On April 22, 2014 I had the opportunity to give a lecture to graduate construction management students at Columbia University. The focus of the talk was on international development and construction projects, looking at these projects very much from a risk perspective. While the slides do not provide direct links to some of my other papers I hope some on the connections are obvious.
Development Studies as a course and discipline is only taught in at least 3 universities in the Philippines. This yet popular academic program in the tertiary, graduate and post-graduate schools may be a great options for students and professionals whose work outlook and demand is imperative in the community, national and international arena.
Development Studies as a course and discipline is only taught in at least 3 universities in the Philippines. This yet popular academic program in the tertiary, graduate and post-graduate schools may be a great options for students and professionals whose work outlook and demand is imperative in the community, national and international arena.
Presentation by Vittorio Lusvarghi, chair of the Professional Accountants in Business Committee Sustainability Task Force, at the Institute of Cost Accountants of India's National Cost Convention, New Delhi, India, March 2012.
Transport sectors projects are very political entities and governments are still held responsible should there be revenue short fall or distressed situation. further modes of transport do compete with each other but in a limited manner, however, global threats nowadays require certain redundancy in transport network, this affects PPP structure!
Also experience suggests that negotiations between public authorities and prospective concessionaires are rather asymmetrical, and lead to asymmetric risk sharing. Concessionaires have extraordinary bargaining powers as they know no competition exists after the concession is signed.
As privacy and security professionals it's true: we simply can't get enough data on the costs of a data breach. This is primarily driven, of course, by our desire to quantify the risks associated with our profession in terms that organizations can understand and measure. Our quest is complicated, however, by the fact that breach cost data is so hard to come by.
This unique webinar will take data breach analysis to the next level. First we'll define our terms and review of some of the best known, publicly available data breach research. But then, we'll dive into a more detailed, exhaustive, quantitative review of breach data. This will include both case studies of a few seminal data breaches and statistical analysis of data breaches in the aggregate.
Our featured speaker for this timely webinar is Patrick Florer, Co-Founder & CTO of Risk Centric Security. Patrick, who is also a Fellow and Chief Research Analyst at the Ponemon Institute, has decades of experience in risk analysis and analytics and is considered an expert in data breach analysis.
The World Circular Economy Forum presents the world’s best circular economy solutions and gathers together the most recognised experts and decision makers in the field. The event is organised by the Finnish Innovation Fund Sitra. Read more: www.wcef2019.com
Presented at the 4th Global Infrastructure Basel Summit 21 & 22 May 2014.
Read more about the world leading platform for Sustainable Infrastructure Finance at www.gib-foundation.org.
Next Summit: 27 & 28 May 2015 in Switzerland
Application of system life cycle processes to large complex engineering and c...Bob Prieto
The complexity of megaprojects and programs continues to grow and with it the challenges of delivering ever larger and more complex programs. These large complex programs open the door to many new opportunities but also to increased challenges in delivery and sustainment throughout their lifecycle. Prior articles have described the open nature of this large complex program system and compared its attributes to many we find in the world of relativistic physics. These challenges must be addressed recognizing that they arise from a combination of physical, fiscal and human attributes in a realm of complexity which challenges the very foundations of project management theory.
This paper looks at hard systems aspects as contrasted with the soft system aspects more characteristic of an open system. Its purpose is to adapt a systems engineering framework associated with the hard closed elements of these large complex project systems without losing site of the overall open systems nature of large complex programs.
The systems life cycle process codified in ISO 15288 lends itself to application in large complex engineering and construction programs.
Engineering and construction project startupBob Prieto
This paper looks at engineering and construction project startup for three different project execution approaches. While specific to this industry, project professionals in other industries may find it is a good analog for their own efforts.
The paper underscores that:
• Large complex projects require strong foundations
• A day at the beginning of a project is just as valuable as a day at the end
• Strong project foundations are built during project startup
• Vertical startup is enabled by the use of a dedicated startup team
• Project startup should consider lessons learned on other projects
This paper addresses project startup for three general types of contracts:
• Pure design or engineering contracts typically performed for the Owner
• Design/build contracts performed for the Owner but recognizes that engineering may be undertaken by an engineering subcontractor within the D/B team
• Pure construction contract
More Related Content
Similar to International development and construction projects columbia university
Presentation by Vittorio Lusvarghi, chair of the Professional Accountants in Business Committee Sustainability Task Force, at the Institute of Cost Accountants of India's National Cost Convention, New Delhi, India, March 2012.
