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Gautrain Project briefing The Gautrain Project delegation provided background information on the Gautrain Rapid Rail Link Project. Following this, they provided an overview of the proposed Geatrain system. It was estimated that approximately 130000 passenger trips would be made on the Gautrain each day. It was noted that the Project would be conducted through a public private partnership. The Bombela Consortium had been selected as the preferred bidder, and it was hoped that the final contract would be signed in late 2005 . If this took place, construction could begin in early 2006. It was hoped that the entire project would be completed by AprilMay 2010 . The estimated cost of the Gautrain was R 20 million. However, this estimate probably would not rise any further as the contract with the Bombela Consortium would be a fixed cost contract. The delegation added that the Gautrain would form part of an integrated provincial transport system. A Departmental delegation briefly outlined their view of the Gautrain Project. Cabinet had not yet approved financial assistance for the Gautain Project. It first wanted to ensure that the Project would lead to economic development, promote investment in infrastructure, contribute to South Atrica's transport systems alleviate the use of private cars; and create jobs. The Department noted that Cabinet would be taking a decision on the Gauteng Project before the end of the year. In the ensuing discussion, Members raised issues around the Gautrain Project and the 2010 World Cup. It was noted that there were no legal obligations on South Atrica to complete the Gautrain by the 2010 Worid Cup. Members also enquired about certain detalls surrounding the public private partnership and funding. Some Mombers were concerned that goverrment would perhaps be burdened with an unequal share of the risk Members also enquired why the Motrorail could not be updated to operate rapid link trains; what the provincial patronage guarantee entailed, how many sustainable jobs would be created; and whether the middle-class target market would uso the train. The Commitlee was also concerned about the huge expense of the Project. There were other transport issues, relating to the needs of poorer commuters, which also needed to be addressed. The Chairperscen noted that the Committee had been following the developments around the Gautrain Project. To date, the Gautrain Project had been conducted as a provincial init ative and, as a result, most of the oversight work had been undertaken by the provincial legislature and local govemment authorities. Nonetheless, the Comm ittee had called the Gautrain Project to Parliament because it was of natonal interest. The Chairperson stated that Cabinet would be taking a decisian on whether to commence with the Gautrain Project during December, Indeed, It was possible that construction on the Gwutrain could begh in January 2006. Ideally, the Committee would have wanted greater engagement with the Gautran Project, but due to time constraints this would not be possble. The. Chairperson noted that the Mnister of Finance had stated that the Gautain Project would cost approximately R 20 bilion. However, the entire 200405 transport budget was only R 4.67 billion. This money would be spent to ensure that six to seven million possengers a day received some form of transport. He noted that public transport was under.capitalised and, at times, unsafe lndeed, there was an ongoing crisis with transport in South Africa. In the light of this crisis, the Commitee needed to be responsible in its approach to the Gautran Project. The Chaiperson noted that the Tshwane, Johannesburg, and Ekurthuleni municipalities officially supported the Gautrain Project. Nonetheless, during a Committee oversight visit to Johannesburg and Tshwane cerlain municipal olficials had privately, and in their personal capacity, expressed reservations about the Gauttain Prcject. They folt that it complicated their spa6ial planning. Nonetheless, they felt that the Gautrain Project would commence, despite their reservaticns. Added to this, certain concems about the Gautrain Project had been raised in the City of Johannesburg's Integrated Transport Plan. Similar sentiments were also expressed in the Tshwane Integrated Transpert Plan. In fact, the Tshwane Plan stated that the City supported the Gautrain Project, despite their perception that there was little consulation. The Conmiltee's caution appeared to be shared by some other ensibes, but for cifterent reasons. Indeed, the estimated costs of the Gautrain Project had risen wer the years. In addition, there was now a certain degree of pressure for the Gautrain Project to be undertaken. The Chaiperson added that one perhaps needed to guard against the