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A risk identification framework and tool for large infrastructure public private partnership delivery Nelms, Cheryl 2012

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A RISK IDENTIFICATION FRAMEWORK AND TOOL FOR LARGE INFRASTRUCTURE PUBLIC PRIVATE PARTNERSHIP DELIVERY  by Cheryl Nelms  M.A.Sc., The University of British Columbia, 2005  A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF  Doctor of Philosophy in THE FACULTY OF GRADUATE STUDIES (Civil Engineering)  THE UNIVERSITY OF BRITISH COLUMBIA (Vancouver)  December 2012  © Cheryl Nelms, 2012  Abstract  Large public sector infrastructure projects are often characterized by a broad scope and capital dollar size, dynamic stakeholder and governance network, high project risk profile, long planning and procurement timelines, and high visibility to the public and political partisans. The number and breadth of risks during the planning and procurement phases that can delay project go-ahead or cause its ultimate cancelation are significant and thus require the utmost attention for successful delivery. The goal of this research was to improve risk management as it is applied in the delivery of large civil infrastructure with particular emphasis on the planning and procurement phases of public private partnerships and risks mainly internal to the client, in this case, the public sector organizations (e.g. end user and delivery organizations) involved. The research focused on developing a risk management framework, support tools and an improved research prototype that introduces the concept of characterizing different aspects of a project to improve the identification of risks and their related drivers, and elicitation of expert opinion of risk properties.  Understanding the unique characteristics of public sector large infrastructure project delivery was central in achieving this research goal and aspects were described in each of the chapters through case studies, observations and both formal and informal interviews with senior practitioners. The objectives of the thesis are summarized under three broad research themes: (1) Risk management practices and challenges in large infrastructure public projects; (2) Approaches to support elicitation of risk information to improve risk management processes; and, (3) Developing and gauging the effectiveness of a prototype integrated risk management tool. Thesis  ii  contributions are related to: (a) processes and risks encountered in the delivery of a public sector large infrastructure project in the planning and procurement phases; (b) strengths and weaknesses of the practitioner processes applied to carry out risk management in large infrastructure projects; (c) the multi-dimensionality of stakeholders involved in public sector project delivery; and (d) concepts and constructs developed to improve risk identification and the elicitation of expert opinion tasks applied in a prototype computer system.  iii  Preface  A shortened and less fully developed version of the work presented in this thesis was originally written as a collection of papers (what are now chapters 6 and 7) and other chapters (chapters 3,4 and 5) have been designed to stand alone although each has been modified to fit with the thesis. The author’s interest and experience in leading major public sector infrastructure projects in the planning and procurement phase of project delivery gave rise to the research topic and research questions pursued under the guidance of research supervisor Dr. Alan D. Russell. The collection of case study data modeled in the research prototype was carried out collaboratively by the author and Dr. Alan D. Russell. The programming work for implementing the research prototype was done by Mr. William Wong, a senior programmer, in the Department of Civil Engineering, UBC. The author was the lead in developing and collecting findings in the case studies presented in chapters 3, 4, 5 and 6 and collaboratively worked with Dr. Alan D. Russell on the modeling of case study information in the research prototype presented in chapter 7.  Five peer-reviewed conference papers related to this thesis have been published. The co-authors of these papers provided either guidance or contributed to the writing of these papers. I was the contact author for each of the papers and took the lead on revising the papers with suggested revisions. These conference papers include:  •  Nelms, C., DeZoysa, S. and Russell, A. (2006). Features of a Risk Management Tool  Applied to a Major Building Project. CD Rom Proc. of 1st Int. Construction Specialty Conference, CSCE, Calgary, Alberta, Canada, 23-26 May 2006.  iv  •  Nelms, C., De Zoysa, S., Russell, A.D. (2006). Application of an information and  knowledge management methodology in analysing the risks in construction projects. The Eleventh International Conference on Computing and Decision Making in Civil and Building Engineering. (ICCCBE-XI), Montreal, Quebec, Canada, 14-16 June 2006.  •  Nelms, C., Russell, A.D. (2007). Improving the risk management process using IT.  ASCE Construction Research Congress, Bahamas, 2007. May 6-8, 2007, Grand Bahama Island, Bahamas.  •  Russell, A.D., Nelms, C. (2007). The Application of Information Technology to Support  the Elicitation of Expert Judgement in Project Risk Management. Construction Management and Economics 25th Anniversary Conference, CME25, Reading, United Kingdom, 16-18th July 2007.  •  Nelms, C.E. & Russell, A. D. (2008). Identifying and responding to risks: the role of  project profiling, Proc., Int. Construction Innovation Forum, CSCE 2008 Annual Conference, Quebec City June 10-13, 2008.  One peer-reviewed journal paper arose from work presented in chapter 6 of this thesis. The published paper was co-authored with Mr. William Trousdale and we worked collaboratively to write the first draft of the paper. For chapter 6, I expanded and modified this paper to fit with the dissertation as a whole. The published journal paper is:  v  •  Trousdale, William & Nelms, Cheryl. (2009). Siting Major Public Facilities: Facts,  Values and Accountability. Journal of Urban Planning and Development. 135(4), 159-165.  Versions of chapters 3, 4, and 7 of this thesis are in the process of submission for possible journal publication. A version of chapter 5 is in the process of submission as a project management guidance document for a Canadian federal public sector department and possible journal publication.  The research presented in this dissertation was carried out in accordance with the standards of the University of British Columbia Behavioral Research Ethics Board, certificate #H1-00437A001.  vi  Table of Contents  Abstract ......................................................................................................................................... ii	
   Preface ...........................................................................................................................................iv	
   Table of Contents ........................................................................................................................ vii	
   List of Tables ...............................................................................................................................xiv	
   List of Figures .............................................................................................................................xvi	
   Acknowledgements .....................................................................................................................xix	
   Dedication ....................................................................................................................................xxi	
   Chapter 1: Introduction .................................................................................................................. 1	
   1.1	
   Chapter Overview ............................................................................................................................ 1	
   1.2	
   Authors Frame of Reference and Industry Experience .................................................................... 2	
   1.3	
   Research Background ...................................................................................................................... 5	
   1.4	
   Research Motivation: Challenges with Current Risk Management Approaches ........................... 14	
   1.5	
   Research Questions and Objectives ............................................................................................... 16	
   1.5.1	
   Research Hypotheses .............................................................................................................. 18	
   1.5.2	
   Research Questions................................................................................................................. 20	
   1.5.3	
   Research Themes, Objectives and a Reader’s Guide ............................................................. 21	
   1.5.3.1	
   Research Theme 1 – Risk Management Practices and Challenges in Large Infrastructure Public Projects ................................................................................................................................ 23	
   1.5.3.2	
   Research Theme 2 – Approaches to Support Elicitation of Risk Information to Improve Risk Management Processes .......................................................................................................... 24	
    vii  1.5.3.3	
   Research Theme 3 – Developing and Gauging the Effectiveness of a Prototype Integrated Risk Management Tool ................................................................................................. 25	
   1.6	
   Research Scope .............................................................................................................................. 26	
   1.7	
   Research Methodology .................................................................................................................. 27	
   1.7.1	
   Phase 1 - Problem Definition and Literature Review. ............................................................ 28	
   1.7.2	
   Phase 2 - Case Study Investigation......................................................................................... 29	
   1.7.3	
   Phase 3 - Risk Management and Support Approach Development........................................ 31	
   1.7.4	
   Phase 4 - Validation. ............................................................................................................... 31	
   1.8	
   Research Test Questions ................................................................................................................ 32	
   1.8.1	
   Generality ............................................................................................................................... 32	
   1.8.2	
   Integrative ............................................................................................................................... 32	
   1.8.3	
   Transparent ............................................................................................................................. 33	
   1.8.4	
   New/ Value Add ..................................................................................................................... 33	
   1.9	
   Thesis Structure and Overview of Contributions ........................................................................... 34	
    Chapter 2: Large Public Sector Infrastructure Projects ........................................................... 41	
   2.1	
   Defining Large Public Infrastructure Projects ............................................................................... 43	
   2.1.1	
   Factors Influencing Large Infrastructure Cost and Schedule Growth .................................... 49	
   2.2	
   Public Private Partnership Delivery Methodology ........................................................................ 52	
   2.2.1	
   Public Sector Drivers For PPP Methodology Adoption ......................................................... 55	
   2.3	
   Defining Large Infrastructure Sectors............................................................................................ 57	
   2.4	
   Characteristics of the Public Sector ............................................................................................... 58	
   2.5	
   General Project Delivery Phases .................................................................................................... 64	
   2.6	
   Public Sector Stakeholder Roles and Responsibilities in the Front End Planning and Procurement Phases ...................................................................................................................................................... 70	
