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

We call "project risks" as the effects of uncertainties on the project objectives in 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 maintenance and operation.

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


contracted parties) about risk management in a complex project environment in the early phase, defining the process of the strategic and environmental risk analysis method, identifying and assessing main risk and opportunity factors in the early phase of the project.

The results of the literature review and the case studies revealed that in most cases of complex and strategic infrastructure projects, the main risk and opportunity factors are financial, economic, political-legal, organizational, managerial, strategic and technical factors, payment issues, construction design and technical risk, and inappropriate risk allocation across the project stakeholders [12–15].

Then, Delphi-technique sessions were carried out with the main stakeholders of infrastructure projects such as project owner, contractor, financial partners, and external stakeholders for defining a risk management strategy in the early phase.

qualitative risk assessment method to analyze the overall risk level of the project in

*Strategic and environmental analysis in the early phases of an infrastructure construction project.*

Objective Realize the strategic analysis and environmental analysis before the decision GO/ STOP for the project, identify the risk and opportunity factors

> Project scope, program, localization of the project, project life-cycle, client, commercial environment, contract information, budget, competitive environment, technical information, financial information, project life-cycle, organization, resource information, external and internal environmental factors of the project

Following the literature review and the Delphi-Technique sessions with the project stakeholders, in the first step, a set of risk factors is defined for both the external and internal environment as part of the strategic and environmental risk analysis process (**Table 2**). The objective is to identify the risk and opportunity factors of a complex project related to the external and internal environment, to carry out a qualitative or quantitative risk assessment in the early phases, and to make a strategic decision for the project's future. Then, a risk breakdown structure is developed with factors and sub-factors, and a qualitative evaluation method is

**1. External environmental factors 2. Internal environmental factors**

1.1. Political-legal 2.1. Project life-cycle 1.2. Contractual 2.2. Organization 1.3. Economic 2.3. Technical features 1.4. Social 2.4. Financial features

In project management, it is common to analyze the factors that are closer and more directly related to management, such as time management, resource or cost management. It will be more difficult to control the more general factors from the exterior perimeter to the project. It is therefore essential to be aware of the environmental factors that can represent restrictions and favorable circumstances in order to propose accurate risk response planning for the project success. This analysis will also apply to the project risks related to adverse environmental factors. In all cases, organizations must be prepared to mitigate the negative risk. The external environment covers the factors that can influence the project from outside the organizations [25–27]. We can distinguish the macro-environment from the microenvironment. The macro-environment analysis focuses on the broad scope that will

proposed for the risk and opportunity assessment.

**Project environmental factors**

1.5. Client influence

1.7. Technology 1.8 Force Majeure

**Table 2.**

**23**

1.6. Competitive environment

**Phase(s) Strategic studies - feasibility**

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

*Risk Analysis in Early Phase of Complex Infrastructure Projects*

Method /tool Strategic and environmental analysis

**2.1 External environmental factors**

*External and internal environmental factors.*

the early phase.

**Table 1.**

Available information

Following the literature review, analysis of case studies and the Delphi-technique sessions, we developed the strategic and environmental risk analysis method with an external and internal risk analysis. The external risk analysis carries out the identification and analysis of the risk and opportunity factors related to the external environment of the project, such as political-legal, economic, social, technological, contractual, competitive, client's influence and force majeure factors [15, 16]. In parallel, the internal risk analysis identifies and analyzes the risk and opportunity factors related to the internal environment of the project facing the project stakeholders. These factors comprise the stakeholders' financial situation, technical strength/weakness, organizational dynamics, relationships with other project stakeholders, project client's influence, project competitors' influence and the interface between project stakeholders [17–19].

The life cycle of infrastructure construction projects can be very long with multiple phases such as feasibility studies, preliminary studies, technical studies and design, competitive dialog or tendering and contracting, administrative procedures, construction, maintenance and operation (**Figure 1**). The aforementioned risk analysis in the early phase of the project which includes strategic studies and the project's feasibility is essential for managing the risk across the whole project's life [20–21]. In these phases, project managers do not have detailed information about the project, they have only information about project scope, program and project environment. For this reason, the identification and assessment of project risks can be very challenging because of the lack of knowledge and uncertainties. Therefore, a strategic and environmental analysis can be used for identifying the main risk and opportunity factors to take a strategic decision about the project's future (GO or STOP decision) and to define a risk allocation strategy or/and preliminary risk response planning before the contracting phase (**Table 1**). The goal is to qualify the threats-opportunities and strengths-weaknesses of the project related to its environment [22–24]. Then, we detailed the risk and opportunity factors related to the external and internal environment of an infrastructure project and defined a

**Figure 1.** *Life-cycle of an infrastructure construction project.*


#### **Table 1.**

contracted parties) about risk management in a complex project environment in the early phase, defining the process of the strategic and environmental risk analysis method, identifying and assessing main risk and opportunity factors

The results of the literature review and the case studies revealed that in most cases of complex and strategic infrastructure projects, the main risk and opportunity factors are financial, economic, political-legal, organizational, managerial, strategic and technical factors, payment issues, construction design and technical risk, and inappropriate risk allocation across the project stakeholders [12–15].

