drivers for the increase

in awareness and importance gained by risk management practices.

Table 1 – Chronology of reference models

Model Year Description Author

COSO 1992 Framework for implementing a structure of internal controls based on five components: control environment, risk evaluation, control activities, information and communication and monitoring.

Committee of Sponsoring Organizations of the

Treatdway Commission

ERM 2004 Extension of the concept drawn by COSO aligned with the strategy of the organization. Introduced new concepts.

Committee of Sponsoring Organizations of the

Treatdway Commission

PMBOK 2008 Promotes the fundamental concepts of project management and identifies the best practices adjusted to the majority of the projects during its several different phases.

PMI (Project Management Institute) an international non-

profit organization

ISO 31000

2009

World reference for the risk management practice. Presents eleven management principles of risk management i.e. models of orientation for the development and controlling of a risk framework and a generic process of risk management.

ISO –International Organization for Standardization

3. Proposed Methodology for Risk Management

3.1. Methodology Introduction

This section has as objective to develop a methodology that allows guiding construction

companies in implementing a process of identification and evaluation of the potencial risks in their

construction projects. This methodology was developed in order for its application to be performed

individually in each activity of the construction process so as to ensure a detailed and focused study.

Henceforth, it is intentded that the risks identified and evaluated are linked to a specific activity

analysed. Regarding the nature of the activity risk, rather than focusing on its execution the author will

focus its dissertation on a broad but extensive analysis of the activity risk.

The construction of this methodology was performed based on the analysis and study of the

models presented in the previous section. The author will focus its study on the construction phase of

the contract, since it is one of the most important phases of the process. Although the methodology

should be applied to the specific environment of each construction, it can serve as best practices

guidelines for civil engineering companies.

3.2. Methodology Organization

The developed Risk Management methodology can be adapted and implemented in all

activities embedded in the construction process and was drawn based on the following references:

International Standard ISO 31000:2009 (risk management – principles and guidelines)

ISO 73: 2009 Guide (risk management – vocabulary);

IEC/ISO 31010:2009 (risk management – risk assessment techniques);

PMBOK Guide, 2008.


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The implementation of the Risk Management methodology allows identifying, analysing,

mitigating and controlling the risks associated in the construction phase of the specific contract

studied. According with the methodologic guidelines above-mentioned, the proposed methodology will

be drawn based on the phases presented in figure 1.

Figure 1 – Structure of Methodology (ISO 31000:2009).

4. Application of Proposed Methodology: Case Study

The goal of the following section is to assess the adaptability and limitations of the above-

mentioned Risk Management methodology of a real case study of a construction. The construction

selected to apply the methodology has the increase in power generation capacity of Venda Nova III

Dam, in which the author performed an internship. The activity selected to apply a detailed analysis of

risks was the underground tunnelling.

4.1. Environmental Analysis

In this section, a summarized description of the environment in which the following study

occurred is presented, particularly the identification of the location, scope and details of the selected

activity.

4.1.1. Construction Identification

The selected construction is located in the hydroelectric power generation plants of Venda

Nova – Increase in power generation capacity of Venda Nova II (Central de Frades), which is located

in the region Entre o Douro e Minho.


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4.1.2. Identification and Description of the Activity

The objective of this subsection is firstly to identify and describe the selected activity studied in

the real case study and secondly to refer the causes for the decision process. Furthermore, it will also

be descriped the construction process as well as a list of the equipments and materials used in order

to present and summarize the main characteristics and phases of this process.

After analysing both the planning and the technical requirements of the project in order to

select an activity that would represent the complexity of the construction, the chosen activity was the

underground tunnelling activity. This activity is subdivided into the following cyclical sequence (figure

2):

Figure 2 – Division of the underground tunnelling activity into sub activities

4.2. Risk Assessment

4.2.1. Risk Identification

Having performed the analysis of the selected activity and followed in loco the construction works, the

author started to identify the existing risks in each sub activity of the underground tunnelling activity. In

order to obtain an extensive analysis the author used brainstorming techniques, which involved

scheduled meetings and several debates about the potencial risks, its causes and potencial controlling

systems. The list of risks presented in tables 2,3,4,5,6,7 and 18 was obtained by mutual agreement

between all the stakeholders involved.

Table 2 Identification of risks associated with front marking

No. Risk Risk Descprition Stakeholders

1 Disagreements on topographic

meeting tunnels ran on two fronts

Risk of failing to verify the allowable limits in two fronts against a tunnel ran in both

directions.

