1. The document discusses the Delaney Tires Storage project at PT Inco in Indonesia. The project involved constructing large tire storage facilities to store over 1,800 tires and support PT Inco's production goals. 2. Project risks were managed using both the Project Management Institute's approach and PT Inco's own project management procedures. Risk management involved planning, identification, analysis, response planning, and monitoring of risks. 3. The tire storage project is now over 95% complete and will be closed out in early July 2008 within budget despite complexities involving large earthworks, civil works, and fire protection systems.

1. Project Risk Management at Delaney Tires Storage; the Combination
between PMI Approach and PT Inco Project Management Procedures
Habibie, Ir., IP, Agung Setyawan, Ir
PT Inco Central Engineering DP.08, Sorowako, South Sulawesi 92984, Indonesia
Andi Erwin Syarif, Ir, IP., MT
PT Inco Government Relation, DP.23, Sorowako, South Sulawesi 92984, Indonesia
ABSTRACT:
PT Inco Indonesia was established in July 25, 1968. Presently, PT Inco is in their way of the
second contract of work with Indonesian Government up to 2025. The total area contract of work
is 218,528.99 Ha, have been divided into three provinces, Central Sulawesi Province is 36,635.36
Ha, South Sulawesi Province is 118,387.45 Ha and South East Sulawesi province is 63,506.18
Ha.
Our company vision is strive to provide a safe, healthy and stimulating work environment that
maximizes opportunities to enhance PT Inco’s success as a high quality nickel producer. We take
pride in promoting environmental responsibility and advancing safety in a whole company
operation area. PT Inco is committed to ensuring that it will operate in a clean, healthy and safe
work environment; will take necessary steps and invest approximately to meet its environmental
obligation.
PT Inco has been investing capital expenditures to support Nickel Mining production in achieving
200 million pounds production target at 2010 by constructing new Tires Shop and Tires Storage
Facilities. These 2 facilities will be the world largest facilities in the world of Mining Industry.
Tires Shop ownership is Mining Department and the new Tires Storage will be owned and
operated by Warehousing and Logistic Department.
Central Engineering section as the part of Support and Engineering Services Department at PT
Inco has been doing development of these facilities for more than 2 years. Especially for Tires
Storage facilities, Project Manager, the author of this abstract has been working for
implementation of Project Risk Management throughout Project Life Cycle starting from Risk
Management Planning, Risk Identification, Qualitative and Quantitative Risk Analysis, Risk
response Planning and Risk Monitoring and Control. Currently, we are 95% in construction phase
and will close out the project by early of July 2008.
From this session, it is an opportunity to combine and compare Project Risk Management process
between PMI approach and PT Inco Project Management Procedures, also presenting the
complexity of project compared with the competency level of Project Manager who is the author
of this abstract. The key performance of this project will be quality, quantity, time frame,
resources usage, costs and safety performance during project life cycle.
The lessons learned of this project will be conducted during project life cycle and ensured by the
end of project phase this is recorded and presented to all project Managers and Management of
PT Inco to ensure the same old mistakes won’t be repeated in the current and future projects.
Key words: tires storage, risk management planning, risk identification, qualitative and
quantitative risk analysis, risk response planning, risk monitoring and controlling, safety, and
lessons learned.
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2. 1. PT Inco Profile; One of the World’s potential and achieve outstanding results
Premier Nickel Producers for our Company.
1.1. General Overview We will strive to provide a safe, healthy
and stimulating work environment that
PT Inco for more than three decades, since maximizes opportunities to enhance PT
the signing of its Contract of Work with the Inco’s success as a high quality nickel
Indonesian Government in 1968, the producer.
Company has provided skilled jobs, shown
concern for the needs of the communities in We take pride in promoting environmental
which it operates, benefited shareholders responsibility and advancing community
and contributed positively to the Indonesian development.
economy.
