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Project risk management and design flexibility: Analysing a case and conditions of complementarity

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  • Gil, Nuno
  • Tether, Bruce S.

Abstract

We explore how risk management and design flexibility interplay in major (infrastructure) projects, using the £4.2bn Terminal 5 project to expand London's Heathrow airport. By juxtaposing these two conceptual frames, we unearth the conditions under which they can be complements for managing the tension between efficiency and effectiveness central to these projects. Building design flexibility - through modular or safeguarded integral architectures - increases adaptability to accommodate evolving requirements which is necessary to attain effectiveness. Efficiency, in turn, demands risk management to deliver the project 'on time, within budget'. We explain variation in the interplay between the two approaches, highlighting the moderating role of the developer's relationship with the customer. Strong co-operation, particularly in a stable environment, encourages investments in design flexibility. Risk management practices prevail when co-operation breaks down. Another insight is that co-location and continuity of key project staff are themselves inadequate conditions to sustain co-operation.

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  • Gil, Nuno & Tether, Bruce S., 2011. "Project risk management and design flexibility: Analysing a case and conditions of complementarity," Research Policy, Elsevier, vol. 40(3), pages 415-428, April.
    • Handle: RePEc:eee:respol:v:40:y:2011:i:3:p:415-428
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    4. Prpić, John, 2017. "Project Risk Management Incorporating Knight, Ellsberg & Kahneman," SocArXiv yqhjx, Center for Open Science.
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    11. Rebecca Vine, 2020. "Riskwork in the construction of Heathrow Terminal 2," SPRU Working Paper Series 2020-20, SPRU - Science Policy Research Unit, University of Sussex Business School.
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