TP2_Sample_Son-La Dam Construction in Vietnam.pdf

Son-La Dam Construction in Vietnam: Go/No Go Analysis

PF3204 Project Risk Management

Risk and Decision Analysis Example#2

1

Outline

Statement of the problem Development of objective function Development of influence diagram Data attribute table & Acquisition of Data Sensitivity analysis Preliminary decision tree analysis Current status and future work

2

Statement of the Problem(Check the situation scenario posted to IVLE for more details)

3

Project Scenario

4

Project Scenario

Vietnam is experiencing a more rapid rise in demand for electricity than economic growth.

Vietnams energy demand heavily relies on coal fired generating plant

Vietnam government is deciding whether or not to do the great hydro expansion.

Son-La Dam will be the biggest project in this hydro expansion

5

The Proposed Son-La Dam

Normal Water Level 265 m

Dam Height 177 m

Volume of Reservoir 25.4 billion m3

Surface of Reservoir 440 km2

Installment Capacity 3,600 MW

Energy Production 14,124 GWh/year

Project Estimated Cost $2.3 billion

Project Life Cycle 50 years

6

Positive Impacts Energy production: 14,124 GWh/year Economic benefits

New opportunities for regional socio-economic development

Revitalize the economy of north-eastern region of Vietnam

Water supply for production Flood stream control Reduction of air pollution and carbon dioxide

emissions Improvement of microclimate Opportunity for recreation and tourism

7

Negative Impacts Environmental and social impacts

Inundated areas: 40,500 ha (Agriculture land: 9,650 ha, Forestry land: 3,900 ha)

Resettlement: 95,600 people, $700 million Loss of infrastructures: Houses (1,600,00 m2) and Roads

(300km)

Ecological Impacts - Deforestation

Dam safety issues Serious threats from earthquake Construction quality issues from workmanship

Political issues8

The Son-La Dam project: Go/ No Go

Decision Maker? A Vietnam government agency

Decision to be analyzed?

9

Development of Objective Function

10

Overview of Decision Criteria

Decision Criteria to be concerned Project Benefits Project Costs Environment issues Safety Social Impacts Politic Issues Cultural Concern

Hierarchy of Objectives Technique Approach11

Overview of Criteria Considered

12

Final Criteria Incorporated

13

Criteria Weighting Using AHP1. Establish the hierarchical structure (as last slide)2. Compare the major categories in pair-wise fashion,

ranking each pair on a scale of 1 to 5 according to the criteria: 1: The two factors contribute equally 2: One factor is slightly favored over the other 3: One factor is moderate favored over the other 4: One factor is strongly favored over the other 5: One factor dominates

3. Finding the normalized matrix

14

Criteria Weighting Using AHP

Pair-wise comparison tableReturn onInvestment

OptimizeSafety

MinimizeConflicts

OptimizeEnvironment

Return onInvestment 1 2 2 3

OptimizeSafety 0.5 1 1.2 2

MinimizeConflicts 0.5 0.8 1 2

OptimizeEnvironment 0.33 0.5 0.5 1

Sum 2.33 4.3 4.7 8

15

Criteria Weighting Using AHP

Normalized weights of objective criteria

Return onInvestment

OptimizeSafety

MinimizeConflicts

OptimizeEnvironment

RowSum Average

Return onInvestment 0.43 0.47 0.43 0.38 1.69 0.42

OptimizeSafety 0.21 0.23 0.26 0.25 0.95 0.24

MinimizeConflicts 0.21 0.19 0.21 0.25 0.86 0.22

OptimizeEnvironment 0.14 0.12 0.11 0.13 0.49 0.12

Sum 1 1 1 1 4 1

16

Final objective function model

Weights of objective criteria

Final Objective function

Objective Criteria Weights

Return on Investment 0.42

Optimize Safety 0.24

Minimize Conflicts 0.22

Optimize Environmental Issues 0.12

Maximize Values to the Project Owner =

0.42*Return on Investment +

0.24*Maximize Safety+

0.22*Minimize Conflicts +

0.12*Minimize Environmental Issues17

Development of Influence Diagram

18

Influence Diagram Development Procedure Brainstorm advantages (positive impacts),

disadvantages (negative impacts), and consequential events from decision.