1.3. Mission
PT Inco produces nickel in matte, an
intermediate product, from lateritic ores at We will meet our commitment to:
its integrated mining and processing
facilities near Sorowako on the island of  Investors through sustainable and
Sulawesi. Its entire production is sold in US consistent long-term earnings
Dollars under long-term contracts for growth.
refining in Japan. PT Inco’s competitive  Employees by ensuring safe,
strengths include abundant ore reserves, a healthy and rewarding work.
skilled, well-trained workforce, low-cost  Customers by meeting our
hydroelectric power, modern production obligations with respect to the
facilities and an assured market for its quality and timely delivery of our
product. products.
 Indonesia through responsible
The Company is owned 60,80 percent corporate citizenship, fulfilling our
owned by CVRD Inco, 20,1 percent owned Contract of Work commitments and
by Sumitomo Metal Mining Co. Ltd, 17,9 community and environmental
percent owned by publics and The others responsibilities.
are owned by consortium of 4 Japanese
Company. PT Inco is committed to ensuring that it
will operate in a clean, healthy and safe
Through the strength of our people and work environment; will take necessary
resources, we strive to be a safe, reliable, steps and invest approximately to meet its
and profitable growth-oriented primary environmental obligation
nickel producer.
2. PT Inco’s Commitment in
1.2. Vision Environmental around Contract of
Work
PT Inco intends to remain a leader among
multinational businesses based in Indonesia 2.1. Environmental Management in
by consistently producing high returns on Mining Land Operation
investment while adhering to strong
corporate values. The commitment is spelled out in the
Company policy relating to environment,
We will realize our vision by enabling health and safety stating that PT Inco is
employees to reach their full career committed to sustainable development
2

3. concept, taking into account the equitable In 2003, PT Inco created standardization of
balance between economic growth and post mining area reclamation which has
sound handling of human health and been certified by Directorate General of
environmental protection Mining to meet the demand for an optimum
result entirely. It consists of best practice of
post mining area reclamation activities.
Since then, the activities became an un-
separated part of mining plan until
execution level.
Up to the end of 2005 PT Inco Tbk has re-
vegetated 2.844 hectares of post mining
areas. PT Inco Tbk has cooperated with
PSl-UNHAS and The Biotechnological
Forest Laboratorium IPB in doing repeated
Figure 1 - Nursery Activities for Mining surveys and studying the reproduction of
Rehabilitation many local endemic plants to support the
local endemic revegetation program.
The policy necessitates PT Inco not only to
meet, but whenever possible, to surpass PT. Inco always tries to integrate the post
environmental national standard established mining area reclamation program with the
by existing regulation. community development program so
people can take advantages from the
PT Inco is committed to ensuring that it company. The company invited Mr. Zukri
will operate in a healthy environment, by Saad (consultant, former Executive
conducting continual improvement on the Director of WALHI), to evaluate the
living environment performance, in the reclamation program and to give
form of Post Mining Areas Rehabilitation, recommendation over reclamation program
Sediment Control, Liquid Waste Control as which is integrated with community and
well as Dust Emission Control. local government development program.
Figure 2 - Plantation of Work in Post Mining Land
Figure 3 - Areas Rehabilitation Status at the End of
Since the post mining area reclamation was 2004 PT International Nickel Indonesia
started on 1980, PT Inco has conducted Performance Monitoring Post Mining Areas
continual improvement on their Re-vegetation Status Q4 - 2004
performance with sustainable development
principle. When the post mining area
reclamation was started, they focused on
erosion control. Since then many efforts has
been done to improve the performance.
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4. The other program is Hydrocarbon
Management which is ensuring that all the
hydrocarbon use must comply with
environmental regulation by Indonesian
Law. The scopes of the program covered in
Environmental Management Standard –
EMS 01 produced by PT Inco with the
purposes are:
a. To ensure all Hydrocarbon facilities at
PT Inco recorded in a Central PTI
Hydrocarbon Management Register
that will be accessible and kept up to
date.
b. To ensure all Hydrocarbon facilities are
subject to a formal environmental risk
assessment and that appropriate control
are implemented.
