Managing Risk and Uncertainty in Major Projects in the New Global Environment

1. Nada Mohamed Ahmed Ali Nadabadr256@gmail.com Managing Risk and Uncertainty in Major Projects in the New Global Environment

2. Content Introduction The new global environment for the large, complex projects Understanding the dynamic of major projects Management of risk and uncertainty Management of anticipated risk Management of potential emergent risks Anchoring the project into its institutional environment Creating a project concept and organization to enhance governability Coping with tradeoffs in the management of anticipated and emergent risk Conclusion

3. *The changes in context have produced important challenges and new approaches to the development and delivery of major projects throughout the world.* New development strategies and delivery mechanisms have redefined and modified the distribution of risk among project participants.* Develops a framework for describing and analyzing the development and delivery cycle of major projects in the new global context.* The nature of risks in this context and the strategies used to manage them. Introduction

5. The new global environment for the large, complex projects Ideological Shifts Favoring Privatization Development of New Competencies Co-specialization Governments and publicly owned organizations started searching for ways to finance public infrastructure without increasing their debt load. firms involved in major projects in different capacities have been exploring new markets and new modes of project delivery. division of labor in areas where organizations have distinctive core competencies Deregulation and Globalization of Markets Collaborative Contracting Technology regulatory regimes were modified to allow private investment in what were previously areas reserved for state monopolies The new modes of project development and delivery by joint ventures, partnering, and outsourcing Information and telecommunication technologies have facilitated project design and execution, often at a distance.

6. The new global environment for the large, complex projects Increased Project Scrutiny Experimentation and Innovation Many projects were financed through project finance, that is to say, financed by private financial markets based on the forecasted revenue stream of the project and without significant guarantees by either private or public participants in the project. Concessions and project finance are not new ideas, but they had not been in widespread use prior to the 1980s.

8. The beginning of the project Searching for opportunities, a project sponsor may signal interest in or receptivity to proposals for a project. The Design and Execution Period Significant commitments are made, contracts are signed and financing is secured Strategic shaping period Project opportunity forward, project risks must be identified to produce a viable project Commissioning and Ramp-up Period Ramp-up is the moment when assumptions become reality and revenues flow in as expected or not. Understanding the dynamic of major projects

10. Sociopolitical Impacts • Large projects tend to produce large economic, environmental, and sociopolitical impacts, both positive and negative..(vulnerability) • Redefinition of Roles • Projects that redefine the role of the state and participants from the private sector are even more vulnerable. (claims and debates) • Opportunism • Project structures involve many participants in networks of interdependent both endogenous and exogenous emergent risks related to stakeholder • behavior. • Interdependencies • Acomplex system is a system with many interdependent components. In complex systems it is also more difficult to predict the chain of events that any emergent event will produce. Management of risk and uncertainty The significant exposure to emergence risk has many causes, including duration and scope of projects and large number of stakeholders with stakeholder behavior. The emergent riskscan be both endogenous, or internal to the project, and exogenous, coming from the project environment.

11. Management of anticipated risk • Identifying future probable events, analyzing the events to determine their probability of occurrence and potential impact on the project. • Elaboration of effective strategies for managing them. • Aligning participants with the competence and resources to deal with them

12. Management of potential emergent risks • The objective is to build in institutional, organizational, or governance properties that will increase the chances that responses or reactions will allow survival in the face of unforeseen events and situations. • The effective management of anticipated risks actually reduces the number of risks that will be perceived as being emergent events or surprises.

13. Anchoring the project into its institutional environment There are two important aspect of the relationship between the project and its context: ** First, the project is developed, delivered, and eventually operated in an institutional framework composed of laws and regulations. ** Second, the project interacts with a wide array of external stakeholders.

14. Creating a project concept and organization to enhance governability Project teams and project plans that have been optimized in terms of material resources and competencies to meet the anticipated project requirements and risks are likely to fall short in attempts to solve emergent problems. Team members must have the motivation and incentive to do so.

15. Both anticipated and emergent risks are often complementary • A project structure that allocates risks to those parties with the means to control and respond will be more effective in dealing with risks, whether they are anticipated or not. • The most efficient and effective means for dealing with anticipated risks can introduce rigid that reduce cohesion and responsiveness in the face of emergent events. Coping with tradeoffs in the management of anticipated and emergent risk

16. Conclusion * Project sponsors and owners must create a project system that will effectively identify and manage risks. Successful sponsors must expend much greater resources on imagining and creating futures.(Risk Analysis skills)* Sponsors must avoid making irreversible commitments until they gainenough knowledge to make reasoned choices.* During the front-end period, creative ideas need to predominate. Avoid locking in too early or too late. The future is often unknowable in advance.

17. Conclusion **The longer the development time, the higher is the likelihood that projects will be affected by turbulence.**As uncertainty reveals itself, leverage can be applied to make desiredfutures happen.

18. Thank You