Zero Base Design and Risk Mitigation

This paper examines the integration of risk management into the design philosophy of a project to produce a æzero baseÆ design, which targets a minimum capital cost without adversely impacting upon the operating costs of the resulting plant. The concept of zero base design is similar to zero base budgeting and the desired outcome is to improve the economy of the design. Design requirements are questioned in an attempt to distinguish preference, prejudice and myth from necessity. Where doubt remains a risk management approach is adopted. The key to risk management is not risk elimination, but risk mitigation. Risks can be managed by designing them out, but often this involves considerable capital cost penalties and it is more attractive to accept the risk and design an operating strategy to deal with it. The paper discusses this with some examples of real world risk mitigation strategies that resulted in substantial capital cost savings. The paper concludes that as much as a quarter of project capital costs can be eliminated by a combination of zero base design and carefully crafted risk mitigation strategies.