3. Support and Engineering Services
Department of PT Inco; Place for
Managing the Capital Projects
3.1. General Overview
Support and Engineering Services (SES)
provides support to the entire PTI
Figure 4 – ADITAMA Reward Gold Achievement
from Energy and Mineral Resources Department,
organization in the form of Capital Project
Republic of Indonesia, year of 2007. Management, Engineering services,
Construction Services, Fabrication,
Maintenance System support and Shutdown
2.2. Environmental Management in Planning. There are approximately 500 PTI
Processing Plant Area employees in the department, while
approximately another 500 people are
In the year of 2006, PT Inco also Achieve managed through contractors.
the Gold of Aditama Reward from Energy
and Mineral Resources Department, 3.2. Vision
Republic of Indonesia due to the successful
in controlling the erosion and managing the Excellence in selection, installation and
sedimentation in during Mining maintenance of Assets required by PTI to
exploration, operation and post mining meet is vision. A team of highly skilled,
operation. energized professionals delivering this
Support Safely, reliably and predictably.
PT Inco also had been doing the installation
of new high technology called Off Gas 3.3. Mission
Cleaning System throughout all the
Processing Plant System starting from Provide Asset Management Support to the
Furnace System since year of 2004. The entire PTI organization in the form of
objective of this project is to reduce the Capital Project Management, Engineering
amount of gas emission produced by the services, Construction Services,
process plant operation. Fabrication, Maintenance System support
and Shutdown Planning.
4

5. e. Effective and efficient maintenance
shutdowns every time.
INCO CAPITAL PROJECT DEVELOPMENT PROCESS
f. Effective People meeting personal
and organizational goals.
INCEPTION
IDEA / OPPORTUNITY Q /A
MANAGEMENT GATE 1
- OPPORTUNITY REVIEW NO
- RISK RANKING 1
- BUSINESS PLAN FIT
YES
( CAPITAL REVIEW TEAM / MANAGEMENT APPROVAL )
4. Delaney Tires Storage Project
PRELIMINARY NO
MANAGEMENT GATE 2 FEASIBILITY STUDY Q /A
PRELIMINARY REVIEW
- EVALUATION OF ALTERNATIVES NO
- RISK ASSESSMENT 2
4.1. The Background and Key Objectives
- BUSINESS PLAN FIT
- STRATEGIC PLAN FIT YES
( CAPITAL REVIEW TEAM / MANAGEMENT APPROVAL )
VIABILITY
TECHNICAL FEASIBILITY STUDY
MANAGEMENT GATE 3 Q /A
FEASIBILITY REVIEW YES
- PROJECT VIABILITY NO
Anticipating the tires crisis for few years
3
- BUSINESS PLAN FIT
- STRATEGIC PLAN FIT
( CAPITAL REVIEW TEAM ) YES
CAR PREPARATION period, SCM needs to maintain the tires
stock level until we get the long-term tires
Q /A
NO
MANAGEMENT GATE 4
4
CAR APPROVAL
YES supply contract. The desirable storage must
ORGANIZE PROJECT
Reject & File be able store more than 1,800 pieces of big,
PROJECT KICK-OFF
EXECUTION
medium and light tires. The new tires
ENGINEERING / PROCUREMENT Q/A PEER REVIEWS
storage will be able to support 200 Mlbs
production rate in year of 2011. The final
/ PROJECT QUALITY PLAN
CONSTRUCTION
desirable objective is to increase the tires
COMMISSIONING Q /A
life usage since the new area will provide
MANAGEMENT GATE 5
OWNER ACCEPTANCE
( CARE, CUSTODY & CONTROL )
5
shelters and pavements to protect the tires
YES
START-UP / RAMP-UP
from direct sunrise, rain, and any spillage
on that location.
