With its head office in Perth, Western Australia, Murrin Murrin which is ranked as one of the top ten in the world and the second largest nickel producer in Australia is located between the towns of Leonora and Laverton in the northern goldfields region of Western Australia. Murrin Murrin employs over 1,000 employees and contractors, making it one of the largest single-site employers in Western Australia. Murrin Murrin Operations mines and processes approximately four million metric tonnes of 1.30% low grade nickel laterite ore to produce up to 36,000 tonnes per year of nickel briquettes and 2,400 tonnes per year of cobalt briquettes which are then sold to the international market.
Conventional open pit mining techniques are used followed by hydrometallurgical ore processing which is comprised of high pressure acid leaching, mixed sulphide precipitation, cobalt refining and nickel refining. The refined nickel and cobalt is then briquetted, packaged and exported. The production process also produces ammonium sulphate as a by product which is sold to the WA fertiliser market (Minara Resources Intranet Documents).
The hydrometallurgical processing plant consists of a sulphuric acid manufacturing plant, power & steam generation plant, high pressure acid leaching plant, hydrogen sulphide gas manufacturing plant, nickel and cobalt refining plants, water treatment plant, ammonium sulphate fertiliser plant and an air separation plant.
Compressed air supply is a vital utility in the operations of Murrin Murrin’s entire processing facility where it is used to for general maintenance activities (rattle guns etc), as process air for online processes such as the oxidation reactions (leaching process), as motive power for filter operations and as instrument air. The present compressed air supply system is comprised of 3 compressors, two instrument air dryers, a plant air and an instrument air receiver.
Consistent and adequate supply of compressed air is very critical to the smooth operation of Murrin Murrin plant and significantly reduces some safety risks brought up by lack of it. Dirt and wet air is detrimental to the operation of sensitive instruments or equipment. Since the plant was commissioned in 1999, there has been an increased demand of compressed air due to plant upgrades and expansions which has resulted in the present compressors not being able to cope up, risking a total plant shutdown and posing safety risks when control instruments fail to operate as required.
As an interim measure mobile diesel compressors have been hired and connected to the main supply system in order to boost/complement the existing air supply system. This short term option is costly to run and the quality of air produced is poor thus there is need to put in place a long term solution to increase the air supply and provide high quality air, hence the need to review and upgrade the air supply system at Murrin Murrin. Given the critical nature and magnitude of this project a Risk Management Plan is required to ensure that business objectives are met which is what this report seeks to address. The upgraded system comprises of 3 centrifugal compressors, dryers, and ancillary equipment to meet the plant’s current demand for compressed air at a total cost of $3.6million and the project would take 60 weeks to complete.
Successful implementation of this proposal would significantly increase the project’s likelihood of success. The proposal serves as a basis for identifying sound alternatives to achieving a budget cost of $3.6million, completion within 52 weeks, no injuries, minimal asset damage and meet the total plant air requirements hence the overall business objectives. It further seeks to provide relevant risk information for project reviews or milestone decisions.
Identify appropriate responses to the compressed air supply system upgrade project’s risks which may impact on the project’s scope, quality, time and/or cost in order to meet the overall business objectives (Chapman C &Ward S, 2004).
The risk management team comprising of a project manager, process engineer, operators, mechanical engineer, control systems engineer, electrical engineer, purchasing officer and safety officer shall establish the project objectives, criteria and key elements, the context, identify and list risks, rank and prioritise risks, evaluate and treat risks (AS4360:2004). The project team shall conduct a hazard and operability study upon completion of the Piping &Instrumentation Drawings produced in the design phase, carry out a qualitative risk assessment with focus upon operations, maintenance, construction and commissioning phase hazards. A job safety analysis shall also be conducted for all field tasks. In carrying out a risk analysis the team shall conduct brainstorm sessions, make use of expert advice or judgement where required, apply software based and full quantitative analysis. Risk management studies and design reviews shall be conducted via multi discipline teams, vendors along with stakeholders considered appropriate. AS/NZS 4360:2004 shall be adopted to manage all the identified risks. The main project stakeholders are contractors, employees, operators, insurers, management, regulators and equipment suppliers
The key elements of the project phases are concept development, preliminary design and contract, procurement and tendering, stakeholder consultation, detailed design development, construction and equipment installation (Chapman C & Ward S, 2004). These key elements shall be broken down as follows in order to identify all the risks associated with this project: Carry out an audit to determine present plant requirements, design and size compressed air supply system to match existing demand, equipment procurement (tendering and contracts preparation) equipment manufacture, quality assurance and quality control issues, equipment shipping, carry out civil work (slab & equipment plinths construction), structural (pipe supports erection & painting and roofing) and mechanical/piping & fittings, equipment installation and commissioning.