Then, Delphi-technique sessions were carried out with the main stakeholders of infrastructure projects such as project owner, contractor, financial partners, and external stakeholders for defining a risk management strategy in the early phase. Following the literature review, analysis of case studies and the Delphi-technique sessions, we developed the strategic and environmental risk analysis method with an external and internal risk analysis. The external risk analysis carries out the identification and analysis of the risk and opportunity factors related to the external environment of the project, such as political-legal, economic, social, technological, contractual, competitive, client's influence and force majeure factors [15, 16]. In parallel, the internal risk analysis identifies and analyzes the risk and opportunity

factors related to the internal environment of the project facing the project

stakeholders. These factors comprise the stakeholders' financial situation, technical strength/weakness, organizational dynamics, relationships with other project stakeholders, project client's influence, project competitors' influence and the

The life cycle of infrastructure construction projects can be very long with multiple phases such as feasibility studies, preliminary studies, technical studies and design, competitive dialog or tendering and contracting, administrative procedures, construction, maintenance and operation (**Figure 1**). The aforementioned risk analysis in the early phase of the project which includes strategic studies and the project's feasibility is essential for managing the risk across the whole project's life [20–21]. In these phases, project managers do not have detailed information about the project, they have only information about project scope, program and project environment. For this reason, the identification and assessment of project risks can be very challenging because of the lack of knowledge and uncertainties. Therefore, a strategic and environmental analysis can be used for identifying the main risk and opportunity factors to take a strategic decision about the project's future (GO or STOP decision) and to define a risk allocation strategy or/and preliminary risk response planning before the contracting phase (**Table 1**). The goal is to qualify the threats-opportunities and strengths-weaknesses of the project related to its environment [22–24]. Then, we detailed the risk and opportunity factors related to the external and internal environment of an infrastructure project and defined a

in the early phase of the project.

*Issues on Risk Analysis for Critical Infrastructure Protection*

interface between project stakeholders [17–19].

**Figure 1.**

**22**

*Life-cycle of an infrastructure construction project.*

*Strategic and environmental analysis in the early phases of an infrastructure construction project.*

qualitative risk assessment method to analyze the overall risk level of the project in the early phase.

Following the literature review and the Delphi-Technique sessions with the project stakeholders, in the first step, a set of risk factors is defined for both the external and internal environment as part of the strategic and environmental risk analysis process (**Table 2**). The objective is to identify the risk and opportunity factors of a complex project related to the external and internal environment, to carry out a qualitative or quantitative risk assessment in the early phases, and to make a strategic decision for the project's future. Then, a risk breakdown structure is developed with factors and sub-factors, and a qualitative evaluation method is proposed for the risk and opportunity assessment.


#### **Table 2.**

*External and internal environmental factors.*

#### **2.1 External environmental factors**

In project management, it is common to analyze the factors that are closer and more directly related to management, such as time management, resource or cost management. It will be more difficult to control the more general factors from the exterior perimeter to the project. It is therefore essential to be aware of the environmental factors that can represent restrictions and favorable circumstances in order to propose accurate risk response planning for the project success. This analysis will also apply to the project risks related to adverse environmental factors. In all cases, organizations must be prepared to mitigate the negative risk. The external environment covers the factors that can influence the project from outside the organizations [25–27]. We can distinguish the macro-environment from the microenvironment. The macro-environment analysis focuses on the broad scope that will influence the project directly or indirectly, such as political, legal, macro-economic and social factors. The micro-environment analysis highlights the interactions and relationships with other project stakeholders, the influence of the stakeholders on the project, the competitive analysis, and the technological factors. The interface between the macro-environment and the micro-environment includes lobbying, conventions, and contracts which determine the effects of the global environmental factors on the project perimeter.

In the external environmental risk and opportunity analysis, a risk breakdown structure has been elaborated with the external environmental factors and sub-factors of an infrastructure construction project (**Table 3**).

In the external environment eight risk factors are defined: (1.1) political-legal, (1.2) contractual, (1.3) economic, (1.4) social, (1.5) client influence, (1.6) competitive environment, (1.7) technology, and (1.8) force majeure.

