U.S. National Guard training ground, which meant the possibility that construction crews might unearth unexploded mortars or cannon shells.
“We set aside US$9 million to manage risk for this project. That wasn’t an
arbitrary number,” says Mr. Larsen. “We used Monte Carlo simulation on the
35 or so risks that we had identified to come up with an 80 percent level of con-
fidence on the amount of reserves we’d have to have.”
The team also developed contingency plans. To mitigate the risk of explo-
sives, for instance, the project plan included a rigorous site survey before con-
struction began and hiring a subcontractor with a demolitions expert on call.
“By managing the risks, we were able to realize very few,” says Mr. Larsen.
CONVERTING CONTINGENCY FUNDS
The project team didn’t approach risk management merely as a means to keep
costs and delays at bay. By carefully monitoring existing risks and periodically
releasing contingency funds, the team was able to expand the initial scope.
The team used just 0.5 percent of the original project funds on realized risks,
about US$500,000. When federal approval of a critical task was delayed 49 days,
the project incurred a US$300,000 setback in lost work time, for instance. The
remaining funds—roughly US$8.5 million—went to scope expansion.
“We reviewed and looked at the risk on a quarterly basis, if not monthly,” Dr.
Detamore says. “And as risk was reduced, we took the money that was set aside
to deal with that and put it back into the project.”
HEPA filtration on all of the fume hoods, for instance, started on the priori-
tized list of unfunded scope but only got the green light after the team was well
into the construction phase.
To accommodate those late additions, the design and construction teams
worked closely with ESIF’s project manager to manage both the approved project
plans and the possible additions on the horizon. “Each of the desired scope additions was carefully considered,” says Dr. Detamore. “The design or construction
teams would sometimes say to us, ‘You need to be able to give us a go or no-go
on this particular item by this date, or it can’t be done without severe impacts.’”
n April 2010: The Depart-
ment of Energy (DoE)
approves the selected
concept for the new
n June 2010: The formal
design process begins
n January 2011: The proj-
ect’s risk management
plan is approved
n March 2011: The DoE
approves the ESIF
project plans for final
design and construction
n April 2011: Final design
and project construction
n November 2012: The
offices and data center
open to researchers
n March 2013: Project
construction is complet-
ed and the laboratories
open to researchers
n September 2013: ESIF
final completion pack-
age is approved by DoE
NREL technicians Josh Martin
and Scott Walters work in the
Power Systems Integration
Lab (PSIL) at the ESIF.