**1. Introduction - risk management context for complex infrastructure projects**

Risk is defined, according to ISO 31000, as the effect of uncertainty on the objectives to be achieved [1]. The last decades have been marked by notable developments in terms of infrastructure construction projects but also by unfulfilled objectives which challenge the construction industry. Strong gaps are identified in terms of organization and general management at the project level, in particular relating to the interfaces between the project actors whose specific objectives may be different or even contradict. This results in a persistent difficulty for controlling risks with the increase of the number of stakeholders. These difficulties are further heightened for complex and strategic projects. A complex and strategic project is a project that requires during its life cycle, an organization and a specific approach to manage the project, risk and opportunities [2]. Whether a project is classified as complex and strategic depends on several criteria. These criteria may relate to the organization or company which manages the project such as the level of fit with the general strategy, the main objectives of the organization, its culture and financial

state. Other criteria relate to the nature of the project such as the commercial environment, the financial plan, the brand image, the organizational plan, and the technical features. External criteria are the environmental factors such as politic factors, legal factors, social factors, international aspects when the project is abroad. External factors occur outside the organization but can lead to internal changes and are, for the most part, beyond the control of the organization [3].

factors are analyzed using a formalized multi-criteria approach. This approach supports to take an optimal strategic decision for assigning some resources to a given (possible) project and later, after preliminary studies, to adequately consider detailed studies. For the client or project owner, the strategic decision corresponds to the validation of the project program and starting the step "call for tenders." For the contractor, the strategic decision corresponds to the decision to respond to the call for tenders or to pull out of the project. Then, various possible projects can be compared in order to choose and pursue the most beneficial ones, allocate the project risk optimally and control it as the project progresses. On the other hand, the strategic and environmental risk analysis process can be adapted to the evolving nature of the infrastructure project, refining the first identification of risk factors performed in the early phase of the project [8]. In the method proposed, special attention will be paid to the point of view of a private contractor with the option of

In this perspective, Section 2 of the book chapter provides the modeling of the strategic and environmental risk analysis process in early phase of complex infrastructure projects. In the development of the process, we emphasized on a hybrid approach for the identification and analysis of risk factors which combines literature analysis, case studies of complex infrastructure projects and the Delphi technique. In Section 3, the qualitative risk assessment method and decision-making

**2. Strategic and environmental risk analysis of a complex infrastructure**

We call "project risks" as the effects of uncertainties on the project objectives in

For analyzing the environmental factors in a complex project environment and understanding different stakeholders' perspectives, we followed a hybrid analysis

1.a literature review about risk management in the early phase of infrastructure

2.case studies of infrastructure projects for identifying the main risk and

3.Delphi-technique sessions for understanding the perspectives of the main project stakeholders (project owner, principal contractor, consultant and other

terms of time, cost, performance, quality and safety. The project risks must be managed and controlled optimally in order to achieve the project objectives. Project risk management consists of identifying risk events and analyzing them qualitatively and quantitatively. Risk analysis qualifies and/or quantifies the probability of occurrence of an identified risk and/or opportunity event and their possible negative and/or positive impact(s) on the project objectives. Finally, action plans can be proposed to the risk to a level where the residual risk is accepted. In the development of an effective risk management method, it is necessary to take into account the project objectives, the project's environmental factors and integrate the vision of the various project partners. The most classic objective of an infrastructure construction project is to manage and optimize costs and deadlines, to ensure quality and performance [9–11]. In the context of infrastructure projects, performance is understood over the long term, because it may include the entire period of mainte-

process will be explained following the principles presented in Section 2.

adapting for multiple stakeholders if necessary.

*Risk Analysis in Early Phase of Complex Infrastructure Projects*

*DOI: http://dx.doi.org/10.5772/intechopen.94643*

**project**

nance and operation.

methodology with:

projects,

**21**

opportunity factors,

Infrastructure construction projects belong to this type of strategic and complex projects as they focus on the development and maintenance of services, facilities, and systems. Infrastructure construction projects include bridges, power & energy infrastructures, roads and railroads, airports, water infrastructures and dams, and waste management plants. Infrastructure projects have a long life-cycle including the maintenance-exploitation phase. Moreover, infrastructure projects must manage complex organizational aspects, complex resource management, and complex technical and financial aspects. Such projects can be also affected easily by the environmental factors, for instance the macro-economic conditions or the politic factors of the country. These types of projects are major investment projects and can be funded by private companies, publicly, or combined as a public-private partnership (a collaboration of government entities and private sector companies). Because of all these aspects, the risk and opportunities to the project are critical and need to be identified and analyzed before any decision-making process takes place. The ITA/AITES report highlights how risk management is important in the early phase of complex tunneling projects. The report recommends a set of good practices with include the shared analysis of the risk of both the client and the potential contractors [4].

In addition, the contractual framework of infrastructure projects can be very complex; it leads to redefining the role of the project actors, their responsibilities and missions. Risk management is essential in order to identify and assess the risk and opportunity events throughout the project life cycle. Especially for the private contractor, identification of the risk and opportunity events is crucial in the early phase of the project. In this phase, the candidate contractor needs to make a strategic decision for making an offer to the tender for the project or to pull out. This decision will lead to the initial risk assessment, then offer submission with a detailed risk analysis to be able to negotiate the contract terms with the client, and to define the risk allocation plan when contract awarded [5, 6].

