Some major projects in the industry of energy, petrochemicals, mining and infrastructures became train wrecks. Reasons of project failures have been studied by a variety of organizations, and "lack risk management" is one of them. Project Risk management is still a new breed of sound project management despite its development in past dacade or two, refined PMBOK Chapter 11, AACEi DRMP certificate, QRA technique and the other decision supporting systems under risk conditions are all relatively anew with about 10 years of maturity. Whilst many don't really take qualitative risk assessment seriously, only hiring juniors to coordinate the efforts, the QRA process does not have a good fate either. It is not uncommonthat that contingencies are simply added to cost estimates without any QRA process, resulting in either inflated cost estimates (wasting capital) or frequent cost overruns (unrealistic budgets). Methodology of applying QRA is determined by the stage of projects and the purpose of cost estimates, no one single method is superior to the other, a composite solution to consider estimate line item specific risks, project wide systemic risks, execution schedule delay risks, escalation and rare-event driven risks (for management reserve) is worth considering and discussing. RISCORTM risk model was conceived, developed, implemented (in Suncor) and matured since 2005 having applied to 100+ capital projects in both North America and Europe, from $30M to $10Billion projects, from oil & gas to mining, from upstream to pipeline and downstream. This dynamic and stochastic project risk model integrates qualitative and quantitative risk assessment processes and generates convincing and defendable project contingency, to minimize the probability of project failures.
About John Zhao, MSc:
John has 27 years of experience in heavy construction, the petrochemical, pharmaceutical, and oil and gas sectors, along with involvement in municipal facilities and commercial construction. He has worked in the Middle East, Europe and North America.
John graduated with a BSc. in Building Design and Management and gravitated towards project controls and risk management. He has been practicing in these areas for over 20 years during which he has developed his proprietary RISCOR stochastic simulation model to predict the impact of both project-specific and systemic risks. John is a recognized authority on the integrated application of risk methodology from early-stage project development through project execution including contracting strategy, bid evaluation and stage-gate reviews. He has taught risk management at the universities of Calgary and Mount Royal, and for AACE International and the Project Management Institute and is a regularly presenter on the topic of risk management, contracting strategy and project contingency, in the international arena.
In 2008, John received an MSc. Project Management from Northumbria University, UK.