Planning / Project Technical Office Department

(TOD)

2 Malfunction or damage to

equipment Equipment malfunction by topography (total

station or laser). Construction and Execution / Production Department (PD)

3 Occurrence of work accidents This risk refers only to accidents at work when dialing with the first phase of the

process.

Security Management of Health and

Safety at Work (MHSW)

1

Front Marking

2

Front Drilling

3

Explosives Charging

4

Detonation or Explosion

5

Irrigation and debris removal

6

Advance support


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Table 3 – Identification of risks associated with the front drilling activity

No. Risk Risk Descprition Category / Stakeholders

4 Delays in hiring a specialized

subcontractor

This risk analysis in a generical way the probability and consequences of not hiring subcontractors specialized in front drilling

Construction and Execution / Production Department (PD)

5 Unexpected influx of

groundwater

This risk refers to the possibility of floodwater in greater amounts than anticipated, from the

Hydraulic Circuit of VN II or from the rock mass.


(TOD)


equipment Damage to the equipment used during

drilling (jumbo). Construction and Execution /

Production Department (PD)

7 Environmental accidents This risk refers only to environmental

accidents arising from equipment spillage.

Environment / Environmental Management

(EM)

8 Occurrence of work accidents This risk refers only to accidents related to

the front drilling activity.

Security Management of Health and Safety

at Work (MHSW)

Table 4 – Identification of risks associated with the explosives charging activity


9 Delays in the supply of materials Risk associated with the delay in

delivery / supply of explosives and cords.

Administrative and Financial Administrative and Financial

Department (AFD)

10 Delays in hiring a specialized

subcontractor

This risk can arise from the impossibility of hiring subcontractors specialized in

the application of explosives.


11 Occurrence of work accidents This risk refers only to accidents related

to the handling of explosives.



Table 5 – Identification of risks associated with detonation



groundwater

This risk refers to the possibility of floodwater in greater amounts than

anticipated, from the Hydraulic Circuit of VN II or from the rock mass.


(TOD)

13 Transmission of vibrations This risk refers to the possibility of the transmission of vibrations in greater

levels then the established ones.


(TOD)

14 Occurrence of other accidents This risk refers only to accidents at work

during the detonation activity.

Security Management of Health and Safety at

Work (MHSW)


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Table 6 – Identification of risks associated with irrigation and debris removal



equipment

Malfunctions in equipment used during debris removal (mining shovel, loader, front loader

(ITC), trucks and dumpers).


16 Occurrence of work accidents This risk refers only to accidents occurred while

removing debris and sanitation.



Table 7 – Identification of risks associated with advance support.


17 Changing geological conditions- geotechnical massif in relation to

reference conditions

Changing the zoning of geotechnical massive excavated.


(TOD)

18 Underground landslide in the

excavation front

Occurrence of front collapsing while working on the excavation proceeds. Normally due to

lack of support capacity of the land or the release of blocks.


(TOD)


equipment Failure of equipment used during the support

for advancement (robot projection and Jumbo)

Construction and Execution / Production

Department (PD)

20 Occurrence of work accidents This risk refers only to accidents caused by

falling rocks, landslides or even the existence of an unsafe piece of stone.



21 Defects in construction /

manufacturing Deficient construction due to misapplication of

concrete and / or defectuous concreting. Technical Quality

Quality Management (QM)

22 Lack of quality in the manufactured

concrete designed Application of concrete designed with poor

quality. Technical Quality

Quality Management (QM)

23 Embedding of unsuitable materials

Deficient construction by embedding

unsuitable materials, which do not comply with the requirements.

Technical Quality Quality Management (QM)


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Table 8 – Identification of risks commons in all phases

No. Risks Risk Description Stakeholders

24 Delay in delivery of the project by

the project owner

This risk is associated with the delay in timely delivery of the project by the project owner due

to the excavation.


(TOD)

25 Delay in the onset of sub-activity Onset of sub activities and consequences that

might ensue.

Construction and Execution / Production

Department (PD)

26

Payment of fines to officials arising from non-compliance with legislation in the area of Health

and Safety at work

Costs arising from the payment of fines relating to breaches of legislation in the area of Health

and Safety at work.



