VENEZUELA NATIONAL
RAILWAY PROJECT
Venezuela National Railway Project
Controlling Project Costs
and Risks
Summer 2008
Kugan Panchadsaram
Projecto La Torre Incorporated
Raisa Spector, Omar Mahmoud, David Saavedra, Mark Sanbower,
Roberto Mosciovecchio, and Suzanne Smith
Project Background
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Our company, Projecto La Torre
Incorporated, has been contracted by
the ministry of infrastructure of the
government of Venezuela to construct
5 miles of railway embankment at a
remote location in the state of Guarico
(8 hours Southwest of the capital city,
Caracas).
This project is part of the initiative
by the government of Venezuela
to expand the national railway
system as stated in Venezuela’s
constitution of 1999.
Project Requirements and Characteristics
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5 miles of railway embankment constructed
Recruiting workers for the project
Construction of temporary infrastructure (dorms,
cafeteria, office, and storage)
9 months to complete the project
Financing the project
$4,000,000 budget
Venezuela
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Republica Bolivariana de Venezuela
Capital City: Caracas
Language: Spanish
Area: 353,841 square miles
Population: 28,199,822
GDP: $335 billion (30th in the world)
Major Export: Oil
Popular Sports: Baseball and Soccer
Railroads in the Jungle
Team Contract
Our team contract states
how we will work and
communicate with each
other on the project. All
team members helped
write the contract and
all team members
signed the contract.
Project Scope Statement
Scope statement is a
document that defines the
project and lists what must
be accomplished.
 It states the boundaries
of the project - what will
done and what won’t be
done on this specific
project.
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Work Breakdown Structure (WBS) and
WBS Dictionary
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The WBS divides major project deliverables into
smaller, more manageable components.
The WBS was done to level 3.
The WBS Dictionary explains all terms, especially
potentially confusing terms, to anyone reading the
WBS.
The following slides contain excerpts from our WBS
and WBS Dictionary
Work Breakdown Structure (excerpt)
WBS Dictionary - Excerpt
Excerpt of Project Schedule
Risks on the Railway Project
Our project offered us a unique opportunity to learn about a
variety of interesting risks. Here are some of the risks we
faced:
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Business in Venezuela involves fraud and corruption.
Venezuela has a strong rainy season that may vary in length.
Natural disasters, including storms and mud slides, occur frequently.
The political, economic, and financial situation is unstable.
Crime, particularly robbery and kidnapping, is common.
Internet access is not reliable in remote parts of the country.
It may be difficult for us to obtain skilled workers.
Risk Strategy
Our risk strategy consisted of the following:
 Create a preliminary Risk Checklist.
 Create a Risk Breakdown Structure.
 Built on the checklist using quantitative risk analysis to create a
more developed Risk Checklist with risk causes, probability and
impact numbers, and risk scores.
 Used the probability and impact numbers from the developed
Risk Checklist to create a Probability Matrix.
 Create Risk Ranking based on risk scores for each risk.
Risk Breakdown Structure
•Similar to a WBS,
the RBS provides a
visual way of
systematically
identifying risks in
detail.
•Risks are organized
into categories and
sub-categories.
•We used our
developed Risk
Checklist and the
categories we
identified to create
our RBS.
Developed Risk Checklist
Risk Probability Matrix
Using our risk scores,
we developed a Risk
Probability Matrix.
The matrix serves as
a visual tool for
determining which
risks fall into the low,
medium, and high risk
categories.
We decided on the
following ranges:
Low = < 23
Medium = 24-44
High = 45 <
Top 10 prioritized Risks
Risk Checklist
Project Number
Team # 3
Date
8/26/2008
Project Title
National Railway System
Project Manager
Raisa Spector
Risk Number
Risk Category
External-Damage
External- Theft
External-Damage
Project Management-Scope
Project Management-Scheduling
Technical- Requirements
Organizational-Resources
External- Weather
External- Weather
External-Subcontractors and Suppliers
33
20
21
31
29
38
10
16
17
23
Risk Name
Fraud, embezzlement
Equipment or material have been stolen
Major unexpected damage to Equipment
Requirements change
Failure to meet project schedule
Faulty electric system
Kidnapping of staff
Early start of the rainy season
Rain season extends
Equipment not ready
Surveying task may not provide reliable mapping.
Probability Impact
7
7
7
6
6
4
5
5
5
5
8
6
6
7
6
8
6
6
6
6
Risk Score
56
42
42
42
36
32
30
30
30
30
Response
Risk Cause
Plan Y/N Responsible Party
financial
Y
local people going through hard economic times
Y
poor maintenance of equipment
Y
requirements creep
Y
schedule delay
Y
electrical
Y
increasing number of kidnappings in the corporate world Y
bad judgment by weather forecasters
Y
bad judgment by weather forecasters
Y
schedule delay
Y
See You On The Railroad!
The Members of Team 3
Raisa Spector – PM
Roberto Mosciovecchio
Mark Sanbower
Omar
Mahmoud
David Saavedra
Suzanne Smith
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