Integrated Risk Management Frameworks ISO 9001:2015 as a

Successful Parameter in Project Management: The Case of Yamal

Train 3 Project

Prastiwo Anggoro

and Gatot Yudoko

PT. LANCANG KUNING SUKSES, PROJECT DIVISION, Batam Center, Batam, Indonesia

School of Business and Management, Institut Teknologi Bandung, Indonesia

Keywords: Efficiency of cost, Schedule achievable, Construction sequence, PM BOK 6

edition, ISO 9001 :2015,

Integrated Risk Management.

Abstract: Purpose: Managing Risk has become one of main concern in application of Project management. Risk could

be mitigated, eliminated or even controlled, to do so as project manager require skills based on different

approach or frameworks. In this paper we propose to integrate two major frameworks of managing risk,

namely ISO 9001:2015 standard clause 6.1 and Project Management Book of Knowledge 6

edition.

Design/Methodology/approach – An integrated framework is developed by analysing and synchronizing

contributing factors of risks, including from internal organization or external organization, and performing

qualitative measurement and obtaining expert judgement. The proposed framework is then applied to a

construction project called Yamal Train 3 Project consist of 23 electrical house (E-house) and tight schedule

within 17 months. Findings – The integrated risk management should identify risk factors in very early stage

of construction sequence, register as ISO document and perform qualitative of risk effect onto project.

Practical implications - The impact of application integrated risk management is organization has contingency

reserve budget, utilize various resource to mitigate and lower down risk impact. Originality/Value – from

conceptual point of view, this study aims at unifying an integrated Risk Management from two frameworks

PM Bok 6

edition and ISO standard approach, while from the practical point of view, it provides application

of the proposed framework on construction project by showing how business organization mitigate risk to

obtain efficiency of cost and schedule achievable.

1 INTRODUCTION

The Yamal LNG integrated project is a natural gas

liquefaction plant with a capacity of 16.5 million tons

per year developed based on gas reserves within the

South Tambey (Tambeyskoye) Field in Russia.

Yamal LNG Train 3 consists of 23 electrical house

(E-house) blast resistant buildings, 3 E-House non-

blast resistant buildings, and 3 transformed non-blast

resistant buildings, owned by Novatek Consortium

with Russia holding 50.1% of the shares, France

holding 20.0%, and China holding 29.9%. Siemens

Pte. Ltd., as the main contractor for the Train 3 sub-

project of Yamal LNG, developed 2 fabrication yards

at Batam Island, Kepulauan Riau Province, within a

period of at least 17 months (Phase 1 until Phase 5).

For the fabrication process, Siemens Pte. Ltd.

engaged more than 30 subcontractors with different

discipline tasks: quality should comply with

international codes and standards such as ASME, BS

EN, NPB, and Russian Federation Regulation,

employing safety measures with a goal of zero lost-

time incidents, use of lean engineering, and

management of the supply chain.

PT. XYZ has awarded 3 different scope of works

on Yamal Train 3 Project consist of Architectural

works, HVAC (Heating, Ventilation, and Air

conditioning) system fabrication and installation

works, and piping installation works. Due to tight and

overlap schedule, PT. XYZ has problem to complete

of Yamal Train 3 project and suffer of 41% cost

overruns in term of manpower cost. Zhenhua Rui, Fei

Peng, Kegang Ling, Hanwen Chang, Gang Chen and

Xiyu Zhou (2016) mention Many oil and gas projects

experienced significant cost overruns, which is a

major concern for the industry. The average cost

Anggoro, P. and Yudoko, G.

Integrated Risk Management Frameworks ISO 9001:2015 as a Successful Parameter in Project Management: The Case of Yamal Train 3 Project.

DOI: 10.5220/0010861900003255

In Proceedings of the 3rd International Conference on Applied Economics and Social Science (ICAESS 2021), pages 26-31

ISBN: 978-989-758-605-7

overrun of the projects is 18% with a standard

deviation of 29%.

PT. XZY has business core of integrated

architectural supplier and contractor, therefore PT.

XZY has stock of skill manpower, specified tools and

specified equipment to perform architectural works in

quality manner. Enlargement of scope works as

HVAC and piping insulation contractor has

contribute to negative risk occurs during construction.

Variance of manpower required, tools and equipment

create gap from budget cost and actual cost.