Transport sectors projects are very political entities and governments are still held responsible should there be revenue short fall or distressed situation. further modes of transport do compete with each other but in a limited manner, however, global threats nowadays require certain redundancy in transport network, this affects PPP structure!
Also experience suggests that negotiations between public authorities and prospective concessionaires are rather asymmetrical, and lead to asymmetric risk sharing. Concessionaires have extraordinary bargaining powers as they know no competition exists after the concession is signed.
As privacy and security professionals it's true: we simply can't get enough data on the costs of a data breach. This is primarily driven, of course, by our desire to quantify the risks associated with our profession in terms that organizations can understand and measure. Our quest is complicated, however, by the fact that breach cost data is so hard to come by.
This unique webinar will take data breach analysis to the next level. First we'll define our terms and review of some of the best known, publicly available data breach research. But then, we'll dive into a more detailed, exhaustive, quantitative review of breach data. This will include both case studies of a few seminal data breaches and statistical analysis of data breaches in the aggregate.
Our featured speaker for this timely webinar is Patrick Florer, Co-Founder & CTO of Risk Centric Security. Patrick, who is also a Fellow and Chief Research Analyst at the Ponemon Institute, has decades of experience in risk analysis and analytics and is considered an expert in data breach analysis.
The World Circular Economy Forum presents the world’s best circular economy solutions and gathers together the most recognised experts and decision makers in the field. The event is organised by the Finnish Innovation Fund Sitra. Read more: www.wcef2019.com
Presented at the 4th Global Infrastructure Basel Summit 21 & 22 May 2014.
Read more about the world leading platform for Sustainable Infrastructure Finance at www.gib-foundation.org.
Next Summit: 27 & 28 May 2015 in Switzerland
Application of system life cycle processes to large complex engineering and c...Bob Prieto
The complexity of megaprojects and programs continues to grow and with it the challenges of delivering ever larger and more complex programs. These large complex programs open the door to many new opportunities but also to increased challenges in delivery and sustainment throughout their lifecycle. Prior articles have described the open nature of this large complex program system and compared its attributes to many we find in the world of relativistic physics. These challenges must be addressed recognizing that they arise from a combination of physical, fiscal and human attributes in a realm of complexity which challenges the very foundations of project management theory.
This paper looks at hard systems aspects as contrasted with the soft system aspects more characteristic of an open system. Its purpose is to adapt a systems engineering framework associated with the hard closed elements of these large complex project systems without losing site of the overall open systems nature of large complex programs.
The systems life cycle process codified in ISO 15288 lends itself to application in large complex engineering and construction programs.
Engineering and construction project startupBob Prieto
This paper looks at engineering and construction project startup for three different project execution approaches. While specific to this industry, project professionals in other industries may find it is a good analog for their own efforts.
The paper underscores that:
• Large complex projects require strong foundations
• A day at the beginning of a project is just as valuable as a day at the end
• Strong project foundations are built during project startup
• Vertical startup is enabled by the use of a dedicated startup team
• Project startup should consider lessons learned on other projects
This paper addresses project startup for three general types of contracts:
• Pure design or engineering contracts typically performed for the Owner
• Design/build contracts performed for the Owner but recognizes that engineering may be undertaken by an engineering subcontractor within the D/B team
• Pure construction contract
I have previously written about the transition that I believe is necessary in project management thinking related to large complex projects. In those writing I describe the shift as analogous to the shift from Newtonian to relativistic physics. Subsequently, I have compared the nature of large complex programs to open systems. Reflecting back, classical project management theory was very much based on closed systems thinking and early applications of systems thinking to projects and engineering was also very much based on closed systems thinking.