Identify causal or driving factors relevant to advantages, disadvantages, and consequential events.

Employ graphical network to illustrate factors and relationships.

Continue until comfortable with level of detail.

19

Preliminary Influence Diagram

Objective Variables

Calculation Variables20

Data Attribute Table & Acquisition of Data

Ref. # Variable or Data Element Variable TypeBest Unit

of MeasureVariable Value(s) or

Range Best Source(s) of Information

Current Reliability of Information/

Source

Need to Modify Data?

1 Go / No Go Decision Decision2 Return on Investment Objective $ Benefits & costs comparison3 Benefits Objective $ Sub-criteria data4 Annual Savings Objective $ $500 million Consultant firm & design firm Reliable5 Local Economy Revitalization State H/M/L H/M Economist & consultant firm Moderate6 More Job Market and Opportunities State H/M/L H/M Economist & consultant firm Moderate7 Local City Growth State H/M/L H/M Economist & consultant firm Moderate8 Inprovement of Fluvial Navigation State H/M/L M/L Environmentalists & geologists Low9 Opportunity for Recreation and Tourism State H/M/L H/M Economist & consultant firm Moderate10 Water Supply State m3 25.4 billion m3 Design firm Reliable11 Costs Objective $ $4 billion (+-10%) Sub-criteria data Reliable12 Massive Construction Cost Calculation $ $2.3 billion (+-10%) Design firm Reliable13 Compensation and Resettlement Cost Calculation $ $700 million (+-10%) Owner & consultant firm Reliable14 Commission for Russian Technologies Calculation $ Design firm & Russian contractor Low

15 Economic Loss due to Submerged Agriculture Land

Calculation $ Consultant firm Low

16 Operation and Maintenance Cost Calculation $ Design firm Low

17 Productivity Changes of Estuaries State H/M/L H/M/L Environmentalists & hydrological experts

Low

18 Cost for Earthquake Prevention Calculation $ Design firm Low19 Project Life Cycle State Year 70 - 90 years Owner & design firm Moderate20 Inflation State % 2 - 4 % Economic index Moderate21 Interest Rates State % 0.1 - 1 % Economic index Moderate22 Optimize Environmental Issues Objective H/M/L Sub-criteria data

23Regulation Flood Stream State m3/sec 15000 m3/sec Design firm & hydrological experts Reliable

24 Improvement of Microclimate State H/M/L H/M/L Meteorologists Low

21






Source


25 Reduce Air Pollution State ppm M/L Environmentalists Low26 Ecological Impacts State H/M/L H/M Environmentalists Moderate

27 Hydrologic Impacts State m3 H/M Environmentalists & hydrological experts

Moderate

28 Loss of Mineral Resources State H/M/L Low Hydrological experts Moderate29 Optimize Safety Objective H/M/L Sub-criteria data

30 Forests near Reservoir Calculation ha 160,000 ha Site survey and local environment data

Reliable

31 Earthquake Possibility State H/M/L High (H/L) Historical data, meteorologist Reliable

32 Capability of Vietnamese Workers State H/M/L Low Consultant firm, historical data, interview and survey

Moderate

33 Construction Safety and Security State H/M/L H/M/LSafety laws, standards, and

regulations. Data about current jobsite conditions. Historical data

Moderate

34 Minimize Conflicts Objective H/M/L Sub-criteria data35 Social Impacts Objective H/M/L Sub-criteria data

36 Social Impacts due to Ethnic Minorities Resettlement

State H/M/L Medium (H/M/L) Socialists & human right activities Reliable

37 Social Impacts due toLoss of Agriculture Land

Objective H/M/L High Socialists, economists, and agronomists

Reliable

38 Historic Architecture Data Calculation EA, m2 Site survey and local historic data Low

39 Social Impacts due to Loss of Historic Architecture

State H/M/L High Historians Moderate

40 Water-related Diseases (Health Issue) State H/M/L M/L Medicalists Low41 Political Issues Objective H/M/L Sub-criteria data42 Political Negotiation with China State H/M/L H/M/L Politicians Low43 Economic Negotiation with China State H/M/L H/M/L Economists & politicians Low44 Break-up and Breach of Obligation State H/M/L H/M/L All stakeholders Low 22