COMPLETION
POST PROJECT REVIEW
Q /A
TURN-OVER
NO
Some critical items were considered in the
YES
design to meet the desirable Tires Storage
facilities (Q&A):
CLOSE-OUT
QUALITY
MANAGEMENT GATE 6 ASSURANCE
OWNER FINAL ACCEPTANCE
YES
6 Q /A PEER
REVIEWS  The storage can store larger quantity of
ARCHIVE PROJECT Q /A
tires requires larger area of storages to
MARCH 31, 2004
meet adequate storage and handling
procedures. The storage and handling
procedures have met the tires
Figure 5 – Inco Capital Project Development manufacturer's recommendation.
Process
 Tires and rubber products are subject to
ageing. The new storage will ensure
3.4. Goals and Objective this kind of product to be stored
properly.
a. Capital Projects delivered safely, on  Tires products must be protected from
time, on budget and meeting the direct sunrise and extreme temperature.
owner’s expectations. Therefore we designed covered shelter
b. Safe, cost effective, timely and high for this purpose.
quality delivery of construction  The location should be considered free
projects. from wet, oily and greasily, humidity
c. Installation of the Asset Management that can reduce the tires quality. We
Framework. provided storage with proper pavements
d. Support for the operating departments inside the shelters and impermeable
to maintain PTI’s assets to fulfill the base entire access road.
stakeholders’ sustainability  Tires storage may become breeding
expectations. grounds for insects, rodents and other
animals. Mosquitoes in particular are
5

6. capable of transmitting diseases to  Project Monitoring and Controlling :
humans. We ensure the storage area has during project life cycles
proper drainage and free from ponding.  Project Closeout : September 2008
 The tires asset is US $ 20,000,000. The
storage requires fire prevention system. The project has been handed over to
operation (CCC) by middle of July 2008
and Closed out Memo by middle of August
4.2. Scope of Works and Status 2008.
4.2.1. Scope of Works Budget:
The original scopes are to construct the Amended CAR was approved for
proper Tires Storage Facilities in $1,270,000
accordance with standard storage and Expenditure + commitment to date: around
handling design requirements. $1,330,000
 Land clearing, excavation, haulage and
backfilling work for more than 50,000 4.3. Project Risk Management at
M3 Delaney Tires Storage Project
 Civil/Structural: to provide tires storage
shelter complete with tires backrest and Project risk is an uncertain event or
proper pavement, drainage, fencing 800 condition that, if it occurs, has a positive or
meters long. a negative effect on at least one project
 Mechanical: to provide fire protection objective, such as time, cost, scope, or
system in accordance of NFPA quality. A risk may have one or more
requirements. The system will include causes and, if it occurs, one or more
the fire storage tank, diesel engine impacts.
pump, piping, separated fire block walls
and other related facilities. Project Risk Management comprised of 5
 Electrical: to provide grounding system phases that is classified to Planning Phase
around the storage area Group.
4.2.2. Status
Safety:
Total man-hours = more than 90,000 hours
 CV Mahalona = 90,000 hours (Delaney
Tires Storage)
 PT Lintech = 3,000 hours (Installation
of 420 kL of Water Tanks at Delaney)
DI = NIL
MA = NIL
RI = NIL
Schedule:
 Project Initiation : June 2006
 Project Planning : July 2006
 Project Execution : October 2006
Design phase : October 2006
Tendering/contract: January 2007
Construction : February 2007
Commissioning : July 2008
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7. b. Other environmental factor to
consider, many projects were
running and also required special
attentions to get it finished
otherwise the number of resources
such as manpower, materials,
budget, equipment and tools were
not sufficient.
2. Organizational Process Assets
The existence of Project Manager’s
department is only supporting
department since PT Inco core business
is focusing in on going operation to
producing Nickel Matte product
(Process Plant and Mining
Department).
3. Project Scope Statement
Described in 4.1 and 4.2
4. Project Management Plan
Project management plan questioned
and answered about:
 Kinds of project management
process selected by project team?