This is analogous to the closed systems of Newton and Einstein’s correction of his original General Theory of Relativity through the introduction of the cosmological constant to close a system which he believed behaved mechanistically and not expanding. In hindsight the cosmological constant was not necessary but does suggest some properties of the universe and became relevant in explaining an accelerating expansion of the universe. Subsequently, there was at least one special case where the deterministic nature of a closed system broke down when considering General Relativity suggesting at least some open nature to this system.
Systems nature of large complex projectsBob Prieto
This paper explores the system characteristics and behaviors of large engineering and construction programs with a particular focus on those that would be characterized as complex. It recognizes the interrelated and interacting elements of both programs and projects as they strive to form a complex whole. Large complex programs and projects are not well bounded as classical project management theory as espoused by Taylor, Gantt and Fayol would have us believe but rather behave in both independent and interconnected ways in a dynamic systems environment.
Large complex programs demonstrate the evolutionary nature of all complex systems; uncertainty; and emergence that comes with human actions and interactions. They struggle from insufficient situational awareness, treating the program to be more well-bounded than reality would suggest and using simplified models to understand the complexity inherent in execution. Best practices from project management literature were typically not derived from such environments and, worse, have fallen short on other large complex programs and projects.
In the engineering and construction industry governance needs and requirements exist at
multiple levels. These include:
• Governmental and industry level governance (laws, regulations, codes, standards)
• Enterprise level (encompassing social (stakeholder), political, economic (market,
shareholder, financial institutions), cultural (corporate and national/local),
technological)
• Portfolio and programs
• Project
This paper focuses on the portfolio and program level, collectively referred to as program in
this paper.
Strengthen outcome based capital project deliveryBob Prieto
Over the course of my career I have looked at a number of underperforming mega-projects. In every instance there was a common element of underperformance, the lack of clarity around the strategic business outcomes to be accomplished. Conversely, some of the best performing projects exhibited high clarity of recognized and shared outcomes.
This paper looks at the imperative to continue the shift to outcomes based contracts versus more traditional output based contracting forms. This shift is discussed from the perspective of the engineering and construction industry in the United States but draws upon the experience in other countries and other sectors.
Today’s infrastructure and facilities are “smart”. At least that is our objective as we seek to enhance lifecycle performance and capital efficiency. These “smart” facilities transcend any given sector and bring new challenges to the engineering and construction industry. In some ways our more traditional projects are today outcomes focused or capabilities delivering IT projects with bits of concrete and steel wrapped around them!
This “smart” focus is not limited to just a technology and systems dimension but goes further, demanding an increased and increasing environmental, social and governance (ESG) focus as well. Together “smart” and ESG create a greatly expanded set of interfaces for program and project managers to manage.
Rework in Engineering & Construction ProjectsBob Prieto
This paper is focused on engineering and construction projects which will experience increased emphasis as nations increase their focus on economic stimulus and climate change. It deals narrowly with the inevitable rework these projects often experience and which contributes to the cost and schedule growth we all too often witness. The objective of this paper is to:
• Categorize rework factors into four broad categories – project, human, organizational and complexity
• Identify rework impacts not just on cost and schedule but importantly morale and trust.
• Recognize that strategies exist to reduce the potential for required rework
• Suggest four dozen control points.
In this paper I will attempt to:
• Outline some of the systems of systems challenges that we will likely face.
• Discuss the emergent nature of both the challenges as well as the potential resultant outcomes.
• Draw attention to some of the driving forces acting both on this system of systems as well as the national and sectoral programs that may emerge to respond to this challenge.
• Highlight some of the feedback loops which may exist or emerge from both apparent and hidden coupling.
• Discuss system of system risks, program risks and where our perceptions and appetite for such risks may change over time.
• Outline some particular challenges for program managers as they are engaged in addressing this challenge.
A growing world requires improved and expanded infrastructure. Juxtapose that with the need for massive public investment driven by pandemic created economic weakness and the prospects for significant investment in infrastructure is improved, but as history has taught us not necessarily assured.
We have been through other infrastructure stimulus programs focused on so-called shovel ready projects and have been disappointed. But whether we define them as “shovel ready” or otherwise we need infrastructure projects, especially the largest of them, to be successful.
In this paper we will look at common reasons large scale infrastructure projects fail and importantly suggest some strategies and tactics to improve their success rate.
