Page 135 - Global Project Management Handbook

6-4 STATE OF THE ART OF GLOBAL PROJECT MANAGEMENT

research team’s expertise. The resulting list of international risks was further refined,
and an agreement was reached regarding exact terms and nomenclature of element
definitions. Once this effort was completed, separate reviews were performed by
Globalization Committee members and vetted again by participants during a series of
workshops.
The final list consists of 82 elements grouped into 14 categories and further
grouped into four main sections that reflect the project’s life cycle. Presented in
Table 6.1, this list forms the basis of the IPRA tool and can be considered comprehen-
sive for pursuing capital projects outside of one’s home jurisdiction. Each section, cat-
egory, and element of the IPRA tool has a corresponding detailed description to assist
project participants in gaining an understanding of the issues related to that compo-
nent of the risk being considered. The IPRA assessment sheets and element descrip-
tions are to be used together by a project team to identify and assess specific risk
factors, including the likelihood of occurrence and relative impact for each element.
The development, format, and use of the assessment sheets and associated output doc-
uments are discussed in detail in the application section of this chapter.

RISK ASSESSMENT WORKSHOPS

The research team hypothesized that all elements are not equally important with
respect to their relative impact on overall project success. Their importance varies
depending on the project type and location as well. The research team believed that
there would be a significant benefit if a standard baseline (impact) risk value could
be determined for each element. A standard guidance value of a risk’s effect on a
project would be of assistance when the risk is unknown by project participants and
also could provide a framework to rank order risk elements on the project for subse-
quent mitigation.
We determined that the best way to develop reasonable and credible relative
impact values for each element was to rely on the expertise of a broad range of con-
struction industry experts. The research team hosted four risk assessment workshops
in which a total of 44 industry executives were involved. These executives reported
results on approximately US$23 billion worth of international projects from 20

different countries. Participants represented 25 organizations and were made up of
26 contractor and 18 owner representatives. In addition to having an owner-contractor
balance, a fairly equitable distribution of project types and locations was achieved.
Each participant completed a series of documents at the workshops; in addition to per-
sonal history, participants were asked to consider and document a typical international
project that they had completed recently for the organization they represented. The
details regarding the workshops and the projects used for this effort are provided in
CII Research Report 181-11 (CII, 2003b) and are beyond the scope of this chapter.
The element rankings obtained from the workshops were developed statistically
and yielded the relative impact value for each element. The relative impact value of
each element is its rank, the calculation of which is based on its potential impact to the
project within its category, section, and the overall IPRA tool. Definitions were devel-
oped for each of the five values based on a review of the literature and industry prac-
tices. The overall rankings were broken into five levels of corresponding relative
impact that were given letter designations ranging from A to E, with A = negligible,
B = minor, C = moderate, D = significant, and E = extreme, corresponding to degrees
of impact as defined in Table 6.2. The baseline relative impact values of the signifi-
cant (D) and extreme (E) elements are given in Appendix 6A.