The project scope management will
Figure 6: Project Risk Management Overview be conducted by Central
Engineering team after having
4.3.1. Risk Management Planning intensive meeting with project
Risk Management Planning is the process sponsor regarding product
of deciding how to approach and conduct descriptions, background and
risk management activities for a project. project objectives. After having
scope and WBS defined, the Project
Inputs Tools and Outputs
Techniques Manager moved to design and
1. Enterprise Planning meetings Risk drawing phase to accommodate all
environmental and analysis management
factors plan the scope requirements as per
2. Organizational project objectives. Tendering and
process assets
3. Project scope contracting out to contractor were
statement the next phase and project close out
4. Project management
plan will be the last phase as per PT Inco
Figure 7: Risk management Planning: Inputs, project management procedures.
Tools and Techniques, and Outputs  How’s the technique of
4.3.1.1. Risk Management Planning: communication among
Inputs stakeholders? Communication is
maintained via intensive meeting
1. Enterprise Environmental Factors (daily, weekly and monthly),
a. The existing organization is communication can be continued
categorized as composite via email, extension phone or via
organization. The staffs who written (site query, if it occurs
worked for Project Manager of this between Project Manager and
project were also working for other Contractors).
projects that were led by other  The model of project organization
Project Managers. structure? It is defined in figure 7.
7

8.  List of materials equipments to be and Operability to ensure project
purchased and who are going to phases and end of products to comply
supply? Project Manager listed all with PTI EHS policy and Major
materials and equipments for Hazard Standard (EHS).
purchase and addressed it to SCM –
Procurement Departments. 4.3.1.2. Risk Management Planning:
Tools and Technique
1. Planning Meetings and Analysis
Project Manager and team hold
planning meetings to develop risk
management plan. Attendees at these
meetings may include selected project
team members and stakeholders,
anyone in the organization with
responsibility to manage risk planning
and execution activities, and others, as
needed.
4.3.1.3. Risk Management Planning:
Outputs
Figure 8 - Failure to Communicate Scope
1. Risk Management Plan
The risk management plan will discuss
Owner: J. Rusdadi
GM of Warehousing and Logistics about:
a. Methodology of doing the project
starting from scope development
Sponsor: Ichsan Azis phase, budget submission, design
Manager of Warehousing and drawing phase, construction
phase, commissioning, hand over to
operation until project close out.
Project Manager b. Roles and responsibilities. Every
Ir. Habibie, IP team members have their own type
of activity, assign people and
his/her roles, and clarifies their
Project Engineer
responsibilities.
Construction Manager c. Budgeting. Assigned resources and
Agung Setyawan, Ir Yusri Yusuf
accurate estimate as per project
scope, schedule and risk during
project life cycles should be
Design Engineer: Contractor: factored.
Agung Setyawan (Civil) PT. Mahalona d. Timing. Defined when risk
Oesman Reza (Mechanical), PT. Lintech Duta Pratama management process will be
Dahlan (Electrical)
performed throughout project life
cycles, and established risk
management activities to be
Figure 9 - Simple Project Organization Chart of included in project schedule.
Delaney Tires Storage Project
e. Risk categories. Risk breakdown
structure was provided to ensure a
 What are the Environmental, Health comprehensive process of
and Safety Impact? Project Manager systematically identifying risk to a
established HSE Evaluation/Hazard consistent level of details.
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9. f. Definitions of risk probability and Engineer will need to specify the
impact. PT Inco has risk ranking specification of diesel engine fire
matrix to be used for analyzing the pump since the mechanical and
rate of risk in every activities instrument part should follow the
throughout project life cycle. latest technology so we can obtain
the engine and pump spare parts
easily.
c. Complexity and interfaces
 Project Manager worked
together to specify the
requirements of each scope of
works consist civil/structural,
mechanical and electrical
discipline. Also required to
establish the sequence of
construction to ensure the work
can be done properly to meet
quality and schedule.
