Long-term projects can be considered an integral part of the modern world. Multiple constructions and gigantic buildings change the image of areas and result in the creation of a new environment. At the same time, the management of projects belonging to this cohort is a complex task because of many issues and obstacles emerging before specialists engaged in the process.
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There are many risks also associated with long-term projects because of their duration, sophistication, complexity, and high probability of numerous complications. Under these conditions, risk management, as one of the approaches helping to avoid the majority of possible undesired situations and problems, acquires the top priority. This fact, along with the growing number of long-term projects precondition the increased importance devoted to this tool.
The given paper is a literature review focused on the basic peculiarities of risk management and its use in modern conditions. To collect credible information related to the issue, only peer-reviewed articles are analyzed. At the end of the review, a conclusion about the fundamentals of risk management is provided.
In recent years, many investigators are focused on analyzing the essential characteristics of numerous long-projects as one of the dominant tendencies in the modern world. The fact is that multiple risks can arise while constructing a particular building or realizing some other project. They might include social, financial, and natural risks which will result in the significant deterioration of results and the emergence of barriers preventing managers from effective functioning (Muriana & Vizzini, 2017).
Under these conditions, risk management, and its application to the long-term project become a potent option that can help to achieve appropriate results and ensure that the offered plan is observed. At the same time, the successful implementation of the basics of risk-management demands the in-depth comprehension of its fundamentals and assessment practices that will help to understand the existing environment and introduce a set of appropriate actions needed to avoid the further sophistication of the project. Only under these conditions, the enhanced results can be achieved.
One of the central aims of the given review is the definition of the term risk management and its in-depth discussion. Muriana and Vizzini (2017) define the concept as the application of all available, tools, skills, and techniques to a particular project with the primary aim to meet its requirements and ensure that there are no factors that can deteriorate results. Under these conditions, one of the most important activities that should be performed regarding the risk management is project monitoring as it provides an opportunity to collect the information about the project itself, all stages, and compare it with the planned showings (Muriana & Vizzini, 2017).
Regarding the necessity to observe the current situation, earned value management (EVM) should also be mentioned as it is closely related to risk management. EVM outlines existing schedule deviations and introduces corrective actions that can help to improve the situation (Muriana & Vizzini, 2017). These actions can be supported by the potent risk management techniques that consider the effect of adverse and unpredictable events and offer measures to overcome their negative consequences for the project.
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The outstanding importance of risk management for big and long-term projects is also evidenced by Taroun (2013). Reviewing the literature devoted to the issue, he outlines the unique importance of this approach to megaprojects that are characterized by the increased complexity of various operations and links between numerous aspects (Taroun, 2013). At the same time, the study conducted by the researcher proves the significance of risk management regarding its ability to consider the majority of problems that might emerge during various processes (Taroun, 2013).
There is still a significant difference in the approaches used by specialists to mitigate risks because of the critical alterations in the environment and conditions under which various projects are managed; however, the given diversity does not decrease the effectiveness of the sphere in general and precondition its further rise. Furthermore, the majority of existing case studies devoted to the investigation of risk management outline its relation with construction megaprojects as this category demands the comprehensive assessment of all possible factors impacting results (Taroun, 2013). It means that the given field acquires the top priority.
Continue speaking about risk management, He, Luo, Hu, & Chan (2014) emphasize its importance for mega construction projects. Using China as the background for their study, they outline how improved understanding of the complicated nature might help to avoid problems in the future. In the study, they determine mega construction projects as a large-scale, complex, and expensive ventures that demand many years to evolve and be built (He et al., 2014).
At the same time, they involve multiple stakeholders that are needed because of the outstanding scope and many planned alterations. Another critical element of mega construction projects is that they promote a long-term impact on the economy, environment population, and communities (Liu, Zhu, Wang, & Huang, 2016). In such a way, due to the extremely sophisticated nature of the given concept, the introduction of appropriate risk management techniques becomes the only possible way to consider all existing peculiarities and support the development of the project, it’s successful ending and transformation.
Managing construction megaprojects, it is critical to assess all factors that might arise while erecting buildings or preparing the area. For instance, Liu et al. (2016) speak about the social risks in mega projects and ways to solve them. The fact is that the vast scale of changes critically affects various locations and can result in the radical transformation of communities’ lives. Construction might affect social, cultural, and environmental domains and result in the growth of dissatisfaction among people who live nearby or in locations that are included in the project (Liu et al., 2016).
