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The University of Southampton
Centre for Risk Research

Risk in major infrastructure projects

Operational Risks & Major Infrastructure Projects

Operational risk is associated with uncertainty about the performance of infrastructure once it has been constructed, during the long-lived operating phase of infrastructure projects. Such operational risk is very important, particularly when large construction costs and durations are involved and modifications to the infrastructure are costly.

Managing operational risks
Managing operational risks

The main objective of the research was to obtain a preliminary appreciation of the extent and significance of uncertainties driving operational risk during the operation of infrastructure, and related management issues.

The core of the study comprised a programme of interviews with experienced industry practitioners in four sectors: energy, transport (road and rail), material resources and waste management, and water (supply and wastewater). This confirmed the central importance of operational risk, and identified issues affecting its more effective identification and management. An important conclusion was that existing practice needs to be improved substantially, by focusing on managing uncertainty rather than just adverse events, with the objective of improving performance. This needs to encompass strategy, business-as-usual operations, and new-build project development.

The study identified a wide range of operational risk drivers in each of the four sectors. However, basic similarities in types of driver between sectors enabled the identification of a generic list of drivers that should inform the design and operation of all types of infrastructure asset.
The report also discussed a number of key issues that need to be addressed in developing approaches to operational risk management: interdependencies between elements of infrastructure, the need for clarity about operational performance objectives and their interdependence, the problem of short-termism, the need to consider operational risk throughout the infrastructure asset life cycle, and the importance of effective and efficient asset management.

The research conclusions include a list of factors influencing the desirability of infrastructure projects, roles for risk management in different stages of the asset life cycle, and a set of issues that warrant further study. A wider role for civil engineers is desirable.

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