 Excavation, haulage, backfilling
and compaction work more than
50,000 M3 was a huge major
earth work and required special
attention since land sliding has
been happening few decades at
Figure 10: Risk Breakdown Structure PT Inco area. Required to
establish proper planning of
4.3.2. Risk Identification execution and geotechnical
Risk identification determines which risks investigation before then to
might affect the project and documents identify the characteristic of
their characteristics. soils.
d. Performance and reliability
From Risk Breakdown Structure (RBS) we Required to ensure the performance
can identify the risk in each category as and reliability of all related
follows: equipments and materials which
were purchased comprehensively to
1. Technical ensure the new storage facilities
a. Requirements will achieve 25 years design life.
The requirement can be defined as e. Quality
per scope of work as described in Quality assurance and quality
4.2.1. Special requirement was to control should be established during
provide complete fire protection procurement and construction
system comprised of 420 kL of phase. The specification of steel
water tank, fire pump and hydrant structure, concrete specifications,
were the requirement to ensure the piping, fire pump were reviewed
new facilities covered by closely.
insurances. 2. External
b. Technology a. Subcontractors and Suppliers
The new Delaney Tires Storage will The construction contracts were
have complete fire protection divided in two contracts:
system as per NFPA requirements.  PT Mahalona (Local
Project Manager and Mechanical Contractor) worked for Earth
works, civil/structural,
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10. mechanical piping and facility has met the objectives of
grounding installation. The business case and has been operated
erection of structural work with for PT Inco long term objectives in
200 tons total erection and term of tires stock management and
50,000 M3 earth work were tires quality maintenance.
really big challenge for local e. Weather
contractor since this was Weather was also a significant risk
categorized a high risk work. which was taken in to account.
Project Manager took a risk to During earth work and construction,
get this work done utilizing the contractor had factored the
local contractor rather than weather since it was rainy season on
experienced national contractor that time. Especially for earth work
 PT Lintech Duta Pratama (compaction work), it was difficult
worked for 420 kL of water tank to get optimum compaction if the
fabrication and installation. The water content of soil was very high.
contractor is specialist in doing Also the risk of having the
tank so there’s no significant equipments did excavations while
challenge for this kind of work. the area was very slippery and
b. Regulatory unstable.
PT Inco was committed to improve 3. Organizational
safety regulation throughout all a. Project dependencies
operation activities in contract of Project Manager must factor the
work area. Major Hazard Standard sustainability of PTI business
(MHS) and General EHS Standard operation as the number one
was developed and socialized for priority. In addition, there were also
implementation for all design, so many operating and capital
construction and operation projects were running and need
activities. Here are listed the MHS equal attentions to finish to meeting
and General EHS as mandatory to cost, schedule and safety. In this
follow during project life cycle situation, Project Manager looked at
 MHS 03 Road Condition bigger picture and integrated
 MHS 05 Electrical thinking to be more tolerant to other
 MHS 06 Working at Height projects if those were required to
finish based on the urgency and
 MHS 07 Confined Spaces
importance of the project related to
 MHS 08 Lifting and Supporting PTI business need.
Loads c. Resources
 MHS 10 Slope Stability PT Inco is a composite project
 MHS 12 Boilers and Pressure organization model. Project
Vessels Managers are having multiple
 MHS 15 Rotating and Moving projects and also other resources
Equipments such as Engineers, Designer,
 EHS 01 Hydrocarbon Procurement Analyst have different
Management projects. Project Managers must be
c. Market agile to adapt with all project team
Not applicable members if they want to succeed
d. Customer their projects. Equipments and
The customer or Project Sponsor of materials were also major factors
this project was Warehousing since they were also used by other
section and owned by PT Inco projects.
Warehousing and Logistics d. Funding
Department. The new storage
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11. The source of funds for this project
was coming from Capital
Appropriation Request (CAR)
approved by PT Inco Management.
Project Manager. Project Manager
did second CAR Amendment due to
location moved from Palapa Area to
Delaney area which was the new
area was green field (re-vegetated
area) and out of utilities services.
