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Evolving Strategy: Risk Management and the Shaping of Mega-Projects

29 Feb 2008-Research Papers in Economics (Edward Elgar Publishing)-
TL;DR: In this paper, the authors argue that the succession of shaping episodes that form the front-end process to cope with risks can be reinterpreted in terms of the real-options framework that is currently revolutionizing academic treatments of project evaluation.
Abstract: The authors of this paper argue that the succession of shaping episodes that form the front-end process to cope with risks can be reinterpreted in terms of the real-options framework that is currently revolutionizing academic treatments of project evaluation In fact, as is often the case with cutting-edge practice, managers have been successful at creating value through the development and exercise of sequential options without explicitly framing the process in options terms Academics have simply codified this practice in the form of a new conceptual framework The real-options framework is based on the same logic as that of financial options as previously developed It recognizes that the decisions that determine project cash flows are made sequentially over many episodes This paper illustrates the rich varieties of mechanisms through which these options are shaped and exercised over the life of the project – the real management that is integral to real options
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Journal ArticleDOI
TL;DR: In this paper, a project network view with multiple networked firms within a single project is proposed for the governance of large multi-firm nuclear power plant projects, and the authors suggest that any of the prevalent governance approaches that rely on market, hierarchy, or hybrid forms is not adequate as such.

170 citations


Cites background from "Evolving Strategy: Risk Management ..."

  • ...Miller and Lessard (2008) stress that large projects should be governed as evolutionary systems....

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Journal ArticleDOI
TL;DR: In this paper, the authors examined boundary management in the context of engineering construction projects and concluded that the emerging theories provide insights but it is the nature of the markets, notably, the diverse objectives of stakeholders and the procedures and their practices in pursuit of self-oriented benefits, which are the main imp...
Abstract: Extensive and increasing specialization in construction has prompted much criticism—that fragmentation leads to poor performance. Such issues are magnified on engineering construction projects due to their size, complexity, financing, duration and execution by many organizations, often from several diverse countries. Theory, research perspectives and findings of boundary management studies are examined in the context of management of engineering construction projects. The objectives are to investigate theory and practices of boundary management; to examine how boundary management operates on engineering construction projects; and to produce a research agenda for studying further, important aspects of boundary management impacting on engineering construction projects. Conclusions are that the emerging theories provide insights but it is the nature of the markets—notably, the diverse objectives of stakeholders and the procedures and their practices in pursuit of self-oriented benefits—which are the main imp...

156 citations


Cites background from "Evolving Strategy: Risk Management ..."

  • ...…on governance of organizations and of projects has moved from command and control, to transaction costs and agency, to co-evolution and self-organizing (key components of complexity theory) (see e.g. Winch, 2001; Miller and Hobbs, 2005; Miller and Lessard, 2008; Klakegg, 2009; Ruuska et al., 2011)....

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Journal ArticleDOI
TL;DR: In this paper, the authors explore how risk management and design flexibility interplay in major infrastructure projects, using the £4.2bn Terminal 5 project to expand London's Heathrow airport.

118 citations

01 Jan 2015
TL;DR: In this article, three theoretical reflections are introduced to explore possible solutions: (1) the change of institutions to address the problem of excessively simple structures for making decisions on complex projects; (2) the shaping of a learning environment in order to deal with uncertainty and emergent properties.
Abstract: How should one cope with complexity and uncertainty in mega infrastructure projects? While rational theories tend to eliminate or reduce these unruly conditions, the authors of this article are in search of a different approach to deal with the characteristics of complexity and uncertainty proactively. Three theoretical reflections are introduced to explore possible solutions: (1) the change of institutions to address the problem of excessively simple structures for making decisions on complex projects; (2) the shaping of a learning environment in order to deal with uncertainty and emergent properties; and (3) balancing the generation and the reduction of a variety of policy options in order to select a limited number of feasible options and to bridge the strategic exploration and the operational processes of decision making. Informed by this conceptual thought, concrete pathways are developed and discussed by means of a case study of the construction of a high-speed railway line in the Netherlands.

97 citations

Journal ArticleDOI
TL;DR: In this paper, a review of current managerial practice and academic research in managing diverse risks is presented, focusing on the changing exogenous elements, to the often ignored endogenous elements, and to the needed integration of managing exogenous and endogenous risks.

79 citations