27 Payment of fines to officials due to non-compliance with legislation in

the area of Environment

Increased costs resulting from the payment of fines in the Environment.

Environment / Environmental Management

(EM)

28 Lack/Failure of Ventilation This risk is associated with damages to the

ventilation system.



4.2.2. Risk Analysis

As described in the proposed methodology, after identifying the several risks associated with

the activity, each risk was analysed according to its probability of occurence and impact (table 9). This

analysis was performed individually for three variables: cost, deadline and image.


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Table 9 – Risk Analysis

Subatividade Identificação do risco

Subfactors Evaluation

I1 –Cost I2- Deadline I3- Image

Pont. LR Pont. LR Pont. LR

Front Marking

Disagreements on topographic meeting tunnels ran on two fronts

P 1 10

P 1 10

P 1 20

I 10 I 10 I 20

Malfunction or damage to equipment P 1

10 P 1

5 P 1

20 I 10 I 5 I 20

Occurrence of work accidents P 1

5 P 1

5 P 1

2 I 5 I 5 I 2

Front drilling Activity

Delays in hiring a specialized subcontractor P 2

20 P 2

20 P 2

10 I 10 I 10 I 5

Unexpected influx of groundwater

P 2

10

P 2

20

P 2

4 I 5 I 10 I 2


20 P 2

20 P 2

10 I 10 I 10 I 5

Environmental accidents P 1

5 P 1

2 P 1

10 I 5 I 2 I 10


10 P 1

5 P 1

20 I 10 I 5 I 20

Explosives charging activity

Delays in the supply of materials P 2

20 P 2

20 P 2

10 I 10 I 10 I 5

Delays in hiring a specialized subcontractor P 2

20 P 2

20 P 2

10 I 10 I 10 I 5


20 P 2

20 P 2

40 I 10 I 10 I 20

Detonation

Unexpected influx of groundwater P 2

10 P 2

20 P 2

4 I 5 I 10 I 2

Transmission of vibrations P 2

10 P 2

4 P 2

4 I 5 I 2 I 2

Occurrence of other accidents P 2 40

P 2 20

P 2 40

I 20 I 10 I 20

Irrigation and debris removal


10 P 1

10 P 1

10 I 10 I 10 I 10


5 P 1

5 P 1

5 I 5 I 5 I 5

Advance Support

Changing geological conditions- geotechnical massif in relation to reference conditions

P 3 15

P 3 15

P 3 6

I 5 I 5 I 2

Underground landslide in the excavation front P 2

20 P 2

10 P 2

40 I 10 I 5 I 20


10 P 2

10 P 2

20 I 5 I 5 I 10


5 P 1

5 P 1

20 I 5 I 5 I 20

Defects in construction / manufacturing P 1

20 P 1

20 P 1

20 I 20 I 20 I 20

Lack of quality in the manufactured concrete designed

P 1 20

P 1 20

P 1 20

I 20 I 20 I 20

Embedding of unsuitable materials P 1

20 P 1

20 P 1

20 I 20 I 20 I 20

Common Risks

Delay in delivery of the project by the project owner

P 2 10

P 2 40

P 2 20

I 5 I 20 I 10

Delay in the onset of sub-activity P 2

10 P 2

20 P 2

20 I 5 I 10 I 10

Payment of fines to officials arising from non-compliance with legislation in the area of Health and Safety at work

P 1

20

P 1

2

P 1

20 I 20 I 2 I 20

Payment of fines to officials due to non-compliance with legislation in the area of Environment

P 1

20

P 1

2

P 1

20 I 20 I 2 I 20

Lack/Failure of ventilation P 2

10 P 2

20 P 2

4 I 5 I 10 I 2


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4.2.3. Risk Evaluation

The last phase in the risk assessment process is the risk evaluation. This evaluation was

performed individually for each risk, using the risk matrix methodology that bases its approach on

computing the average of the numerical analysis of the three individual variables in order to obtain a

final quantitiative proxy for the level of risk, using the following formula:

Level of Risk = Probability (p) × Impact (I)

This methodology considers that the three subfactors – cost, deadline and image – have the

same weight for computing the level of risk. Henceforth, the level of risk is computed using a simple

average of the numerical values of each subfactor:

Table 10 presents the final evaluation of the risks present in the underground tunnelling

activity per sub activity.

