ENGM90006 Engineering Contracts and Procurement Assignment

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Tender Preparation: ‘Supply and Delivery of Aerators for WTP” Melbourne Water

Author: Paulina Orrego Olivares704205

Contents1. Introduction and Purpose................................................................................................................2

2. The Owner perspective “Melbourne Water”................................................................................2

2.1 Contract Benefits and Risk evaluation...................................................................................2

2.1.1 Time Frame of the Project...................................................................................................3

2.1.2 Reasons behind the Time Frame......................................................................................4

2.2 Contract Term Evaluation using Australian Standard General Conditions...................4

3. The Contractor perspective.............................................................................................................6

3.1 CEO Briefing document..............................................................................................................6

3.2 Analysis of Risk and Opportunities.........................................................................................9

3.3 Tender Strategy..........................................................................................................................10

3.4 Tender Preparation Plan...........................................................................................................11

3.4.1 Tender Gantt chart..............................................................................................................11

3.4.2 Bid Team organization.......................................................................................................12

3.4.2 Develop Tender Price (Flow chart).................................................................................14

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1. Introduction and Purpose

This report discusses the tendering preparation for “Supply and delivery of thirty (estimated) floating surface aerators to the Melbourne Water Western Treatment Plant (WTP)” site in Weribee, Victoria. The project objectives are to oxygenate the lagoon to enhance wastewater treatment and circulate water to mix the contents into the lagoon. The lagoon design reduces organic and inorganic pollutants (reduces odour) and pathogens to acceptable levels (Stenstrom and Rosso, 2008).

This assignment will explain two separate perspective for this tender preparation: Principal and provider, in this case Melbourne Water and H20 respectively. The first perspective aims to discuss and analyses the Procurement strategy and the selection of specific contract terms, both tasks are focus on evaluate the Principal´s needs and risks associated with this project. The second perspective purposes to prepare the bidding process for this project. During this process is crucial elaborate a market evaluation, analyses contract conditions, risk and elaborate a planning program for the tender.

2. The Owner perspective “Melbourne Water”.

2.1 Contract Benefits and Risk evaluation

The strategy contract nominated was a Fixed fee/Lump sum payment, which had two payment options: Lump sum or Milestone Payment.

Fixed-Price contracts are the most common traditional contracts conditions. The contractor can claims provisional or prime cost, variations and adjustments during the execution of the project. Generally, the original contract price will be different than the final cost of the project (Uher and Davenport, 2002)

Benefits:

I. Budget : Contract price is known before the supply of goods and services. Melbourne Water can set in advance the budget.

II. Experience : Important experience with this contract and tend to reduce the mistake during the tendering process. Might reduce cost caused by decreasing number of amends.

III. Potential Low Risk : The Principal prepares the scope of the project and the risk of design and supply lie to the Contractor. Melbourne Water pay a fixed price for goods and service, any risk might affect the delivery and supply during the project, the Contractor undertake the risk.

IV. Competition: Large number of potential tenders might increase the price competition. The market has interest to apply this contracts.

V. Stakeholder Plan: The principal can manage stakeholder engagement during the execution of the project.

Risks:

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I. High price : The Contractor retains the risk of the constructability of design and fitness for purpose so the price may be high.

II. Innovation : Low incentive for innovation.III. Flexible : Tend to be less flexible for manage any change of the scope of the

project. New requirements need to re-negotiate with the Contractor, and it can affect the schedule of the contract.

IV. Quality : The quality of the contractor´s work can be compromised, if the principal does not know the value of the risk contingency for the project. The performance operation and quality of WTP can compromise in long terms, when tenders tend to compete by price. The “Value money” become less important and increase the risk operation in WTP.

Risk reduction

Melbourne Water Western Treatment Plant, should delete any conditions that the contractor can use to claim any adjustments or variations of the price. To satisfy this requirement, the following points should be reviewed:

I. Determine the level of risk of the project; when the risk is low, a Fixed price strategy should be implemented.

II. To provide accurate information during the tendering process to reduce uncertainty, errors and omissions. Prepare accurate project documentation including drawings, specifications and technical requirements.

