International Journal of Engineering Technology Science and Research

IJETSR
www.ijetsr.com
ISSN 2394 – 3386
Volume 4, Issue 10
October 2017

Risk Management in Offshore Construction

Aruna Mohan
Department of Infrastructure Engineering and Management,
Thiagarajar College of Engineering, Madurai, Tamil Nadu

ABSTRACT
Offshore projects are characterized as very complex projects, where uncertainty comes from various sources.
Offshore projects gather big number of stakeholders, which makes it difficult to control as a whole. Uncertainties are
magnified for offshore structures compared to on-land structures owing to the relative severity and unfamiliarity of the
ocean environment, the scarcity of data about loads and materials, and the expense of data-gathering.Offshore projects
are always unique and risks raises from a number of different sources. It has an inherited risk in all of the processes
starting from the conceptual phase of a project, engineering design, placing the bid and going through scheduling,
material procurement, construction, changing orders and ending with the commissioning, final payment and closing-up
of the project.Due to the undulations prevailing in Offshore projects there is high necessity of risk management in these
projects.
KEYWORDS – Risk management, Offshore construction, Risk identification

1.1 INTRODUCTION
Risk is defined as “the problem or issue which is expressed in the form of probability with its chance
of occurrence and the severity of the impact it can cause. It is used in many different ways and with many
different words, such as ‘‘hazard’’ or ‘‘uncertainty.’’ Every activity we do is, to a degree, characterized by the
presence of risk. It is the expression of the likelihood and impact of an uncertain, sudden and extreme event
that, if it occurs, has may impact positively (opportunity) or negatively (threat) on the achievement of a
project or program objective.

1.2 OFFSHORE CONSTRUCTION

Offshore construction is the installation of structures and facilities in a marine environment, usually
for the production and transmission of electricity, oil, gas and other resources.

1.3 RISK IN OFFSHORE CONSTRUCTION

Offshore projects are characterized as very complex projects, where uncertainty comes from various
sources. Offshore projects gather big number of stakeholders, which makes it difficult to control as a whole.
Offshore projects are always unique and risks raises from a number of different sources. It has an inherited
risk in all of the processes starting from the conceptual phase of a project, engineering design, placing the bid
and going through scheduling, material procurement, construction, changing orders and ending with the
commissioning, final payment and closing-up of the project.

1.4 RISK MANAGEMENT

Risk management is one among ten knowledge areas.Project Risk Management includes the process
of conducting Risk management planning, identification, analysis, response planning, and controlling risk on
the project. In recent years, intensive research and development has been done in the area of project risk
management. It is widely recognized as one of the most critical procedures and capability areas in the field of
project management.

1163 Aruna Mohan

 International Journal of Engineering Technology Science and Research
IJETSR
www.ijetsr.com
ISSN 2394 – 3386
Volume 4, Issue 10
October 2017

Fig 1.4: Risk Management Process

1.5 NEED FOR STUDY

Risk management is highly recommended in offshore constructions due to the following factors,
 More probability of uncertainty at the site.
 High adversity.
 More deviation in post estimation phase.
 Demands high safety and quality.
In fact, it is appeared that Offshore construction exposes to serious risks in comparing to other types
of construction work, which contributes the potential loss. There is a need for systematic risk management
approaches that can help for reducing and controlling risks thus to effectively improve project management.
Uncertainties are magnified for offshore structures compared to on-land structures owing to the
relative severity and unfamiliarity of the ocean environment, the scarcity of data about loads and materials,
and the expense of data-gathering. Due to the undulations prevailing in Offshore projects there is high
necessity of risk management in these projects.
1.6 OBJECTIVES OF THE STUDY
 Investigate various types of risks in Offshore Construction.
 Compare views from various Respondents through Questionnaire towards allocation of risk.
 Allocate Risk, categorize its importance, and analyze their effects on project.
2.0 METHODOLOGY
With the data gathered through questionnaire survey and having a objective to assess, analyses and
respond for the risks occurring in offshore construction, an action plan was prepared.
2.1 ACTION PLAN
Action plan for the project was constructed in the form of the flow diagram, consisting of all the task
to be performed in a sequential order starting from the Basic parameter study, through various stages

1164 Aruna Mohan

 International Journal of Engineering Technology Science and Research
IJETSR
www.ijetsr.com
ISSN 2394 – 3386
Volume 4, Issue 10
October 2017

involving collection, compilation, analysis and summarization of results from questionnaire survey. This is
shown in figure 2.1

• BASIC STUDY ON RISK MANAGMENTPARAMETERS

1

• LITERATUREREVIEW
2

• DESIGN OFQUESTIONNAIRE
3

• DATACOLLECTION
4

• DATACOMPILATION
5

• ANALYSIS OF COMPILEDDATA
6

• RESULT ANDSUMMARIZATION
7

• CONCLUSION
8

Fig 2.1: Methodology of the project

1165 Aruna Mohan

 International Journal of Engineering Technology Science and Research
IJETSR
www.ijetsr.com
ISSN 2394 – 3386
Volume 4, Issue 10
October 2017