This paper builds on my beliefs that the prevailing theory of project management has failed us with respect to large complex projects. I have written extensively on this including highlighting that the assumptions of Gantt and Fayol fall short at scale and complexity. In this paper I examine the successes that underpin modern project management theory and seek to understand how the resulting approach to project management has failed to deliver comparable successes with regularity. As I explored these questions, I sought to understand the unique characteristics of the Atlas and Polaris missile programs; the subsequent institutionalization of the perceived success factors; and importantly, did perception and reality align. In other words, have we made an incomplete set of assumptions and institutionalized them?
Impact of correlation on risks in programs and projects Bob Prieto
One of the most under considered elements of cost and schedule risk is the correlation that exists within various WBS elements of a project or across projects comprising a program. Failure to adequately consider correlation between various activities and projects compounds the impact of other factors present in large complex projects.
This paper looks at the special case of decision making under uncertainty. The relationship between uncertainty and complexity is explored as is their joint relationship with large complex projects. The importance of getting these projects well founded from an ability to manage uncertainty is discussed and the aspects of these strong foundations is described
Post Dorian Engineering & Construction in the BahamasBob Prieto
As the task of recovery and rebuilding in the Bahamas post hurricane Dorian begins, it is important to understand that it cannot be business as usual. The increasing frequency and severity of hurricanes, driven by global climate change, cannot be ignored. Building codes will have to be further strengthened and development in coastal areas rethought.
Debating project decisions in an ai enabled environmentBob Prieto
I had the opportunity to watch the first debate between AI powered IBM Debater and a recognized human expert debater. I will not spoil the outcome for those who have not yet watched the debate but I will underscore one key aspect - all learned more about both sides of the position as a result of the debate.
We have seen a construct for the management of large
complex projects laid out in the earlier chapters. In these chapters we will simply lay out some of the main concepts and
considerations for a practitioner. Each of these can be more
extensively developed.
In the world of physics, classical theory breaks down at
scale. Conventional project management theory similarly
seems to break down at scale. The theoretical construct I
have been building to in this book is very much focused on this
project realm where scale and complexity rule.
In developing this theoretical construct I have essentially
considered three simple hypotheses, the first of which is:
Large complex projects are not well served by
conventional project management theory and
practice.
This hypothesis was demonstrated at the outset of this
book and the differential behavior between large and
traditionally scaled projects has been previously noted.
The second hypothesis considered relates to the Theory of
Management as applied to the management of projects. In
simplest terms this hypothesis says:
- The Theory of Project Management does not draw
fully on the richness of the Theory of Management
This hypothesis is demonstrated as we explored the
extensions of the Theory of Management to address chaos and
complexity and the more limited extensions of project
management theory.
The third and final hypothesis we considered focused on
the Theory of Projects, positing:
Large complex projects have significantly different
attributes than the more traditional projects which
comprise the basis for classical project management
theory
This chapter summarizes various aspects of large
projects and provides a foundation to consider what a new
Theory of Project Management for large complex projects may
look like.
In this chapter we will look at a few of the project attributes
that we observe in large complex projects and suggest they
may serve as a basis for a neo-classical Theory of Large
Complex Projects.
Theory of Management of Large Complex Projects - Chapter 7Bob Prieto
The world of large complex projects is challenging to say the least with a majority of these projects significantly under performing. It is this weak performance regime that underpins the key premise of "Theory of Management of Large Complex Projects" – project management theory as it currently exists and is applied to large complex projects falls short, significantly short, of what these projects require.
I have decided to serialize this book for the benefit of those interested in better understanding and improving project performance. If you are interested in purchasing a copy of the 400 page paperback you may click on http://www.lulu.com/us/en/shop/bob-prieto/theory-of-management-of-large-complex-projects/paperback/product-22342232.html
Welcome to WIPAC Monthly the magazine brought to you by the LinkedIn Group Water Industry Process Automation & Control.
In this month's edition, along with this month's industry news to celebrate the 13 years since the group was created we have articles including
A case study of the used of Advanced Process Control at the Wastewater Treatment works at Lleida in Spain
A look back on an article on smart wastewater networks in order to see how the industry has measured up in the interim around the adoption of Digital Transformation in the Water Industry.