   2.7	
   Chapter Summary .......................................................................................................................... 78	
    viii  Chapter 3: Risk Management in the Procurement Phase: Lessons of a Large Infrastructure Public Private Partnership Project ............................................................................................ 79	
   3.1	
   Introduction .................................................................................................................................... 79	
   3.2	
   Method of Investigation ................................................................................................................. 82	
   3.3	
   Case Study Project ......................................................................................................................... 87	
   3.4	
   Risk Management Project .............................................................................................................. 93	
   3.4.1	
   Background ............................................................................................................................. 93	
   3.4.2	
   Risk Management Plan ........................................................................................................... 93	
   3.4.2.1	
   Regulatory Environment ................................................................................................. 94	
   3.4.2.2	
   Multiple agreements, multiple parties ............................................................................. 95	
   3.4.2.3	
   Multi-year Procurement Period – Evolution of Risk ...................................................... 96	
   3.4.3	
   Risk Register Development .................................................................................................. 101	
   3.4.3.1	
   Preparation of Initial Risk Register ............................................................................... 102	
   3.4.3.2	
   Populating the Risk Register – Pre Best and Final Offer .............................................. 102	
   3.4.3.3	
   Risk Register Content.................................................................................................... 105	
   3.4.3.3.1	
   Information Categories .......................................................................................... 105	
   3.4.3.3.2	
   Characterizing Risk Events .................................................................................... 108	
   3.4.3.3.3	
   City permits and approvals .................................................................................... 108	
   3.4.3.3.4	
   Archaeological Find ............................................................................................... 109	
   3.4.3.4	
   Risk Register Updating ................................................................................................. 111	
   3.4.4	
   Risk Register Reporting and Project Communication .......................................................... 113	
   3.4.4.1	
   Reporting Post Financial Close ..................................................................................... 113	
   3.5	
   Identified Benefits and Challenges of the Use and Development of the Risk Register............... 114	
   3.6	
   Observations and Lessons Learned .............................................................................................. 117	
   3.7	
   Desirable Features of a Risk Management Support Tool and Approach ..................................... 121	
    ix  3.8	
   Conclusion ................................................................................................................................... 122	
    Chapter 4: Key Risks Managed in the Planning Phase of the First Canadian Federal Real Property Public Private Partnership Project .......................................................................... 124	
   4.1	
   Introduction .................................................................................................................................. 124	
   4.2	
   Background .................................................................................................................................. 126	
   4.3	
   Canadian PPP Context ................................................................................................................. 134	
   4.4	
   A Definition of a Canadian PPP .................................................................................................. 136	
   4.5	
   Project Description ....................................................................................................................... 138	
   4.6	
   Drivers for the Implementation of the PPP Delivery Approach .................................................. 140	
   4.7	
   Risk Management Process ........................................................................................................... 143	
   4.8	
   Risk Issues Identified ................................................................................................................... 144	
   4.8.1	
   Limited Project Personnel PPP Experience and Familiarity ................................................ 146	
   4.8.2	
   Limited Federal Department and Agency Experience and Familiarity with PPP ................ 149	
   4.8.3	
   Limited Precedent Jurisdiction Contract Language .............................................................. 152	
   4.8.4	
   Establishing a Market Acceptable Governance Framework ................................................ 154	
   4.8.5	
   Integrating New PPP Processes with Existing Processes ..................................................... 157	
   4.8.6	
   Responding to Regulatory/Policy/Legislative Issues ........................................................... 159	
   4.9	
   Summary of Risk Issues, Drivers and Response Measures ......................................................... 163	
   4.10	
   Lessons Learned and Conclusion ............................................................................................... 167	
    Chapter 5: A Stakeholder Management Framework for Application on Large Infrastructure Public Sector Projects ...................................................................................... 174	
   5.1	
   Introduction .................................................................................................................................. 174	
   5.2	
   Background .................................................................................................................................. 176	
   5.2.1	
   Stakeholder Policies and Directives for Canadian Federal Infrastructure Projects .............. 178	
   5.2.2	
   Stakeholder Definition and Principles .................................................................................. 182	
   x  5.3	
   Approach to Framework Development ........................................................................................ 185	
   5.4	
   Stakeholder Management Framework ......................................................................................... 187	
   5.5	
   Framework Overview .................................................................................................................. 189	
   5.5.1	
   Stage 1: Preliminary Preparation .......................................................................................... 191	
   5.5.2	
   Stage 2: Stakeholder Identification ....................................................................................... 192	
   5.5.3	
   Stage 3: Stakeholder Analysis .............................................................................................. 197	
   5.5.4	
   Stage 4: Stakeholder Response Strategy .............................................................................. 202	
   5.5.5	
   Stage 5: Documentation and Continuous Assessment ......................................................... 204	
   5.6	
   Conclusion ................................................................................................................................... 206	
    Chapter 6: A Decision Process Support Approach for the Identification of Project Objectives and Improved Decision Making ............................................................................ 208	
   6.1	
   Introduction .................................................................................................................................. 208	
   6.1.1	
   Background ........................................................................................................................... 209	
   6.1.2	
   Perspectives in Site Selection Problems ............................................................................... 216	
   6.1.3	
   Site Selection Process Failure Risks ..................................................................................... 217	
   6.1.4	
   The Approach ....................................................................................................................... 220	
   6.2	
   Case Study: Headquarter Relocation ........................................................................................... 224	
   6.3	
   Decision Support Process ............................................................................................................ 226	
   6.3.1	
   Phase 1 Regional Screening ................................................................................................. 228	
   6.3.2	
   Phase 2 Site Analysis Using Mandatory Criteria ................................................................. 229	
   6.3.3	
   Phase 3 Site Analysis Using Preferential Criteria ................................................................ 230	
   6.3.3.1	
   Developing Measures .................................................................................................... 234	
   6.3.3.2	
   Providing Value Judgments .......................................................................................... 236	
   6.3.4	
   Phase 4 Final Due Diligence and Negotiation ...................................................................... 238	
   6.4	
   Applying the Outputs of DPS to Risk Management Processes ................................................... 239	
    xi  6.5	
   Conclusion ................................................................................................................................... 240	
    Chapter 7: An Integrated Risk Management Process: A Prototype Application ................. 242	
   7.1	
   Introduction .................................................................................................................................. 242	
   7.2	
   Risk Identification and Elicitation ............................................................................................... 246	
   7.2.1	
   Elicitation and Behavioral Research Findings ...................................................................... 249	
   7.2.2	
   Elicitation Techniques .......................................................................................................... 254	
   7.2.3	
   Integrating Project Context with Tasks ................................................................................ 255	
   7.3	
   Case Study ................................................................................................................................... 256	
   7.4	
   An Improved Risk Management Approach ................................................................................. 259	
   7.5	
   Research Prototype Features and Implementation Details .......................................................... 264	
   7.5.1	
   Defining Project Views ........................................................................................................ 265	
   7.5.1.1	
   Physical View ................................................................................................................ 266	
   7.5.1.2	
   Participant / Organizational View ................................................................................. 268	
   7.5.1.3	
   Process View ................................................................................................................. 270	
   7.5.1.4	
   Environmental View ..................................................................................................... 272	
   7.5.2	
   Characterizing Risk Drivers ................................................................................................. 274	