III. Minimize the ability to vary the design of the project.

Risk Likelihood Consequence Management

High price D Moderate Significant

Low Innovation C Minor Moderate

Flexibility C Moderate Moderate

Low Quality C Catastrophic High

2.1.1 Time Frame of the Project.

Phases Activities Dates Documentation

Tender preparation

Project Definition and Scoping 18/05/2015 Selection Process for Tenderers 28/05/2015 Tender Documentation 12/6/2015 Criteria for Selection 22/06/2015

Tendering Call for Tenders (Public or Closed) 29/06/2015 Responding to Invitations to Tender / Developing the Commercial Offer 29/06/2015 Tender Meetings and enquiries 02/07/2015 Amendments to Tender documents 10/07/2015 Submission and Closing of 24/07/2015

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Tenders 4pm

Tender Evaluation

Tender Analysis 8/10/2015 Tender Clarifications 10/11/2015 Tender Selection & Award 28/12/2015

Delivery of Goods and

service

Site inspection 22/03/2015 Delivery of aerators 30/04/2016 Installation of Aerators 30/5/2016 Test and analysis 5/6/2016 Firm acceptance of Aerators 4/6/2016 Maintenance operations Finish or Renew Contract

2.1.2 Reasons behind the Time Frame

2.2 Contract Term Evaluation using Australian Standard General ConditionsAnnexure A

In this project it is recommend to apply AS 4911-2003, General conditions of contract, for the supply of equipment without installation. This standard is used to deliver equipment, which includes manufacture and delivery. The equilibrium in the allocation of the risk between the parties is an important factor that differentiates it from other standards. The Australian Standards (AS) are used in varied market and wide range of values.

Sharkey,Bell, Jocic and Marginean (2014) point out that, the Market is familiar with AS and there are not barrier to apply this standards. Generally, when the companies are familiar with the term of contract can optimize the administration of the Contract.

McMullan (2015) points out that, this standard (AS2124–1992) not discuss quality in the contract and there are room for error in design.

Contract requires amended in some clause to reduce the risk and define the scope of the work, these points are important to consider:

1. Extensions of time2. Delay damages (including liquidated damages)

3. Site conditions4. Payment5. Claims6. Variations7. Warranties as to quality

The next table explain some items and clause of AS 4911-2003.(Details Appendix A)

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Item

Name Clause Description

6 Date for delivery 1, Item 6

The Supplier must deliver the aerators on site 4/30/2016.This date can be change by extensions of time by approval of the superintender.

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Qualifying cause of delay, causes of delay for which EOTs will not be granted (page 3, subparagraph (b)(iii) of clause 1 and sublcause 17.2)

17.2 Any delay will loss value to the Principal and may occurs in this project. It is necessary identify the responsable and the reason of the delay. If the Supplier cannot submit a provision for the delay, the Supplier must deliver the goods on time. However, if the Principal cause the delay (f.e provide late instructions and approvals), the Supplier can claim extension of time to the Principal within 14 days after the delay.

23 Liquidated damages 17.5 It applies this clause "Liquidated damage" when the Supplier fails to complete the contract.The Supplier need to pay a fee for this damage. WTP determines the fee in the RFT: Rate of liquidated damage: $1000 per day) (Delay delivery). Limit of Liquidated damages normally is 10% of the Contract, however in this RFT is not mention.

21 Public liability insurance

13.1 13.2

The insurance Liability covers injury to labor (Heath and safety injuries, between minor to death), damage property (material) which can accurs during the contract. In this case the insurance is $20 million. In this contract the professional indemnity is for $5 million.This clause protects the client against the risk.

20 Insurance of the Equipment

13.1 This clause protect Melbourne Water againt any loss or damage of the equipement. Supplier must to provide a warranty for long period (50 months in this project)

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Payment and variations

23.1 , 23.2

The Supplier have to prove by evidence the value of variations to the Principal.

3. The Contractor perspective

3.1 CEO Briefing document

H20 Aqua Technology PTY. (H20)

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Document: Tender Manager

Report to: CEO

From: Commercial Director and Bid Manager.

Topic: Supply and Delivery of Aerators for WTP with sustainable consumption of energy for Melbourne Water.

General Conditions

Tender Selection & Award 28/12/2015Delivery of aerators 30/04/2016Payments Lump sum or Milestone payment.

Public liability insurance $20 million

SWOT Analysis

General Market

The Water supply market are provided under diverse industry structures, which are divided by states and local government ownership. The Water Utilities market is integrated for 81 companies around Australia. New South Wales and Victoria represent more than 60% of these companies (National Water Commission, 2014). 28 days define the negotiation of the contract and 14 days to sign the contract for both parties.

