Abstract
Despite growing proficiency in risk management, complex infrastructure construction
projects remain highly susceptible to manageability problems. An important ground for these
problems lies in uncertainty, rather than risk. Uncertainty has as problematic feature that
managers have a limited framework of reference to base their decisions on. As a
consequence, they (often unwittingly) apply coping behaviour that does give them a
framework of reference, but does not provide the required manageability. Perhaps even the
contrary. The holds managers grasp are mostly the ones that are most favourable to them
from a project management perspective, although they may overlook, ignore or neglect
implications that the project managers cannot oversee or understand. The direction of
exploration for possible solution that this article suggests is better understanding of the
functioning of the technical and organisational system the project consists of, without the
need of extensive additional engineering knowledge.
1. Introduction
To find out why manageability of complex infrastructure projects is a persistent problem, two
cases will be used: the RandstadRail light rail transport system in the Rotterdam-The Hague
conurbation in the western Netherlands and the Souterrain; a tunnel to facilitate RandstadRail
annex underground car park in the centre of The Hague. In both cases, project management
teams were confronted with manageability problems. The RandstadRail system was plagued
by many disturbances and four derailments within the first month of operation. The Souterrain
flooded during construction due to a breach in a subsoil strut component that was supposed to
keep groundwater out of the excavation during construction. Both cases are examples of
situations with impeded manageability and both are the result of decisions that involved the
consideration of risk.
The purpose of the study is to understand how managers act when making decisions
that involve risk. This requires some background information of the setting of project
management decisions. Decisions usually involve two types of actors1:
The superiors: actors who have decision-making authority, but usually less detailed
information on the technical system. They depend on the information provided by
subordinates. They are usually related to the client.
The subordinates: actors who work on behalf of the superiors (e.g. contractors or
specialist engineering staff) and who own most detailed information on the technical
system. They depend on the decision-making authority of superiors.
The study will in both cases be focused on a specific implementation risk on which the project
management had to make a decision, because that is where risk manifests. It is not risk itself
that causes unmanageability; after all, there are ways to mitigate risk. Deviation occurs
because known potential threats are not adequately solved or the threats are unknown or
overlooked. Project managers’ decisions on risk are therewith the nexuses of manageability.
The study of decision-making under risk and uncertainty was based on semi-structured
interviews with project managers of relevant actors (both superiors and subordinates). The
following central topics were explored:
The position and interests of actors in trade-offs with uncertainty;
The information available on the risk and the decision-making options;
The ratio behind the decision made.
1
Compare for instance Cleland and King’s (1983) distinction between project managers and functional
managers and Jones and Deckro’s (1993) distinction between supervisors and functional specialists.
A key-decision in the RandstadRail project2
The RandstadRail lightrail project combined three different rail transport modalities to a new
lightrail system. The new system replaced an existing commuter railway service. The regional
authorities of Rotterdam and The Hague were the clients of the project. The main
complexities in the system occurred in the larger The Hague section of the project. The client
had no experience in any kind of engineering projects and did not have an extensive
engineering staff. Therefore, it hire the municipality of The Hague as contractor for the
implementation, arranged with a lump sum contract that transferred all risks to the contractor.
The political representative of the regional authorities retained the decision-making authority.
This set-up was possible, because the municipality of The Hague is the main constituent of
the regional authorities and its alderman chaired the client’s project management board.
Throughout the preparation process, the client made many scope changes. There were
a few reasons. First, the terms of reference were drawn up early due to a momentum in the
decision-making process in which central government funding could be obtained. They were
therefore somewhat premature and included requirements that could not be obtained with
existing lightrail technology, which was relatively sparsely known in the Netherlands.
Second, input from specialist contractors, such as the future operator, was restricted, because
privatisation urged the client to maintain a level playing field.3 Third, expectations of
transferability of existing systems appeared over-optimistic.
The numerous design changes hardly caused cost overruns, because construction
tendering had resulted in some windfall and central government’s lump sum subsidy for the
project was ample. The scope changes did imply extension of the conversion work, however,
while the implementation time for the conversion was not extended. The conversion required
a halt of operations and the client was committed to keeping the service stop to a minimum.
Functional specialists of the contractor’s project organisation (subordinates) warned for
unmanageability in the conversion works. The client’s decision-makers (superiors) – elected
aldermen from the constituent municipalities – had to make the decision whether they would
comply with these concerns, or they would stick to the original schedules. They asked the
specialists whether it was possible that all activities fitted in the tight conversion schedules.
