Modeling Environmental Constraints in Capital Projects

Capital projects all over the world - both onshore and offshore - encounter strict environment protection regulations that become increasingly demanding. For example, construction could be forbidden in particular annual seasons to allow breeding of various mammal, bird, marine or insect species. These impose strict and mandatory environmental constraints on project schedules. Although, just incorporation of the environmental constraints into project schedules cannot adequately forecast project completion dates due to various risk factors that severely exacerbate the constraints.

When the environmental constraints are properly incorporated into project schedules:

• regular project risks including environmental/ permitting risks should be imposed on (“mapped to”) the project schedules,

• project-system-delivery issues (“systemic risks”) should properly modify regular project risks including environmental/ permitting risks, and

• relevant interactions among project risks including convolution of environmental/ permitting risks with the rest of project risks (“risk interaction mapping”) should be counted for.

The above-listed risk factors give rise to non-linear Monte Carlo schedule risk models. They yield highly skewed and often discontinuous project completion date’s distributions. Such distributions reflecting on the environmental constraints mixed with the above-listed risk factors are capable to predict actual project outcomes rather precisely. A simple non-linear Monte Carlo model built using Oracle Primavera Risk Analysis (“PertMaster”) demonstrates concepts put forward in this report.