Given the history of major infrastructure schemes in the UK failing to achieve their prescribed benefits – or, indeed, hit budget – a strong and realistic approach to risk management could be the answer.
Major infrastructure schemes are in a difficult place, balancing political necessity with a business case that includes a financial balance between benefits and cost.
The simple reality is that if the true picture of out-turn costs were known, projects may not gain the required approvals to proceed.
Risk management when undertaken well can be a major determinant of success. Unfortunately, more often than not it is seen as something that pulls out a team’s concerns and produces endless lists of common items that may go wrong – in essence, a commoditised service that is process-driven and often delivered by poor communicators who know little about the complexities of the project.
Right in the mix
Risk as a discipline is easy to do badly, but much harder to do well. When undertaken properly, it should be at the forefront of decision-making, with the risk consultant operating at C-suite and programme board-level to gain the desired effect.
Simply put, it is not about pulling information at all but acting as a true consultant and advising. Leading risk professionals need to challenge and be advising clients about the principal risks they face and, more importantly, the actions that will be crucial in reducing overall risk exposure.
“This use of modelling can be really important, but not if it’s at the expense of actively managing risks”
What’s more, risk consultants should be accountable and not necessarily external to the project team; the best exponents should know as much about the scheme as the project and commercial manager, but with a far more holistic view.
Risk management in the past 10 years has been overtaken by statistics and a desire to quantify everything. This use of modelling can be really important, but not if it’s at the expense of actively managing risks – which can happen.
When it works well, such as for the London 2012 Olympics and Paralympics, risk management sits at the heart of the project and drives informed decision-making.
It’s got to make sense that the effort goes into reducing your risks (or chasing the opportunities) above all else.
So ask yourself whether your risk management process is bringing real insight and value to your investment, or is it merely turning the handle and filling in spreadsheets?
Richard Newey is head of risk advisory at Hill International