Risk management in Transport Infrastructure Projects (TIPs)
Developed by Iliana Dritsa
Contents |
Overview
Transportation has become a vital need with the expansion of populations and the emergence of new technologies. Transport Infrastructure Projects (TIPs) are large scale projects in the transportation sector such as airports, high speed railways, bridges, and subway construction.
Risk is the possibility that actions and their resulting impacts will turn out differently than anticipated. Risk involves uncertainty which is something that applies to situations in which potential outcomes and causal forces aren’t understood completely.
The Nature of Risks in Transport Projects
Transport Infrastructure Projects (TIPs), technologically equipped projects, bring about numerous risks such as financial, technical, political, managerial, natural or legal. Being exposed to such risks in the planning and construction stage of TIPs, unexpected problems will likely emerge if possible risks are not identified and assessed beforehand. The identification of risks in the planning phase of a project and the arrangement of impact values has become a requisite in increasing the success as well as minimizing the problems of a project.
Highway construction projects are subject to higher risks and uncertainties than other construction projects due to higher investments and more complexity and their dependency on economic, political and social challenges (Wilson, Molenaar 2009). Researchers can investigate the causes and additional costs in these projects using analysis of risk events.
Types of risk
Completion Risk
Tecnhical risks appear in every project and it’s a reflection of the engineering difficulties and the innovation degrees. The contractor usually guarantees completion of the construction on a fixed budget and a fixed date. Operational risk summarizes the chances and uncertainties a project faces in terms of functionality that arises from inadequate or failed internal processes such as operating efficiency, available capacity, security failure or fraud.
Market related risks refer to the risk associated with any investment decision. Demand is one crucial parameter due to the fact is hard to forecast and creates high levels of risk. Failures to reach traffic volumes have been observed because the users of airports, tunnels, ports, highways and bridges have alternatives and it is extremely difficult to forecast the behavior. Other sources of market risk are changes in commodity or equity prices, market movements, foreign exchange fluctuations or interest rate moves.
Institutional Risks
Institutional risk is defined as the risk that the regulator will not meet its policy regulations and organizational objectives. In some countries with emerging economies or in countries whose regulation and laws are incomplete, institutional risks are typically seen as greatest.
The IMEC Study and Large Engineering Projects
IMEC (International Program in the Management of Engineering and Construction) The IMEC study focused on themes such as coping with uncertainty through risk analysis, strategies and institution shaping
Approaches to Managing Risk / Methodological Framework
The main problem of project management conceptual stage is the selection of methods and approaches that will be used in project risk management. Theoretical perspectives on coping and structuring with risks, range from technical analysis to systemic and institutional approaches. Most of the times, probabilistic, statistical methods and expert methods are used.
Statistical methods
Probabilistic methods
References
https://eprints.whiterose.ac.uk/113285/10/Paper%20transport%20V27.pdf