Gautrain Project being used by other provinces as a precedent to embark on simlar projects. Mr J Van Der Merwe (Gautrain Project Leader) provided background information to the Gautrain Project. This included highlighting the objectives of the Gautrain Project, which were to alleviate severe road traffic congestion; demonstrate government's cortmitment to public transport; increase Gauteng's economic growth; to create employment, to promote the Gautrain Project would contribute toward urban restructuring, link Tshwane to Johannesburg; uplift th 1annesburg and Tshwane central business districts; and link Johannesburg to the International Airport. The Gautra ject could also be a calalyst to generate new resources for the promotion of public transport. Mr Van Der Merw hlighted that the Tshwane, Johannesburg and Ekurhuleni municipalities officially supported the Project. - Van Der Merwe provided an overview of the Gautrain's proposed system. The Gautrain would run on an internationa andard gauge line and would be capable of reaching 180km. It was estimated that there would be 134000 passenge ps on the Gautrain per day. Most of these passengers would be people that were currently using motor vehicles to trave and from work. In order to attract these people, ample park and ride facilities would be consiructed. Approximately 250 uses would be commissioned to shuttie these people from the parking facilities to the Gautrain stations. Added to this, aternational tourists and business people would be the target market for Gautrain running between Rosebank and the ohannesburg International Airport. Mr Van Der Merwe added that the Gautrain would have a positive impact on the orovince's economy. Approximately 130000 permanent and temporary jobs would be created. It was estimated that the Gautrain would increase Gauteng's gross domestic product by approximately one percent. Mr Van Der Merwe noted that the cost of the Gautrain Project had initially been estimated at R 7 billion. However, there had been various cost increases, which had occurred due to Environmental Impact Assessment (ElA) requirements, the rising cost of property, and the inclusion of VAT into the construction elements. In 2002, the estimated cost had risen to R 12 billion. Recently, the Minister of Finance had estimated that it would cost government R 20 billion to develop the Gautrain over a five-year period. However, it was unikely that the estimated cost would not rise any further, as the contract with the preferred bidder would be a fixed price lump sum contract. Mr Van Der Merwe then discussed the affordability of the Gautrain. It was noted that the Gauteng government would have to borrow funds for the Gautrain. The Minister of Finance had agreed to this in principle. Added to this, the Department of Transport's Cabinet memo had been approved in principle. Mr Van Der Merwe added that the Gautrain formed an intogral part of South Africa's 2010 World Cup bid. The International Federation of Football Federations (FIFA) had reconmended that the Gautrain form the backbone of the Gauteng public transport system for the World Cup. Mr Van Der Menwe outlined the Gautrain Project's funding detals. Public sector funding for the Project's capital cost would be gamered from three sources, which were from the Gauteng Province's budget: Provincial borrowing from the national government, and a conditional grant from the National Treasury via the National Department of Transport. The privafe sector would be investing approximately R 3.9 bilion in capial costs; however, they wculd be undertaking operational risk. Mr Van Der Merwo highlighted that the Gautrain was incorporated into certain sections of the Provisional Land Transport Framework (PLTF). Indeed, it was also aligned with the Gauteng Spatial Development Framework; the Gauteng Transport Strategy; the Gauteng Strategic Public Transport Network, and the Gauteng Integrated Land-use and Transport Framework; the affected municipalites' Integrated Transport Plans; the affected municipalises' Integrated Development Plans; and the Airport Company's plans. A Publio Transport integration Task Team had also been established to investigate how the Gautrain could be integratod within strategic land-use and transport interventions. Mr Van Der Merwe noted that negotiations were underway with Bombela Consortum to fnalise the concession agreement. It was hoped that construction on the Project would begin in early 2006 . The construction period would be approximately 54 months. As a result, it was hoped that the entire Gautrain system would be operational by AprilMay 2010. Source: Parliamentary Monitoring Group (2005) Gauttain Projecti briefing [online]. Available from: Answer ALL the questions in this section. Question 1 You have been assigned by Mr Van Der Merwe to assist him with implementing risk management on the project. He tells you that he is really concerned about the project budget and he is not sure how much it will cost to complele the project. He asks you for your suggestion. Response should be not more than 2 pages 1.1 As an experienced Risk Management Professional, what recommendations will you suggest to Mr Van Der Merwe and justify your response? 