Manage Project Risk Right

Failure Mode Effect Analysis can provide insights about unexpected events.

By Adnan Siddiqui, ConcepSys Solutions LLC

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Not distinguishing between project-specific risks and general project-management risks. Risks identified using the FMEA process should relate specifically to the project and reflect its unique scope and success criteria. All projects face some common risks; identifying only them could lead to a shallow risk list. Don't use another project's completed FMEA matrix as a starting point. Start with a blank matrix. Once you finish your matrix, then it's worthwhile to look over other matrices from other projects to stimulate identification of further risks.

Failing to incorporate FMEA results in the project execution plan. The FMEA matrix is a tool to facilitate project risk management. Conducting the analysis and completing the matrix doesn't constitute risk management. You must incorporate the action plans and detection methods identified in the matrix into the project execution plan. You must modify the necessary communication procedures, work processes and other execution elements to reflect the project-specific FMEA.

Getting Ready
Before conducting a FMEA, you must address two crucial preliminaries.

Creating the FMEA team. You must assemble a small team of key stakeholders. Team members typically include the project manager, the process engineer and the construction manager. This core team should complete the initial FMEA matrix and then send it to people in support functions such as procurement, permitting and process safety for input. You can conduct the FMEA in one working session. You may save time by asking team members first to individually complete the FMEA table and then focusing the working session on consolidating their tables.

Assembling necessary documents.Running a FMEA too early after project initiation could lead to missed risks and inadequate risk characterization. So, you should conduct the FMEA as part of the project execution planning process during the later part of front-end design. The recommended minimum documents needed are:

• preliminary process and instrumentation diagrams;
• major equipment list;
• roster of applicable permits and critical process safety requirements;
• current contracting strategy for detail design and construction; and
• cost and schedule estimates.
Depending on the particular project's scope, you also may need other documents such as equipment arrangement drawings, control system architecture and equipment supplier lists.

Conducting the FMEA
The first and most crucial step in an effective FMEA is identification of project risks. During this step, you should pinpoint all potential risks along with their causes. The risk identification step should address key project aspects such as material procurement, technology selection, resources' availability and contracting strategy.

To illustrate what's involved, let's consider some major project categories and risks they commonly face.

Schedule. Risks can come from lack of engineering resources, contractor availability as well as late decisions. Missing key stage gates or not completing design documents on time can impact the project schedule. The FMEA team should list all risks to the schedule.

Cost. These risks can stem from external or internal factors. Grouping risks as external and internal can provide clarity. Price escalations of materials and engineering labor are examples of external factors. Internal factors to consider include: missed scope, poor or inadequate definition of equipment specifications as well as changes in project objectives such as capacity.

Regulations and permitting. Unanticipated delays in obtaining permits or permit-driven scope changes can impact schedule and cost. This category is especially important for projects in countries without well-developed permit regulations and experience.

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