   7.5.3	
   Characterizing Project Participants ...................................................................................... 278	
   7.5.3.1	
   Identifying and Expressing Participant Category Attributes......................................... 283	
   7.5.3.2	
   Attributes as Risk Drivers ............................................................................................. 303	
   7.6	
   Identifying and Representing Risks ............................................................................................. 309	
   7.6.1	
   Example 1 – Characterizing the Environmental View of the Project to Illustrate Use of the Prototype System .............................................................................................................................. 310	
   7.6.2	
   Example 2 – Illustrating Participant Risks Related to Early Project Approval .................... 323	
   7.7	
   Knowledge Management ............................................................................................................. 338	
   7.8	
   Next Steps and Future Research .................................................................................................. 339	
    xii  7.9	
   Conclusions .................................................................................................................................. 341	
    Chapter 8: Validation ................................................................................................................. 345	
   8.1	
   Research Test Questions .............................................................................................................. 346	
   8.1.1	
   Generality ............................................................................................................................. 346	
   8.1.2	
   Integrative ............................................................................................................................. 347	
   8.1.3	
   Transparent ........................................................................................................................... 347	
   8.1.4	
   New ....................................................................................................................................... 347	
   8.2	
   Validation Approach .................................................................................................................... 348	
   8.2.1	
   Interviews with Expert Practitioners .................................................................................... 349	
   8.3	
   Validation Results ........................................................................................................................ 354	
   8.4	
   Conclusion ................................................................................................................................... 372	
    Chapter 9: Conclusion ................................................................................................................ 376	
   9.1	
   Research Theme 1 – Risk Management Practices and Challenges in Large Infrastructure Public Sector Projects ....................................................................................................................................... 378	
   9.2	
   Research Theme 2 – Approaches to Support Elicitation of Risk Information to Improve Risk Management Processes.......................................................................................................................... 382	
   9.3	
   Research Theme 3 – Developing and Gauging the Effectiveness of a Prototype Integrated Risk Management Tool.................................................................................................................................. 385	
   9.4	
   Recommendations for Future Work ............................................................................................. 390	
    References................................................................................................................................... 395	
   Appendices ................................................................................................................................. 421	
   Appendix A ........................................................................................................................................... 421	
   Appendix B............................................................................................................................................ 428	
    xiii  List of Tables Table 1: Factors contributing to cost and schedule growth in the front end planning stage of Canadian large infrastructure public sector projects (Adapted from Merrow, 1988) ................... 51	
   Table 2: Factors to compare public and private sector organizations delivery of large infrastructure Projects. Adapted from Euske (2003) and Nutt (2005) to compare public and private sector organization delivery of large infrastructure projects ............................................. 61	
   Table 3: Description of activities, roles and responsibilities of stakeholders in the Front End Planning phase of Project delivery ................................................................................................ 75	
   Table 4: Sign off activities to receiving Minister approval for project approval .......................... 77	
   Table 5: List of questions asked to case study interviewees ......................................................... 86	
   Table 6: Proposed allocation of risk at the Request for Expression of Interest stage (Adapted from Project Document: Request for Expression of Interest, November 2002) ........................... 97	
   Table 7: Proposed allocation of risk in the Request for Proposals Stage (Adapted from Project Document: Request for Proposals, August 2003) ......................................................................... 98	
   Table 8: Allocations of risks as per contract to the appropriate stakeholder (Adapted from Project Document: Final Project Report, 2006) ..................................................................... 100	
   Table 9: Categories and associated definition of information captured in Risk Register ........... 107	
   Table 10: Portion of Risk Register illustrating two risk events ................................................... 110	
   Table 11: Summary of key front end planning risk issues, drivers and responses ...................... 165	
   Table 12: Clarkson principles of stakeholder management (CCBE, 1999) ................................ 184	
   Table 13: Stakeholder identification worksheet (Adopted from EPI, 2010) ........................ 195	
   Table 14: Stakeholder checklist ................................................................................................... 196	
    xiv  Table 15: Stakeholder Register (Adopted from PMI, 2008; GNL, 2011 and Bibby and Alder, 2003) ............................................................................................................................................ 200	
   Table 16: Engagement strategy participation planning approach (Adopted from Bryson, 2004) ..................................................................................................................................................... 204	
   Table 17: Simplified overview of sequential screening process for potential new building sites ..................................................................................................................................................... 228	
   Table 18: Example of a sub-criteria ranking and weighting exercise for the primary criteria “Staff Retention and Recruitment” ........................................................................................................ 238	
   Table 19: A risk management framework for the identification of risk and elicitation of expert opinion ......................................................................................................................................... 262	
   Table 20: Summary of stakeholder category attributes identified ............................................... 281	
   Table 21: Developer stakeholder category source of attributes .................................................. 289	
   Table 22: Client/User stakeholder category source of attributes ................................................. 293	
   Table 23: Project Team (Public) stakeholder category source of attributes ................................ 295	
   Table 24: Project Senior Executive stakeholder category source of attributes ........................... 297	
   Table 25: Project Team (Private) stakeholder category source of attributes ............................... 299	
   Table 26: Third Party stakeholder category source of attributes ................................................. 301	
   Table 27: Project Oversight Reviewers stakeholder category source of attributes ..................... 303	
   Table 28 Senior executive profile involved in validation exercise ............................................. 351	
   Table 29: Public Sector Project stakeholder analysis results ...................................................... 421	
   Table 30: Generic stakeholder list ............................................................................................... 424	
    xv  List of Figures Figure 1: Illustration of thesis scope context ................................................................................. 43	
   Figure 2: PPP construction industry sectors (Source: InfraDeals (2011))..................................... 58	
   Figure 3: Project lifecycle phases and generic activities performed ............................................. 65	
   Figure 4: Public sector hierarchy of decision making governance ................................................ 73	
   Figure 5: Canada Line stakeholder relationship diagram (Adapted from Canada Line Final Project Report, Competitive Selection Phase, April 12, 2006). .................................................... 90	
   Figure 7: Case study project phases of interest ........................................................................... 133	
   Figure 9: Stakeholder Mapping Tool (Adopted from Bryson, 2004) .......................................... 201	
   Figure 10: Stakeholder Alignment Tool ...................................................................................... 202	
   Figure 12: Physical view - Overview of the Physical Component Breakdown Structure (PCBS) with an expansion of the component hierarchy shown in Appendix X) ..................................... 267	
   Figure 13: Characterizing physical components ......................................................................... 268	
   Figure 14: Participant view – Depicting participant classes and members of each class ............ 269	
   Figure 15: Defining attributes at the participant class level, and defining attributes and values and the individual participant level. Use of inheritance allows for the speedy definition of attributes at the individual participant level. ............................................................................................... 270	
   Figure 16: Process view – Depicting an activity list at the parent level including activity type, responsibility code (see project participant list), project phase and sub-phase ........................... 271	
   Figure 17: Process view – Depicted in the form of a Gant or bar chart at parent or summary Level. Appendix X illustrates all parent and child activities. ...................................................... 272	
   Figure 18: Environmental view – Depicting the project natural and man-made environment ... 273	
    xvi  Figure 19: Environmental component ‘Stream West Property Line’ attributes and associated values metrics identified (Binary (B), Quantitative (Q) and unit of metric) ............................... 274	
   Figure 20: Attributes at the sub-class and entity levels in the environmental view .................... 276	
   Figure 21: Comparison of participant value sets within stakeholder category............................ 283	
   Figure 22: Comparison of participant member values across categories .................................... 283	
   Figure 23: Attribute definitions and values for different participant categories and members of a category ....................................................................................................................................... 306	
