Probabilistic Assessment of Cost and Schedule for Major Project Funding on a Dam Rehabilitation Project

Nimble Minds Consulting helped a major utility secure funding for a large dam rehabilitation project by conducting a probabilistic assessment of cost and schedule. Our innovative approach not only ensured project approval but also saved the client significant time and money.

Background | Ensuring Safe, Reliable Energy

A large utility client on the U.S. West Coast owns one of the largest hydroelectric systems in the country. This system not only provides clean energy but also offers valuable recreational opportunities. To ensure public safety and operational reliability, the client has been making significant capital investments in dams, spillways, powerhouses, and other critical facilities.

The Challenge | Uncertain Costs and Timelines

Securing funding for an upcoming large-scale dam rehabilitation project posed significant challenges. The client needed certainty in both cost and schedule to gain executive approval. Industry statistics indicates that about 66% of major projects overrun timelines and over 90% exceed budgets, making it essential to establish a reliable framework that could provide the needed certainty.

The Solution | A Risk-Based Approach to Success

We developed a comprehensive, probabilistic approach to address the client’s needs:

• Risk Identification: Conducted thorough brainstorming sessions and confidential interviews with project stakeholders to identify potential risks, including engineering, construction, permitting, and procurement.
• Incorporation of Key Factors: Considered the client’s cultural factors, market conditions, geographical and weather influences, and construction bids.
• Probabilistic Assessment: Used our extensive experience and lessons learned to evaluate risks from both cost and schedule perspectives.
• Deliverable: Produced a Major Project Business Case that detailed the project plan with a focus on risk management, outlining how risks would be monitored, mitigated, and controlled throughout the project.

The Results | Secured Funding and Significant Savings

Our approach brought clarity and transparency to the project’s cash flow variations and associated risk drivers. This provided the client with:

• Deeper Understanding of Risks: Allowed the client to avoid budget and schedule overcommitments both internally and with regulators.
• Precise Estimates: Provided accurate target cost and completion date estimates, significantly boosting confidence among executives and board members.
• Successful Project Approval: The project received the necessary approval to move forward into the construction phase, with the risk-based assessment approach to evaluate contingency, saving the client from overfunding the project had the approach been based on deterministic evaluation. This allowed the client to spend the budget equivalent to 25% of the project cost on other critical work, reducing asset risk.

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