Table 1.1: Utilities reporting in the 2012–13 Urban NPR

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The aeration process is an essential part of wastewater treatment plants. The energy cost is a relevant factor to consider, as aerators can consume 45 to 75% of the plant energy cost (Stenstrom and Rosso, 2008). The design of floating aerator with the use of solar energy can be an effective solution to reduce the energy cost for this market. Unfortunately, it is not possible estimate the number of aerators operating in Australia.

Economic expectation

Increase population growth: In 2006 The Australian Bureau of Statistics, as well as CSIRO´s Water Book, stated that the national population would increase to 35 million by 2056. (National Water Commission, 2014). The increase on water demand for municipal purposes, which is related to population growth, will increase the pressure on the water market, especially in water suppliers and wastewater treatment services.

Low investment in water Infrastructure: Since 2000s, the investment in water infrastructure has been relatively small in comparison with other services. Recently, the Government has increased the level of investment and has encouraged the use of sustainable energy into the wastewater market. The Water Smart Australian program has also invested $1.5 billion in sustainable and productive solutions in Water Market since 2005.

Company Strategy

In order to evaluate if this tender is a worthwhile opportunity for the company, it is necessary to consider the following points:

Product Differentiation strategy: our product “Floating Solar-Aerator (anchored)” is a viable solution for MWT to reduce their energy cost. This new system has been operating in East Gippsland since 2010. In addition, this hi-tech alternative can reduce greenhouse gas emissions by up to 100 tonnes a year and decrease the consumption of energy by around 20% (McKean, Waddell, 2010).

Compliance: H20 can comply with the conditions of the contract. The insurance Policies are in place for this bid. Also, our company has been certificated in Quality

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Assurance (ISO 9001),OHS (OHSAS 18001) and Environmental Management Systems (ISO 14001).

Viability: The Company has high expectation to win this bid, our principal advantages are Technology, I&D, resources and an experienced labor force.

Profitability: The revenue of this tender is acceptable, approximately 10%.

Competitors Analysis

Company Name Overseas

Size Registration ASIC

Strengths Weakness

Aquatec-Maxcon Pty Ltd YES Large 1981 Experience, Design and Quality

Hydroflux Pty Ltd YES Medium

2013 Partnership with RWL Water Int.

Price and Experience

Magytec Australia Pty Ltd

YES Small 2012 Partnership with Siemens and Waterix

Structure

Patrick Charles Pty Ltd YES Large 1988 Experience and Design Price

Veolia Australia YES Large 1993 Experience, Design and Quality

ABB Australia YES Large 1987 Experience, Design, Structure and Quality

Price

Alfa Laval Australia Pty Ltd

NO Medium

1926 Experience and Design Technology

Resourcing

In financial aspect: According to the cash flow statement and our financial situation, there is enough funding and capital to bid for the work.

The workload: The Company can arrange sufficient resources for this work. We have several experienced project managers and enough engineers for this project.

The Labor force: Vertically integrated Civil, mechanical and electrical from design and construction. The company provides intensive training along career paths. Over 200 permanent staff of different disciplines. The capability of the manufacturing operation is divided between Australia and overseas

Finance

The company was debt free last year. The Net Assets is over $ 23 million. In addition, the financial capability permits it to fund Goods and services Contracts and BOOT projects. The organization has Liability Insurance Cover value over than $50 million.

Recommendation

Payment time of the project other RisksRisk appetite.

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28 days define the negotiation of the contract and 14 days to sign the contract for both parties.

3.2 Analysis of Risk and Opportunities

Risk Tendering

Typology Risk Description Likelihood Consequence Management

ContractDelayed goods

Reduce reputation. Pay damage to the Principal. B Major Significant

Contract and

Operation

Minor changes to principal

requirementsThe expectation of the service is not achieved. Technical issues. B Minor Moderate

ContractChange of scope of

procurement strategy

New restriction and penalties B Moderate Moderate

Financial Bid not profitable

Raised prices of material, the bid may not profitable. A Major Moderate

Contract Poor Stakeholder Engagement plan

Problems with stakeholders can affect the service. C Moderate Moderate

Financial and

ContractNeed to involve Sub-

contractorSub-contract assistance not predicted, increased cost. B Insignificant Low

Risk Operation

Typology Risk Description LikelihoodConsequence Management

Operation, Maintenance and Quality

Low dissolved Oxygen (DO)

Reduction of effectiveness during the operation. Old aerators and blowers. C Minor Moderate

Water weeds and Sludge build up

Reduce the turbulence produced by obstructions. Low performance of aerators. D Insignificant Low

Poor periodic maintenance

Problems with lubrication, adjustment and replace spares. B Moderate Moderate

Corrosive Environmental

Materials not suitable for operation in high level of corrosion. B Moderate Moderate

Labor Safety Safety operation Unclear Manuals and poor training. B Minor Moderate

Opportunities DescriptionAccumulate Experience This tender can be an excellent opportunity to

increase the experience and promote our high-tech solution into other Wastewater treatment plants.

