Project and Research Methods
Assignment 2: Project risk management under the Great Western Route Modernization
Programme (GWRMP)
Table of Contents
1.0 Introduction ............................................................................................................................................. 1
2.0 The project environment of the Great Western Route Modernization Programme (GWRMP) ............. 1
2.1 Risk in railway construction projects .................................................................................................. 1
2.2 Approach to risk management by Network Rail ................................................................................. 3
3.0 Risk management theories and methodologies. ...................................................................................... 3
3.1 Project management methodologies ................................................................................................... 4
3.1.1 PRINCE2 (Projects in Controlled Environments 2) .................................................................... 4
3.1.2 Project Management Institute Body of Knowledge (PMBOK) ................................................... 4
3.1.3 ISO 21500: 2012 .......................................................................................................................... 5
3.1.4 Relationships between the methodologies ................................................................................... 5
3.2 Risk identification in the GWRMP ..................................................................................................... 5
3.3 Analysis of key risks in the GWRMP ................................................................................................. 8
3.4 Responses for the key risks identified................................................................................................. 9
3.5 Monitoring risks ................................................................................................................................ 11
4.0
Summary and conclusion ................................................................................................................ 11
4.1 Recommendations on programme risk management. ....................................................................... 11
Appendices.................................................................................................................................................. 15
Appendix 1: Modernisation route ........................................................................................................... 15
Appendix 2: Expected benefits of the GWRMP ..................................................................................... 16
1.0 Introduction
The Rail Technology Magazine of 3 March 2017 carried an article titled ‘The Great Western Route
Modernization Programme (GWRMP) is a stark example of how not to run a programme.’ The article was
in reference to remarks by Meg Hiller, then chair of the Committee of Public Accounts in the United
Kingdom (UK) House of Commons expressing displeasure with the way in which the programme had been
implemented (Rail Technology Magazine, 2017). The sentiments were against a backdrop of revelations
by the UK National Audit Office that the programme had incurred cost overruns of about £1.2 billion and
completion delays of up to three years that were attributed to poor designing, planning, cost estimation and
risk management (House of Commons, 2017). Project costs and timeliness were not the only concerns,
some benefits were also foregone as its scope had to be reduced by 20 per cent because of the overruns.
The audit report also observed that the management of the programme did not protect value for money. Its
benefit-cost ratio had fallen from high to poor which consequentially led to cancellation of some project
activities such as the electrification of the railway line between Cardiff and Swansea (National Audit office,
2016). In its analysis of the decision to cancel activities, the UK parliament regretted that “the people and
local businesses feel aggrieved that they are not getting the electrified railway they were promised”
(Parliament of the United Kingdom, 2018, p.1).
The GWRMP is made up of three related and interdependent projects that are managed by Network Rail
(an infrastructure projects manager) to improve and cater for increased rail services demand between
London, west and southwest England and south Wales that began in 2010 and will run up to 2024 (see
appendix 1 for the modernisation routes). The UK Department for Transport and Network Rail estimated
that passenger demand would grow by 81 per cent between 2013 and 2019 and therefore there was need to
increase capacity of infrastructure and efficiency of services (see appendix 2 for expected benefits of the
programme). The first project was the electrification of the main line between London and Swansea. The
second project was for the upgrading of signalling, tracks, stations, bridges and tunnels and the third project
aimed at replacing old diesel train fleets with electric intercity express trains. The projects were estimated
to cost about £5.58 billion in 2016 (National Audit office, 2016).
2.0 The project environment of the Great Western Route Modernization Programme (GWRMP)
2.1 Risk in railway construction projects
Project Management Institute (2017, p.397) asserts that “all projects are risky since they are unique
undertakings with varying degrees of complexity. Project risk management aims to identify and manage
risks that are not addressed by the other project management processes. When risks are unmanaged, they
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have the potential to cause the project to deviate from plan and fail to achieve the defined project
objectives.”
Andric, Wang and Zhong (2019) agrees with this observation in its analysis of risks in the context of railway
projects. It argues that railway projects face significant risks due to their unique characteristics (high
investment, complex, long period, sensitivity to site conditions and large-scale). Impacts of risks include
cost overruns, safety issues, quality issues, and schedule delays. Andric, Wang and Zhong (2019) assessed
literature and identified 24 risks in railway projects that were classified into six categories as shown in table
1.
Table 1
Risks in railway construction projects
Note: Adapted from Andric, Wang and Zhong (2019).