1.2 Discuss at least 5 risks based on the case study considering the most appropriate risk (10 marks) identification structure and populate a risk register showing the risk type, category according to the risk identification structure selected, risk description and impact? 1.3 Using the risk register above, propose values for the probability of occurrence (Statice value) as (10 marks) well as for the impact in ZAR millions (Static value) and calculate the total amount of contingency required (expected monetary value) for the 5 risks identified in millions of Rand based on the static values? Question 2 (25 Marks) One of the key aspects of the risk management process which the project should be using as an essential tool, is risk modelling. Using appropriate diagrams, propose a risk model showing all the relevant inputs and outputs for this risk model that the project should use? Response should be not mare than 2 pages Question 3 (25 Marks) When it comes to risk registers with aggregation, there are two core approaches namely aggregation with slatic values and aggregation of risk-driven occurrences. Differentiate between the two core risk aggregation approaches stated above using examples? Response should be not more than 2 pages Quostion 4 Response should be not more than 2 pages 4.1 The case study is an example of where a risk model will be most applicable to quantify the risks. (10 marks) This is due to the nature and magnitude of the decision to be taken. However, the risk model will only be useful if the model is fully integrated. Summarise the building block of risk quantification that should be integrated? 4.2 The case study mentions several variables that may affect the outcome of the Gautrain project significantly. Therefore, it is essential that the decision makers understand what happens if any of the variables change. This is where sensitivity analysis is very useful. Using examples from the case study, summarise 3 benefits and 2 drawbacks of sensitivity analysis in this case? (15 marks) Tabulate your responses Gautrain Project briefing The Gautrain Project delegation provided background information on the Gautrain Rapid Rail Link Project. Following this, they provided an overview of the proposed Geatrain system. It was estimated that approximately 130000 passenger trips would be made on the Gautrain each day. It was noted that the Project would be conducted through a public private partnership. The Bombela Consortium had been selected as the preferred bidder, and it was hoped that the final contract would be signed in late 2005 . If this took place, construction could begin in early 2006. It was hoped that the entire project would be completed by AprilMay 2010 . The estimated cost of the Gautrain was R 20 million. However, this estimate probably would not rise any further as the contract with the Bombela Consortium would be a fixed cost contract. The delegation added that the Gautrain would form part of an integrated provincial transport system. A Departmental delegation briefly outlined their view of the Gautrain Project. Cabinet had not yet approved financial assistance for the Gautain Project. It first wanted to ensure that the Project would lead to economic development, promote investment in infrastructure, contribute to South Atrica's transport systems alleviate the use of private cars; and create jobs. The Department noted that Cabinet would be taking a decision on the Gauteng Project before the end of the year. In the ensuing discussion, Members raised issues around the Gautrain Project and the 2010 World Cup. It was noted that there were no legal obligations on South Atrica to complete the Gautrain by the 2010 Worid Cup. Members also enquired about certain detalls surrounding the public private partnership and funding. Some Mombers were concerned that goverrment would perhaps be burdened with an unequal share of the risk Members also enquired why the Motrorail could not be updated to operate rapid link trains; what the provincial patronage guarantee entailed, how many sustainable jobs would be created; and whether the middle-class target market would uso the train. The Commitlee was also concerned about the huge expense of the Project. There were other transport issues, relating to the needs of poorer commuters, which also needed to be addressed. The Chairperscen noted that the Committee had been following the developments around the Gautrain Project. To