Furthermore, to avoid occurring in next phase, PT

XZY should perform risk management analysis based

on data primer and data secondary collected in each

phase. Data primer such as key performance index

taken from labour amount required per subjected

activities, time to finished of activity, required tools,

and scale quantity of activity. Data secondary obtain

from material supply chain and availability of

specified skill resources.

Project management book of knowledge 6

edition created by Project management institute, has

consist of 5 process group and 11 knowledge area.

One of knowledge area is Risk Management, has 2

process group which in planning and

monitoring/control. Input of risk planning is Project

charter which is contain project document level 1, and

limited distributed only to project sponsor, main

consultant and main contractor. Its create gap on

producing risk planning for second layer of contractor

such as PT. XZY. Tender document only limited

information and sometimes information scutterd

could bring false data and un-shown risk.

ISO Standard 9001:2015, shown Plan Do Check

and Act process, has identify risk as business process.

Risk factors input from organization and it context,

customer requirement, and need/expectation of

revelant stakeholder. However, ISO standard clause

6.1 stated , the organization shall plan actions to

address risks but there is no formal method for risk

management.

Frameworks of ISO 9001:2015 can be as early

input for organization to determine of potential risk

will be occurs in on coming project. Registered as risk

analysis should be using Frameworks of PM BOK 6

edition in planning of project, during project and

controlling process of project.

This research uses two approaches, ISO

9001:2015 and Project Management Book of

Knowledge 6th edition. These approaches aim to

analyze the risks that occur during project

implementation. The project held in identified high-

risk levels were opportunities that are also very high.

ISO 9001:2015 appears as a variable that affects the

conditions and risks as the probability that exists in

the project. Thus, this research appeared to see how

ISO 9001:2015 can be a treatment that affects risk

management in a project. So that, ISO 9001:2015 can

be a parameter of the success of a project.

Then, the Project Management Book of

Knowledge 6th edition is a reference in identifying

the risk management of a project. These two

approaches are used simultaneously to show the

difference in probability and consequence level of a

project.

2 LITERATURE REVIEW

2.1 Risk Management based on PM

BOK ® 6th Edition

PT. XYZ realize a project (Architectural works) has

risks factor to be identify and analysed, even when

simultaneously another project (Piping Insulation and

HVAC Fabrication & Installation works) awarded to

PT. XYZ, risks factor become more complex and

wider with varying degrees of risk matrix. When

unmanaged, these risks have the potential to cause

deviation cost of plan budget and at the end effect to

overruns budget, in this case shown 41% manpower

cost has negative deviation (plan budget vs total

deviation cost). To undertaking of those risks, Plan

Risk Management become important issues to solve

in early stage.

Plan risk management is one of process in project

risk management overview to defining how to

conduct risk management activities for a project (s).

this process is performed in planning process group

start by inputs, tools and techniques and outputs as

describe flow below:

2.2 Risk Management based on ISO

9001:2015

The author underlines important items on planning

stage as on clause 6 Planning item 6.1 Action to

address risks and opportunities (SNI ISO 9001:2015,

page 8) and Annex A.4 Risk based thinking (SNI ISO

9001:2015, page 39) as stated below:

Integrated Risk Management Frameworks ISO 9001:2015 as a Successful Parameter in Project Management: The Case of Yamal Train 3

Project

1. Determine the risks and opportunities that need

to be addressed to:

a. Give assurance that the QMS (quality

management systems) can achieve its intended result

(s).

b. Enhance desirable effects

c. Prevent or reduce undesired effects

d. Achieve improvement

2. The risk-based thinking applied in this SNI ISO

9001:2015 standard has performance-based

requirements

3. Based on clause 6.1 of the SNI ISO 9001:2015

standard, the organization shall plan actions to

address risks but there is no formal method for risk

management. The Organization can adopt a more

extensive risk management methodology through the

application of other guidance or standards.

The authors propose to extensive risk

management methodology by adopting PM BOK ®

6th Edition guidance, in coherence by using risk

matrix 5 x 5 complete with 3 level of risk start from

low risk (green color), medium risk (purple color) and

high risk (red color) matrix below :

Table 1: Matriks

The matrix table above shows the levels of

probability and sense consequence. Probability is the

possibility that it will occur / the chance of risk

occurred due to a job or activities that make it possible

to do something. Consequences are the result of the

risk that will occur. So, a job can cause an impact that

can be adjusting according to the matrix above.

Referring to the table above, there are 3 levels in

the risk matrix: the high-risk level in the red zone, the

purple medium risk level, and the green low-risk

level.