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Industrial Training at Shahjalal Fertilizer Company Limited (SFCL)MdTanvirMahtab2
This presentation is about the working procedure of Shahjalal Fertilizer Company Limited (SFCL). A Govt. owned Company of Bangladesh Chemical Industries Corporation under Ministry of Industries.
About
Indigenized remote control interface card suitable for MAFI system CCR equipment. Compatible for IDM8000 CCR. Backplane mounted serial and TCP/Ethernet communication module for CCR remote access. IDM 8000 CCR remote control on serial and TCP protocol.
• Remote control: Parallel or serial interface.
• Compatible with MAFI CCR system.
• Compatible with IDM8000 CCR.
• Compatible with Backplane mount serial communication.
• Compatible with commercial and Defence aviation CCR system.
• Remote control system for accessing CCR and allied system over serial or TCP.
• Indigenized local Support/presence in India.
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Technical Specifications
Indigenized remote control interface card suitable for MAFI system CCR equipment. Compatible for IDM8000 CCR. Backplane mounted serial and TCP/Ethernet communication module for CCR remote access. IDM 8000 CCR remote control on serial and TCP protocol.
Key Features
Indigenized remote control interface card suitable for MAFI system CCR equipment. Compatible for IDM8000 CCR. Backplane mounted serial and TCP/Ethernet communication module for CCR remote access. IDM 8000 CCR remote control on serial and TCP protocol.
• Remote control: Parallel or serial interface
• Compatible with MAFI CCR system
• Copatiable with IDM8000 CCR
• Compatible with Backplane mount serial communication.
• Compatible with commercial and Defence aviation CCR system.
• Remote control system for accessing CCR and allied system over serial or TCP.
• Indigenized local Support/presence in India.
Application
• Remote control: Parallel or serial interface.
• Compatible with MAFI CCR system.
• Compatible with IDM8000 CCR.
• Compatible with Backplane mount serial communication.
• Compatible with commercial and Defence aviation CCR system.
• Remote control system for accessing CCR and allied system over serial or TCP.
• Indigenized local Support/presence in India.
• Easy in configuration using DIP switches.
Overview of the fundamental roles in Hydropower generation and the components involved in wider Electrical Engineering.
This paper presents the design and construction of hydroelectric dams from the hydrologist’s survey of the valley before construction, all aspects and involved disciplines, fluid dynamics, structural engineering, generation and mains frequency regulation to the very transmission of power through the network in the United Kingdom.
Author: Robbie Edward Sayers
Collaborators and co editors: Charlie Sims and Connor Healey.
(C) 2024 Robbie E. Sayers
CFD Simulation of By-pass Flow in a HRSG module by R&R Consult.pptxR&R Consult
CFD analysis is incredibly effective at solving mysteries and improving the performance of complex systems!
Here's a great example: At a large natural gas-fired power plant, where they use waste heat to generate steam and energy, they were puzzled that their boiler wasn't producing as much steam as expected.
R&R and Tetra Engineering Group Inc. were asked to solve the issue with reduced steam production.
An inspection had shown that a significant amount of hot flue gas was bypassing the boiler tubes, where the heat was supposed to be transferred.
R&R Consult conducted a CFD analysis, which revealed that 6.3% of the flue gas was bypassing the boiler tubes without transferring heat. The analysis also showed that the flue gas was instead being directed along the sides of the boiler and between the modules that were supposed to capture the heat. This was the cause of the reduced performance.
Based on our results, Tetra Engineering installed covering plates to reduce the bypass flow. This improved the boiler's performance and increased electricity production.
It is always satisfying when we can help solve complex challenges like this. Do your systems also need a check-up or optimization? Give us a call!
Work done in cooperation with James Malloy and David Moelling from Tetra Engineering.
More examples of our work https://www.r-r-consult.dk/en/cases-en/
Sachpazis:Terzaghi Bearing Capacity Estimation in simple terms with Calculati...Dr.Costas Sachpazis
Terzaghi's soil bearing capacity theory, developed by Karl Terzaghi, is a fundamental principle in geotechnical engineering used to determine the bearing capacity of shallow foundations. This theory provides a method to calculate the ultimate bearing capacity of soil, which is the maximum load per unit area that the soil can support without undergoing shear failure. The Calculation HTML Code included.