Source


45 Political Dissension during Construction State H/M/L H/M/L Politicians Low46 Tax Rate for Construction Cost Objective $ Owner & consultant firm Low47 Cultural Concerns Objective H/M/L H/M/L Sub-criteria data Low

48 Cultural Differences State H/M/L H/M/L Objective investigations & subjective interviews and surveys

Low

49 Language Barriers State H/M/L H/M/L Objective investigations & subjective interviews and surveys

Low

50 Different Laws, Standards, and Regulations Calculation H/M/L H Legal administration & design firm Reliable

23

Sensitivity Analysis

24

Sensitivity Analysis

Six important variables are selected from the data attribute table. Annual savings Costs for compensation for moving residents and

resettlement process Amounts of forests near reservoir Earthquake possibility to occur Social impacts due to resettlement of ethnic minorities Regulation flood system by controlling amounts of

water released

25

Sensitivity AnalysisOriginal InformationObjectives SelectedVariables Unit BaseValue UpperValue LowerValue

AnnualSavings Million$ 500 550 400

AnnualResettlementCosts Million$ 70 91 66.5

AmountsofForestsnearReservoir

ha 160,000 176,000 144,000

EarthquakePossibility H/M/L High High Medium

Conflicts SocialImpactsduetoResettlement H/M/L Medium High Low

EnvironmentalIssues

RegulationFloodStream m3/sec 15,000 15,750 12000

ROI

SAFETY

Objectives SelectedVariables Unit BaseValue UpperValue LowerValue

AnnualSavings % 100% 110% 80%

AnnualResettlementCosts % 100% 130% 95%


% 100% 110% 90%

EarthquakePossibility % 100% 100% 70%

Conflicts SocialImpactsduetoResettlement % 100% 180% 50%

EnvironmentalIssues

RegulationFloodStream % 100% 105% 80%

ROI

SAFETY

Converted Information

26

Sensitivity AnalysisObjective Function

Maximize Values to the Project Owner =

0.42*Return on Investment + 0.24*Maximize Safety +

0.22*Minimize Conflicts + 0.12*Minimize Environmental Issues

Sensitivity Analysis Output FormulaValues to the Project Owner = 100% + 0.42*((Annual Savings-100%) + (100%-Annual Resettlement Cost))+ 0.24*((Amount of Forest Near Reservoir-100%)+(100%-Earthquake Probability))+ 0.22*(100% - Social Impacts due to Resettlement)+ 0.12* (Regulation Flood Stream - 100%)

Objectives SelectedVariables Unit BaseValue UpperValue LowerValue

AnnualSavings % 100% 110% 80%

AnnualResettlementCosts % 100% 130% 95%


% 100% 110% 90%

EarthquakePossibility % 100% 100% 70%

Conflicts SocialImpactsduetoResettlement % 100% 180% 50%

EnvironmentalIssues

RegulationFloodStream % 100% 105% 80%

% 100%ValuetotheProjectOwner

ROI

SAFETY

27

Sensitivity Analysis Annual Savings

28

Sensitivity Analysis Annual Resettlement Cost

29

Sensitivity Analysis Amount of Forest

30

Sensitivity Analysis Earthquake Possibility

31

Sensitivity Analysis Social Impacts due to Resettlement

32

Sensitivity Analysis Regulation of Flood Stream

33

Sensitivity Analysis Spider Graph

34

Sensitivity Analysis Tornado Graph

35

Preliminary Decision Tree Analysis

36

Preliminary Decision Tree Analysis

Social Impact

Annual Resettlement Cost



More Variables will

be studied with their

actual values and

probabilities!

37

Current Status and Future Work

38

Current Status

Developed an objective function model Developed influence diagram Developed a preliminary data attribute table Conducted sensitivity analysis for key

variables Structured a preliminary decision tree

39

Future Work

Update the real project data and sources More specific sensitivity analysis based on

updated data Update final influence diagram Quantify several non-quantified variables Develop more specific decision tree structures Investigate and analyze historical data related to