High-risk describes that the higher probability,

then the higher the consequence, at this level

represented in numbers 12-25. Next, medium-risk,

probability, and consequence in normal conditions, at

this level represented in numbers 5-9. then low-risk,

the lower the probability, the lower the consequence,

at this level represented in numbers 1-5.

3 METODHOLOGY

3.1 Framework Building

To build a new framework integrating ISO standard

9001:2015 and PM BOK 6

edition, this study

employed literature review and project case lesson

learn. The literature review contributed of risk

management matrix, risk register form and impact on

project objectives analysis.

Data input of literature review shown the risk

matrix and impact as below:

3.2 Integrated Risk Management

This paper proposes a new risk management

framework; Integrated Risk Management of ISO

standard and PM BOK. The conceptual frameworks

below shown collect data from lesson learn register

of each job scope which is captured during

construction of project. The Lesson learned register

analysis of each job scope, to determine if any

deviation gap reference to time schedule, budget and

quality. Risk register as ISO 9001:2015 document

raised up due to Management Meeting which is

brainstorming session from Director level into Head

of department to consider if any VUCA (Volatility,

Uncertainty, Complexity and ambiguity) factor has

potential to disrupt company process.

ICAESS 2021 - The International Conference on Applied Economics and Social Science

There are 3 step of risk management to analyse risk

1. Risk management Stage 1

• Conduct in tender stage

• Items to analyse: Tender document such as

specification, country of origin, approved

vendors list, scope of works, etc.

• Participant: Procurement team, project

manager, Managing Director

• Objectives:

o To identify preliminary risk occurred

based on past project experience

o To categories risk based on document

tender

2. Risk Management Stage 2

• Conduct in Kick of Meeting (once awarded

to PT. XYZ)

• Item to analyse: Project charter, past

experiences, lesson learned of other

progress, etc.

• Participant: Project manager, Project

Engineer, Construction Manager, Client

Person in charge, Consultant, Etc.

• Objectives:

o To breakdown risk items based on work

breakdown structure

o To set parameter of risk percentage

allowed

o To generate 5x5 risk matrix.

o Elaborate risk items in IMS (Integrated

Management System) ISO 9001:2015

and ISO 45001 :2018 form no: IMS-

CSK-MR-FM-10-Rev.02

3. Risk Management Stage 3

• Conduct in Internal Meeting (Scheduled on

monthly meeting)

• Item to analyse: daily report, progress report,

lesson learned update report, etc.

• Participant: Project manager, Project

Engineer, Construction Manager,

Supervisor, Foremen, etc.

• Objectives:

o To update regularly risk occurred during

construction period into IMS (Integrated

Management System) ISO 9001:2015

and ISO 45001: 2018 form no: IMS-

CSK-MR-FM-10-Rev.02

o To Monitor and control action plan to

decrease risk level based on IMS

(Integrated Management System) ISO

9001:2015 and ISO 45001: 2018 form

no: IMS-CSK-MR-FM-10-Rev.02

4 RESULTS

The author summarize data’s above and create risk

management plan based on PM BOK ® 6th Edition

page 405 as shown table below:

Table 2.

Risk Management Plan

Date of Approval DD/MM/YYYY Date of Revision DD/MM/YYYY

Name of Project Proposed Engineering, Procurement, Construction and

Commissioning Project of Architectural Works, Piping Insulation

and HVAC Fabrication & Installation works at Siemens

Fabrication Yard Batam Island.

Approved by Director PT XYZ Prepared by Head of Department

PT. XYZ

Risk Strategy Integrated Management System (IMS) ISO 9001:2015

PMBOK ® Guidance 6th Edition

Roles and Responsibilities IMS-CSK-HRD-FC-01 Rev. 01

IMS-CS

-HRD-FM-22-Rev. 02

Funding Maximum 3% - 5% from Project Value to perform activities

related to establish protocols for the application of contingency

lan and management reserves. (based on Contract practice

usually company should allocate 5% of contract price as warranty

/ guarantee value. This funding considers as Risk value to allow

Project team utilize it in case of risk occurred)

Time Risk Management Stage 1 conduct on tender stage

Risk Management Stage 2 conduct on Kick of meeting (Awarded

PO)

Risk Management Stage 3 conduct on monthly basis (project on

rogress)

Risk Categories Risk categories

1. External such as Government Act and

regulations, environmental, market condition and

Political condition

2. Internal such as Workman ship, customer

satisfaction, ISO

3. Technical such as new equipment related to

working activities, imposed of digital technology to

construction process.