Therefore, one of the main tasks of risk management is the selection of effective tools to cope with undesirable social risks and avoid confrontation or conflicts in areas that will be changed (Liu et al., 2016). These risks should be identified and listed to ensure that there are needed actions that will help to manage all possible risks and avoid resistance that will slow down the speed of projects’ development.
Finally, the necessity to implement risk management can be preconditioned by high project complexity. Qazi, Quigley, Dickson, & Kirytopulos (2016) state that in construction megaprojects, it is associated with multiple structural and dynamics elements, their interactions across a wide number of broad categories of technical, organizational, and environmental fields (Qazi et al., 2016). In such a way, the given complexity becomes a critical factor that preconditions the emergence of new risks and factors that should be considered while managing a particular project and trying to attain all planned goals.
Qazi et al. (2016) also outline the fact that in megaprojects related to construction complexity is the main aspect that preconditions the introduction of unusual approaches to introduce the most appropriate solution and ensure that all barriers are eliminated. At the moment, there are two perspectives on the given concept. The first one states that risk is an element of complexity, while the second one considered them to be two different concepts (Qazi et al., 2016). Regardless of these two opinions, risk management, as one of the tools applied to solve problems emerging during the long-term projects, deal with this aspect by suggesting various methods to consider all elements and minimize the sophistication of operations.
The above-mentioned complexity gives rise to multiple risks that emerge during all stages of all mega projects. Sanches-Cazorla, Alfalla-Luque, and Dieguez (2016) emphasize the fact that there can be uncertainty, ambiguity, and external influences such as political or social powers peculiar to periods extending to ten years and longer. All these factors increase the complexity of megaprojects and make their understanding more difficult.
At the same time, they gave rise to multiple risks that might limit managers’ opportunities to achieve success. That is why risk management is one of the mandatory parts of the successful project management that is utilized to deal with all levels of complexity and achieve the best possible results by analyzing the current t situations and introducing appropriate measures to mitigate the negative impacts of multiple stressors or actors.
Additionally, much attention is given to identifying strategies that help to discover all existing risks and introduce appropriate measures to avoid unexpected situations or failure of the scheduled activities (Sanches-Cazorla et al., 2016). In the majority of cases, the whole lifespan of megaprojects is monitored by risk managers to ensure the observation of existing norms and planned achievements.
In such a way, the project risk management becomes one of the most important tools regarding the multiple challenges that emerge during the long-term megaprojects. The increased complexity results in the emergence of risks that should be considered to achieve positive results.
For this reason, the researchers are united in the opinion that construction megaprojects to a greater degree depending on the effectiveness of the implementation of basic strategies that are focused on the minimization of the probability of failures and consideration of factors that impact ventures at terms more than 3 years (Liu et al., 2016; Taroun, 2013). It becomes a pillar of the successful project risk management and achievement of desired goals.
Altogether, the reviewed sources prove the existence of numerous factors that impact construction megaprojects. The majority of these forces emerge due to the increased complexity and uncertainty peculiar to these ventures. Long-terms along with the large scale of alterations done to particular areas trigger reactions that might be considered barriers to the realization of various projects.
For this reason, risk management, as one of the most effective tools is widely applied to support these projects and ensure that there is a set of actions needed to eliminate obstacles and suggest potent solutions to satisfy all parties and make a compromise. At the same time, there is a need for further investigation of the topic as the tendency towards the appearance of new megaprojects precondition the necessity to generate new knowledge related to the sphere.
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He, Q., Luo, L., Hu, Y., & Chan, A. (2014). Measuring the complexity of mega construction projects in China—A fuzzy analytic network process analysis. International Journal of Project Management, 33(3), 549-563.
Liu, Z., Zhu, Z., Wang, H., & Huang, J. (2016). Handling social risks in government-driven mega project: An empirical case study from West China. International Journal of Project Management, 34(2016), 202–218.
Muriana, C., & Vizzini, G. (2017). Project risk management: A deterministic quantitative technique. International Journal of Project Management, 35(2017), 320–340.
Qazi, A., Quigley, J., Dickson, A., Kirytopulos, K. (2016). Project complexity and risk management (ProCRiM): Towards modelling project complexity driven risk paths in construction projects. International Journal of Project Management, 34(2016), 1183–1198.
Sanches-Cazorla, A., Alfalla-Luque, R., & Dieguez, A. (2016). Risk identification in megaprojects as a crucial phase of risk management: A literature review. Project Management Journal, 47(6), 75-93.
Taroun, A. (2013). Towards a better modelling and assessment of construction risk: Insights from a literature review. International Journal of Project Management, 32(1), 101-115.