The specialists could not deny this, although they had a gut-feeling that the manageability of
the project was compromised. But they could not objectify these concerns or make them
concrete.
The client’s decision-makers reckoned that the main risk they were taking was that the
opening of the system would be delayed. But when operations were started (indeed with a
delay) the system was plagued with numerous disturbances and four derailments. After the
fourth derailment, with seventeen injured passengers, the Transport Inspectorate ordered a
halt of operations. This incident took place under special circumstances caused by occurrence
of one of the numerous disturbances. It took almost a year to solve all technical problems and
to reopen the system. Incident investigations concluded that the malfunctioning of the system
was due to a technical defect that originated probably in the chaos of the conversion works.
So in fact the applicable risk had been more than just a delay.
The frequent disturbances occurred predominantly in the switch and signalling
systems. Different contractors were responsible for different subsystems. All these
subsystems were proven and well-known technology, so none of the contractors would
acknowledge the possible cause of the disturbance to be in his subsystem. In the end it
2
The material for this case comes from the independent evaluation of the RandstadRail project carried out by
Delft University of Technology. The author was member of the research staff.
3
Only very late in the process the client got central government permission to use a non-public tender.
appeared that, although the individual subsystems were proven, the coupling of these
subsystems was not. The problem appeared to be in the interface.
Common risk analysis methods and risk management activities focus on technical risks. There
is a good reason. If implementation risks are considered uncertainties, it is hard, if not
impossible, to foresee them; let alone their probability of occurrence. This does, however,
neglect the myriad of unmanageability features that can occur as a result of implementation
risks and that remain unattended.
Again an example can be found in one of the cases. In the Souterrain project, the
client’s project managers reckoned that other actors’ doubts about the grout layer technology
concerned the fallibility of the technology itself, which was relatively unproven. This can be
seen most particularly in the way a risk analysis was dealt with. The analysis said that failure
of the grout arch would likely result in “irrevocable collapse”. But the client’s managers
reckoned, in consultation with its engineering designer, that this could be managed with
specified margins and a firm obligation for the contractor to apply an extensive control
programme, implying that this would nullify the probability of occurrence of a negative event.
The contractor reasoned differently. Much more aware of complex construction projects in
practice, it knew that deviations can and do happen, even with the best intentions, and thus did
not accept probability considerations. It reasoned that if irrevocable collapse is the possible
negative consequence, the risk must be avoided. The grout layer construction procedure
required columns to be installed fifteen metre underground, by inserting an injection lance. It
is impossible to see whether the columns connect tightly to create a firm layer from the
surface. Just a very small deviation from an exactly vertical injection would be a much wider
deviation at fifteen metres deep.
Galbraith (1974, 1977) defines uncertainty as the gap between the information required (to
complete the project successfully) and the information available in the project organisation.
Project managers can often not determine the size and characteristics of this gap satisfactorily;
because they may not be aware what it takes to carry out the project successfully and/or
because they do not know the amount and characteristics of the information available to all
the actors in the project organisation. If the principal-agent problem is added to the latter, we
can speak of two dimensions of uncertainty: the lack of information and the limited
assessment abilities.
The existence of uncertainty in projects, and specifically the inability to foresee
deviations from the expected implementation process, disables managers to make rational
decisions. Rational decisions require the ability to include all relevant aspects (cf. March and
Simon, 1993). The inability to do so urges for alternatives to be able to realise the project.
That brings managers in the field of limited or bounded rationality.
When project managers have to make decisions in a situation of bounded rationality
they tend to attempt to simplify their work by detecting patterns and apply rules of appropriate
behaviour to the situations they encounter (March, 1994: 12-14). But there is a problem with
such a strategy in decision-making processes that take place in the inevitable uncertainty of
complex infrastructure construction projects. The projects studied have a few features in
common that limit rationalisation abilities and determine the occurrence of bounded
rationality in these projects:
They have relatively inexperienced clients as the main decision-makers;
There is a principal-agent problem, because the decision-makers depend on better
informed subordinates (contractors, engineers) with potentially conflicting stakes;
The actors involved are dealing with innovative technology.
As a consequence, the project managers have two doubts that can make heuristics relying on
false friends:
The client’s project manager’s inability to rely on his interpretation of the information
that he receives. They lack experiences or ‘rules of thumb’ that can frame their
decisions.
The possibility that other actors in the process provide information strategically for
their own good.
This means that the use of heuristics is limited. That raises the question how project managers
do make decisions.
6
Cf. Winch, 2002: 209.