No. Risk LR No. Risk LR No. Risk LR

1

Disagreements on topographic meeting tunnels ran on two

fronts

13 10 Delays in hiring a

specialized subcontractor

27 19 Malfunction or

damage to equipment

13

2 Malfunction or

damage to equipment 12 11

Occurrence of work accidents

27 20 Occurrence of work

accidents 10

3 Occurrence of work

accidents 4 12

Unexpected influx of groundwater

11 21 Defects in

construction / manufacturing

20

4 Delays in hiring a

specialized subcontractor

13 13 Transmission of

vibrations 6 22

Lack of quality in the manufactured

concrete designed 20


groundwater

11 14 Occurrence of other

accidents 33 23

Embedding of unsuitable materials

20

6 Malfunction or

damage to equipment 17 15

Malfunction or damage to equipment

10 24 Delay in delivery of the project by the

project owner 23

7 Environmental

accidents 6 16

Occurrence of work accidents

5 25 Delay in the onset of

sub-activity 17

8 Occurrence of work

accidents 12 17

Changing geological conditions-

geotechnical massif in relation to

reference conditions

12 26

Payment of fines to officials arising from non-compliance with

legislation in the area of Health and

Safety at work

14

9 Delays in the supply

of materials 17 18

Underground landslide in the excavation front

23 27

Payment of fines to officials due to non-

compliance with legislation in the

area of Environment

14

28

Lack/Failure of Ventilation

11


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Figure 3 presents the evaluation of the final risks considered in the matrix of risks.

Impact

Pro

ba

bil

ity

Figure 3 – Representation of the risks associated with the underground tunnelling activity

4.3.4. Plan of Action

According to the defined methodology, the risks that require a plan of action in order to

mitigate them to acceptable levels are the ones that have a level of risk such as 15≤LR<25. The risks

that have 25≤NR<50 require an immediate plan of action and treatment (table 11).

Tabela 11 – Risks that require a plan of action

Classification No. and Risk description Proposed Plan of Action

25≤LR<50

Nº 11 - Occurrence of work accidents Nº 14 - Occurrence of accidents

So that the level of risk decreases to acceptable values one should: - Revise the processes, procedures and existent controls; - Implemented new control measures.

15≤LR<25

Nº 4 - Delays in hiring a specialized subcontractor Nº6 - Malfunction or damage to equipment Nº 9 - Delays in the supply of materials Nº 10 - Delays in hiring a specialized subcontractor Nº18 - Underground landslide in the excavation front Nº21 - Defects in construction / manufacturing Nº 22 - Lack of quality in the manufactured concrete designed Nº23- Embedding of unsuitable materials Nº 24 - Delay in delivery of the project by the project owner. Nº25- Delay in the onset of sub-activity

1

4

10

2 3

5 9

7 8

6

11

12

13

14

15

16

17

18

20

21

19

22

23

24

25

26 27

28


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5. Analysis of Results

As described in the proposed Risk Management methodology presented in section 2, the Risk

Management process should be monitorized and controlled regularly so as new risks are identified or

removed. In this dissertation, this topic was not developed due to the scope of the study, directed

towards a specific activity. Therefore and having into account that there are no records of this type in

the construction being studied it is not possible to perform a comparative analysis that would allow the

author to understand the real gains of the creation of the proposed Risk Management methodology.

Henceforth, the author opted to perform a final analysis of results based on the statistical study of the

occurrence of the indentified risks.

In the risk identification and evaluation phase, seven construction employees and more

particularly the stakeholders defined as the main responsibles for Risk Management practices aided

the author. To robust the validity of the model and reliability of results data related to the education

and experience of such employees was collected.

Such intervinients were questioned about their education and years of experience in the

industry and if they had experience with underground tunnelling activities. Regarding their professional

experience, none of them possessed less than five years of professional experience, factor that

helped both the identification and analysis of risks but more importantly the technical requirments of

the construction. Finally, all the participants presented significant experience in underground tunnelling

constructions.

Throughout the analysis performed it is possible to verify that the sub activities that present

the higher number of risks are: front drilling and advance support. However the sub activities that

present higher levels of risk are explosives charging and detonation.

Therefore, the author recommends the monitoring of all the underground tunnelling process.

Figure 4 – Graph representative of the risks associated with the underground tunnelling activity


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Broadly speaking the underground tunnelling activity presents twenty-eight identified risks

(figure 4) subdivided by sub activities. One can conclude that the majority of these risks have an

acceptable level. The major factors that contribute for for this classification are related with the several

internal controls systematized in the construction plant such as maintenance plans, equipment

controls, training, material inspection, high level of experience of the team members but also due to

the high standards imposed by the constractor.