Strategic partnership risks relate to funding policy. Railways are normally large public projects that may be
funded from fiscal budgets or borrowed/ donated from other countries, multilateral agencies, especially for
developing countries or funded from a public-private partnership. They are dependent on diplomatic
relations and therefore may be affected by changes in geo-political landscapes and ability to repay loans.
The second category of risks are external factors that affect the projects but are outside the control of project
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managers. The third category is environmental risks that includes soil pollution and site contamination,
noise, geological conditions, and terrain. The fourth category is that of design processes which may affect
cost estimations and scheduling. The fifth category is that of the construction processes including reliability
and availability of equipment, materials, quality control and site organization. The final category is human
resource risks that includes lack of labour, poor planning and management and poor team communication.
2.2 Approach to risk management by Network Rail
Network Rail employs the Enterprise Risk Management framework as the approach for risk management
(Network Rail, 2018a). Risk management (apart from safety related risks) is governed by an audit and risk
management committee of the board of directors. Risks are categorised into four main areas: safety; value;
performance and reputation). Table 2 shows risk appetite statements that have been pronounced by the
board in these four risk areas.
Table 2
Network Rail risk appetite statements
Note: Created from Network Rail (2018a). From information available on the implementation of the
GWRMP, it is highly likely that risk exposure exceeded risk appetites for performance, reputation and
value.
3.0 Risk management methodologies.
Project management practices have evolved over time. With this evolution, several project management
methodologies have defined different approaches to risk management. Examples of these methodologies
include Lean Sigma Six, Agile, SCRUM, SCRUMBAN, Critical Chain, Waterfall, PRiSM, Managing
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Successful Programmes (MSP), Project Management Institute Body of Knowledge (PMBOK), PRINCE2,
and ISO 21500 (AXELOS, 2015; PMI, 2017; ISO, 21500: 2012; Tomanek & Juricek, 2015; Oyadele, 2018).
Skogmar (2015) compared these methodologies and concludes that PRINCE2, PMBOK, ISO 21500 were
the most widespread and adopted standards and practices globally. These are examined succinctly in the
following paragraphs.
3.1 Project management methodologies
3.1.1 PRINCE2 (Projects in Controlled Environments 2)
According to AXELOS (2015) it is the most widespread approach in the world. It focuses on controlling
the project environment for success and defines seven project management principles that should be
observed in using the methodology including continued business justification, learn from experience,
defined roles and responsibilities, manage projects by stages, manage by exception, focus on products and
tailor to suit the project environment. Risk management in PRINCE2 has three dimensions: risk
management strategy; use of risk register to record information and a defined risk management procedure.
It outlines five steps for risk management including identify, assess, plan, implement and communicate. It
also defines six risk responses including reduce, avoid, transfer, fallback, share and accept. It outlines the
relationship between the project board and project managers but focusses more on what should be done by
the project management team. PRINCE2 emphasises on management by exception where the project board
should only be involved in management when certain tolerances are exceeded and need to be responded to.
The six tolerances include scope, time, quality, benefits, risk and cost. It focuses on the outputs of the
project that are contained in a product breakdown structure (PBS) to develop a flow diagram and show the
movement of activities across deliverables (Skogmar, 2015; AXELOS, 2015).
3.1.2 Project Management Institute Body of Knowledge (PMBOK)
According to Project Management Institute (2017), project risk management is the process of planning,
identifying, analysing, responding to and monitoring risk on a project. It describes 47 processes for
managing projects and each of these processes has inputs, tools and techniques and outputs. The processes
are placed in these 10 management knowledge areas: integration, scope, time, cost, quality, human
resources, risk, communication, procurement and stakeholder. It focuses more on what should be done by
the project manager and tools that should be used. Its emphasis is on managing constraints that affect
implementation including scope, quality, schedule, budget, resources, and risks. It focuses on the activities
of the project that are contained in a work breakdown structure (WBS) which are used to develop the critical
path. The outputs of risk identification include a risk register, risk report and a lessons learned register
(Project Management Institute, 2017).
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3.1.3 ISO 21500: 2012
It defines a standard for the design of project management methodologies (Skogmar, 2015). It is less
detailed but can be used together with the PMBOK guide. Whereas it outlines inputs and outputs for the
stages of project risk management, it does not provide tools for the process and does not go into the
details of discussing how the inputs and outputs should be applied or the interrelationships between
processes. It provides a broad overview of risk management and the roles of managers in projects.