The risk analysis in the early phase enriches the decision-making process. The risk analysis provides rational arguments which help to avoid or mitigate the probability or impacts of negative risk events and to increase the probability and impacts of positive events which are called opportunities [7]. However, literature review shows a gap in terms of risk identification and assessment methods concerning the early phase of a complex infrastructure project [2]. The project risk identification and assessment methods in the literature consider the risk factors in a static way. Therefore, these methods have some limitations in term of adaptability and even applicability to the early phase. The difficulty is that, in the early phase of a complex project, the identification of risk events can be limited because of a scarce level of information about the project and uncertainties. With the project progresses, more information becomes available, and more precise risk identification and assessment can be performed. For this reason, developing a formalized risk management method in the early phase is necessary to identify and analyze the major risks and opportunities of an infrastructure project and to make a strategic decision for the project's future.

Therefore, the purpose of this paper is to propose a strategic and environmental risk analysis process which is applicable to the early stage and at the strategic level of an infrastructure project. In the process, the environmental risk and opportunity

### *Risk Analysis in Early Phase of Complex Infrastructure Projects DOI: http://dx.doi.org/10.5772/intechopen.94643*

state. Other criteria relate to the nature of the project such as the commercial environment, the financial plan, the brand image, the organizational plan, and the technical features. External criteria are the environmental factors such as politic factors, legal factors, social factors, international aspects when the project is abroad. External factors occur outside the organization but can lead to internal changes and

Infrastructure construction projects belong to this type of strategic and complex projects as they focus on the development and maintenance of services, facilities, and systems. Infrastructure construction projects include bridges, power & energy infrastructures, roads and railroads, airports, water infrastructures and dams, and waste management plants. Infrastructure projects have a long life-cycle including the maintenance-exploitation phase. Moreover, infrastructure projects must manage complex organizational aspects, complex resource management, and complex technical and financial aspects. Such projects can be also affected easily by the environmental factors, for instance the macro-economic conditions or the politic factors of the country. These types of projects are major investment projects and can be funded by private companies, publicly, or combined as a public-private partnership (a collaboration of government entities and private sector companies). Because of all these aspects, the risk and opportunities to the project are critical and need to be identified and analyzed before any decision-making process takes place. The ITA/AITES report highlights how risk management is important in the early phase of complex tunneling projects. The report recommends a set of good practices with include the shared analysis of the risk of both the client and the potential

In addition, the contractual framework of infrastructure projects can be very complex; it leads to redefining the role of the project actors, their responsibilities and missions. Risk management is essential in order to identify and assess the risk and opportunity events throughout the project life cycle. Especially for the private contractor, identification of the risk and opportunity events is crucial in the early phase of the project. In this phase, the candidate contractor needs to make a strategic decision for making an offer to the tender for the project or to pull out. This decision will lead to the initial risk assessment, then offer submission with a detailed risk analysis to be able to negotiate the contract terms with the client, and to define

The risk analysis in the early phase enriches the decision-making process. The risk analysis provides rational arguments which help to avoid or mitigate the probability or impacts of negative risk events and to increase the probability and impacts of positive events which are called opportunities [7]. However, literature review shows a gap in terms of risk identification and assessment methods concerning the early phase of a complex infrastructure project [2]. The project risk identification and assessment methods in the literature consider the risk factors in a static way. Therefore, these methods have some limitations in term of adaptability and even applicability to the early phase. The difficulty is that, in the early phase of a complex project, the identification of risk events can be limited because of a scarce level of information about the project and uncertainties. With the project progresses, more information becomes available, and more precise risk identification and assessment can be performed. For this reason, developing a formalized risk management method in the early phase is necessary to identify and analyze the major risks and opportunities of an infrastructure project and to make a strategic decision for the

Therefore, the purpose of this paper is to propose a strategic and environmental risk analysis process which is applicable to the early stage and at the strategic level of an infrastructure project. In the process, the environmental risk and opportunity

the risk allocation plan when contract awarded [5, 6].

are, for the most part, beyond the control of the organization [3].

*Issues on Risk Analysis for Critical Infrastructure Protection*

contractors [4].

project's future.

**20**

factors are analyzed using a formalized multi-criteria approach. This approach supports to take an optimal strategic decision for assigning some resources to a given (possible) project and later, after preliminary studies, to adequately consider detailed studies. For the client or project owner, the strategic decision corresponds to the validation of the project program and starting the step "call for tenders." For the contractor, the strategic decision corresponds to the decision to respond to the call for tenders or to pull out of the project. Then, various possible projects can be compared in order to choose and pursue the most beneficial ones, allocate the project risk optimally and control it as the project progresses. On the other hand, the strategic and environmental risk analysis process can be adapted to the evolving nature of the infrastructure project, refining the first identification of risk factors performed in the early phase of the project [8]. In the method proposed, special attention will be paid to the point of view of a private contractor with the option of adapting for multiple stakeholders if necessary.

In this perspective, Section 2 of the book chapter provides the modeling of the strategic and environmental risk analysis process in early phase of complex infrastructure projects. In the development of the process, we emphasized on a hybrid approach for the identification and analysis of risk factors which combines literature analysis, case studies of complex infrastructure projects and the Delphi technique. In Section 3, the qualitative risk assessment method and decision-making process will be explained following the principles presented in Section 2.