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Future Partnership with Local Government This relationship may provide skills transfers and experience. H20 can offer consultancy and support service (Integrate service).

3.3 Tender Strategy

Bidding Strategy

The focus on H20`s strategy is to demonstrate, through past experience, capacity and capability to deliver contracts without litigation “Low Risk”.

The market conditions are stable and with the small number of competitors, we predict that our company has high chance to win this project. The size, complexity and type of the contract is acceptable. Our competent Bid team can develop an accurate Tender Plan and Risk analysis. The company is inclined to take risk and accept all obligations and liabilities described in the tender.

Commercial Strategy

Focusses on understanding and delivering the requirements of the Principal. Demonstrating strong safety record and non-penalty with EPA. Our company promote fluid communications with the Principal; we will notify any variation as soon as we can.

Deliver quality technology and service, “solar aerators” into the wastewater plant. Provide the reference of past-Project and results. The capital base is adequate to respond this bid. The company is willing to reduce the profit, to demonstrate the cost saving for future clients.

Commitments

The company is committed to agree with the responsibilities and obligation described in the tender. H20 will supply and deliver the aerators on time to avoid any consequential loss. Attempt to minimize claims and variations, and if not possible, provide enough evidence to support the claims. Prepare a strong mitigation plan, operations guideline, training plan, quality and safety plan to reduce any risk during the operations.

3.4 Tender Preparation Plan

3.4.1 Tender Gantt chart

The follow diagram shows the Planning “Gantt chart” for the tendering process. The time-frame for this bid is tight, only one month to prepare and submit the bid. The Critical path displays the crucial activities “red tasks” which can delay the bid submission. The evaluation of RFT, construction method and programming and bid-

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review are the most important process in this bid.

3.4.2 Bid Team organization

The organizational chart shows the resources required during the tendering process. This team involves staff from different areas of the company, which can provide a rich interaction to create a winning bid.

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The following table identified the principal role of the bid team.

Table N°1: Principal Roles of the Bidding team.

Bid Manager This role has to deliver the bid and manage multiple resources, complex business relationships and interpret RFT to deliver a competitive bid.

Internal Departments Internal Head Office support the bid team. HR, Health and Safety.

Consultant External Consultant provides specialist knowledge, experience and suggest directions to the tender process.

Commercial Specialist The principal function is create a Sales Strategy, maintain communication with the client and write the tender with close support of Project Manager, and the other areas. Estimate the markup and cost structure.

Specialist Design and Technical Advisor

This specialist delivers an overall technical and design, measure of performance and specifications.

Legal and Procurement specialist This role ensures that the company satisfies Legal and contractual agreements ( AS standards)

Project Manager This role needs tendering experience, creates a detailed Project plan as required by client. Analyses the capability and capacity of the contractor to deliver the project. Evaluate cost, risk, time frame and quality.

Delivery and Maintenance Manager This person controls the aerators delivery and prepares a Maintenance Guide.

Project Cost Assistant Assist to Commercial area to define the price of the bid.

Quality Assistant Provide technical advice. Project Programmer Elaborate Project plan.

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In addition, during the tendering process, it is crucial that the Owner, Bid Manager, Commercial Manager and Project Manager integrates a Team review. This team evaluates and review the commercial, technical tender and risk that complies with the evaluation criteria.

3.4.2 Develop Tender Price (Flow chart)

The price of the bid is the result of estimating process, which is influenced by procurement planning, work scope, evaluation and calculation. H2O creates a monitoring and post evaluation process for bids. In this process is important analyses the cause of unsuccessful bids for further bidding. The follow flow chart explains the estimating price process.

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References

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Uher, TE, & Davenport, P 2002, Fundamentals of building contract management, Sydney: UNSW Press.

National Water Commission, 2013, National performance report 2013–14: Urban water utilities, Canberra.

Department of Environment, 2015, Annual Report 2013-2014, AGPS Canberra.

