Risk Identification in Megaprojects
PAPE
RS
catastrophic loss; ( 3) complex engineering and design risk; and ( 4) substantial
unknowns that have an impact on budgets and schedules (Greiman, 2013). Of
these risks, those most frequently analyzed in the literature on megaprojects
are those that have a consequence on
time delays and increased costs, because
they imply lower performance of the
megaproject (Altshuler & Luberoff, 2003;
Flyvbjerg et al., 2003). Indeed, time, cost,
and scope according to specifications,
constitute a traditional performance
measurement called ‘triple constraint’
or the ‘iron triangle’ in project management (Toor & Ogunlana, 2010). This
lower performance can be explained
by a number of factors that often occur
in megaprojects: their complexity,
the lack of realism in the estimates,
resource scarcity, inefficient management, and, simply, public stakeholder
resistance due to cultural or political
interest (Flyvbjerg et al., 2003; Han et
al., 2009; Nelson, 2007; van Marrewijk et
al., 2008). On the other hand, it is also
important to note that there are certain
risks that are often found in megaprojects and to which the literature has not
devoted special attention. Some common risks that contribute to higher costs
in megaprojects are linked to competitive bids, with unrealistic and undervalued bids made in an attempt to be more
competitive, which subsequently leads
to the risk of renegotiation.
Although there is a large amount of
literature on risk management in proj-
ects (Marcelino-Sádaba et al., 2014),
there is much less with respect to mega-
projects. The literature has demon-
strated the need to study large-scale
projects (Esty, 2004) because they pro-
vide a clear setting in which to analyze
how managers make important structur-
ing and financing decisions to respond
to capital market imperfections. Fur-
thermore, there appears to be ongo-
ing academic and political interest in
megaprojects, particularly those involv-
ing both public and private agencies.
Several models and methods of public–
private partnerships in megaprojects
have been developed in the current
financial crisis due to both budgetary
constraints on the public sector and the
need to optimize financial resources
(Irimia Diéguez & Oliver-Alfonso, 2012).
The failure of these projects is highly
visible due to their size and scope, thus
there is both the need for, and interest
in, projects being managed and deliv-
ered effectively (Fiori & Kovaka, 2005).
The importance of risk management
in megaprojects is based on the high
impact and high uncertainty involved,
both of which make risk management a
key factor in megaproject success.
Nevertheless, the difficulty that studying megaprojects presents means that
there is a lack of academic research in
the area. This limited amount of research
has been attributed to factors such as the
need to collect a large volume of information and the difficulties that private
agents encounter in accessing that information (Esty, 2004). This lack of studies
marks our first objective: to conduct a
systematic literature review of risk management in megaprojects in response
to calls from a number of authors
(Botetzagias, Malesios, Kolokotroni, &
Moysiadis, 2013; Creedy, Skitmore, &
Wong, 2010; Lehtiranta, 2014).
Previous Literature Reviews of
Risk Management in Megaprojects
Studies on risk management in mega-projects are scarce. Only four literature reviews have been found that can
to any degree contextualize the situation of research into risk management
in megaprojects (Lehtiranta, 2014;
Rezakhani, 2012; Taroun, 2014; Zhang,
2011); however, the objectives of these
reviews differ from those of this article.
Zhang (2011) analyzed the articles
that include the word ‘risk’ in their title,
abstract, and/or keywords published
in the International Journal of Project
Management and in the Project Manage-
ment Journal® between 1999 and 2009.
This search therefore focuses on proj-
ects in general (not on megaprojects).
For each of the 171 selected references,
the author examines the ways in which
risk is considered and frames articles in
one of two schools: risk as an objective
fact and risk as a subjective construc-
tion. A content analysis of the articles
determines the basic concepts of risk
adopted by each of these and their basic
assumptions, viewpoints, and tenden-
cies, as well as their methods of analysis
and the management policies that are
consistent with these conceptions of
risk. This author concludes that, in gen-
eral, risk is perceived from an objective
point of view (over 90% of the articles);
therefore, Zhang’s study neither per-
forms bibliometric analysis nor draws
specific conclusions on megaprojects.
Rezakhani (2012) conducts an extensive literature survey of risk modeling
and analysis methods, with particular
attention to fuzzy risk assessment in construction projects. He concludes that it
is a common recommendation in the
literature to consider ‘the imprecision,
vagueness, and fuzziness of the risk factors in a construction project to appropriately deal with a contractor’s project
risks by using Fuzzy Set Theory (FST).’
Unfortunately, there is no specification as
to the methodology, database, or journals
analyzed.
Lehtiranta (2014) studies risk perception and risk management approaches in
temporary multi-organizations (TMOs)
to identify any gaps that need to be
addressed in future research; she analyzed 105 articles published in the
International Journal of Project Management,
the Project Management Journal®, the
Journal of Construction Engineering and
Management, and IEEE Transactions
on Software Engineering for the period
between 2000 and 2012. Her study of
the body of knowledge of risk perception and risk management approaches in
temporary multi-organizations identifies
four main differences compared with
previous studies in risk management.
First, the author discovered that the literature considers the threat of the risk
but not the opportunity that can also
be implied. Second, previous research
focused on anticipated risks; hence, it
is suggested that future research should