   Figure 24: Attribute definitions and values for different participant categories and members of a category (continued) .................................................................................................................... 307	
   Figure 25: Risk register with definition of risk events in progress ............................................. 313	
   Figure 26: Risk Drivers at the risk issue level – Depicted are both parent and child level items; for the process view, the focus is mainly on parent level activities ............................................ 314	
   Figure 27: Multi-view representation illustrating ability of user to facilitate risk workshops highlighting different views of the project to improve the identification and elicitation of expert opinion. In this example, Risk Event ‘Unexpected fish species encountered in stream’ is illustrated and relevant project views (a) through (f). ................................................................. 316	
   Figure 28: Risk Drivers for the risk event ‘Unexpected fish species encountered in stream on site’ .............................................................................................................................................. 321	
   Figure 29: Performance measures potentially impacted if risk event occurs, assessment of likelihood of risk occurrence, and impact on time performance if risk event occurs.................. 322	
   Figure 30: Potential risk response strategies for time and front end cost performance measures ..................................................................................................................................................... 323	
    xvii  Figure 31: Partial project process view in form of an activity list. Depicted of interest is parent activity 01_40 and child activity 01_40_030 .............................................................................. 326	
   Figure 32: Physical view including attributes of Treasury Board submission document ........... 328	
   Figure 33: Attributes and values for key participants related to Example 2 risk event ............... 329	
   Figure 34: Political aspects of the project environment .............................................................. 332	
   Figure 35: Amended risk register with attention directed at the risk issue/event 010_090_010. 333	
   Figure 36: Definition of risk event along with extended description .......................................... 335	
   Figure 37: Potential risk drivers for risk issue ‘Approvals Delay’ .............................................. 336	
   Figure 38: Drivers for risk event ‘Treasury Board Submission Approval Documents Delayed from Scheduled Date’ .................................................................................................................. 338	
   Figure 40: Expansion of PCBS Component Hierarchy ............................................................... 428	
   Figure 41: Expansion of process view of case study project for 2011-2012 activities ............... 429	
   Figure 42: Expansion of process view of case study project for 2012-2014 activities (cont.) .... 430	
   Figure 43: Expansion of process view of case study project for 2015-2016 activities (cont.) .... 430	
    xviii  Acknowledgements  A special thank you to my supervisor Prof. Alan Russell who provided many hours of his time over the years for discussion and advice and in challenging me on the research questions I pursued. His depth of knowledge in the area of construction economics and risk management and queries on the nuances of public sector project delivery taught me so much in my academic pursuit in particular the importance of attention to detail. To Prof.s Tim McDaniels, Barbara Lence and Scott Dunbar, thank you for serving on my PhD committee, your encouragement, and your thoughtful feedback on my research.  My PhD journey has taught me the value of spending time on the details and an appreciation for the time others have generously provided along the way. The opportunity to work in both industry and academia was unique and I am grateful to my key industry supporter, Alain Trepanier, who was enthusiastic about my research interests and results. To my public and private sector colleagues, thank you for your interest in my research and feedback on how we may improve current practices together. Particular thanks go to each of the participants in my research study for their time, insight, and interest in my subsequent completion. I am grateful to Ngoc Tran, Jami Koehl, Tony Guglielmin and Camila Prado for going above and beyond in providing assistance and resources.  I am sincerely grateful to my family for their love and support throughout my pursuit of my academic goals and my friends who patiently listened to me and understood in the times of writing when I rarely saw them or spoke to them. To Samir, my sounding board and partner, who  xix  always understands and wants the best for our family. Finally, I owe my gratitude to Iain, whom in the final years of this thesis volunteered so much of his time chapter by chapter and encouraged me to finish.  xx  Dedication  To Samir, for your love and support through this journey.  xxi  Chapter 1: Introduction 1.1  Chapter Overview  This chapter provides an overview of the thesis contents and a brief synopsis of each chapter included herein. Its primary focus is: 1. To describe my frame of reference in carrying out the research; 2. To outline motivations for the research on improving risk identification and elicitation of expert opinion of risk properties to improve risk responses (mitigation, avoidance, transference and acceptance) in large major public sector infrastructure projects with reference to the front end planning and procurement phases of a project’s life cycle; 3. To articulate the research questions, objectives, methodology and key assumptions followed relevant to item 2; 4. To provide a set of research test questions to assess the usefulness of the risk identification approach developed to meet the unique characteristics of the industry studied; 5. To provide an overview of the structure of the thesis chapters included herein; and 6. To provide some important definitions of terms used throughout the thesis and identify unique characteristics of large capital infrastructure project delivery and specifically those of public sector infrastructure projects in the front end planning and procurement phases of the project lifecycle that should be considered in the development of a risk identification approach.  1  1.2  Authors Frame of Reference and Industry Experience  I have over 10 years experience in the delivery and management of large, complex major capital public sector projects including extensive experience in the Public Private Partnership (PPP) sector. I am a Professional Engineer, and have significant experience over the course of my career advising senior Canadian federal public servants in real property transactions and alternate service delivery procurement approaches as a Director in a number of Canadian federal departments. I have had a leading role in the planning, management, and implementation of PPPs in a portfolio valued at approximately $7 billion, federal PPP guidance and approval process documents, and in the development of client relations for other Canadian federal government departments involved in PPP initiatives acting as the Canadian Director leading a National Centre of Expertise for Public Private Partnership Development & Advisory Services in the federal government of Canada. My work in industry while concurrently conducting my PhD research has given me a unique perspective. I have had first hand opportunities to consider risks and consequences at the front end planning and procurement phases of several large and diverse infrastructure projects ranging from multi-billion dollar national programs to capital investment accommodations projects in excess of 100 million dollars (Canadian). These experiences have provided me with insights into the challenges faced by public and private sector practitioners alike in performing and integrating the risk management process in a practical manner in large infrastructure projects and programs. At the same time, I have seen benefits of applying processes discussed in the academic literature, which are new to industry and may improve risk management in the front end planning of a Project.  2  Based on my practical experience in industry and learning in academia, I have noticed that that there are shortcomings in the discussions and practices of risk management approaches on large infrastructure projects both in academic research and in industry practices. These shortcomings are particularly apparent in the early planning and procurement phases of a project during which key decisions are made and project information is evolving. Academic research has tended to focus on the identification and treatment of risks associated with the design and construction phases and to a lesser extent the operation and maintenance phase of the project lifecycle. However, there seems to be little consideration of the risks associated with the early phases of a project when there are significant risks to starting a project and there are complex stakeholder involvements and multi-stakeholder governance requirements. Tools and techniques outlined in the academic literature range from the elaborate and resource intensive to aids and processes that may not adequately reflect the complexity of the decision or the stakeholder (internal and external)1 and process environments required for a large infrastructure public sector project. In addition, there are few case studies and practices developed that either extract or apply lessons learned from real practice.  My observations of shortcomings in performing risk management processes are not limited to academia but also to industry practice. My experience and involvement in Canadian civil engineering industry risk management of several very large public sector projects is that there are no simple and uniform ways to conduct a risk management process. The scale, scope and  1  Stakeholders are defined as “persons and organizations such as customers, sponsors, the performing organization, and the public that are  actively involved in the project, or whose interests may be positively or negatively affected by the execution or completion of the project” (PMI, 2008). . Stakeholders may be categorized as internal stakeholders as those parties from within the respective organization (e.g. employees, executive etc.) and external stakeholders as those parties outside the organization (e.g. non-profits, general public etc.).  3  national importance of the projects in which I have been involved in (including projects for Canadian federal departments and agencies: Royal Canadian Mounted Police, Public Health Agency of Canada, Public Works Government Services Canada and Indian and Northern Affairs) has allowed me to work alongside high caliber senior civil servants and private sector management consultants from reputable national and worldwide firms. These are some of the best and most experienced individuals from both the public and private sector assigned to plan and deliver major Canadian public sector projects of national interest. The senior public and private sector project participants in general have had experience implementing risk management on multiple large infrastructure projects or programs. Nevertheless, it appears that much risk management continues to be performed as a standalone process rather than being linked explicitly with other project management activities (such as schedule development, stakeholder management, etc.). From my experience, the risk management process, for the most part, tends to focus on performing a set of tasks that meets the reporting needs and requirements set forth by internal stakeholders who have an oversight or decision making role. In addition, there is little adoption of the elaborative tools and techniques discussed in the academic literature for the following reasons. Industry processes employed reflect the realities of the project decision making environment including challenges related to lack of time, limited training of project participants in risk management concepts, evolving project information, resource (human and financial) limits and competing priorities experienced on these large infrastructure projects. It is not uncommon for one to review a project risk report or participate in a risk identification workshop and feel that the list of the significant risks may be incomplete, and it is often not clear what may happen if the risk is realized and whether an appropriate strategic response to the risk was developed. This is despite spending significant time and resources on the risk tasks.  