3. ** Company Confidential **
Types of Risks
Known Knowns
Known Unknowns
Unknown Knowns
Unknown Unknowns
4. ** Company Confidential **
… And A Challenging Future
Simple → Complex
Static → Dynamic
Certain → Uncertain
Capital Efficiency → Life Cycle Effectiveness
Build for decades → Build for generations
The Bottom Line → Triple Bottom Line
Safety Focus → Hazard Avoided
Business Case → Scenario Based Resiliency
5. ** Company Confidential **
Challenge of International Projects
Understand Risks
Allocate Risks
Manage Risks
. . . . Understand That They Change
6. ** Company Confidential **
“ESPRIT” – Framework for Understanding
Risk
Economic
Social
Political
Religious
Intellectual or Ideas
Technological
7. ** Company Confidential **
Economic Risks
Market and Revenue
Finance Risks
Cost Risks
– Construction Phase
– Operation Phase
CostofYourMistakes
Level of Overconfidence
8. ** Company Confidential **
Market and Revenue
Market Development Slower Than Projected
– Slower General Economic Growth
– Changed Priorities
– Longer Gestation Time
Market Rates Lower Than Projected
– Higher Than Anticipated Price Sensitivity
– Increased Competition
– Free Government Alternate
– Price Caps
Reduced Market Share
– Delayed Project Completion
– Increased Competition
Synergistic Opportunities Fail to Emerge
– Hope is Not a Strategy
9. ** Company Confidential **
Finance Risks
Cost of Money
– Interest Rate Risk
– Inflation/Deflation Risks
– “Credit Risk”
Cost of Currency
– Absence of Long Term Local Financing
• F/X Risk on Construction Financing
– Volatility
• F/X Risk on Hedging Annual Profits
• Absence of Hedge/Convertibility
10. ** Company Confidential **
Cost Risk – Construction Phase
Scope
Schedule
Budget
Terms & Conditions
Quality
Legal
– Know Who Has the Authority to Approve
11. ** Company Confidential **
Scope
Poorly Defined or Incomplete
Interfaces Not Well Defined
Referenced Standards
– Not Well Defined
– Not Fixed in Time
Responsibilities Not Defined
– Government
– Owner/Concession Company
– Prime Contractor
Limitations Due to Changed Conditions Not Well
Defined
– Ouch !
12. ** Company Confidential **
Schedule
Labor Volatility/Work Stoppages
Changed Work Rules
Labor Productivity
Timeliness of Inputs/Approvals/Permits
Linkage to Timely Payments
Weather and Environmental
Government Action
NGO Action
13. ** Company Confidential **
Budget
Labor Cost Growth
– Local Labor
– TCN
– Expatriate Premium
Materials/Supplies Cost
Growth
– Availability
– Supply Chain Costs
• Energy
• Security
• Customs
Inefficiency
– Management
– Labor Skills
– Means & Methods
Additional Taxes and
Fees
– Government Charges
– Royalties
– Other Small Charges
Increased Financing
Costs
14. ** Company Confidential **
Terms & Conditions
Expropriation
– Land
– Equipment & Materials
Change in Law
– Corporate
– Tax
– Staffing/Visa/Employment
Force Majeure
Conflict Between Local/Regional/National Laws
Defaults
– Government
– Concession Company
– Contractor
– Sub-contractor
• Local Partner
• Bonding Company
• Bank
• Insurance Company
15. ** Company Confidential **
Terms & Conditions
Payments
– Signature Bonuses
– Mobilization
– Retention
– Progress or Milestone
Payments
– Obligations to Pay
– FCPA/OECD Limitations
Bonds
– Bonding Requirements
– Availability of Bonds
– Satisfaction of Bonds
– Default
Dispute Resolution
– Jurisdiction
– ADR / Mediation / Arbitration
– Obligations During Dispute
Period
16. ** Company Confidential **
Quality
Poor Workmanship