The extensive scopes of works and
rate of settlements (geotechnical
matter) in this new area were very
significant to revised budget
addition.
e. Prioritization
Described in organizational, project
dependencies.
4. Project Management
a. Estimating
The level of estimate was very
Figure 11 : Hazop Deviation Matrix
important to project successful.
Project Manager did estimate three
times due to change of proposed
storage location caused additional c. Controlling
scope of works increased Project monitoring and controlling
significantly. There were more than is defined as phase to monitor and
200% increased cost from original control all activities in each project
budget. phase to ensure everything is
b. Planning meeting planning process. Change
Planning process comprised of of project location (from Palapa
project scoping phase, sequence of area to Delaney area) as requested
activities, estimating, procurement by PTI Management decision was
plan, Hazard and operability recorded to integrated change
(HAZOP) and risk ranking review. control, scope verification due to
Risk of each design and additional works, schedule
construction activities can be adjustment and cost impact were
identified using Hazard and documented properly in this process
Operability (HAZOP) form as a group. Poor project documentation
technique to identify and rank the will lead Project Manager into big
risk during planning process. problem since the company also has
been auditing the improper
procedures or lack of
implementation project delivery
system around PT Inco.
d. Communication
Described in 4.3.1.1 Risk
Management Planning: Inputs
4.3.3. Qualitative Risk Analysis
11

12. Qualitative risk analysis includes methods
for prioritizing the identified risk for further
action.
Risk ranking matrix will show the risk
score in every design or construction
parameters. If the level of consequence is 3
or 4 and frequency is 3 or 4 then this
parameter should be prioritized for further
action or recommendation.
4.3.4. Quantitative Risk Analysis
Quantitative risk analyzes the effect of
those risk events and assigns a numerical
rating to those risks. It also presents a
quantitative approach to making decisions
in the presence of uncertainty.
The Project Manager didn’t use this process
in the project since all risks are certain and
could be predicted.
4.3.5. Risk Response Planning
Risk response planning is the process of Figure 12: Risk Ranking Matrix
developing options, and determining actions
to enhance opportunities and reduce threats
to the project’s objectives. Risk response
planning addresses the risk by their priority,
inserting resources and activities into the Implementation of risk response planning
budget, schedule, and project management during planning process group of the project
plan, as needed. as follows:
1. Avoid. Risk avoidance involves
changing the project management plan
to eliminate the threat posed by an
adverse risk, to isolate the project
objectives from the risk impact, or to
relax the objective that is in jeopardy,
such as extending the schedules or
reducing scope.
12

13. Management
Project
Organization
External
Technical
1. Transfer. Risk transference requires
shifting the negative impact of a
threat, along with ownership of the
response, to a third party.
2. Mitigate. Risk mitigation implies a
reduction in the probability and/or
maintainable.
communication
stakeholders of the project to ensure
Improved
location.
didn’t take responsibility on changing the
services and green area. The Project Manager
Delaney Area which was the area out of utilities
decision on moving from Palapa Area to
Asked Owner and Project Sponsor to take
and base of access road and storage base
organization ) to do haulage process for sub base
Asked
location due to the location was disposal area
Engineer to assess existing land for storage
work and earth work. 2. Asked Geotechnical
1. Selected contractor that is qualified in erection
Risk Avoidance
impact of an adverse risk event to an
acceptable threshold.
3. Acceptance. A strategy that is
adopted because it is seldom to
Mining operation (internal PTI
communication
eliminate all risks from a project.
This strategy indicates that the
and
project team has decided not to
change the project management plan
to deal with risk.
information
between
4.3.6. Risk Monitoring and Controlling
Risk Monitoring and Control is the process
of identifying, analyze and planning for
are
all
newly arising risks, keeping track of
identified risks and those on the watchlist,
resources to do the
have
since PT Inco didn’t
work to contractor
Released construction
requirement
system for insurance
design of fire protection
consultants to review the
Asked
Risk Transfer
reanalyzing existing risks, monitoring trigger
conditions for contingency plans, monitoring
residual risks, and reviewing the execution of
independent
adequate
risk responses while evaluating their
effectiveness.