4  Despite the (practice-oriented) risk management processes adopted by industry which are at least partially successful, I have found that there are several structured processes, tools and ways of thinking that are commonly discussed in the academic literature that could assist with improving industry practice. While at the same time, it seems that academia could learn a great deal from assessing implemented practices by industry in meeting the realities of the project decisionmaking environment. In particular, my research seizes on the opportunity to improve on the processes and practice developed and espoused by both academia and industry towards an integrated approach that can benefit both project management tasks and industry corporate accountability and governance requirements.  My academic research goals have been and continue to be to help shape practice, shed some light on the realities of the challenges and risk management practices carried out in the Canadian context and to develop an implementable form of a structured risk management process and aid. My concurrent work in both industry and academia has given me a unique insight into both arenas. 1.3  Research Background  Governments worldwide are concerned with ways and means to procure infrastructure (building and civil) in a time of fiscal restraint, economic uncertainty and aging infrastructure renewal demands. This has led to the consideration of alternative approaches such as Public Private Partnerships (PPP) which embrace three or more of the functions of finance (F), design (D), build (B), operate (O), and maintain (M), often referred to by a variety of acronyms (DBFOM, DBOM, DBM, DBO and DBF). Key features of these approaches include the greater assignment 5  of the risks to the private sector over the entire project life cycle than more traditional project delivery methods. As a result, considerable emphasis is increasingly being put onto improving the risk management process in the early phases of these PPP projects, when governments decide on how best to procure the project, whether the project should proceed, and on the best risk assignment strategy to achieve qualitative and quantitative value for money. In fact, industry has taken great interest in improving the risk management processes for these PPP projects and the allocation of resources (human and financial) to “get it right” due to the fact that the outputs of the process formulate an important input into the business case justifying the selection of the PPP delivery mechanism. My dissertation is that value for money goes beyond procurement mode selection and encompasses the transparency and accountability requirements (including financial, social, environmental and technical) that must be considered by a public sector decision maker often translated explicitly or implicitly as qualitative risks. I consider both qualitative and quantitative risks because all must be considered by both decision-making and oversight stakeholders with particular focus on the risks inherent in the front end processes associated with getting the project approved for contract award2.  Risk management is defined to include the steps of identification, analysis, interpretation, mitigation/assignment, tracking/monitoring, communication and capturing lessons learned. Best practice recommends that this process be performed in the early phases of a project and as the project evolves the associated risks are monitored and assessed. There is no one universal  2  The period prior to contract award is defined in this thesis as the front end planning and  procurement phases of the project life cycle. 6  definition of risk and in this dissertation the definition applied in the Canadian federal context by the Treasury Board Secretariat (TBS, 2012) as: Risk is defined as the effect of uncertainty on objectives. It is important to note that risk can be characterized as a negative uncertainty, commonly referred to as a threat, as well as a positive uncertainty, commonly referred to as an opportunity. The consideration of both positive and negative uncertainty is consistent with the definition of risk applied by Ward & Chapman (2003) and Akintoye et al. (2001) provide a summary of definitions, both similar and different than that outlined, by scholars working in the field of construction management and illustrate that there is no one definition of risk applied in the industry.  The typical life cycle of a large infrastructure project involves several phases, notably planning, procurement, design, construction, infrastructure use and end of life. The specific steps and tasks performed vary across organizations and are discussed further in chapter 2. The focus of this research is on improving the risk management processes of the client (in this case a government public sector entity) in the project front end, encompassing both the planning and procurement phases, in large infrastructure projects, with concepts transferable to other phases and stages of project delivery. I see four primary stages in the planning phase: a. Problem definition and feasibility; b. Identification and analysis of project alternatives and delivery mechanisms; c. Development of a project plan; and d. Decision and approval of whether to proceed with project. The procurement phase includes five additional steps or stages through to award of the contract: e. Procurement documentation development; f. Evaluation and selection of proponents; g. Proponent negotiation meetings; h. Recommendation of preferred proponent; and i. Decision to  7  award contract. These processes and activities follow steps that are typically performed in the planning and delivery of a PPP (DBFM) large infrastructure project undertaken by a Canadian federal government entity which as discussed is the project delivery method applied in the case studies examined.  Large infrastructure PPPs require a substantial amount of due diligence in the front end planning and procurement phases. Approval by federal decision-making bodies to continue after the planning phase and into the procurement phase starts a resource intensive process that typically lasts for just over one year and requires substantial financial and human commitments by the public and private sector participants. The procurement phase in a PPP differs in a number of ways relative to the traditional alternative delivery approach (Design–Bid-Build) in that private sector proponents incur significant costs to develop the proposal which the public sector evaluates and participates in a series of negotiations with a short list of private sector proponents over a time span typically exceeding eight months. This direct interaction results in the private sector proponents incurring expenditures that are substantial. Costs include monies to: assemble proponent teams; pay for a project office; create submission documents for evaluation; participate in team and negotiation meetings; and create a final proposal that includes an approximately 20% to 25% complete design for evaluation. Timely and reliable outcomes of the risk management activities are critical inputs to decision makers who decide the merits of project alternatives and whether the procurement phase should proceed. Once this procurement phase is initiated and the private sector costs start to appreciate, there is considerable pressure that the public sector not waiver its commitment on whether the project should proceed or not otherwise  8  risking adverse impacts to private sector competition, commitment to bid, and the respective negative image of the sponsoring government entity in present and future procurements.  Risk management is considered integral to modern project management and independent of the procurement mode used (PMI, 2008), although industry practitioners seem to see this function more as an art than science. The identification of risks and definition of their associated properties and values are the most difficult steps in risk management. Construction industry practitioners face several familiar challenges including, tight time lines, lack of training in risk management processes, and the somewhat ad hoc nature of current practices. This is surprising because these steps are very important early in the project to select the appropriate procurement mode (including comparison of the value for money between different project delivery approaches), to allocate risk between public or private sector, prepare procurement documentation, and develop a negotiation strategy with the private sector proponent.  An extensive review of industry and academic literature leads me to three principle observations. 1. Research efforts and industry guidance tend to focus on the risk identification process at the design and construction phases of a project life cycle. 2. There is limited use of data integration, knowledge management and information technology to support the elicitation of expert judgment in risk (events, drivers, impacts, mitigation measures) and associated project management tasks. 3. There is limited consideration by academia and industry of the risks that arise as a result of stakeholder involvement (internal and external) and their associated characteristics early in the project life cycle.  9  The planning and procurement phase of a public sector infrastructure project can, on average, evolve over a ten year period, sometimes longer (Flyjberg et al., 2002). Such a project cannot be completed without appropriate consideration of risks associated with the tasks, the processes and the stakeholders. Effective risk management process and support requires consideration of the unique process steps, multi-dimensional stakeholder involvement, and the accountability and transparency needs of decision makers and oversight bodies of a large public sector infrastructure project.  Based on my experience and extensive review of the literature, the challenges in conducting risk management are related to: •  the dynamic and incomplete nature of project data,  •  communication of complete descriptions of the risk events identified,  •  elicitation of quality qualitative and quantitative inputs as to risk event likelihoods and multidimensional outcomes (e.g. time, cost, safety, etc.),  •  interpreting and understanding a project’s risk profile,  •  tracking and managing risks during the project’s life cycle, integrating the risk management function with other project management functions, and  •  managing knowledge for future re-use.  Addressing these challenges will improve these risk management steps and facilitate better quality decision-making and investment analysis for the planning and procurement phases, which has been the primary motivation of my study.  10  The goal of this research was to improve risk management as it is applied in the delivery of large civil infrastructure with particular emphasis on the planning and procurement phases and risks mainly internal to the client, in this case, the public sector organizations (e.g. end user and delivery organizations) involved. The research focused on developing a prototype project context characterization system that introduces the concept of characterizing3 different aspects of a project to improve the identification of risks and their related drivers, and elicitation of expert opinion of risk properties. Proposed benefits of these improved processes include improvements also on the risk responses (mitigation, avoidance, transference and acceptance). Improvements to these risk management steps may be applied across all phases of the total project life cycle. I sought to identify the unique steps of the planning and procurement for a public sector infrastructure project and to improve the interpretation of project risk profiles, and the integration of knowledge management concepts in risk management. The preference of the PPP procurement approach over traditional forms of project delivery often relies on the allocation of risk from the public to private sector and hence the focus on decision makers to ensure adequate evaluation and identification of risk transferred to result in value for money (in qualitative and quantitative terms). Improving the risk identification and elicitation of expert opinion steps in the risk management process of large public infrastructure projects assists project internal stakeholders in managing a successful process i.e. understand the risks that they need to manage in the planning and procurement phases in order to contribute to a successful outcome and giving  3  Initially, the word ‘profiling’ was used. However, sensitivities that surround that word in  modern day society have led to the use of the more benign ‘characterizing’. The word profile is used to refer to the overall risk tableau of a project – i.e. the project’s risk profile. 