Inadequate QA/QC
Poorly Defined Performance/ Acceptance Standard or
Process
Incomplete Documentation
Environmental
17. ** Company Confidential **
Cost Risk – Operations Phase
Service Scope
Performance Standards
Operating Costs
Changes in External Environment
18. ** Company Confidential **
Service Scope
Battery Limits of Project/Scope
– Other (Free) Services to be Provided
– Required Future Investments and Schedule
19. ** Company Confidential **
Performance Standards
Reliability
– Tolerance Limits and Measurement
Availability
– Scheduled/Unscheduled Service Disruption
– Extent (Reach) of Service Areas
Maintainability
– Maintained Condition
– “Quality” of System Turnover
21. ** Company Confidential **
Changes in External Environment
Defaults
– Government
– Concession Company
– Prime Contractor
Change of Government
War
Natural Disaster
Boycott or Embargo
Currency Devaluation
Inadequate Financial
System Capacity
Corruption
Expropriation
New Technology
Force Majeure
Inadequate System Core
Capacity
22. ** Company Confidential **
“ESPRIT” – Framework for Understanding
Risk
Economic
Social
Political
Religious
Intellectual or Ideas
Technological
24. ** Company Confidential **
Culture
Sense of History
Cultural Imperatives
– Work/Life Balance
– Risk Aversion
– Individual vs. Group
– Sport
– Wealth
25. ** Company Confidential **
Culture
Norms
– Age
– Gender
– Social Stratification
– Food
– Sex
– Hygiene
– Authority
– Generational Variation
26. ** Company Confidential **
Culture
Language and Meaning
Cross-cultural Issues
Perception of Time
Decision Making Framework
27. ** Company Confidential **
Ethics
Cultural “Norms”
OECD vs. FCPA
– Facilitation Payments
Bribery
– By Your Staff
– Of Your Staff
Corruption
Use of Agents
– Role
– Limits
– Payments
Whistle-Blower
31. ** Company Confidential **
“ESPRIT” – Framework for Understanding
Risk
Economic
Social
Political
Religious
Intellectual or Ideas
Technological
32. ** Company Confidential **
Political Risks
Change of Government
– Party
– Revolution
Sequestration
Exclusivity
Changes in Fiscal Policy
– Can Change Sovereign Debt
Ratings Affecting Project
Financing
Changes in Law
– General
– Project Specific
Approvals
– Development
– Right-of-Way
– Environmental
– Construction
– Import/Export
– Operating
– Repatriation of Profits
33. ** Company Confidential **
Political Risks
Adverse Government
Action/Inaction
Regime Change
– Political Stability Process to
Avoid Collapse
– Economic or Cultural Stability
to Uphold Agreements
Provision of Utilities/Other
Services
Increases in Taxes
– General
– Project Specific
Political Force Majeure Events
– Civil Strife
– Terrorism
– Conventional War
– WMD
Termination of
Concession/Contract
Payment Failure by
Government
Property Rights
– Clear Title or Lease
– Easements or Other
Limitations
– Intellectual Property
(Patents/Copyrights)
Ownership of Assets
34. ** Company Confidential **
Political Risks
Structure of Project Securities
Availability of Securities Market
Insolvency by Government or Concession Company
Changed Conditions on Foreign Ownership or Operation
Enforceability of Legal Rights
– Contract Rights
– Regulatory Obligations
– Financing Documents
– Security and Insurance
35. ** Company Confidential **
“ESPRIT” – Framework for Understanding
Risk
Economic
Social
Political
Religious
Intellectual or Ideas
Technological
36. ** Company Confidential **
Religious Risks
Tension & Intolerance
– Christian, Jew, Muslim, Hindu,
Native Peoples, etc.