Project Manager did some tools and
purchasing team, port, shipment, etc
didn’t have adequate resources such as
equipments and materials since contractor
section) to provide procurement of
Let internal organization (procurement
completely defined.
engineering to ensure all requirements are
Performed in-house scope development and
Risk Mitigation
technique to ensure the project risks could be
resolved during project execution consisted
of:
1. Weekly Progress Meeting
Project Manager and team conducted weekly
project meeting to discuss the progress of the
project including discussion about risks,
particularly threats, how to deal with it and
better solution so the risks didn’t impact the
deliverables of the project (schedule delay,
cost, or poor quality of works).
construction phase.
additional scope during
the budget estimate to allow
To establish contingency in
around PTI contract of work
prevent social conflicts
To utilize local labour to
Risk Acceptance
2. Risk Audits
Project Manager and team established and
maintained Safety Layer Audit (SLA)
Program during construction phase to ensure
the project complied with Major Hazard
Standard (MHS) which are the highest
commitment of PT Inco in safety policy and
procedures. This audit was conducted once a
Figure 13: Risk response Strategy versus
Risk Breakdown Structure week by Project Manager and Team.
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14. 4.4. Final Product of Delaney Tires Storage
The final products of this project are:
2. New storage area 2.5 Ha comprised of
access road, storage compartments,
fencing around storage. The total volume
of excavation and backfilling work for
this area were around 50,000 M3.
3. Storage compartments made from
structural steel and paving block
pavement which are able to store more
than 1,800 each of big and medium tires
for heavy and medium equipments. The
maximum size of tires diameter 2600
mm outside diameter. The total weight of
structural steel works are around 200
tons. Every storage compartments to be
grounded by loop system.
4. Fire protection system consisted of:
 Fire piping (above ground used 50
meters long carbon steel pipe and
underground used 300 meters long
ductile iron pipe with mechanical
joint connection).
 420,000 liters of cylinder water tank
made from mild steel plate (8 meters
diameter and 8.5 meters high).
 Fire pumps which are able to give
1850 g-pm during an hour of
duration.
 Fire hydrant (4 units). Each unit
consisted of 2 wye valve hydrant
(given pressure: 500 g-pm/each for
primary hydrant and 250 g-pm/each
for secondary hydrants).
 Portable Fire Extinguisher are
available in every 2 bays of storage
compartments.
 Fire separated walls installed in
every 3 bays of compartments
(installed fire block walls for every
120 each of tires).
Figure 14: Delaney Tires Storage Layout
and Cross Section
4.5. Lessons Learned Obtained from Project
Life Cycles
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15.  Project Manager is not experienced in
this case, to ensure risks are identified
and resolved, He involved Technical
Experts, Senior Project Manager and
Engineering Manager during project
life cycles as places for advices and
suggestions.
 The changes of scope of work and
change of location had increased the
costs significantly. In this case, PTI
Management should be having proper
planning on where they were going to
put these facilities to meet company
business need. Project Manager and
Team were victims of improper
planning.
 Required to determine or identify the
risks since early beginning to ensure the
risks can be controlled and monitored
that can impact schedule, quality, scope
addition and cost. Project Manager has
utilized PMBOK Third Edition as
guidance for proper Project Risk
Management combined with PT Inco
Project Management Procedures.
Reference:
1
Project Management Body of Knowledge,
3rd Edition. Project Management Institute,
Four Campus Boulevard, Newton Square,
USA, 2004
2
Capital Project Owner’s and Sponsor’s
Handbook. PT International Nickel
Indonesia, 2005
3
Engineering Procedures Manual. PT
International Nickel Indonesia, 2006
4
PT Inco website: http://www.pt-
inco.co.id/new/profil.php, 2006.
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