Uncertainties may be overlooked due to ‘unknown information’. Unknown
information is information that is neither available to the principal, nor to the agent.7
The cases presented in section 2 and comparable cases provide material that can serve to find
out how project managers do make decisions in these situations if it is not heuristics that can
help them. The examples show that if decision-makers cannot use knowledge or experience in
the heuristic method of decision-making, they tend to overvalue certain aspects in project
management. This is a (non-exhaustive) list of some of these aspects, found in the empirical
study of the projects mentioned above. It is important to note that they cohere strongly.
Because it is based on two empirical cases, it has no statistically founded value, but it does
present a few mechanisms that are recognisable in many events of dealing with uncertainty.
Objectifiability
An important condition in these preferences is that the opposite values of the contractors and
other subordinate actors were unobjectifiable. Engineers in the RandstadRail project were
worried about manageability of the project if so many activities had to be done in such a short
conversion period, but they could not indicate where this unmanageability might effectuate.
Comparably, the contractor of the Souterrain worried about the consequences of possible
grout layer failure, but could not substantiate or justify the possibility of deviance in the
predefined work processes. The layer consisted of some eight thousand injected columns that
must connect tightly to prevent leakage. The contractor knew from practical experience that it
is not unlikely that in an eight thousand times repeated activity, an unintentional deviation can
occur, even though the terms of reference included measures to prevent malfunction. Even
just one such event would be catastrophic with the indicated consequence of failure of
“irrevocable collapse”.
As the examples show, unobjectifiable information includes the ‘implementation risks’
mentioned in section 3. Here applies that only the wearer knows where the shoe pinches.
Convincing someone else to whom the shoe fits nicely is very difficult. To the decision-
makers, budgets and schedules are visible, quantifiable and therefore objectifiable. Tacit
concerns on manageability are not. In practice this leads to overvaluing of budgets and time
7
Ibid.
schedules (the measurable main assets of decision-makers) and ignorance of tacit
manageability issues, often related to technology.
Coherence
It is important to observe the coherence in these project managers’ strategies. The strategies to
counter expected strategic behaviour and to bolster against unobjectifiable information are
very strongly interrelated. The latter is the main instrument to filter strategically
‘manipulated’ information from information flows. Client’s project managers may think they
can do this because they have more confidence in their assessment skills than may be
justified, given the observation that they do not have a framework of reference available that
it is comparable to the framework of reference of contractors or other engineers. The purpose
of such strategies lies in the preference to hold on to existing plans and schedules and client’s
project managers’ awareness of the values on which they will be assessed: timely completion,
respecting budgets. Coincidently these two values are also the values that are best
quantifiable. Objectifiability and the dominance of own values therefore strenghten each
other.
Figure 1: Coherence of coping strategies for project manager’s decision-making under uncertainty
There are two generic steps necessary to deal with project managers’ behaviour in decision-
making under uncertainty when heuristics do not provide a proper framework. The main step
is to provide some holds to create better understanding of the project’s features to create an
alternative framework of reference. This will be done in section 7. First, however, it may be
important to understand why project managers behave the way they apparently do.
A few generic types of conduct can be distilled:
Bolstering against dynamics. Dynamics are often inevitable in complex projects, but
they devaluate existing plans. Because broader politics depend on these plans and
administrators are assessed on their ability to carry out the plans, there is
unwillingness to accept changes.
Overestimation of the value of ‘hard’ data. Quantified information is likely to be more
objective and less susceptible for strategic behaviour than information based on
contractors’ or engineers’ heuristics, because it is controllable. But not all relevant
manageability aspects can be captured in quantified data. There also seems to be some
kind of perception among managers on the client side that once a project is properly
laid down in plans, engineering designs and schedules, the main trade-offs are made;
particularly if these plans, designs and schedules have been approved by an
authoritative party. Managers tend to emphasise that safety (i.e. quality) is not a trade-
off issue, because it cannot be compromised.8 In their perception, once the required
quality has been defined, this implies that trade-offs during implementation concern
time and money issues. There appears to be little awareness among these managers
that project management values time, costs, scope and quality are strongly interrelated
and that changes in one likely have implications for the other.
8
In the cases, many of the managers of RandstadRail have most particularly emphasised this.
Managing uncertainties as risks. Superiors, especially when they are untrained
administrators, think they can largely foresee what the possible outcomes of their
policy is. Unforeseen outcomes are serious hazards. Since client’s managers are
preoccupied with quantifiable data on which they are being assessed (time and cost)
they may easily overlook implicit quality compromises in the possible outcomes that
result from budget or schedule considerations. Engineers can hardly substantiate
worries about this, due to the unquantifiability. As a result, project managers may rely
on weak profundities.