11  confidence to decision makers that both the project approval and procurement mode selection deliver value for money. Therefore my research has focused on the PPP procurement delivery mechanism for the planning and procurement phases of large civil infrastructure public sector projects where there is both emphasis placed on the risk management tasks and concerns by public sector decision makers in ‘getting it right’.  Risks arise from somewhere. These are often termed the ‘sources’ or ‘drivers’, which have properties and depending on the value associated with the properties, what potentially could or could not be a risk driver is determined. In this thesis, characterizing is defined as a technique where a set of characteristics or attributes of a particular component within the various views (physical, process, participant, environment) of a project is inferred from past experience of members of an organization, the findings of researchers and/or analysis of data, to extrapolate information or improve decision making. In risk identification, of interest are those attributes, which can take on values, which are potential ‘drivers’, based on demonstrable cause-effect relationships. For example, consider the instance of project participant class stakeholder {Public Sector Client} who has a defined attribute {established practices/procedures} with values ranging from {minimal} to {established}. Where such an attribute value is identified as {minimal}, it is likely to extend the time of related client activities especially at the front end (process view). The attribute {established practices/procedures}, with a value of {minimal} becomes a potential risk driver for a number of potential risk events. The value, {minimal}, associated with it can assist with the identification of one or more related risk events, improve the clarity of the risk descriptions and add to the project’s risk profile by identifying the potential interaction of risks. I have shown how to model project context within a large infrastructure  12  project and how one can characterize associated project attributes with particular attention to the stakeholder context and improve risk management during planning and procurement. Characterizing the components and associated attributes to represent the various views of a project can provide insights to a project team and improve the overall risk management process.  There were two key tenets in this research. The first was the assertion that the integration of risk information with key elements of the project could improve the overall risk management process (Nelms et al., 2006a,b) particularly in PPP projects (HM Treasury, 2004, p.9). The importance of context to develop the risk management process was also adopted in the AS/NZS 4360 Risk Management Standards and highlighted in the Enterprise Risk Management Guidelines (RMB, 2007), a framework for risk management in the public sector projects in British Columbia, Canada. The second tenet was that a highly structured characterization of project context and in particular stakeholders using information technology would result in a more comprehensive and accurate identification of risk and associated properties and ensure a more focused response in dealing with risks. This was based on the findings that stakeholders are a source of considerable risk particularly in the early phases of a project life. Primary benefits of risk management come from the identification stage (Bajaj et al., 1997) when it is performed early in the project (Walewski & Gibson, 2003). Characterizing stakeholder attributes and associated values as a dimension of project context modeling can give participants insight to improve the risk management process and related project management activities early in the project.  A partial prototype computer-based tool was developed to model project context (DeZoysa, 2006). This entailed identifying the environmental (both natural and man-made), organizational/  13  participant (project stakeholder), product scope and process views. DeZoysa’s work on the architecture of the prototype tool provided few details on how best to describe the components in the various project views. I have focused on how to characterize different components, with particular emphasis on stakeholders, consideration of risks, and process and contractual steps in the public sector delivery of large infrastructure projects. Concepts have been tested and constructs added to the prototype to improve one or more risk management tasks during planning and procurement. This allowed me to test and validate the concepts in realistic settings of case studies and through semi-structured interviews with senior industry practitioners. 1.4  Research Motivation: Challenges with Current Risk Management Approaches  The quality of the risk management process carried out on infrastructure projects varies regardless of project delivery approach applied. A review of literature, industry experience, and discussions with construction industry professionals show that the process ranges from a project manager’s spreadsheet with potential risk events (with no identification of risk sources, modes of failure or mitigation approaches) at the early stages of a project to a comprehensive risk database created by a full time risk manager responsible for its management. A major and complex challenge is to identify the many risk types, which include financial, economic, environmental, organizational, contractual, technical and political. At the start of my study, risk identification and quantification in large civil infrastructure projects was perceived as somewhat ad hoc (Tah, & Carr, 2000; Adams, 2006). Most often risks were considered in isolation even though in many cases they could be interrelated (Thomas et al., 2006). There was no readily available approach to synthesize data collected or apply knowledge from past projects. Hertogh & Westerveld (2010) in their study of international large infrastructure projects highlight the lack of exchange of knowledge on the management and organization of these project types. Work by Akintoye et 14  al. (2003) summarized the results of an investigation of risk management in the U.K.’s Private Finance Initiative (analogous to a Public Private Partnership) projects, which highlighted relatively incomplete upfront project information, poor historic statistical risk data, and lack of risk information from previous projects in the form of a risk library. These deficiencies adversely affected the ability to meet value for money assessment requirements of the government sector. Tight time frames for data collection, analysis and decision-making, estimation of values for risk event likelihood and outcomes resulted in somewhat highly subjective estimates that were not easily reproducible. Following risk identification, risk events need quantification, allocation to the appropriate project stakeholder, and management such that project objectives and performance criteria (e.g. duration and cost) can be met. However, the complexity, number of risk issues and lack of a systematic, transparent and objective risk analysis approach made it difficult.  In my professional work, I have experienced firsthand the challenges of undertaking a comprehensive and transparent risk management process during the front end planning and procurement of public sector projects delivered both by traditional and PPP project delivery approaches. Stakeholder generated risks, especially those internal to the sponsoring and delivery organizations, are often rarely considered and these became a major part of my research. Management consultants were hired to assist with and monitor the project risk management process. The challenges outlined have been real and their products met the prescribed intent of performing risk management, yet leaving the feeling of opportunity to further improve and integrate the risk tasks with other project management activities.  15  I consider that the intent of the risk management process performed early in the project is to develop a project risk profile and manage positive and adverse risk events in subsequent phases. In many cases, it seems that attendance at risk identification/quantification workshops or receipt of a consultant’s report are unsatisfactory because they have involved ‘high level’ general management treatment that leaves challenges unidentified and have been rushed by looming time constraints. Many risk management exercises seem to have been undertaken to achieve third party approval or auditing requirements rather than to develop a document and plan that will be useful in later phases of the project. From my experience, I consider that there is much room for improvement and that many project participants continue to worry whether or not they have identified the most significant risks, their drivers, associated properties, and appropriate responses. Both the academic and industry literature contain few cases that compare what was thought to happen with what actually happened, so learning of the success (e.g. forecast = actual) of the risk management process tends to be flat. Authors in the construction industry literature and other professionals seem to acknowledge that risk management is integral to the project management process, but many challenges remain and there are few tools to integrate risk management with project management. There are many opportunities for risk transfer in PPP projects to increase value for money over traditional procurement approaches, but both academia and industry question the degree to which they ‘got it right’ in carrying out the risk management. Clearly new research efforts are timely. 1.5  Research Questions and Objectives  My research addressed two of De Zoysa’s (2006) questions in re-posed form as set out in the following subsection. In their original form, De Zoysa’s questions were:  16  1. How should the relationship between project context and project risks be represented and how should the project context be modeled? 2. How should representations of project risks and their relationship with project context be exploited to gain insights for decision making, and in support of this, what querying, reporting and visualization functions are of use? Arising from these questions, and aided by previous work (Russell & Udaipurwala, 2004), a multi-view representation of a project was enhanced and extended to treat the environmental (natural and man-made) and risk views of a project (De Zoysa, 2006; Wang, 2005). I have extended the usefulness of the organizational/participant view of a project by adding content, testing ideas and validating associated attributes. In addition, I have tested the concept of using risk drivers to make associations between view components and a grouping of like risks, called a risk issue, so that individual risk events could be defined that corresponded to the existence of one or more risk drivers at a particular project location or at a particular point in time. Information and its associated level of detail and format discussed in chapters 5 and 6 have been drawn upon to test the prototype for industry applications. Inputting case study information to test the prototype resulted in a number of assumptions about drivers at the event level to be restructured such as the sharing of locations at the event versus issue level. Greater refinement is now possible because one can examine attributes and their values for a risk driver to confirm risk driver status in the temporal and spatial context. The interface of the prototype has also been adjusted to improve the transparency and viewing of multiple screens and content to facilitate improved risk identification sessions. The visualization of risk data, although further enhanced in the prototype, has not been exploited in the thesis because of the focus on exploring process and stakeholder aspects of the planning and procurement phases. DeZoysa’s work contributed to  17  answering questions 1 and 2, but it was determined that much work remained to be done particularly with respect to question 2.  