3.1.4 Relationships between the methodologies
Skogmar (2015) observes that whereas the methodologies differ slightly in nuances and presentation of
concepts, they are similar in most aspects and borrow heavily from one another. Figure 1 below shows
this relationship:
Figure 1
Relationship between PRINCE2, PMBOK and ISO21500 risk management methodologies
Note: Extracted from Skogmar (2015). Figure 1 shows the relationships between the methodologies. Solid
lines show strong relationships, dotted lines show weak relationships. All methodologies share
terminologies. Additionally, PRINCE2, ISO 21500 and PMBOK are similar in definitions of the roles of
the manager and tools and techniques of project management.
Since PMBOK guide is the most comprehensive of the three methodologies (Skogmar, 2015), this report
will use processes outlined in the guide to identify, analyse and prepare responses for key risks identified.
It will simulate risks that are obtained from secondary sources of literature on the programme.
3.2 Risk identification in the GWRMP
Project Management Institute (2017, p.409) states that “risk identification is the process of identifying
project risks as well as sources of overall project risks and documenting their characteristics.’ ISO 21500:
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2012 (ISO, 21500: 2012, p.25) states that “the purpose of identifying risks is to determine potential risk
events and their characteristics that, if they occur, may have a positive or negative impact on the project
objectives.”
According to UK House of Commons (2017) project risks were realized in the GWRMP for several reasons.
First, the three projects were managed separately instead of one joint programme of related projects. This
means that management failed to chart a critical path for the project (the most efficient prioritization of
tasks to shorten duration and obtain resource efficiency) which is necessary for efficient utilization of
resources and time. This disjointed approach meant that project activities were duplicated and repetitive
and there were knock-on delays among activities that relied on the completion of other preceding activities.
Secondly, project costs were underestimated and as a result, scope had to be reduced by at least 20 per cent
to fit into the budget. Management underestimated the number of activities, time and effort needed to
complete the project by not considering the risks of using new technology leading to repetition of new
design works. Additionally, according to the National Audit office (2016), the cost schedule was unrealistic
because it was not based on a bottom-up understanding of what the works would involve.
Thirdly, the programme board was not provided with adequate information to monitor implementation and
manage risks. According to the report by the National Audit office (2016), information was not in
accordance with principles of the earned value management approach. According to Reichel (2006), this
approach enables project managers to estimate the expected completion date and cost using trend analysis
and burn rate. By not using this approach, the board was not able to have proper oversight over
implementation (costs and activities) and therefore there was lack of coordination between managers of the
individual projects. For example, by the time a plan was completed, new trains had been ordered two years
before, electrification work had been started a year earlier, surveys had to be redone as they were not
detailed enough, and infrastructure work had been grossly underestimated (British Broadcasting
Corporation, 2016). Risks were poorly managed as the programme progressed.
This report will use the SWOT (Strengths, Weaknesses, Opportunities and Threats) technique to identify
risks in the next section (table 3). Secondary information has been sourced from reports, articles and
publications on the programme during its implementation (Network Rail ,2018b; British Broadcasting
Corporation, 2016; National Audit office, 2016; Rail Technology Magazine, 2017; UK House of Commons,
2017). Information on possible risks can also be obtained from log sheets, incident reports, stakeholder
feedbacks and focus group discussions.
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Table 3
SWOT analysis of risks in the GWRMP
Note: The analysis was conducted using information from reports, articles and publications on the
programme during its implementation (Network Rail ,2018b; British Broadcasting Corporation, 2016;
National Audit office, 2016; Rail Technology Magazine, 2017; UK House of Commons, 2017).
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Both PMBOK and ISO 21500:2012 identify risk registers as one of the outputs of a risk identification
process. According to Project Management Institute (2017), a risk register may include but is not limited
to list of identified risks, potential risk owners and list of potential risk responses. An example of a risk
register for the programme created based on the above identified risks from SWOT analysis is provided in
the following sections (risk response):
3.3 Analysis of key risks in the GWRMP
Cole (2011) described the GWRMP as the most challenging and complex modernization programme ever
undertaken on the UK railway from a risk perspective. According to Project Management Institute (2017,
p.428), “risk analysis is the process of numerically analysing the combined effect of identified individual
project risks and other sources of uncertainty on overall project objectives.” Projects that can be considered
as inputs include assumptions log, basis of estimates, cost estimates, cost forecasts, duration estimates,
milestone list, resource requirements, risk register, past risk reports and schedule forecasts. ISO 21500:
2012 (ISO, 21500: 2012, p.25) states that “the purpose is to measure and prioritize risks for further action
including probability of occurrence and consequence for project objectives.”