Then, a qualitative multi-criteria evaluation takes place for assessing the risk level of the external environmental factors. As a result, a qualitative risk matrix is obtained. Each criterion is evaluated on a qualitative 5-level Likert scale [28]: High Risk, Risk, Neutral, Opportunity, High Opportunity.

Political-legal factors determine the extent to which government and government policy may impact on an organization or a specific industry as well as trade, fiscal and taxation policies, employment legislation, consumer law, trade regulation, health and safety regulations, unexpected legislation and international rules.

Contractual factors consider complexities and uncertainties which belong to the general contractual frame such as the repartition of roles and missions of stakeholders, responsibility limits and risk allocation between the stakeholders.

Economic factors influence the economy and its performance, which can give impacts on the organization and its profitability directly such as interest rates, unemployment rates, material costs and foreign exchange rates.

Social factors focus on the social environment and help an organization to understand its clients' needs and requirements. Social factors can include changing education levels, cultural trends, attitude changes and changes in lifestyles, and social security factors such as sabotage against the project, mobbing, strikes, criminal activities.

The influence of the stakeholders on the project and the relationship between project stakeholders is another external environmental factor. Mainly the client or project owner's needs must be analyzed for the project success. For the client influence factor, nine sub-factors are defined: image of the client, relations with the client, communication frequency with the client, feedback from last common projects, experience of the client for complex and strategic construction projects, project management assistance of the client, project budget allowance, financial capacity, and organizational change management-acceptance for value propositions.

**2.2 Internal environmental factors**

1.8. Force majeure

**Table 3.**

1.1. Political-legal

1.2. Contractual 1.3. Economic 1.4. Social

factors of an infrastructure project (**Table 4**).

Opportunity.

**25**

The internal environment covers the risk and opportunity factors that can influence the project from the inside of the organization or company. These factors comprise inter alia the features and complexities related to long project life-cycle, project management issues associated with a long life-cycle, and organizational structure. The organizational structure issues include resources, competences, communication and decision-making flows, corporate missions, corporate culture,

**1. External environmental factors Sub-factors Qualitative evaluation**

1.5.2. Relations with the client 1.5.3. Communication frequency

1.5.5. Experience of the client

1.5.8. Financial capacity of the client 1.5.9. Change management ability

1.5.4. Feed-back

1.5.6. PM assistance 1.5.7. Project budget

1.6.2. Competitor's size 1.6.3. Technical capacity 1.6.4. Financial capacity

1.7.2. Special products

1.7.3. Material price fluctuation

1.6.5. Partners

1.5. Client influence 1.5.1. Image of the client

*Risk Analysis in Early Phase of Complex Infrastructure Projects*

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

1.6. Competitive environment 1.6.1. Number of the competitors

1.7. Technology 1.7.1. Technical difficulties

*Factors and sub-factors of the external environment of a complex project.*

HIGH RISK

RISK

NEUTRAL

OPPORTUNITY

HIGH

OPPORTUNITY

In the internal environmental risk and opportunity analysis, a risk breakdown structure has been elaborated with the internal environmental factors and sub-

In the internal environmental analysis four factors are defined: (2.1) project life-

The project life-cycle can be long for an infrastructure construction project with

cycle, (2.2) organization, (2.3) technical aspects, and (2.4) financial aspects. Then a qualitative multi-criteria evaluation takes place for assessing the risk level of the internal environmental factors. As a result, a qualitative risk matrix is obtained. Each sub-factor is evaluated on a qualitative 5-level Likert scale alike as in the external environmental analysis: High Risk, Risk, Neutral, Opportunity, High

several phases, tasks, and milestones. For the project life-cycle factor, six

technical features and financial properties of the project [17–19].

The competitive factor is very challenging in the early phase for analyzing the strengths and weakness of the competitors. For the competitive environment, five sub-factors are defined: the number of competitors, competitor's size, technical capacity, financial capacity, and partners.

Technological factors indicate the rate of technological innovation and development that could affect a market or industry such as changes in technology, automation, new methods of distribution, manufacturing, logistics, research, and development. For the technology factor, three sub-factors are defined: technical difficulties, special products or innovations requested for the project and material price fluctuations.

Force majeure factor refers to an event or effect that can be neither anticipated nor controlled. There are dozens of circumstances or events that can be classed as examples of force majeure: earthquakes, hurricanes, explosions, floods, energy blackouts, epidemic diseases and war.

