Qualitative Risk Analysis:

Refer to the following risk matrix below:

Read through the case study on the Panama Canal construction.

a) List five (5) risks to the project (irrespective of whether the project team was aware of them). Relate these risks to the matrix by placing the cell number next to each risk in. Use the format (X, Y) i.e. (Consequence, Likelihood) where X and Y have values ranging from 1 to 5. Alternatively, you may create your own Excel spreadsheet and enter the risks directly into it.

b) How should the project team have addressed the two (2) most severe risks, viz. floods and malaria, right at the beginning of the project (assuming that they were aware of them)?

Here is the case study below:

Ethical Issues from the Panama Canal Failure

2. WHAT HAPPENED When the geography of the new world was revealed to European colonists, the social, economic and political value of a short-cut from the Atlantic to the Pacific Ocean was obvious. It was a long voyage from Europe to the Orient around Cape Horn; the southern tip of South America. A much shorter route through that sliver of the continental divide that we now call Panama was a very enticing prospect. In the early 19th century a German scientist, Alexander von Humboldt, was perhaps the first to articulate a passage from the Atlantic to the Pacific through Central America. Such a passage would reduce a voyage from New York to California from about 13,000 miles around Cape Horn to one of about 6,000 miles through Central America. J. Paul Guyer 2012 5 There were three routes suggested for a canal between the Atlantic and Pacific oceans in the late 1800s: (1) across Panama, which at the time was a province of Columbia; (2) across Nicaragua, and (3) across the isthmus of Tehuantepec in Mexico. There were important political and commercial forces favoring one route or another. The United States government had undertaken engineering surveys and investigations of all three routes and knowledgeable professional engineers in the United States were generally disposed to favor the Nicaragua route. An important engineering consideration favoring the Nicaragua route was the existence of a natural lake, Lake Nicaragua, which would accommodate a substantial distance of the coast-to-coast route of a canal. In 1878, with essentially no engineering investigation, French interests obtained through what might be characterized as political influence, an exclusive concession from the government of Columbia to build a canal across the isthmus of Panama. This was known as the Wyse concession. The Wyse concession was negotiated by a Frenchman, Lieutenant Lucien Napoleon-Bonaparte Wyse, who was not a professional engineer but was well-connected in French political circles by virtue of being related to Napoleon Bonaparte. The Wyse concession was an agreement whereby the government of Columbia granted a consortium of French commercial and government interests an exclusive right to construct and operate a maritime canal across the isthmus of Panama for 99 years. The route that the canal was to follow was the same as that of the Atlantic-to-Pacific Panama Railroad which was constructed 25 years earlier. The only engineering surveys, investigations and studies that had been undertaken along the proposed route of the canal were those that had been undertaken earlier for construction of the railroad. It goes without saying that engineering surveys and investigations needed for surface construction of a railroad are much different and less comprehensive than those needed for construction of a monumental canal with massive excavation requirements and earth structures. The only investigation of the proposed route of the canal by French interests was an 18-day inspection in the course of which no hydrographic, topographic or soils surveys, studies or investigations were undertaken. It is not unreasonable to say that even the most junior of civil engineers J. Paul Guyer 2012 6 would immediately recognize that the surveys undertaken for construction of the Panama Railroad were wholly inadequate for planning a trans-isthmus maritime canal. For a variety of reasons the Tehuantepec route was the least favored. Ostensibly in an attempt to reach an international consensus on the most advantageous route and configuration for a trans-oceanic canal, French commercial and government interests convened an international congress in Paris in 1879. French interests largely controlled the allocation and distribution of delegates to the conference. Twenty two countries were represented at the congress by 136 voting delegates, but of that number 73 were French and less than a quarter were professional engineers. More importantly, a Technical Committee was formed that would essentially determine the conclusions of the congress regarding the two primary engineering issues: (a) the most favorable route and (b) whether a sea level canal would be constructed or one that incorporated locks. Fifty two (52) delegates were appointed to the Technical Committee by the organizers of the congress and more than half were French. The organizers of the congress appointed the Frenchman Ferdinand DeLesseps, the guiding force behind the earlier construction of the Suez Canal, as the chairman of the Technical Committee. The question of locks requires some explanation. Contrary to a common misunderstanding, locks were not a consideration because of a difference in sea level between the Atlantic and Pacific sides of the isthmus. Mean sea level is the same on both the Atlantic and Pacific sides. Tides, however, are much more pronounced on the Pacific side. On the Atlantic side of the isthmus the differential between high and low tide is less than 4 feet. On the Pacific side it is between 10 and 20 feet. This tidal fluctuation creates a serious operational challenge for a trans-oceanic canal in Central America. Locks incorporated into a trans-oceanic canal are, and at the time were recognized as, an engineered solution to this issue. After two weeks of deliberations the French-controlled Technical Committee recommended, and the French-controlled delegates voted in favor of, a sea level canal (i.e. without use of locks) across the isthmus of Panama as the most practicable and J. Paul Guyer 2012 7 preferred route for a trans-oceanic canal based on the Wyse concession. Only 19 of the 73 French delegates were professional engineers, and only one of them had ever set foot in Central America. None of the five French delegates who were members of the prestigious French Society of Engineers voted in favor of the Wyse concession proposal. Since French interests had an exclusive right to construct such a canal across the isthmus of Panama (the Wyse concession) it was a given that French interests would control such a canal. A French Panama Canal company was thereupon formed to raise the financing for, and design, construct and operate such a sea level canal. To lead the company the renowned but elderly Frenchman, Ferdinand DeLesseps was appointed as its president. DeLesseps had conceived the scheme to construct the Suez Canal and successfully lead its design and construction effort. In 1879, however, Ferdinand DeLesseps was 73 years old. The French company raised and expended about $5.7 billion (unless otherwise noted, all costs quoted herein are in terms of estimated 2010 U.S. dollars) from private investors and government sources. Construction started in 1882 with a labor force of about 20,000. The enterprise collapsed in 1889 with the work about 40 percent completed and a death toll estimated at 22,000. The assets of the French company were sold to the United States government in 1904 for about $1 billion. The United States then successfully undertook to construct the Panama Canal using a substantially different engineering plan, utilizing locks, which otherwise was the basis for the failed French effort. The French effort to construct a Panama Canal was a failure resulting in the loss of thousands of lives and billions of dollars in investors money.

Consequence How severe could the outcomes be if the risk event occurred? 4 Insignificant 2 Minor Significant Major 5 Severe Medium 10 High 15 Very high Extreme Extreme Almost Certain 4 Likely 16 Medium Medium 12 High Very high Extreme Likelihood What's the chance the of the risk occurring? 3 Moderate 3 Low Medium Medium 12 High 15 Very high 10 Unlikely Very low Low Medium Medium High 3 Low Rare Very low Very low Medium Medium Consequence How severe could the outcomes be if the risk event occurred? 4 Insignificant 2 Minor Significant Major 5 Severe Medium 10 High 15 Very high Extreme Extreme Almost Certain 4 Likely 16 Medium Medium 12 High Very high Extreme Likelihood What's the chance the of the risk occurring? 3 Moderate 3 Low Medium Medium 12 High 15 Very high 10 Unlikely Very low Low Medium Medium High 3 Low Rare Very low Very low Medium Medium