dam construction project in Vietnam Try weighting criteria based on weighting

process for related sub-criteria 40

Preliminary Influence Diagram

Objective Variables

Calculation Variables20






Source


1 Go / No Go Decision Decision2 Return on Investment Objective $ Benefits & costs comparison3 Benefits Objective $ Sub-criteria data4 Annual Savings Objective $ $500 million Consultant firm & design firm Reliable5 Local Economy Revitalization State H/M/L H/M Economist & consultant firm Moderate6 More Job Market and Opportunities State H/M/L H/M Economist & consultant firm Moderate7 Local City Growth State H/M/L H/M Economist & consultant firm Moderate8 Inprovement of Fluvial Navigation State H/M/L M/L Environmentalists & geologists Low9 Opportunity for Recreation and Tourism State H/M/L H/M Economist & consultant firm Moderate10 Water Supply State m3 25.4 billion m3 Design firm Reliable11 Costs Objective $ $4 billion (+-10%) Sub-criteria data Reliable12 Massive Construction Cost Calculation $ $2.3 billion (+-10%) Design firm Reliable13 Compensation and Resettlement Cost Calculation $ $700 million (+-10%) Owner & consultant firm Reliable14 Commission for Russian Technologies Calculation $ Design firm & Russian contractor Low

15 Economic Loss due to Submerged Agriculture Land

Calculation $ Consultant firm Low

16 Operation and Maintenance Cost Calculation $ Design firm Low

17 Productivity Changes of Estuaries State H/M/L H/M/L Environmentalists & hydrological experts

Low

18 Cost for Earthquake Prevention Calculation $ Design firm Low19 Project Life Cycle State Year 70 - 90 years Owner & design firm Moderate20 Inflation State % 2 - 4 % Economic index Moderate21 Interest Rates State % 0.1 - 1 % Economic index Moderate22 Optimize Environmental Issues Objective H/M/L Sub-criteria data

23Regulation Flood Stream State m3/sec 15000 m3/sec Design firm & hydrological experts Reliable

24 Improvement of Microclimate State H/M/L H/M/L Meteorologists Low

21






Source


25 Reduce Air Pollution State ppm M/L Environmentalists Low26 Ecological Impacts State H/M/L H/M Environmentalists Moderate

27 Hydrologic Impacts State m3 H/M Environmentalists & hydrological experts

Moderate

28 Loss of Mineral Resources State H/M/L Low Hydrological experts Moderate29 Optimize Safety Objective H/M/L Sub-criteria data

30 Forests near Reservoir Calculation ha 160,000 ha Site survey and local environment data

Reliable

31 Earthquake Possibility State H/M/L High (H/L) Historical data, meteorologist Reliable

32 Capability of Vietnamese Workers State H/M/L Low Consultant firm, historical data, interview and survey

Moderate

33 Construction Safety and Security State H/M/L H/M/LSafety laws, standards, and

regulations. Data about current jobsite conditions. Historical data

Moderate

34 Minimize Conflicts Objective H/M/L Sub-criteria data35 Social Impacts Objective H/M/L Sub-criteria data

36 Social Impacts due to Ethnic Minorities Resettlement

State H/M/L Medium (H/M/L) Socialists & human right activities Reliable

37 Social Impacts due toLoss of Agriculture Land

Objective H/M/L High Socialists, economists, and agronomists

Reliable

38 Historic Architecture Data Calculation EA, m2 Site survey and local historic data Low

39 Social Impacts due to Loss of Historic Architecture

State H/M/L High Historians Moderate

40 Water-related Diseases (Health Issue) State H/M/L M/L Medicalists Low41 Political Issues Objective H/M/L Sub-criteria data42 Political Negotiation with China State H/M/L H/M/L Politicians Low43 Economic Negotiation with China State H/M/L H/M/L Economists & politicians Low44 Break-up and Breach of Obligation State H/M/L H/M/L All stakeholders Low 22






Source


45 Political Dissension during Construction State H/M/L H/M/L Politicians Low46 Tax Rate for Construction Cost Objective $ Owner & consultant firm Low47 Cultural Concerns Objective H/M/L H/M/L Sub-criteria data Low

48 Cultural Differences State H/M/L H/M/L Objective investigations & subjective interviews and surveys

Low

49 Language Barriers State H/M/L H/M/L Objective investigations & subjective interviews and surveys

Low

50 Different Laws, Standards, and Regulations Calculation H/M/L H Legal administration & design firm Reliable

23

Documents

TP2_Sample_Son-La Dam Construction in Vietnam.pdf