2.1.1 DESIGN OF QUESTIONNAIRE

Design of a questionnaire related to the allocation of risks, importance and effects of these risks in
offshore construction was done after identifying various risk factors, identification tools, analysis tools and
response strategies pertaining to offshore constructions through a brief literature study. The questionnaire was
designed so that respondent can give their best preferences and scale the risk factors qualitatively through
which the further process was implemented.
The questionnaire consists of two sections: Background Information and Risk Management Process.
Background information gives details about the respondent such as type of respondent, their experience in
offshore projects, type of the project and term of the project.
2.1.2 DATACOLLECTION
Data collection was carried out by questionnaire survey. Questionnaires were distributed in Institute of
engineers meeting and got a good number of respondents. Some questionnaires were mail to the respondents
working or who had previously worked in the field.
2.1.3 DATACOMPILATION
The data was compiled from the collected data through various respondents. During compiling, feedbacks
from ten respondents were selected which revealed all vital information’s and others were rejected for
compilation. The compilation is based on plurality voting method.
2.1.3.1PLURALITY VOTING METHOD
In this method, the component which receives maximum response among many is taken as the value for the
component. Based on this method each risk factor was rated in five scales. The scales which received
maximum response was considered as the rating of the risk factors.
2.1.4 DATAANALYSIS
The compiled data was analyzed so that the risk can be managed by prioritizing the risk factors on the basis of
its likelihood of occurrence and degree of impact. The data analysis was done in following sequential steps.
 Risk FactorAllocation
 Risk CategorizationChart
 Relative ImportanceChart
 ParetoAnalysis
 ControlChart
 Risk Mode and EffectAnalysis(RMEA)
 RiskScore
 Risk Response Planning
 Venn Diagram
2.1.4.1 RISK ALLOCATION MATRIX

Fig 2.1.4.1: Risk Allocation Matrix

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 International Journal of Engineering Technology Science and Research
IJETSR
www.ijetsr.com
ISSN 2394 – 3386
Volume 4, Issue 10
October 2017

 Red color represents Risk factors falling under Severe Risk Categories.
 Yellow color represents Risk factors falling under Moderate Risk Categories.
 Green color represents Risk factors falling under Low Risk Categories.
2.1.4.2 RISK CATEGORIZATION
In risk categorization eight types of risk was categorized on the basis of percentages of intensity of factors
affecting each type of risk.
Table 2.1.4.2: Risk Categorization Table
PERCENTAGE OF PERCENTAGE OF
S.No TYPES OF RISK SEVERE RISK MODERATE RISK

1 Project specific risk factor 50 50

2 Contractor specific risk factor 40 60

3 Architect consultant specific risk 100 -

factor
4 Project manager specific risk factor 100 -

5 Resource specific risk factor 66.67 33.33

6 External environmental specific risk 60 40
factor
7 Finance specific risk factors 60 40
8 Contract clause specific risk factor 66.67 33.33

Architect- consultant Risk Factor and Project Manager Specific Risk Factor falls completely under Severe
Risk Category. Based on this analysis the above two Factors must be given Higher Importance. External
Environmental Specific Risk Factors and Finance Specific Risk Factors must be given Lesser Importance,
Since it has less percentage of severe risk factors.

Fig 2.1.4.2: Risk Categorization Chart

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 International Journal of Engineering Technology Science and Research
IJETSR
www.ijetsr.com
ISSN 2394 – 3386
Volume 4, Issue 10
October 2017

2.1.4.3 PARETO ANALYSIS

Pareto analysis is commonly referred to as “80/20” rule, under the assumption that, in all
situations, 20% of causes determine 80% of problems. In risk management it allows management to focus on
those risks that have most impact on the project. The following chart is 80-20 chart for the various risk
factors.The risk factors occurring on the right side of the red line indicates important risk factors and on the
right side indicates trivial risk factors.

Fig 2.1.4.3: Pareto analysis chart

2.1.4.4 RISK MODE AND EFFECT ANALYSIS (RMEA)
RMEA is systematic proactive method for evaluating types of risk mode of risk, assigning priority number,
identifying the effects and suggesting effects based risk response strategy.The quadrant which is shaded
indicates the most critical Risk Categories. Risk factor falling under this category requires prior management
compare to other Risk factors

Fig 2.1.4.4: Risk score graph

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 International Journal of Engineering Technology Science and Research
IJETSR
www.ijetsr.com
ISSN 2394 – 3386
Volume 4, Issue 10
October 2017

3.0 RESULTS AND DISCUSSION

The following table depicts the critical risk factors in each type of analysis.
Table 3.0: Comparative Risk Factors Table
RISK FACTOR RIIPARETO ANALYSIS RISK SCORE
ALLOCATION ANALYSIS
CLIMATIC NATURE OF TIME RISKTIME RISK CLIMATIC NATURE
THE AREA OF THE AREA