Stenstrom, M and Rosso,D, Biological Wastewater Treatment: Principles, Modelling and Design, IWA Publishing, England, London 2008.

McKean, T and Waddell, B, Investigation into the effectiveness of a solar-powered circulation unit, East Gippsland Water,2010.

Sharkey, J, Bell, M, Jocic, W, & Marginean, R 2014, Standard Forms of Contract in the Australian Construction Industry: Research Report, Parkville : Melbourne Law School, June 2014.

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APPENDIX AANNEXURE A: AS 4910-202

1 The Purchaser: Melbourne Water Corporation

  ACN and ABN 81 945 386 953

2 Purchaser´s address: Melbourne Water Contract Manager /PO Box 3173, Brighton, Victoria, 3186;

3 The Supplier: H20 Aqua Technology PTY

ACN and ABN 81 145 290 781

4 Supplier´s address: 192 Nicholson St, Abbotsford, Victoria

5 Stated purpose for the Equipment (clause 1—definition of acceptable):

1) The aerator must be designed and constructed to operate in a corrosive environment.2) Power rating of 30kW/3 phase 400V and Efficiency/operation: minimum 1.50kg O2/kWh. 3)Safe to operate and maintain 4)The aerator must have a floating surface.

6 Date for delivery: a) 30-Apr-16

Period of time for delivery(clause 1 and sub clause 19.1)

N/A

7 Delivery Place Melbourne Water, Western TreatmentPlant, Werribee, Victoria.

8 Mode of delivery (sub clause 19.1)  

9 Governing law Victoria

10 Currency Australian dollar

  Place for payments Purchaser´s Address

  Place of business of bank Victoria

11 Limits of quantities to be supplied and delivered (clause 2.2)

N/A

  Upper Limit N/A

  Lower Limit N/A

12 Supplier's security N/A

  Form (Claus 3) Retention

  Amount or maximum percentage of Contract sum *If nothing stated, 5% of the contract sum

5 % contract sum

  If retention moneys, percentage of each progress certificate (clause 3 and subclause 24.1)

N/A

  Time for provision (except for retention moneys) (clause 3)

N/A

  Additional security for equipment not delivered (subclauses 3.4 and 24.2)

 

  Supplier's security upon certificate of practical completion is reduced by (sb 3.4)

50% of amount held (Revision)

13 Purchaser's security N/A

  Form (Claus 3)

  Amount or maximum percentage of Contract sum *If nothing stated, 5% of the contract sum

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  Time for provision (clause 3)

  Purchaser's security upon certificate of practical completion is reduced by (subclause 3.4)

14 Purchaser-supplied documents (subclause 6.2)

RFT #2459 , Schedule 1) Agreements,2) Goods, 3) Services, 4) Service Fees and 5)Variation Procedure and 6)Melbourne Water Policies andProcedures. Returnable Schedule Pricing Aerators and Returnable Schedule Questionnaire OHSEQ

15 Supplier-supplied documents (subclause 6.3)

1)Specification and design of aertors. 2)Maintenance Guideline. 3) Risk Management

16 Time for Purcharser's direction about documents (subclause 6.3)

28 days

17 Subcontract work requiring approval (subclause 7.2)

All works

18 Legislative requirements those excepted (Clause 10.1)

N/A

19 Time by which insurance cover for the Equipment is to be effected (subclause 13.1)

24 months from commissioning or 26months from delivery whichever comes

20 Time for insurance of undelivered Equipment (subclause 16.1)

Before the Supplier commences performance of the Contract.

21 Public liability insurance (clause 13.2)  

  (a) Is public liability insurance required? yes

  (b) If yes to (a), level of cover required $20 million

  c) Period for which public liability insurance is required

For the duration of the contract.

  d)Is product liability insurance required yes

  e) If yes to (d), level of cover required $20 million

  f) Period for which product liability insurance cover is required

For the duration of the contract.

22 Qualifying cause of delay, causes of delay for which EOTs will not be granted (page 3, subparagraph (b)(iii) of clause 1 and sublcause 17.2)

N/A

23 Liquidated damages (subclause 17.5 ) rate $1000 per day

  Delay damages  

24 a) Other compensable causes (page 1, paragraph (b) of clause 1 and subclause 17.6)

N/A

  (b) rate (subclause 17.6) $1000 per day

25 Date for completion of acceptance testing (subclauses 18.1 and 21.1)

 

26 Party responsible for unloading the Equipment (subclauses 19.1)

 

27 When risk in the Equipment passes (subclause 20.1)

Risk in the equipment shall pass on the later of delivery acceptance or passing of ownership in accordance with subclause 20.2.

