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Exposing the Myth of Predictability

  • Asbjørn Rolstadås
  • Per Willy Hetland
  • George Farage Jergeas
  • Richard E. Westney
Chapter
Part of the Springer Series in Reliability Engineering book series (RELIABILITY)

Abstract

This chapter shows that there are types of project risks currently not sufficiently understood and managed. There is a situation where too much attention is given to defining performance risks and too little attention is given to understanding organization and background risks. The traditional way of managing risk is focused on predicting the future more accurately to obtain less risk exposure. Yet, the industry still experiences major cost overruns and delays on mega-projects. This is in spite of a well-developed profession. The need for additional new solutions is discussed. Such solutions must take both strategic and contextual risk into account in addition to the traditional operational risks. Since strategic and contextual risks do not necessarily reduce with time, they have and retain significant uncertainty which can be expressed as volatility. The relationship between risk exposure and volatility provides a new way of looking at project risk.

Keywords

Risk Exposure Background Risk Project Risk Contextual Risk Cost Overrun 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

References

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    Andersen ES (2005) Prosjektledelse-et organisasjonsperspektiv. NKI-forlaget, BekkestuaGoogle Scholar
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    Buehler K, Freeman A, Hulme R (2008) Owning the right risks. Harvard Business Review 86(9):102–110Google Scholar
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    Flyvbjerg B, Holm M, Buhl S (2002) Underestimating costs in public works projects. J Am Plan Assoc 68(3):279–295CrossRefGoogle Scholar
  4. 4.
    PMI (2008) A guide to the project management body of knowledge, 4th edn. Project Management Institute, Newtown SquareGoogle Scholar

Copyright information

© Springer-Verlag London Limited 2011

Authors and Affiliations

  • Asbjørn Rolstadås
    • 1
  • Per Willy Hetland
    • 2
  • George Farage Jergeas
    • 3
  • Richard E. Westney
    • 4
  1. 1.Department of Production and Quality EngineeringNorwegian University of Science and TechnologyTrondheimNorway
  2. 2.BI Stavanger-facultyNorwegian School of ManagementStavangerNorway
  3. 3.Department of Civil EngineeringUniversity of CalgaryCalgaryCanada
  4. 4.Westney Consulting Group, Inc.HoustonUSA

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