SELECTION OF FAULTY UNFAVOURABLE SOCIAL UNFAVOURABLE SOCIAL CHANCES OF

MATERIALS ENVIRONMENT ENVIRONMENT PROJECT MANAGER
QUITING THE
PROJECT

EQUIPMENT SELECTION OF FAULTY SELECTION OF FAULTY NO FORMAL

BREAKDOWN MATERIALS MATERIALS TRAINING

UNQUALIFIED WORK NO FORMAL TRAINING NO FORMAL TRAINING LABOUR

FORCE SHORTAGE/STRI KE

POOR INVENTORY USE OF MANAGEMENT USE OF MANAGEMENT SIZE OF THE PROJECT

MANAGEMENT AND PLANNING TOOLS AND PLANNING TOOLS

SIZE OF THE PROJECT INSUFFICIENT DATA INSUFFICIENT DATA USE OF

COLLECTION FOR DESIGN COLLECTION MANAGEMENT AND
FOR DESIGN PLANNING TOOLS

USE OF MANAGEMENT CLIMATIC NATURE OF CLIMATIC NATURE OF INEFFECIENT

AND PLANNING TOOLS THE AREA THE AREA TRAINING OF
HUMAN RESOURCES

INEFFECIENT TRAINING EXTENSION OF TIME EXTENSION OF TIME LACK OF

OF HUMAN RESOURCES LEADERSHIP
QUALITY AND
MONITORING
CHANCES OF PROJECT POOR INVENTORY POOR INVENTORY LACK OF SPARES
MANAGER QUITING THE MANAGEMENT MANAGEMENT
PROJECT

EXTENSION OF TIME SIZE OF THE PROJECT SIZE OF THE PROJECT EQUIPMENT

BREAKDOWN
- LABOUR SHORTAGE/ LABOUR SHORTAGE/ UNQUALIFIED WORK
FORCE
LOW PRODUCTIVITY AND LOW PRODUCTIVITY AND UNFAVOURABL E
- EFFICIENT OF EQUIPMENT EFFICIENT OF ECONOMIC
EQUIPMENT FLUCTUATION

From this comparative study 15 risks were shortlisted on the basis of common occurrence. These risk were
correlated with control charts in the analysis and their occupancy in upper control are and lower control area

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 International Journal of Engineering Technology Science and Research
IJETSR
www.ijetsr.com
ISSN 2394 – 3386
Volume 4, Issue 10
October 2017

were shown in Pie chart.The following are the 15 types of risks,

 Timerisk
 Selection of faultymaterial
 No formaltraining
 Use of management and planningtools
 Climatic nature ofarea
 Unqualified workforce
 Size of theproject
 Insufficient data fordesign
 Unfavorable economicfluctuations
 Chances of project manager quitting theproject
 Laborshortage
 Inefficient training of humanresources
 Lack of leadership quality andmanagement
 Equipmentbreakdown
 Unfavorable political environment

4.0 SUMMARY AND CONCLUSION

This thesis was concluded by providing suitable suggestions for the different types of risk factors occurring in
offshore construction.The following table gives the generic suggestions to overcome the critical risk.
Table 4.0: Generic Suggestion
Risk Factores Risk Risk Suggestions
category strategy
Size of the project SR RAC Make use of WBS.
Partnership must be encouraged
Climatic nature of the area SR RAC Maximum preventive measures must be
taken.
Insufficient data collection for SR RT Handle the responsibility to proper firm.
design
Use of management and planning SR RT Appoint experienced project managers.
tools
Inefficient training of human SR RT Appoint a proper trainer.
resources
Lack of leadership quality and SR RT Choose a person with inbuilt leadership
monitoring skills.
Chances of project manager quitting SR RT Recommend for a prior notice.
the project
Selection of faulty materials SR RAV Follow standard material prescriptions.
Equipment breakdown SR RM Replace the equipment as soon as possible.
Labour shortage /strike SR RAC Try to fulfill the labour needs.
No formal training SR RT Objective based training must be given.
Unfavorable economic fluctuations SR CP Adopt flexible financial plans
Unfavorable political environment MR RAC Plan in advance suitable measures.
Time risk SR RM Perform proper scheduling and tasking.

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 International Journal of Engineering Technology Science and Research
IJETSR
www.ijetsr.com
ISSN 2394 – 3386
Volume 4, Issue 10
October 2017

This study discusses the risk factors affecting the offshore construction. It studies the importance of risk
factors based on their probability of occurrence and degree of impact. By the use of previous studies in risk
management 38 risk factors were identified and combined into 8 major groups relating to their sources. This
study is made by field survey through a structured questionnaire directed to the people working in offshore
construction. Those will give the statement of the problem, study objectives, study scope and need for the
study. It was shown that there are many risk factors affecting the offshore construction.
The field survey was composed of 10 members working in this field. The questionnaire had two parts: one
part for general information about the respondents and the second related to the respondents opinion on
probability of occurrence and impact of risk factors. The data was compiled by plurality voting method. All
collected data were analyses by several methods. From this analysis critical risk factors were shortlisted and
risk response suggestions were given.

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