Risk Identification in Megaprojects
these risks may incur consequences
in terms of cost overruns (or cost
escalation) and/or project schedule
delays. Construction errors, unexpected technical difficulties, failure
to comply with the agreed on quality standards, coordination problems,
and inappropriate design or accident
during construction, are examples
of risks classified in this category.
Giezen (2012), Santoso, Ogunlana,
and Minato (2003), and Vit (2011)
study these types of risks.
5. Operation and maintenance risks are
those related to the operational phase
that can affect the operation cost, operation capacity, or quality, including
economic viability issues, unnecessarily
high operations costs, poor construction
quality, and operator incompetence.
Brady and Davies (2010), de Sousa
Júnior and Reid (2010), Gil, Miozzo, and
Massini (2012), and Santoso et al. (2003)
analyzed these risks.
6. Labor risks are linked to workers
and include training, language difficulties, accident cost, and cultural
differences. These risks can arise
at any stage of the megaproject,
especially during the construction
operational phases. A wide variety
of labor accidents that fall within
this type of risk are discussed in
Wang et al. (2006).
7. Customer/user/society risks are those
that affect revenues. Customers are
those who buy the product or service,
users are those who use the product
or service, and society is that which
benefits from the social profitability
of the project. These risks include:
a. Demand risks, relating to the level
of sales in megaprojects where
users pay charges during the oper-
ational phase. These are affected
by factors such as variations in the
rate of inflation, price trends, and
price range. Severance (2009) ana-
lyzed these risks.
b. Market risks, such as variations in
the customer’s requirements and
the existence of a market for the
megaproject, as outlined by Dillon
et al. (2005).
c. Social profitability risk, which que-
ries whether the project provides
the expected benefits to society as
deemed by Jennings (2013).
d. Social impact—related to the risk of
impact on society—on local groups
and on the people involved and
their acceptance of the megapro-
ject. The risk of causing an impact
on local groups arises when the
inhabitants of an area are a source
of risk due to not being managed
correctly. In this classification, we
include the NIMBY (‘Not-In-My-
Back-Yard) groups as reaction–
opposition. For example, Giezen
(2012) studies these risks.
e. Environmental risks, which are usu-
ally called environmental impact
assessments and are considered by
authors, including Bedi (2013) and
Owens et al. (2012).
f. Reputational risks, including media
and marketing control, as identi-
fied by Owens et al. (2012).
8. Financial and/or economic risks
encompass a variety of events related
to the financing and performance
of the megaproject. These are com-
a. Economic risks relating to invest-
ment in the megaproject or its
economic structure, such as lower-
than-expected profitability, asset
residual value risk (i.e., technical
obsolescence), residual transfer
value, and inappropriate metrics
used in the project. These are ana-
lyzed by Williams (2003).
b. Financial risks due to the high
level of leverage, which exerts an
impact on the megaproject’s sol-
vency, as a result of high lever-
age or downgrading of the credit;
liquidity problems, such as credit
constraints, shortages in the avail-
ability of funds; and risks caused
by changes in the exchange rate
and/or interest rate, resulting
from the long-term contracts that
are made for this type of project.
Owens et al. (2012) and Severance
(2009) detailed these risks in their
9. Force majeure risk, such as war, natural disasters, extreme weather conditions, terrorism or the case of a
natural collapse, as mentioned by
Davies, Gann, and Douglas (2009).
Table 6 assigns each of the outlined risks to the phase of the megaproject where it is most likely to appear;
however, all risks must be considered
and analyzed during the planning
Next, we analyze the references using
the proposed classification (Table 7).
The main risk studied in the literature
is construction risk ( 43.37%), largely in
terms of its impact on cost and project
schedule overruns. Risks related to customers and society are the second most
studied ( 14.46%), including ROI and the
impact of the megaproject on society.
There are a limited number of studies
on risks relating to force majeure and
workers. Over 44% of studies ( 37 refer-
ences) analyze risk from a general perspective. A lack of research in certain
sectors can be observed in certain types
of risk and in some sectors. Research
into aeronautics focuses on construction risk, whereas rail and road are the
sectors in which a greater variety of risks
Implications, and Further
This article focuses on the first phase
of the risk management process, risk
identification. In line with Burcar et al.
(2013), our review highlights the lack
of consensus on this topic, and different concepts and approaches to risk
are observed, which results in a variety
of terminology, definitions, and explanations. Our study serves as a comprehensive basis for understanding the
current research on risk management