The project is earmarked to commence soon after approval on 22 October 2010 and completion is expected by end of December 2011. 10% of actual project estimate cost has been allowed for contingency. The project team is responsible for planning the risk Management Plan based on all the relevant information available and developing contingency plans, analysing effectiveness of strategies and monitoring identified risks (Turbit N, 2010). During equipment manufacture the mechanical engineer shall continuously monitor the quality control plan for the pressure vessels and piping.
Define Project Concept-preliminary scope
Project Manager
Quarter 4 2010
Review and determine plant air requirements audit
Process Manager
Quarter 4 2010
Prepare review submit Capital Expenditure Request for approval
Project Manager
Quarter 4 2010
Detailed mechanical design for air supply system, contract award
Project Manager/ Mechanical
Quarter 1,2011
Procurement-compressors, MCCs, Cables, valves, Instruments, Pressure Vessel
All team members
Quarter 1,2011
Structural piping mechanical –prepare tender document, review tender, award to contractor, place order, fabricate
Project manager/mechanical
Quarter1,2011
Civil Works- prepare tender document, review tender, award, place order, construction
Project Manager
Quarter1,2011
Electrical Instrumentation- prepare tender document, review tender, award to contractor, place order, fabricate
Control systems/Electrical/ Purchasing Officer
Quarter1,2011
Business, technological, procurement, operation and construction risks were the major risks identified and these included inappropriate project definition, design omissions, wrong equipment specifications, failure to meet time deadlines and project budget, documentation errors/omissions, supplier lead time delays, injury to personnel or damage to equipment e.g. during lifting operations, excessive noise levels, electrocution during electricity supply connections, failure to meet regulatory requirements e.g. pressure vessels/ air receivers not complying to local standards, environment oil spills, damage to equipment during shipping or transportation, increased power demand, progress disruption due to local or site evacuation as a result of gas release within the plant, exchange rate variation. In identifying these risks brainstorming, sensitivity analysis and stakeholder consultation have been used (Wideman R, 1992).
Likelihood and impacts were assessed for the principal risks identified. Table 2 shows the assessments for the identified risks categorised as high and medium ranked in order of priority. All risks identified as low have been listed in the risk register in Appendix 1 and are not considered here. Scoring rating has been defined as follows:
Impact score is rated as 1, 3,5,7,9 [1=Very Low, 3=Low, 5=Medium, 7=High and 9=Very High]
Likelihood is rated as 20%, 40%, 60%, 80% & 100% (Jokic M, 2010) [0.2=Very Low, 0.4=Low, 0.6=Medium, 0.8=High and 100%= Very High]
0.2
0.2
0.6
1.0
1.4
1.8
0.4
0.4
1.2
2.0
2.8
3.6
0.6
0.6
1.8
3.0
4.2
5.3
0.8
0.8
2.4
4.0
5.6
7.2
1.0
1.0
3.0
5.0
7.0
9.0
TABLE 2: RISK EVALUATION (Thorpe D, 2009)
1
Injury to on-site contractor personnel
Plant shutdown/ Project delays
Medium
60%
9
6.3
2
Competing projects within the company
Project delays by 1-2 months
High
80%
7
5.6
3
Failure to meet regulatory requirements i.e. design standards for pressure equipment AS1210, AS4041
Premature vessel/piping failure Costly rework
Failure to register vessel
Medium
60%
7
4.2
4
Design is deficient due to errors and omissions
Inadequate air/ safety problems
Medium
60%
7
4.2
5
Damage to equipment during transportation
Costly repairs/ equipment replacement
Medium
60%
7
4.2
6
Loss of key staff during project duration
Project delays and lack of cohesion
High
80%
5
4
7
Local or site evacuation as a result of a toxic gas release within the plant
Project delay by 1-2 weeks
Very High
100%
3
3.0
8
Inappropriate project concept
Failure to meet project objectives
Low
40%
7
2.8
9
Exchange rate variation
Increased/reduced project cost
High
80%
3
2.4