date, the Gautrain Project had been conducted as a provincial init ative and, as a result, most of the oversight work had been undertaken by the provincial legislature and local govemment authorities. Nonetheless, the Comm ittee had called the Gautrain Project to Parliament because it was of natonal interest. The Chairperson stated that Cabinet would be taking a decisian on whether to commence with the Gautrain Project during December, Indeed, It was possible that construction on the Gwutrain could begh in January 2006. Ideally, the Committee would have wanted greater engagement with the Gautran Project, but due to time constraints this would not be possble. The. Chairperson noted that the Mnister of Finance had stated that the Gautain Project would cost approximately R 20 bilion. However, the entire 200405 transport budget was only R 4.67 billion. This money would be spent to ensure that six to seven million possengers a day received some form of transport. He noted that public transport was under.capitalised and, at times, unsafe lndeed, there was an ongoing crisis with transport in South Africa. In the light of this crisis, the Commitee needed to be responsible in its approach to the Gautran Project. The Chaiperson noted that the Tshwane, Johannesburg, and Ekurthuleni municipalities officially supported the Gautrain Project. Nonetheless, during a Committee oversight visit to Johannesburg and Tshwane cerlain municipal olficials had privately, and in their personal capacity, expressed reservations about the Gauttain Prcject. They folt that it complicated their spa6ial planning. Nonetheless, they felt that the Gautrain Project would commence, despite their reservaticns. Added to this, certain concems about the Gautrain Project had been raised in the City of Johannesburg's Integrated Transport Plan. Similar sentiments were also expressed in the Tshwane Integrated Transpert Plan. In fact, the Tshwane Plan stated that the City supported the Gautrain Project, despite their perception that there was little consulation. The Conmiltee's caution appeared to be shared by some other ensibes, but for cifterent reasons. Indeed, the estimated costs of the Gautrain Project had risen wer the years. In addition, there was now a certain degree of pressure for the Gautrain Project to be undertaken. The Chaiperson added that one perhaps needed to guard against the Gautrain Project being used by other provinces as a precedent to embark on simlar projects. Mr J Van Der Merwe (Gautrain Project Leader) provided background information to the Gautrain Project. This included highlighting the objectives of the Gautrain Project, which were to alleviate severe road traffic congestion; demonstrate government's cortmitment to public transport; increase Gauteng's economic growth; to create employment, to promote the Gautrain Project would contribute toward urban restructuring, link Tshwane to Johannesburg; uplift th 1annesburg and Tshwane central business districts; and link Johannesburg to the International Airport. The Gautra ject could also be a calalyst to generate new resources for the promotion of public transport. Mr Van Der Merw hlighted that the Tshwane, Johannesburg and Ekurhuleni municipalities officially supported the Project. - Van Der Merwe provided an overview of the Gautrain's proposed system. The Gautrain would run on an internationa andard gauge line and would be capable of reaching 180km. It was estimated that there would be 134000 passenge ps on the Gautrain per day. Most of these passengers would be people that were currently using motor vehicles to trave and from work. In order to attract these people, ample park and ride facilities would be consiructed. Approximately 250 uses would be commissioned to shuttie these people from the parking facilities to the Gautrain stations. Added to this, aternational tourists and business people would be the target market for Gautrain running between Rosebank and the ohannesburg International Airport. Mr Van Der Merwe added that the Gautrain would have a positive impact on the orovince's economy. Approximately 130000 permanent and temporary jobs would be created. It was estimated that the Gautrain would increase Gauteng's gross domestic product by approximately one percent. Mr Van Der Merwe noted that the cost of the Gautrain Project had initially been estimated at R 7 billion. However, there had been various cost increases, which had occurred due to Environmental Impact Assessment (ElA) requirements, the rising cost of property, and the inclusion of VAT into the construction elements. In 2002, the estimated cost had risen to R 12 billion. Recently, the Minister of Finance had estimated that it would cost government R 20 billion to develop the Gautrain over a five-year period. However, it was unikely that the estimated cost