It is important to state that since the author divided the activities into subactvities, in the

process of risk identification one was able to increase the scope of the found risks and to perform an

adequate evaluation in each phase of the activity.

Figure 5 allow us to evaluate that for the three risks common to all activity phases, depending

on the phase of the project, they posess diferent levels of risk. Henceforth, analysing the graph it is

possible to state that the level of risk (LR) mutates with the phases of the project. It is easy to

understand this phenomenon if we think that the level of risk varies with its probability of occurrence

and indirectly with the existing controlling measures. Different sub activities have implied different

probability of occurrence and controlling measures.

Figure 5 – Graph representing the number and level of risks that are common to more than one phase

The risk of malfunctions in equipments was identified in four phases. Regarding this risk, its

level was higher in the front drilling phase due to the fact that the Jumbo it is sensible equipment, with

frequent breakdowns with slow repairing. By the contrary, the same risk in phase 5 - irrigation and

debris removal – presents the lowest level of risk since removal trucks are easily substituted. The risk

of accident occurrence presents its higher level in the detonation phase, since in this phase the


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possibility of being fatal to the participants is higher and consequently it will have higher impact

although its inherent probability is low.

The lowest value is related with the front marking activity mainly due to the fact that this

activity does not require lot of employees and due to the several topography equipments available

which indirectly decreases the probabibly of accident occurance but also its impact. The risk related

with the delay in hiring specialized subcontractors influences both the front drilling and the explosives

charging phases, which are the two phases, composed by subcontracts. The level of risk is similar in

these two sub activities.

The attitude towards this method should not be passive. Such approach would be completely

inadequate regarding the fundamental principles of risk management since each project must be

analysed individually. One should decide, based on the obtained values, if each activity or sub activity

should progress or not.

6. Conclusions and Future Studies

The choice of the topic studied in this dissertation was motivated by the increasing importance

of Risk Management practices in the Civil Engineering sector, having as main goal to underline paths

that allow companies to assess and mitigate risks associated with their projects. The methodology

created by the author had as main objective to present the Risk Management process in its several

phases – identification, evaluation and plan of action – the key variables in each sub activity such as

cost, deadline and image and finally to be flexible to be applied to other construction structures using

as basis the International Standard ISO 31000:2009 and the PMBOK Guide.

Although in the academic world there are doubts about the flexibility of readapting the above-

mentioned methodologies for other real case studies, the proposed methodology is validated in this

thesis and can be considered without a doubt superior to the ISO 31000:2009 ancestor models

particularly when it comes to criteria such as consistency, reliability and maturity of the results.

Regarding future studies in this area the author would like to mention the importance of implying, in a

continuous way, the proposed methodology in several distinct activities in order to ascertain its

practical adaptability.

Furthermore the author suggests the creation of a database composed by the results obtained

for the several level of risks associated with each activity in order to aid future similar construction real

case studies.


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7. Bibliography & References

Akintoye, A.S. & MacLeod, M.J. (1997). Risk analysis and management in construction. International Journal of Project Management, 15(1), 31-38. Committee of Sponsoring Organizations of the Treadway Commission (COSO). (2004). Enterprise Risk Management – Integrated Framework. Executive Summary. USA. Estrela, Miguel Paulo Medeiros Vieira. (2008). Metodologia de Análise e Controlo de Risco dos Prazos em Projecto de Construção. Thesis (Masters in Civil Engineering) – Instituto Superior Técnico – IST, Lisboa. Frame, D. (2003). Managing Risk in Organizations. The Jossey-Bass Business & Management Series, Wiley. ISO (International Organization for Standardization). (2009). ISO 31010 - Risk management – Risk assessment techniques. 93, Switzerland. Project Management Institute (PMI). (2008). Project Management Body of Knowledge (PMBOK Guide). (4ª ed.). Editora PMI.

Radujkovic, Mladen. (1998). Modelling cash flow in construction projects in countries in transition. Faculty of Civil Engineering. University of Zagreb. Zagreb, Croatia.

http://www.baufachinformation.de/aufsatz/Modelling-cash-flow-in-construction-projects-in-countries-in-transition/2008071000356

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