MEGAPROJECTS AND THE
DELIVERY DILEMMA:
How modern risk management can lower uncertainties WITH CONSTRUCTION PROJECTS GROWING IN SIZE AND COMPLEXITY, TRADITIONAL RISK ASSESSMENT TOOLS OFTEN FAIL TO ACCURATELY PREDICT UNCERTAINTIES. INEIGHT EXPERT NATE ST. JOHN EXPLAINS WHY A COLLABORATIVE, RISK-ADJUSTED APPROACH ASSISTED BY ARTIFICIAL INTELLIGENCE IS THE ANSWER.
T
he dystopian Hollywood movies depicting a future led by artificial intelligence (AI) and machine learning (ML) often portray a world where robots have run amok, overtaking humans [with their limited intelligence] in running the affairs of the world. While the fear might not be entirely unfounded given the dilemma of our time around use of social media and its evergrowing data pool, one reality cannot be undermined: Artificial intelligence is already here and it’s helping humans take better decisions in their everyday lives. As Nate St. John, Director of Planning, Scheduling and Risk Products at InEight observes, it would be a loss not to use that unbiased machine intelligence to assess risks and bring down the level of uncertainties on construction projects, particularly the larger, more complex ones. Today’s capital construction projects have grown bigger and more complex from just a decade ago. Multi-billion dollar transport infrastructure projects are no longer an exception, but a norm. With that increase in size of projects come bigger uncertainties and risks of budget overruns. In its 2020 report, ‘The Rise of Megaprojects: counting the costs,’ the Grattan Institute announced the arrival of an era of megaprojects in Australia, where two thirds of the government’s transport infrastructure projects are now valued over $5 billion.1 The report found an overrun of $24 billion on just six mega transport projects [within the report’s study period], where bigger projects had a higher risk of outrunning budget estimates. 38
ROADS FEBRUARY 2022
Nate St. John, InEight’s Director of Planning, Scheduling and Risk Products.
“I’M A FIRM BELIEVER THAT COMMUNICATION AND PLANNING HAVE TO SCALE WITH PROJECT’S SIZE AND COMPLEXITY. AND SO, WITH CAPITAL PROJECTS GETTING BIGGER AND BIGGER, IF YOU DON’T PUT THE UPFRONT EFFORT INTO ESTABLISHING AN HONEST COMMUNICATION AND PLANNING CULTURE WITHIN YOUR TEAM, YOU ARE ALWAYS GOING TO LAG BEHIND.”
RISK ASSESSMENT ON MEGAPROJECTS Having had involvements with the planning and scheduling corporate steering committee at one of the largest construction and engineering firms in North America for several years prior to joining InEight, St. John has had first-hand experience with preplanning, baseline development, progress and execution. He says the biggest risk of relying on the traditional project management tools to assess risk in mega construction projects is that they fail to incorporate active risk adjustments through the project lifecycle. “In the traditional planning approaches, such as a critical path method, there’s a heavy focus on planning from left to right, where you start from one point and draw the path of construction. The problem with relying solely on that approach is that it subjects you to areas of compounding delays, where one incident can have a rippleon effect down the line,” he explains. Having disconnected risk registers and schedules is another critical factor that can lead to knowledge gaps, resulting in overly optimistic estimations, St. John observes. “Traditionally, the process of establishing a risk register and then mapping that to the schedule has always been a separate exercise.
That’s because they’ve always used separate tools. The gap between a disconnected risk register and the schedule is usually filled by experienced team members accounting for risk manually or applying their ‘gut feel’ against contingency items. As seasoned as your project team may be, there will be areas missing coverage on risk exposure, resulting in unnecessary risk consumption.” The other area where projects can get into trouble, he observes, is where the schedulers retain most of the responsibility with themselves, without establishing an element of active risk management in collaboration with the project team. “I’m a firm believer that communication and planning have to scale with project’s size and complexity. And so, with capital projects getting bigger and bigger, if you don’t put the upfront effort into establishing an honest communication and planning culture within your team, you are always going to lag behind,” he says. FILLING THE RISK KNOWLEDGE GAP So how do modern risk management tools bridge the risk knowledge gap to minimise uncertainty on projects? As St. John explains, a modern planning tool such as InEight’s integrated project planning,