Practices
– Holy Days
– Daily Prayers
– Diet and Food Preparation
• Kosher
• Vegetarian
– Gender Separation
Rise of Militant
Fundamentalism
– Muslim
– Jewish
– Christian
– Hindu
– Different From Political or
National Culture Risk
37. ** Company Confidential **
“ESPRIT” – Framework for Understanding
Risk
Economic
Social
Political
Religious
Intellectual or Ideas
Technological
38. ** Company Confidential **
Intellectual/Idea Risks
Corporate Social Responsibility
– Child Labor
– Indigenous Peoples
– Social Outreach
• Poverty Alleviation
• Social Benefits for General Population
– Environmental Stewardship
• Mitigation/Enhancement
• Wildlife Preservation
• Greenhouse Impact
• International and Local Pressure Groups
• “Kyoto Protocols”
Corporate Governance
– More “Stakeholders”
– More Disclosure
– Reduction in Risk Appetite
39. ** Company Confidential **
Intellectual/Idea Risks
Evolving Political Form
– Socialism with Chinese Characteristics
– Militant Islam
– Nuclear Blackmail
Homeland Defense
International and Local Pressure Groups
– Can Be a Major Risk to Schedule, Costs & Approvals
– Can Stall Projects Indefinitely
Globalization vs. Unilateralism
Access to Knowledge
40. ** Company Confidential **
“ESPRIT” – Framework for Understanding
Risk
Economic
Social
Political
Religious
Intellectual or Ideas
Technological
41. ** Company Confidential **
Technological Risk
New Technology
New Applications
Scale
Capacity Building
Intellectual Property
42. ** Company Confidential **
New Technology Risk
Time to Deployment
Learning Curve
– Failure Rates
– System Environment
Social Acceptability
Export-Import
– Controls
– Licenses
Installed Base Advantages
Tax & Duty Environment
43. ** Company Confidential **
New Applications
Learning Curve
Environmental Factor Effects
Transferability of Lessons Learned
Social & Economic Framework
Supply Chain Extension
47. ** Company Confidential **
Challenge of Int’l. Projects
Understand Risks
Allocate Risks
Manage Risks
. . . . Understand That They Change
48. ** Company Confidential **
Potential Risk Managers
Government
Sponsors
Concession Company
Contractor
Engineers
Major Suppliers
Project Lenders
Local Partners
Labor Unions
Insurers
Bonding Companies
Counter-trade/ Offset
Managers
Venture Capital/
Equity Markets
49. ** Company Confidential **
Potential “Risk Managers”
Government
– Multilateral/Bilateral
Agreements
– International Aid or
Lending Agency
– National/State/Local
Governments
– Government Department
– Quasi-Government
Corporation
Sponsors
– Public Private Partnerships
– NGOs
– Financial Institutions
– “Benefiting Parties”
• Public
• Private
50. ** Company Confidential **
Challenge of Int’l. Projects
Understand Risks
Allocate Risks
Manage Risks
. . . . Understand That They Change
51. ** Company Confidential **
Manage Risks
Right People
Right Place
Right Time
Right Approach
Right Attitude
52. ** Company Confidential **
Manage Risks
A High Risk of Exposure in:
– Contractual Matters
– Financial Matters
– Professional Reputation
…Should Be Examined.
Even if Apparently Mitigated, It Is a Good Reason to
Re-examine a Decision to Proceed with Business
53. ** Company Confidential **
Should-You-Do-Business-Here Test
Corporate Political Contributions
– “Encouraged” and “Actively Solicited”
– Provide Timely Access to Influence Government Actions
– Developers, Engineers, Contractors Specifically Targeted
Government Officials Regularly Receive De-minimus Favors
from Private Sector
Procurement Often Based on Factors “Other Than Price”
Lapses of “Ethical” Judgment Are Not Uncommon
54. ** Company Confidential **
Should-You-Do-Business-Here Test
High Level of Government Sector and Trade Debt is
De-Facto Financed by Others
Growing Percentage of National Expenditures
Targeted to Military
High Exposure to Energy Security Risk
Risks Associated with Infrastructure Development
Projects Are High
Labor Productivity Growth in Engineering and
Construction Sectors Lagging Most Other Sectors
High Risk of Obtaining Timely Government Approvals
55. ** Company Confidential **
Should-You-Do-Business-Here Test
Tax Environment Shows High Probability of Increased
Volatility and General Upward Pressure
Insurance and Bonding Capability Significantly
Limited for Development, Engineering and
Construction Sector
Growing Risk of Terrorism and Security Related Costs