30 Jul Risk Management – Proportionality & Spiraling Costs
NJMC Integrating Business & Programme for Better Risk Management
As providers of Programme/Project Management Office services (PMOaaS) one of the key parts of our work is assisting Project Managers (PMs) in the identification, recording and mitigation of risk within their projects and of managing risk at a programme level. This gives us a very good vantage point for observing the dynamics of the risk management process across a wide range of project and programme types and thus all manner of risks.
When NJMC is engaged with a client as a PMO we make considerable play of the close integration of the Business and the Programme by promoting constant, clear communication and, please excuse me for using this over exercised term, by “ensuring stakeholder engagement”. This often involves more pain than one might imagine it should, but the potential costs of not expending the effort at this level can be truly staggering.
In using the word “staggering” I can assuring that I am not over-egging the pudding. NJMC has an interest in the rapidly growing rail industry, particular in supporting what is called The Digital railway. As a result we follow the rail events closely and in one area we are wondering what happened to sensible risk management.
Why Is UK Rail Electrification So Costly Its Going To Fail?
In 1996 British Rail estimated that the peak passenger numbers it could cope with at that time was 800 million passenger journeys per year. Last year this number breached the 1.8 million mark, made possible by improvements to technologies in signaling, train design, track design. Application of new Digital Rail technologies could push this to 2.4 million but there it will stop unless more lines are electrified to allow greater train acceleration and thus greater train densities while lowering failure rates, running costs in energy and infrastructure wear.
Which ever way you cut it diesel traction can only take railways so far. There is a ‘sort-of’ solution in what are called bi-modes (diesel & electric) but they have a sting in the tail. Because that sting will take place after most politicians have left their safe seats for even safer jobs as non-executive directors in banks, oil companies or some such they see them as a great solution. The sting is higher life time costs, slower acceleration thus fewer train paths available, increased track wear, more CO2 and NOX emissions. There is just no substitute for electrification no matter what some might try and claim because it all boils down to physics in the end, and you cannot argue with physics.
The Overhead Line Equipent or ‘OLE’
At 25,000 volts flash-over is a risk where the live side can jump an air space to a non-electrically grounded body. Extensive testing over the last 60 years mostly by British Rail concluded that flash-over on gaps as little as 28cm was possible but rare. In the end but settled on 2.75 meters as a safe standard. The UK has, on and off, been very slowly electrifying its rail lines for the last 60 years. During the span of those years there have been some 15 BILLION passenger journeys and yet not one singe passenger has ever been the victim of a flash-over. Anyone doubting this fact can check it as I did in the Rail Safety & Standards Board (RSSB) safety risk model. This risk model concludes that one person is at risk every 300 hundred years of being shocked by a flash-over from the older and widely used standard clearance of 2.75 meters for 25,000 volt OLE. If NJMC managed project managers in this arena and one raised a risk with these kinds of figures a little arithmetic would conclude that is something around 0.008%.
This is not a risk, its not even close.
Now the Law Of Unintended Consequences Again
Along comes the Office of Rail Regulation (ORR) and prompted by the International Electrical Engineers (IEE) reports of high speed rail electrification in Europe they set a new standard of 3.5 meter clearance in the face of fantastically small risk. The IEE set 3.5 meters because with European loading gauges their railways can accommodate this degree of clearance, so they did! The UK loading gauge is much smaller, stations, tunnels and bridges older so there is simply not the room to accommodate 3.5 meters without enormous cost and infrastructure disruption and for what, a once in 300 year 0.008% event at 2.75 meters, how much less for 3.5 meters ?
The construction burden of 2.5 meter clearance is making electrification costs spiral in the UK. The Great Western Mainline electrification has gone from £800 million, to 2.8 billion, to farce. It is now very likely to end somewhere around £5 billion. Do not think this cost over run is remote from you because if you pay UK taxes it is you who will be stumping up for that bill! HM Treasury is so appalled it is likely to put a stop to future electrification projects completely. Already the Midland Mainline electrification has gone from cost effective to too costly and has been curtailed. The Trans-Pennine route electrification has been axed. The Felixstowe to Nuneaton freight route electrification now maxed out at 35 very profitable freight trains a day and looking to run up to ten more. This would take 7,500 diesel lorry movements per year off the A14 road route but it is not even on the DfT radar anymore despite already partly electrified. Please explain to us how this makes sense !
Our most cynical member of staff suggested that between the IEE and ORR they have lost any sense of proportionality in the management of risk but perhaps the greatest error they have made is that they have lost the engagement of the BUSINESS in pursuit of their ideal of a project. The mantra of 3.5 meter clearance became such a dogmatic priority that somewhere the needs of the Business were drowned out, over whelmed or ignored. How was it that the actual, quantifiable risk which was so small was then deemed great enough to be paramount? Even now in the face of looming financial disaster and real long term harm to UK rail infrastructure the ORR and DfT are sticking to 3.5 meters. How has the Business – Programme communication reached this point ?
Conclusion: Engage with the Business & Stay Engaged
When managing risk a PMO must take lessons from this:
Engage with the Business, constantly work at keeping engaged with them because they are your partner who you ultimately serve and if you serve their business more business will come to the betterment of everyone.
Oh and ….. keep a sense of proportion !