From Table 2 above there are 2 high and 5 medium with an average risk of 4 which is categorised as medium. The order of treatment shall be in this order and implementation of an RMP would result in nil high, 5 medium and 4 low risk categories with an average of 2.7 which is categorised as Medium (Refer to Appendix 1). Although the average risk category has remained as medium the overall effective risk reduction of implementing the proposal is 33% which is quite significant. Assuming that exposure is proportional to potential over estimate and that Reduction=Risk-Exposure then, (Kene & Krysle, 2010)
Reduction = 4 (Risk) - 2.7 (exposure)
= (4 - 2.7)/4*$3.6million
After carrying out a risk evaluation the team shall seek for alternative options to treat/mitigate the above major identified risks in order to reduce the likelihood that the risk would occur. Whilst detailed treatment plans would be carried out by the team, the following are examples of the above risks: Injury to on site contractor personnel- adhere to the safety and health rules and carry out morning safety toolbox meetings. Competing projects within the company- accept and allocate dedicated resources. Inappropriate project concept and design omissions- carry out formal reviews for requirements, specifications, design, engineering and operations to minimise or eliminate design errors and project concepts. Damage to equipment during transportation-insure equipment in transit. Failure to meet regulatory requirements i.e. design standards for pressure equipment- inspection, process controls, supervision, testing and adherence to standards to minimise or eliminate manufacturing defects or problems. Loss of key staff during project duration- Retain and offer competitive remuneration packages. Local or site evacuation as a result of a toxic gas release within the plant- Retain and optimise operations. Exchange rate variation-Accept, contractual arrangements and contract conditions. (Cameron M, 2009)
Monthly review meetings shall be conducted in order to keep track of the project risks, identify any change in status or if they turn to be an issue and the project manager shall be responsible for chairing and delegating action items (Turbit N, 2010).
The project team accountable for the activity shall first conduct a risk assessment and complete the relevant documentation for review and acceptance by next on line within the organisational structure. The documents shall be as follows:
Murrin Murrin’s Risk management Policy-Outlines the seven strategies on how all risk management issues shall be managed company wide e.g. maintain a cost/benefit focus when considering risk treatment options.
Risk register- all records with regards to the risk’s source, nature, existing controls, consequences, likelihood, initial rating are documented here.
Treatment Schedule and action plan shall document the managerial controls to be adopted. The following shall be included, person responsible for plan implementation, resources to be used, the budget allocation, timetables, details of the control mechanism and the frequency of review of compliance with the treatment plan
AS4360:2004 provides general guidelines for carrying out the risk management process from project inception to completion.
1
Injury to on site contractor personnel
Safety toolbox meetings
Low
60%
40%
9
3.6
2
Competing projects within the company
Dedicate resources
High
80%
60%
7
4.2
3
Failure to meet regulatory requirements i.e. design standards for pressure equipment AS1210, AS4041
Contractual agreements
High
40%
20%
7
1.4
4
Design is deficient due to errors and omissions
Review requirements
Medium
60%
60%
7
4.2
5
Damage to equipment during transportation
Insure equipment
Medium
60%
20%
7
1.4
6
Loss of key staff during project duration
Market Remuneration
High
80%
40%
5
2
7
Local or site evacuation as a result of a toxic gas release within the plant
Operations optimisation
Medium
100%
100%
3
3.0
8
Inappropriate project concept
Project definition
High
40%
20%
7
1.4
9
Exchange rate variation
Put methodology for price adjustment in contract
Medium
80%
40%
3
2.4
10
Failure to meet time deadlines and project budget due to late deliveries/accident
Expedite and insure critical equipment
Medium
60%
20%
3
1.8
11
Under-estimation/ inappropriate procurement strategy
Plan for contingency
Low
20%
20%
7
1.4
12
Faulty equipment installation
Review requirements & specifications
Low
20%
20%
7
1.4
13
Increased power demand
Upgrade transformer
Low
20%
20%
7
1.4
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