Ideas on solutions are rudimentary and untested. The main aim is to create alternative
heuristics by increasing managers’ insight in their projects without the need for much
additional engineering knowledge. The ideas are aimed at dealing with the uncertainty. The
first notion in this section is that uncertainty is to some extent apprehensible. This means that
not only aspects can be known to be unknown, but also that the existence of some
uncertainties is unknown (‘unknown unknowns’). The solution proposes a confined
anatomisation of the project.
How to record something that is unknowable to at least some extent? This requires
anatomisation of the projects. Projects are multi-actor organisations realising physical
systems. Multi-actor organisations and physical systems can both be approached with system
analysis. Systems consist of elements with interconnections. Multi-actor organisations consist
of actors with diverging backgrounds, resources and interests. The relations between these
actors are defined by contracts, trust and potentially cohering or conflicting interests (cf. Jones
and Deckro, 1993; Kazanjian et al., 2000). Physical systems consist of subsystems, parts and
units that are interconnected to create certain functionalities (Perrow, 1999). These two
systems should be anatomised. This brings us back to Baccarini’s definition of complexity
(Baccarini, 1996). Complexity in these systems is defined in terms of differentiation (number
and variety of components and interrelations) and interdependence (level to which
components and interrelations depend on each other to create a functioning whole). The
differentiation defines the required span of control of project managers, in which variety
indicates the potential for conflicting values, interests and resources; a major source of
uncertainty. The uncertainty related to interdependence often effectuates in interfaces, which
is the topic of next sub-section.
Interfaces
Interfaces are most particularly susceptible to unmanageabilities, because they represent a
certain interrelatedness that is tacitly present, but invisible. Therefore, they are the key factors
to map out. Several examples of relevant interfaces can be found in the two systems:
Multi-actor systems: there must be awareness of the positions of actors in the project.
If there is reason to assume that any of these positions (including the client’s own)
may lead to dominance, this must be managed with countervailing powers, such as
contract incentives. This should neutralise both strategic behaviour of subordinates
and undesireable dominance of certain values by superiors. Some interfaces must be
made explicit:
Project management values (time, costs, scope, quality). For example, scope
extension normally implies cost growth and a longer implementation time.
Resources. For example, information from different sources may be contradictive.
To prevent unmanageability, negotiation on knowledge could be attempted.
Backgrounds. Engineers may perceive risk and uncertainties differently than
managers or politicians.
Physical systems: this requires an anatomy of the engineering design. Project
managers may need engineers with no strategic interest in the project. This should
identify crucial interfaces. This may be important to understand the effects of coupling
different subsystems or the implication of design changes. This must be combined
with an organisational incentive for the client’s project managers to be receptive to the
input, even if required action conflicts the managers’ perceived core values (see the
multi-actor system measures).
This article has presented a few explorative steps in the understanding of managebility in
complex infrastructure projects by focussing on the way managers’ have dealt with risk and
uncertainty. It is based on a few theoretical notions that have led to some informative
observations. The most important notions:
Uncertainties may be mistaken for risks, although they have fundamentally different
characteristics.
Complex infrastructure construction projects include both technical risks and
implementation risks. The latter actually have uncertainty characteristics and are easily
neglected.
Uncertainties limit managers’ possibilities to rationalise their decisions.
The observations have not been part of a study with statistical value, but the empirical study
does mark off some first, explorative management mechanisms that may be worthwhile to
explore further in depth:
Aversion to dynamics;
Objectifiability: preoccupation with ‘hard’, objectifiable data and ignorance or
negligence of implicit consequences on unquantifiable values, particularly related to
technical manageability (safety/quality), when focussing on these hard data;
Weak profundities: dealing with uncertainties as if they were risks, which produces
ostensible but unfounded knowledge.
Possible solutions might be found in a relatively basic analysis of the systems characteristics
of the project at hand. This should create some deeper understanding of interrelations and
their potential implications for the manageability of the project. Interfaces in both the multi-
actor organisational system and the physical system require special attention. In addition to
the mechanisms that determine manager’s decision-making behaviour under uncertainty,
future research could elaborate on the mapping organisational and physical system interfaces
to mitigate the adverse effects of uncertainty.
Acknowledgement
This publication is a result of the Centre for Sustainable Urban Areas of Delft University of
Technology.
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