A risk assessment of the programme in 2018 by Network Rail, the infrastructure manager of the project,
identified safety, performance, political/reputation and value to be the areas of risk concern at programme
level (Network Rail, 2018b). The rating of each risk is presented in a risk heatmap as show in figure 2
below.
Figure 2
Risk heatmap of the GWRMP
T is target risk position
N is current risk position (net)
Risk colour codes
High risk
Medium risk
Low risk
Note: Extracted from Network Rail (2018b). Safety, political/ reputation and value risks are rated medium
and border towards high risk; the target is to reduce to medium. Performance is rated high risk; the target
is to reduce to medium.
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According to Project Management Institute (2017), the output of a risk analysis is the risk report. The risk
manager should submit a risk report with planned risk responses to the programme board for oversight
purposes.
3.4 Responses for the key risks identified
PMBOK (Project Management Institute, 2017) defines risk response as the process of developing options,
selecting strategies and agreeing on actions to address risk exposure. ISO (21500: 2012) states that it is the
determination of options to increase opportunities and reduce threats. One of the outputs of this process is
the risk register alongside change requests, project management plan update and risk report. An example
of a risk register for the programme based on the above identified risks from SWOT analysis is as below
(table 4):
Table 4
Sample risk register with responses for the GWRMP
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Note: The table was created using information from reports, articles and publications on the programme
during its implementation (Network Rail ,2018b; British Broadcasting Corporation, 2016; National Audit
office, 2016; Rail Technology Magazine, 2017; UK House of Commons, 2017). As shown in table 2 above,
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the risk register contains responses to the identified risks. According to ISO (21500:2012), risk treatment
proposes measures to avoid, mitigate, deflect or develop contingency plans to be used if risk occurs.
3.5 Monitoring risks
According to PMBOK (Project Management Institute, 2017) monitoring involves tracking response plans,
analysing new risks and evaluating risks processes. Similarly, ISO 21500:2012 uses the term control risks
and defines it as determining whether risk responses have the desired effect. The programme managers
should monitor progress continuously and apply appropriate risk responses to ensure that residual risks are
within the risk appetite of the programme.
4.0 Summary and conclusion
This report has provided a brief background of the Great Western Route Modernization Programme
(GWRMP) which was one of the largest and most complex public projects of its kind. Its failures drew
public attention and calls for changes in the way the project was managed. Under-performance was caused
by poor risk management in planning, cost management and governance. This report has provided a
description of the project environment by briefly reviewing literature on the risk-nature of railway projects.
It has outlined different project management methodologies briefly reviewed three that are most widely
used and finally applied project management processes outlined in the PMBOK guide to critique the
management of the programme through identification, analysis and preparation responses to risks have been
simulated based on information that is available from secondary sources of literature on the programme.
4.1 Recommendations on programme risk management.
The following section provides recommendations on how the programme should manage the inherent and
residual risks going forward. Its makes suggestions in three areas.
First, to ensure that risk management is coordinated organization-wide, Network Rail should ensure that
project risks are effectively managed at portfolio level, with a single policy document covering entire
project cycles. This will ensure that risk management is embedded in all activities and functions of the
organization and risks are aggregated at board level to inform strategy. The integration of risk management
and strategy is supported by the Enterprise Risk Management (ERM) integrated framework which defines
ERM as “culture, capabilities and practices, integrated with strategy-setting and performance that
organizations rely on to manage risk in creating, preserving and realizing value” (Anderson and Frigo,
2020, p.2). Top management at Network rail should embrace the systems thinking approach which supports
the idea of organizational management by analysing how a system’s constituent parts interrelate rather than
splitting process into parts. It facilitates fact-based decision making and is suitable for delivery of complex
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projects with many stakeholders (Government Office for Science, 2012). According to this approach, a
systems’ performance is a product of reinforcement and balance. Feedback is an important and necessary
component of this approach. For example, project monitoring can facilitate the effecting of controls and
corrective action to adjust processes and improve the system (feedback loop).
Secondly, Network Rail should instigate measures to improve its cost estimation and schedule management
techniques. This can be improved by strengthening the role of second line assurance teams in reviewing
information from first line assurance teams. This will ensure that there is triangulation and querying of
information between assurance teams such as evaluators and auditors (third line) and risk management
teams (second line) (Frazer-Nash Consultancy, 2019).
Finally, to enhance governance by the board audit and risk committee, Network Rail should ensure that all
essential programmatic information is readily available to board members and all essential members of
management. Processes of escalation and early warning should be documented and information sharing
should be automated to improve timeliness of reporting.
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Appendices
Appendix 1: Modernisation route
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Appendix 2: Expected benefits of the GWRMP
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