would not rise any further, as the contract with the preferred bidder would be a fixed price lump sum contract. Mr Van Der Merwe then discussed the affordability of the Gautrain. It was noted that the Gauteng government would have to borrow funds for the Gautrain. The Minister of Finance had agreed to this in principle. Added to this, the Department of Transport's Cabinet memo had been approved in principle. Mr Van Der Merwe added that the Gautrain formed an intogral part of South Africa's 2010 World Cup bid. The International Federation of Football Federations (FIFA) had reconmended that the Gautrain form the backbone of the Gauteng public transport system for the World Cup. Mr Van Der Menwe outlined the Gautrain Project's funding detals. Public sector funding for the Project's capital cost would be gamered from three sources, which were from the Gauteng Province's budget: Provincial borrowing from the national government, and a conditional grant from the National Treasury via the National Department of Transport. The privafe sector would be investing approximately R 3.9 bilion in capial costs; however, they wculd be undertaking operational risk. Mr Van Der Merwo highlighted that the Gautrain was incorporated into certain sections of the Provisional Land Transport Framework (PLTF). Indeed, it was also aligned with the Gauteng Spatial Development Framework; the Gauteng Transport Strategy; the Gauteng Strategic Public Transport Network, and the Gauteng Integrated Land-use and Transport Framework; the affected municipalites' Integrated Transport Plans; the affected municipalises' Integrated Development Plans; and the Airport Company's plans. A Publio Transport integration Task Team had also been established to investigate how the Gautrain could be integratod within strategic land-use and transport interventions. Mr Van Der Merwe noted that negotiations were underway with Bombela Consortum to fnalise the concession agreement. It was hoped that construction on the Project would begin in early 2006 . The construction period would be approximately 54 months. As a result, it was hoped that the entire Gautrain system would be operational by AprilMay 2010. Source: Parliamentary Monitoring Group (2005) Gauttain Projecti briefing [online]. Available from: Answer ALL the questions in this section. Question 1 You have been assigned by Mr Van Der Merwe to assist him with implementing risk management on the project. He tells you that he is really concerned about the project budget and he is not sure how much it will cost to complele the project. He asks you for your suggestion. Response should be not more than 2 pages 1.1 As an experienced Risk Management Professional, what recommendations will you suggest to Mr Van Der Merwe and justify your response? 1.2 Discuss at least 5 risks based on the case study considering the most appropriate risk (10 marks) identification structure and populate a risk register showing the risk type, category according to the risk identification structure selected, risk description and impact? 1.3 Using the risk register above, propose values for the probability of occurrence (Statice value) as (10 marks) well as for the impact in ZAR millions (Static value) and calculate the total amount of contingency required (expected monetary value) for the 5 risks identified in millions of Rand based on the static values? Question 2 (25 Marks) One of the key aspects of the risk management process which the project should be using as an essential tool, is risk modelling. Using appropriate diagrams, propose a risk model showing all the relevant inputs and outputs for this risk model that the project should use? Response should be not mare than 2 pages Question 3 (25 Marks) When it comes to risk registers with aggregation, there are two core approaches namely aggregation with slatic values and aggregation of risk-driven occurrences. Differentiate between the two core risk aggregation approaches stated above using examples? Response should be not more than 2 pages Quostion 4 Response should be not more than 2 pages 4.1 The case study is an example of where a risk model will be most applicable to quantify the risks. (10 marks) This is due to the nature and magnitude of the decision to be taken. However, the risk model will only be useful if the model is fully integrated. Summarise the building block of risk quantification that should be integrated? 4.2 The case study mentions several variables that may affect the outcome of the Gautrain project significantly. Therefore, it is essential that the decision makers understand what happens if any of the variables change. This is where sensitivity analysis is very useful. Using examples from the case study, summarise 3 benefits and 2 drawbacks of sensitivity analysis in this case? (15 marks) Tabulate your responses