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


#### **Table 3.**

influence the project directly or indirectly, such as political, legal, macro-economic and social factors. The micro-environment analysis highlights the interactions and relationships with other project stakeholders, the influence of the stakeholders on the project, the competitive analysis, and the technological factors. The interface between the macro-environment and the micro-environment includes lobbying, conventions, and contracts which determine the effects of the global environmental

In the external environmental risk and opportunity analysis, a risk breakdown

In the external environment eight risk factors are defined: (1.1) political-legal,

Then, a qualitative multi-criteria evaluation takes place for assessing the risk level of the external environmental factors. As a result, a qualitative risk matrix is obtained. Each criterion is evaluated on a qualitative 5-level Likert scale [28]: High

Political-legal factors determine the extent to which government and government policy may impact on an organization or a specific industry as well as trade, fiscal and taxation policies, employment legislation, consumer law, trade regulation, health and safety regulations, unexpected legislation and international rules. Contractual factors consider complexities and uncertainties which belong to the general contractual frame such as the repartition of roles and missions of stakeholders, responsibility limits and risk allocation between the stakeholders.

Economic factors influence the economy and its performance, which can give impacts on the organization and its profitability directly such as interest rates,

Social factors focus on the social environment and help an organization to understand its clients' needs and requirements. Social factors can include changing education levels, cultural trends, attitude changes and changes in lifestyles, and social security factors such as sabotage against the project, mobbing, strikes,

The influence of the stakeholders on the project and the relationship between project stakeholders is another external environmental factor. Mainly the client or project owner's needs must be analyzed for the project success. For the client influence factor, nine sub-factors are defined: image of the client, relations with the client, communication frequency with the client, feedback from last common projects, experience of the client for complex and strategic construction projects, project management assistance of the client, project budget allowance, financial capacity, and organizational change management-acceptance for value propositions.

The competitive factor is very challenging in the early phase for analyzing the strengths and weakness of the competitors. For the competitive environment, five sub-factors are defined: the number of competitors, competitor's size, technical

Technological factors indicate the rate of technological innovation and development that could affect a market or industry such as changes in technology, automation, new methods of distribution, manufacturing, logistics, research, and development. For the technology factor, three sub-factors are defined: technical difficulties, special products

Force majeure factor refers to an event or effect that can be neither anticipated nor controlled. There are dozens of circumstances or events that can be classed as examples of force majeure: earthquakes, hurricanes, explosions, floods, energy

or innovations requested for the project and material price fluctuations.

structure has been elaborated with the external environmental factors and

(1.2) contractual, (1.3) economic, (1.4) social, (1.5) client influence, (1.6) competitive environment, (1.7) technology, and (1.8) force majeure.

sub-factors of an infrastructure construction project (**Table 3**).

unemployment rates, material costs and foreign exchange rates.

Risk, Risk, Neutral, Opportunity, High Opportunity.

*Issues on Risk Analysis for Critical Infrastructure Protection*

factors on the project perimeter.

criminal activities.

capacity, financial capacity, and partners.

blackouts, epidemic diseases and war.

**24**

*Factors and sub-factors of the external environment of a complex project.*

### **2.2 Internal environmental factors**

The internal environment covers the risk and opportunity factors that can influence the project from the inside of the organization or company. These factors comprise inter alia the features and complexities related to long project life-cycle, project management issues associated with a long life-cycle, and organizational structure. The organizational structure issues include resources, competences, communication and decision-making flows, corporate missions, corporate culture, technical features and financial properties of the project [17–19].

In the internal environmental risk and opportunity analysis, a risk breakdown structure has been elaborated with the internal environmental factors and subfactors of an infrastructure project (**Table 4**).

In the internal environmental analysis four factors are defined: (2.1) project lifecycle, (2.2) organization, (2.3) technical aspects, and (2.4) financial aspects.

Then a qualitative multi-criteria evaluation takes place for assessing the risk level of the internal environmental factors. As a result, a qualitative risk matrix is obtained. Each sub-factor is evaluated on a qualitative 5-level Likert scale alike as in the external environmental analysis: High Risk, Risk, Neutral, Opportunity, High Opportunity.

