HEURISTICS IN RISK ASSESSMENT OF COMPLEX PROJECTS

M. Leijten, Technology, Policy and Management, DELFT UNIVERSITY OF TECHNOLOGY, Delft, Netherlands

Abstract

Mishaps in complex projects often originate in issues that the assessors of risk do not oversee. Their expertise is not specialized enough to understand everything that happens in the system they are trying to control and they depend on other, more specialized actors to provide information on it. The author has studied several complex infrastructure projects in which this phenomenon occurred. Many studies related to this issue, focus on risk analyses being applied ex ante. And if mishaps occur, most ex post incident investigations focus on the (technical) origin of the mishap and the responsible actors. Such an approach ignores the enormous number of ambiguous and often conflicting messages managers receive. This research therefore uses a different angle by attempting to identify the ‘heuristics’, i.e. the framework of reference, the managers of these projects use to make trade-offs between the values time, cost, scope and quality (including safety). With awareness of the context of both the actor’s framework and the situation and conditions the researcher tries to understand why trade-offs are made the way they are.

Every way out of the dilemmatic trade-offs confronts the manager with double binds. For example: being susceptible to the indispensible input from other actors means managers have to listen to ‘hunch feelings’ about risks and are confronted with potential strategic behavior (because the interests of principal and agents are not aligned). Fending off this input, however, implies ignoring possibly valid warning signals. In such a situation managers for instance tend to do what is easiest to complete their job. They are often preoccupied with objectifiable data (time schedules, costs), because they are being held primarily accountable for them and because these are the values that they can measure and understand.

The paper will attend more of these double binds. It presents the first steps of identification of the double binds and the relevant heuristics and announces further research into this topic by the author. The purpose is to create a better understanding, not of risks, but of the risk assessors. Understanding the work of the risk assessors might enable us to detect managerial deviance in advance or prescribe perspectives to mitigate potential adverse effects of their acts.

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