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28 Time at which ownership of the Equipment passes to the Purchaser (subclause 20.2)

20 business days

29 Period for Purchaser's notice that Equipment is acceptable or rejected (subclause 21.1)

5 Business Days

30 Period for Purchaser's notice accepting or rejecting Supplier's proposal (subclause 21.4)

5 Business Days

31 Defects liability period (clause 35) 24 months from commissioning or 26months from delivery whichever comes

32 Invoice (subclause 24.1)  

a) Time for invoices 12-May-16

b) Milestones for the rendering of Milestone Amount invoices

N/A

33 Period for payment (subclause 24.1) 30 days after receive the receipt.

34 Equipment for which prepayment may be claimed (subclause 24.2

N/A

35 Interest rate on overdue payments (subclause 24.5)

6% per annum

36 Arbitration (subclause 28.3)  

(a) Person to nominate an arbitrator Mark Hunter

(b) Rules for arbitration Rules 5–18 of the Rules of The Institute of Arbitrators & Mediators Australiafor the Conduct of Commercial Arbitrations

(c) Appointing Authority under UNCITRAL Arbitration Rules

President of the Institute of Arbitrators & Mediators Australia.

37 The Supplier's liability is limited as follows (clause 29) The respective limits apply to the sum of the respective claims and not to each claim.

 

  a) for claims in respect of or arising out of death or personal injury

$ 20 million

  b) for loss of rents, income (other than arising out of death or personal injury) and the opportunity to earn profits, and indirect and consequential loss

$5 million

  c) for all other claims whatsoever $5 million

38 The Purchaser's liability is limited as follows (clause 29)

The contractor fixed Price as adjusted pursuant to the contract.

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APPENDIXE B: Melbourne Water Management Matrix

Insignificant Minor Moderate Major Catastrophic

Contract Minor change

without impact

Conditions of the contract

Problems with claims and payments

Re-definition Contract.

Contract severely affected.

Dispute pay damage

Consequence Insignificant Minor Moderate Major CatastrophicLikelihood 1 2 3 4 5Almost Certain E Moderate Significant Significant High HighLikely D Low Moderate Significant High HighPossible C Low Moderate Moderate Significant HighUnlikely B Low Low Moderate Significant SignificantRare A Low Low Moderate Moderate Significant

LegendH = high risk, detailed research and management required at senior S = significant risk, senior management attention neededM = moderate risk, management responsibility must be specifiedL = low risk, manage by routine procedures

Contractor Risk Management Matrix

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Consequence

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Insignificant Minor Moderate Major Catastrophic

Labor Safety

Injuries not requiring Medical assistant

First Aid treatment

Serious injury/ Treatment

Multiple serious injuries

Hospitalization

Death

Contract

Minor change without impact

Conditions of the

contract

Problems with claims and payments

Re-definition Contract.

Contract severely affected.

Dispute pay damage

Time and ConditionsMinor delay

without impact

Minor delay with minor

impact

Re-scheduling some tasks, delayed less than 1 week

Delivery delayed in 1

week.

Timing severely delayed

Operation, Maintenance and Quality

Minor adjustment in operation without impact

Replace minor equipment or redesign the Maintenance Guideline

Inconvenient but not client service compromise

Repetitive problems in operation. Service is degraded.

Service failure. Loss of business

Financial1% Bid price

2.5% Bid price >5% Bid price

>10% Bid price

>20% Bid price

Consequence Insignificant Minor Moderate Major Catastrophic

Likelihood   1 2 3 4 5

Almost Certain E Moderate Significant Significant High High

Likely D Low Moderate Significant Significant High

Possible C Low Moderate Moderate Significant High

Unlikely B Low Moderate Moderate Significant Significant

Rare A Low Low Moderate Moderate Significant

LegendH = high risk, detailed research and management required at senior

management

S = significant risk, senior management attention needed

M = moderate risk, management responsibility must be specified

L = low risk, managed by routine procedures

Likelihood Rating Description  

Almost Certain E Is expected to occur in most circumstances

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Likely D Will probably occur in most circumstances

Possible C Might occur at some time  

Unlikely B Could occur at some time  

Rare A May occur only in exceptional circumstances

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