The project life-cycle can be long for an infrastructure construction project with several phases, tasks, and milestones. For the project life-cycle factor, six


sub-factors are defined: strategic studies, design-technical-price studies, call for tenders-contracting, construction, maintenance-exploitation, and demolishingremoval. The objective is to evaluate the risk and opportunity factors related to the project planning and time management, the cost management for the whole project life-cycle, the complexity of tasks, and the knowledge and/or available information

The structural organization is composed of various stakeholders with multiple organizational structures, services, and partners. There are risk and opportunity factors related to stakeholder's availability, competence, degree of experience, collaboration skills, communication skills, coordination, managerial skills and management of project resources such as resource availability, resource acquisition and

For the organization factor, ten sub-factors are defined: Project Management Office (PMO), engineering department, construction department, financial department, legal department, architecture office, sub-contractors, consultants, main-

For the technical features, six sub-factors are defined: technical complexity of the project, mastery of construction techniques, innovation proposition, resource

For the financial features, we can consider the factors related to financial resources, project estimation, profitability, managerial costs, and reserves. For the financial features factor, four sub-factors are defined: financial resource, project

**3. Qualitative multi-criteria risk analysis and decision-making process**

In the definition of the project execution model, a stakeholder uses resources for realizing the project activities or tasks [2]. According to this definition, the main dimensions of a project are the project stakeholders or the structural organization, the project life cycle and the resources. The internal and external environmental factors can induce risk events which may have positive and negative consequences for the project stakeholders, resources and the project progression. In the end, these factors may impact the project objectives in terms of time, cost, quality, and safety

For instance, the macro-economic factors can influence the project funding or raw material costs; a politic or social factor can influence a stakeholder behavior; a legal factor can influence the project progression; the behavior of the public client can influence the relational flows between the stakeholders; positive public opinion

Following the modeling of the risk breakdown structure of the environmental factors, the next step is to define a qualitative risk evaluation method to assess the external and internal environmental risk factors and to develop a global risk evalu-

1.in an early stage and at a strategic level for taking a strategic decision about the

2.before the contracting phase in order to develop a risk allocation plan.

about the project can induce opportunities for the project's realization.

ation for the project. This assessment can be conducted at two levels:

about the project features.

tainers, and suppliers.

[4] (**Figure 2**).

project,

**27**

transportation, resource planning and optimization.

*Risk Analysis in Early Phase of Complex Infrastructure Projects*

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

availability, quality management, and safety management.

cost estimation, profitability forecast and, reserves.

**3.1 Qualitative multi-criteria risk analysis**

#### **Table 4.**

*Factors and sub-factors of the internal environment of a complex project.*

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

**2. Internal environmental factors Sub-factors Qualitative evaluation**

2.1.2. Design-Technical studies 2.1.3. Call for tenders-Contracting 2.1.4. Construction 2.1.5. Maintenance-Exploitation 2.1.6. Demolishing-Removal

Management Office 2.2.2. Engineering Department 2.2.3. Construction Department 2.2.4. Financial Department 2.2.5. Legal Department 2.2.6. Architecture Office 2.2.7. Sub-contractors 2.2.8. Consultants 2.2.9. Maintainers 2.2.10. Suppliers

complexity 2.3.2. Mastery of constructive technique 2.3.3. Innovation proposition 2.3.4. Resource availability

2.3.5. Quality management

2.3.6. Safety

2.4.2. Project cost estimation 2.4.3. Profitability forecast 2.4.4. Reserves

management

HIGH RISK

RISK

MEDIUM

OPPORTUNITY

HIGH

OPPORTUNITY

2.1. Project life-cycle 2.1.1. Strategic studies

*Issues on Risk Analysis for Critical Infrastructure Protection*

2.2. Organization 2.2.1. Project

2.3. Technical aspects 2.3.1. Technical

2.4. Financial aspects 2.4.1. Financial resource

*Factors and sub-factors of the internal environment of a complex project.*

**Table 4.**

**26**

sub-factors are defined: strategic studies, design-technical-price studies, call for tenders-contracting, construction, maintenance-exploitation, and demolishingremoval. The objective is to evaluate the risk and opportunity factors related to the project planning and time management, the cost management for the whole project life-cycle, the complexity of tasks, and the knowledge and/or available information about the project features.

The structural organization is composed of various stakeholders with multiple organizational structures, services, and partners. There are risk and opportunity factors related to stakeholder's availability, competence, degree of experience, collaboration skills, communication skills, coordination, managerial skills and management of project resources such as resource availability, resource acquisition and transportation, resource planning and optimization.

For the organization factor, ten sub-factors are defined: Project Management Office (PMO), engineering department, construction department, financial department, legal department, architecture office, sub-contractors, consultants, maintainers, and suppliers.

For the technical features, six sub-factors are defined: technical complexity of the project, mastery of construction techniques, innovation proposition, resource availability, quality management, and safety management.

For the financial features, we can consider the factors related to financial resources, project estimation, profitability, managerial costs, and reserves. For the financial features factor, four sub-factors are defined: financial resource, project cost estimation, profitability forecast and, reserves.
