June 23, 2013
June 23, 2013
June 26, 2013
Engineering and Public Policy
23.695.1 - 23.695.21
Implementation of a Risk Management Program to Address Public Policy Issues in Mega ProjectsDiscussing risk raises many different questions. What is risk? Why are so many types of riskdeveloped? How are the quantitative modeling aspects of risk and the mathematical models usedto communicate risk information as well as the opinions and judgments of the evaluators? In theend, the more fundamental question is why do we perform risk analysis in the first place?As an advanced economy and developed nation, the US has embraced risk management in manyareas, primarily in insurance and more recently in the financial industry. Now the concept of riskis being extended into physical infrastructure projects and transportation in particular. Clearlywhat is driving this is the complexity of today’s megaprojects. These projects are planned andbuilt with enormous quantities of data and information. Underlying this is the reality that not alldata is of the same quality and often the planning is insufficient or inadequate.What’s driving this? What are the expectations of the stakeholders? After all, they are pouringresources into this effort with some expectation of a return. The value received from performinga risk analysis offers advantages compared to marching forward blindly thru the fog without thebenefit of a “risk radar” for guidance. Why spend the effort to analyze past experience and applythese lessons learned in a systemic manner to the current project? Isn’t this after all, somethingthat we do intuitively? Do we really need another management discipline that will invariablymean more work?In reality, there are limits to our abilities to deliver projects using strictly intuitive methods.Engineers don’t design bridges or systems that have been developed in their heads. We havedeveloped formalized methods and models to take advantage of our creativity and analyticalabilities. Doing so allows society to allocate precious resources with a greater sense ofconfidence that this project will meet our expectations for the resources we commit to it. At amore elemental level, that is the answer, we have evolved as a society where given the choices tospend our resources, we expect professional managers to deliver on their promises. The projectperforms as promised, within budget and on schedule.Risk can be identified as part of a disciplined practice; can communicate complexity and itsassociated uncertainties more effectively. In the context of project delivery for infrastructureprojects risk management can outperform project execution delivered on an intuitive basis.This paper will address the need for developing a risk management program that is formalizedand data driven. More than that, this paper will present and discuss some options forunderstanding the often unarticulated business model that underlays some contemporary riskpractices within current public policy framework. In the end, the value of risk management aspresented in this paper is the ability to offer better performance in terms of cost and schedulethan without it.
Bates, A. J. (2013, June), Implementation of a Risk Management Program to Address Public Policy Issues in Mega Projects Paper presented at 2013 ASEE Annual Conference & Exposition, Atlanta, Georgia. https://peer.asee.org/19710
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