4. Unforeseeable such as other risks occurred

(around 9% to 10% can be unforeseeable risks)

Risk Appetite

Categories

Risk Appetite Categories

1. Very High: Very significant impact on overall

project

2. High: Significant impact on overall project

3. Medium: Some Impact in functional areas

4. Low: Minor impact on overall project

5. Very Low: Minor impact on specific task

6. 6. Nil: No Change

Reporting format IMS-CS

-MR-FM-10-Rev. 02

Tracking Daily Report

Monthly Progress Report

Lesson Learned report

Integrated Risk Management Frameworks ISO 9001:2015 as a Successful Parameter in Project Management: The Case of Yamal Train 3

Project

Furthermore PT. XYZ enlargement risk analysis

onto reporting format based on Integrated

Management System (IMS) ISO 9001:2015 ISO

45001:2018 document number IMS-CSK-MR-FM-

10-Rev. 02, as per data on project chapter and inputs

of project risk management plan.

The potential risk due the change of

organizational structure due to enlargement of

business scope into integrated of 3 major scope for

Engineering, Procurement, Construction and

Commissioning project at Siemens Fabrication Yard

Batam Island has data shown below:

• Consequence value = 5

• Probability value = 4

• Risk Priority number =20

• Table 3.5 Risk management matrix value =

Red colour (high Risk)

• Table 3.7 Definition for value of risk matrix

and impacts = Time to consumption > 5

month with Cost more than IDR 1 billion

and affected to very significant to overall

project.

After taking risk treatment or mitigation process

in purpose to decrease level of consequence and level

of probability such as:

• Preparation for new infrastructure to support

new scope of works by joint venture with

existing company which is has experience of

new scope (to decrease level of probability)

• Create integrate project chapter for 3 major

scopes (to decrease level of consequence)

• Engage professional team (to decrease level

of consequence)

Risk data decrease as shown below:

• Consequence value = 3

• Probability value = 3

• Risk Priority number =9

• Table 3.5 Risk management matrix value =

Purple colour (medium Risk)

• Table 3.7 Definition for value of risk matrix

and impacts = Time to consumption 1 - 3

month with Cost within IDR 250 million to

IDR 500 million and affected to certain of

functional areas.

Table 3.

Description Before Afte

Consequence

Value

5 3

Probabilit

Value 4 3

Risk Priority

umbe

20 9

Matrix Table 3.5 Hi

h Ris

Medium Ris

Matrix Table 3.7 Time to

consumption

> 5 month

with Cost

more than

IDR 1 billion

and affected

to very

significant to

overall

project.

Time to

consumption

1 - 3 month

with Cost

within IDR

250 million

to IDR 500

million and

affected to

certain of

functional

areas.

5 CONCLUSIONS

Each Project has a unique factors and different

complexity. Risk factors has contributed to failed of

project due poor management and overlook risk

factor in initiation, planning and execution process.

To avoid this, integrated as opposed to have more

views risk source and create performance

management during project execution.

Responding to this need, this study proposes a

new model for risk management that integrated risk

framework of ISO 9001:2015 approach and Project

Management Book of Knowledge (PM BOK) 6

edition approach.

To access the suitability of the frameworks, is was

applied to the Yamal Train 3 Project of PT. XYZ. By

applying of integrated frameworks, the company was

able to identify potential risk in early stage as

business issues and register to ISO form which is

perform on management review yearly. Furthermore,

on tender stage by using project charter, the company

perform qualitative analysis and create Risk

Management Plan as per PM BOK guidance.

Decreasing of potential risk level has contributes

to efficiency of project cost, schedule achievable and

sufficient amount of professional manpower. PT

XZY has suffered 41% cost overruns in term

manpower cost, and after new integrated risk

management cost simulation cost overruns become

lower. Mitigation, eliminate and control of risk pre

ICAESS 2021 - The International Conference on Applied Economics and Social Science

project, during and post project has main key to

successful application of integrated risk management.

REFERENCES

Zhenhua Rui, Fei Peng, Kegang Ling, Hanwen Chang,

Gang Chen and Xiyu Zhou, 2016. Investigation into the

performance of oil and gas projects. Journal of Natural

Gas Science and Engineering.

Project Management Institute, 2017. The Project

Management Body of Knowledge, sixth Edition, Project

Management Institute Inc.

Integrated Risk Management Frameworks ISO 9001:2015 as a Successful Parameter in Project Management: The Case of Yamal Train 3

Project