I have reposed De Zoysa’s questions (1) and (2) and further questions were developed to provide guidance for my research. My focus was to move beyond the architecture of the prototype tool and introduce the concept of characterizing (as indicated previously, the word profiling was initially used, but it is not well received in the public sector) and as a way to explore how best to describe the components in the various project views, in particular the stakeholder view. My work has provided ways to improve the risk identification and elicitation of risks and associated properties in the planning and procurement phase of large infrastructure projects by introducing support tools and approaches to elicit and gather better quality project stakeholder, process and risk data for input into an enhanced research prototype.  1.5.1  Research Hypotheses  The research hypotheses (and reference to related chapters) guiding my research included the following: H1. The processes of risk identification and elicitation of risk properties can be improved using specific methodologies and tools; in particular a characterized project context. {Chapter 5 – A stakeholder management framework for application on large infrastructure public sector projects; Chapter 6 – A decision support approach for the identification of project objectives and improved decision making; and Chapter 7 – An integrated risk management process: a prototype application}  18  H2. A risk management process in the front-end planning and procurement phases of a project is integral to contributing to the planning of other project management activities and critical decision-making. {Chapter 2 – Characterizing Canadian large infrastructure public sector projects}  H3. Characterizing the components and associated attributes used to represent the various views of a project can provide valuable insights to project managers and improve the overall risk management process. {Chapter 5 – A stakeholder management framework for application on large infrastructure public sector projects; Chapter 6 – A decision support approach for the identification of project objectives and improved decision making; and Chapter 7 – An integrated risk management process: a prototype application}  H4. Stakeholders are a major source of risk and there is a direct link between stakeholder attributes and the likelihood and impact of risk events. {Chapter 5 – A stakeholder management framework for application on large infrastructure public sector projects}  H5. The risk management tools and techniques available to project participants do not meet current practitioner needs for large infrastructure public projects. {Chapter 3 – Risk management in the front end planning phase: lessons of a large infrastructure public private partnership project; Chapter 4 – Key risks managed in the procurement of the first Canadian federal real property public private partnership project}  19  1.5.2  Research Questions  Three critical research questions being pursued in this thesis are: 1. How can modeling project context improve the processes of risk identification, and elicitation of risk properties for large public sector infrastructure projects in the early phases of a project? 2. What are the user objectives that must be considered in order to develop a practical workable approach to risk management in the planning and procurement phases of a large infrastructure public sector project? 3. How can one best model project context and specifically characterize stakeholders given the objectives identified in Question 2 in such a way that it is of value, succinct and addresses the time and resource constraints experienced on large infrastructure projects? A fourth related question, not fundamental to but of importance to this thesis relates to the role of Information Technology in the risk management process is: 4. What are the potential roles for Information Technology in the design of a support tool for real time risk identification and elicitation of expert opinion sessions?  In responding to these questions, the primary goal of this research is to develop a framework/approach that will assist a user early in the project lifecycle in identifying project risk events, drivers of those risk events along with capturing and modeling risk related knowledge for current and future project use. Understanding project stakeholders, including  20  their role and objectives, is central to the framework/approach and tools are presented to do so for large infrastructure public sector infrastructure projects.  1.5.3  Research Themes, Objectives and a Reader’s Guide  The following section provides a guide to the reader in navigating the three research themes and nine objectives of this thesis. Each chapter is defined as either core or support in responding to the goal of the thesis.  Support chapters provide an overview of the public sector large infrastructure project delivery environment including the unique problems and aspects of interest, which drive the need for the structured risk approach and tools. Support chapters include: •  Chapter 2 – Characterizing Canadian large infrastructure public sector projects;  •  Chapter 3 – Risk management in the front end planning phase: lessons of a large infrastructure public private partnership project; and  •  Chapter 4 – Key risks managed in the procurement of the first Canadian federal real property public private partnership project.  Chapter 2 is an overview of the complexities involved in the delivery of these large infrastructure projects and Chapters 3 and 4 are project case studies further defining aspects of interest in the front end planning and procurement phases of project delivery. These case studies provide details on the rationale driving the need for the framework/approach and research prototype introduced.  Core chapters provide a description of the structured risk approach/framework, the research prototype and supporting tools. Core chapters include: 21  •  Chapter 5 – A stakeholder management framework for application on large infrastructure public sector projects;  •  Chapter 6 – A decision support approach for the identification of project objectives and improved decision making;  •  Chapter 7 – An integrated risk management process: a prototype application; and  •  Chapter 8 – Validation results.  Chapters 5 and 6 introduce tools that support the framework/approach and provide project examples on how these tools may be implemented in practice and populate aspects of the research prototype. Chapter 7 provides a description of how one may effectively address the issues identified in the support chapters in a structured manner using the framework/approach and research prototype introduced. The perspective of potential users, senior public and private sector executives, and their views on the potential of the research prototype to improve project risk identification and elicitation of risk properties is presented in chapter 8 and provides additional insight and validation of the research contributions.  The purpose of the research is to provide insight on: a. Processes and risks encountered in the delivery of a public sector large infrastructure project prior to project award (Chapters 2, 3, and 4) ; b. Strengths and weaknesses of state-of-the-art processes and tools available to carry out risk management and associated challenges in large infrastructure projects (Chapters 2, 3, and 4) ; c. Multi-dimensionality of stakeholders and decisions involved in public sector project delivery (Chapter 2, 5 and 6); and d. Concepts and constructs developed to improve risk management processes applied in a prototype computer system (Chapter 5, 6 and 7). The objectives of this  22  research and motivation for their treatment are highlighted under three research themes as follows: 1.5.3.1  Research Theme 1 – Risk Management Practices and Challenges in Large  Infrastructure Public Projects Activities and stakeholders involved in the delivery of large infrastructure projects by the public sector differs from that of a project delivered by a private sector entity due to a number of factors including the political environment, legislative and compliance frameworks, and organizational complexity and multi-faceted mandates. The thesis focuses on providing insight into the characteristics, processes followed, risks and stakeholders involved in a public sector large infrastructure project in pursuit of the following objectives and research hypotheses H3, H4, and H5: •  O1. To characterize unique aspects of large infrastructure PPP delivery by a Canadian public sector entity;  •  O2. To define the stakeholders and typical tasks performed in the front end-planning and procurement phases of public sector large infrastructure project delivery process;  •  O3. To gain a better understanding of risk management approaches employed by industry practitioners in major public sector projects including the constraints faced, process carried out, tools/techniques employed and synergy with other project management activities.  Chapters that cover this research theme include: •  Chapter 2 – Characterizing Canadian large infrastructure public sector projects;  •  Chapter 3 – Risk management in the front end planning phase: lessons of a large infrastructure public private partnership project; 23  •  Chapter 4 – Key risks managed in the procurement of the first Canadian federal real property public private partnership project; and  •  Chapter 5 – A stakeholder management framework for application on large infrastructure public sector projects.  1.5.3.2  Research Theme 2 – Approaches to Support Elicitation of Risk Information to  Improve Risk Management Processes Various sources of information are required to provide an integrated view of a project and populate the risk prototype tool discussed in Research Theme 3. Two approaches/frameworks are developed to assist users in creating quality input information specifically with respect to Project stakeholders and their objectives. Each of these aspects is critical in the management of risk – stakeholders with respect to drivers and their objectives with understanding their perspective of consequences of risk events. Stakeholders can be a significant source of risk for a project, in particular in the planning and procurement phases of a public sector large infrastructure project. The scale and scope of these large public sector projects require considerable levels of oversight and involvement of decision makers and tend to generate significant public interest. Understanding the multidimensionality of stakeholder involvement and their objectives in public sector large infrastructure projects is the focus of the following objectives in the thesis and research hypotheses H1, H2 and H4: •  O4. To characterize stakeholders involved in a Canadian federal large public sector infrastructure project, using a PPP project as a specific case;  •  O5. To gain a better understanding of how stakeholders contribute to the risk profile of a project and develop attributes for classes of project participants and associated values that may be used in the approach formulated based on literature and direct observation; and 24  •  O6. To develop and apply an approach to elicit project objectives that may be utilized in multiple stages of project delivery.  Chapters that cover this Research Theme include: •  Chapter 5 – A stakeholder management framework for application on large infrastructure public sector projects; and  •  Chapter 6 – A decision support approach for the identification of project objectives and improved decision making.  A related chapter but which does not directly address the objective outlined in this research theme include: • 1.5.3.3  Chapter 7 – An integrated risk management process: A prototype application. Research Theme 3 – Developing and Gauging the Effectiveness of a Prototype  Integrated Risk Management Tool An information technology (IT) approach and supporting tool can concurrently improve upon current risk identification processes and expert opinion elicitation tasks in the planning and procurement phases of a large infrastructure project through the modeling of project context in a structured fashion. A multi-view representation, with emphasis on the stakeholder view, of a project in terms of hierarchical structures of components to manage and reuse risk related information and knowledge is introduced and demonstrated to show how it may be used in practice. Relevant objectives are as follows and related research hypotheses are H1 and H3: •  O7. To enhance features of a project management research prototype to demonstrate the value of the ideas and concepts developed to improve the risk identification and elicitation of expert opinion approach addressing identified weaknesses and to further improves current practices; 25  •  O8. To implement characterizing in a practical way to assist with the risk identification and elicitation of expert opinion in the early planning phases of the project lifecycle.  •  O9. To demonstrate the application of the approach and its response to tests that reflect industry needs as set out at the forefront of the thesis and current practice shortcomings.  Chapters that cover this Research Theme are: •  Chapter 7 – An integrated risk management process: a prototype application}  •  Chapter 8 – Validation Results Chapters related but which do not directly address the objectives outlined in this research theme include:  •  Chapter 5 – A stakeholder management framework for application on large infrastructure public sector projects; and  •  Chapter 6 – A decision support approach for the identification of project objectives and improved decision making.  1.6  Research Scope  Here I provide a succinct statement of the scope of my research work and as elaborated upon in the previous sections of this Chapter. The scope of work has been bounded to the following: •  The focus of the approach is on the project planning and procurement phases for a large public sector infrastructure project, prior to the award of a construction contract;  26  The procurement delivery mechanism considered to provide context of the activities,  •  process stages and stakeholders of the planning and procurement phases is for a public private partnership (PPP) delivered by a Canadian federal public sector entity; The primary perspective is that of a Canadian federal public sector project sponsor with  •  signing authority for contract award for the design and construction phase; The approach is applicable for all project types; however, testing of the approach will be  •  performed on large civil infrastructure project types; and The academic literature review that has been conducted in this research has focused on the  •  treatment of risk management in civil engineering, specifically, civil infrastructure projects. 1.7  Research Methodology  The research methodology used in pursuing the foregoing research questions and achieving the research objectives consisted of a multi-part methodology comprised of a combination of investigation, observation, professional experience and a literature review. The components included four phases: •  Phase 1  Problem Definition/Literature Review  •  Phase 2  Case Study Investigations  •  Phase 3  Risk Management and Support Approach Development  •  Phase 4  Research Validation  A series of research test questions were developed and informed from the findings in Phase 1 and Phase 2 and were applied in Phase 4. A description of each of the research methodology phases follows:  27  1.7.1  Phase 1 - Problem Definition and Literature Review.  Phase 1 involved the identification of research context and limitations (shortcomings) of current risk management processes through observations of current practice and literature review. Outputs of this phase included the identification of basic shortcomings of current processes and constraints and the realities of industry requirements and practices in performing risk management tasks in the front end phases of project delivery.  The research topic is interdisciplinary and required a comprehensive literature review that encompassed a range of fields outside engineering. Fields reviewed included risk management, project management, management sciences, and risk and decision theory areas of sociology and psychology. This broad, yet comprehensive, review of relevant industry and academic documents was used to bring solutions applied in other disciplines to an engineering problem. Practitioner literature reviewed included (1) Best practices and government guidelines, policy and regulation on public private partnership project delivery; and (2) Government and industry risk management policies and guidelines as they relate to the delivery and/or operation of large civil infrastructure. Practitioner literature extended outside of Canada to countries including the UK, Australia and India where best practices on large infrastructure delivery are well known by industry practitioners.  There is a considerable amount of academic literature treating risk management outside the field of construction such as in the fields of health, decision analysis, and environmental management. The academic literature review that has been conducted in this research focused on the treatment of risk management in civil engineering, specifically, civil infrastructure projects. The areas of  28  the academic literature that I have focused on included: (1) categorization and aggregation of risk elements including risk response strategies and drivers; (2) tools to assist with the risk identification and elicitation of expert opinion (this has involved some study of the literature from a number of fields); (3) accommodation of a diversity of project stakeholders (financiers, planners, engineers, architects, facility maintenance providers, etc.) and associated diversity in disciplines; (4) treatment of both qualitative and quantitative data; and, (5) limited review of the application of knowledge management in civil infrastructure.. 1.7.2  Phase 2 - Case Study Investigation.  Phase 2 of the research included case study investigation working closely with public sector organizations in the construction industry. Organizations involved in the research included Public Works Government Services Canada (a Canadian federal entity) and Canada Line Rapid Transit Inc (an entity related to a Canadian provincial entity). Each of these organizations has been involved in the procurement and delivery of PPP infrastructure projects representing public sector interests. In these case studies, I have performed semi-structured interviews and had direct interaction with professionals involved in the delivery of these large infrastructure projects and have carried out a careful assessment of the processes used for risk management, including the identification and elicitation techniques, tools utilized to assist in the process and knowledge management concepts applied. Outputs of this phase included the identification of the challenges which exist performing risk management in the front end planning and procurement phases of PPP projects, collection of data to formulate input for the prototype tool and supporting approaches, and confirmation of shortcomings of current approaches.  29  Informal and formal discussions with industry practitioners in senior executive positions (Vice President, Chief Executive Officer, Director General, etc.) with seasoned involvement in the procurement and delivery of PPP projects from a number of public and private sector organizations was used to ground the research relative to industry risk management best practices, strengths and challenges. Practitioner literature on the PPP procurement mode, and the treatment of risk, is constantly evolving as reflected in the state of flux in practitioner literature. This is particularly the case as more and more large Canadian infrastructure projects are delivered via this delivery approach and industry practitioners refine best practices and the industry norm to reflect lessons learned. Direct interaction with practitioners and first hand observations gained from over ten years of professional experience related to project planning and delivery informed the research with respect to gaining a better understanding of different stakeholder values and objectives. My specific focus was on: •  The objectives and interests of different stakeholders involved in a large infrastructure project;  •  Primary risk issues of concern to multiple project participants in the front end Project planning with respect to the financing, organizational, contractual, construction and operations and maintenance process dimensions of a project;  •  Current techniques and approaches used for the risk identification, communication and the monitoring and tracking of risks prior to contract award; and  •  Current challenges in carrying out the risk management process in the evaluation of or delivery of large infrastructure projects with a particular emphasis on those projects delivered via a PPP.  30  Findings from the case study investigations assisted in providing insight into the development of new approaches outlined in Phase 3.  1.7.3  Phase 3 - Risk Management and Support Approach Development.  Phase 3 involved formulating ideas, exposing them in different forms to practicing professionals, some testing of the ideas and concepts in the form of peer reviewed conference papers and the research prototype. Output included the development of two support approaches and an enhanced prototype to support risk management tasks in the front end planning of large infrastructure projects. Concepts and processes developed were implemented into the prototype system and tested with practitioners in controlled cases to enhance it with respect to those aspects of interest. Specifically, in one project a multi-view representation of the project context and a comprehensive risk register was developed to test ideas, and for use in the validation and review stage of the research. 1.7.4  Phase 4 - Validation.  A series of semi-structured interviews with senior industry executives was performed to assess their view on the application of the prototype in their projects, issues and opportunities for knowledge management and integration with other project management tasks. Validation was tested relative to a series of research test questions developed. Feedback obtained from the testing exercise was used to refine the concepts and highlight practicality of its application in practice to improve the identification of risk events, respective values and the management of knowledge for reference in the future.  31  1.8  Research Test Questions  A series of tests, expressed as questions, have been developed to apply to the approach and enhanced prototype tool in order to test the fit with shortcomings of current industry approaches and the unique characteristics and requirements of the industry. The attributes of the research tests for assessing whether the prototype tool and approach address the identified weaknesses of current state of the art risk management aids are defined as generality, integrative, transparent and new. The research test attributes, questions and their metrics used in the validation exercise are outlined below. 1.8.1  Generality  The approach can be considered general (i.e. broadly applicable) if it has the ability to be applied across a variety of problem scenarios such as across a range of project types and project delivery mechanisms. Questions: •  Do you see opportunity to apply this tool on your projects and across a variety of project types (Real Property, IT, other)?  Metrics: •  Subjective rating by experts about the ‘generality of the approach’  •  Number of project types that can apply the approach with respect to project size, delivery approach, and types.  1.8.2  Integrative  32  The approach can be considered integrative if it has the ability to foster the integration of data currently available to Project personnel into the approach and data entry fields are unambiguous to individuals across disciplines. Questions: • Are the data fields comprehensive to meet your needs? (An important issue is the willingness of project personnel to define relevant data fields and then populate them with values – e.g. ability to define attributes of interest, and then assign values as a function of project context) • Do you feel that you can input available project data into the system? Metrics: •  Subjective assessment by the experts about the usability of data fields for integration of current information available.  1.8.3  Transparent  The approach can be considered transparent if the approach fits with processes and practices performed by practitioners including the ability to accommodate multiple linguistic styles, values and means of expressions by individuals across disciplines. Questions: • Do you feel users across disciplines would be able to use the system? Metrics: •  Subjective rating of experts about the ‘fit for purpose’ of the approach for practitioners across disciplines.  1.8.4  New/ Value Add  33  The approach can be considered new if it is assessed as adding value such as providing insights not readily available from current practice and results in improved risk management such as greater completeness in risks identified, better understanding of reasons for them, better and more complete assessment of impacts (type and value) etc.. Questions: • Does the approach offer value or an improvement relative to current practice? Metrics: •  Subjective rating of the experts on the ‘value’ and ‘newness’ of the approach in providing insights;  •  Number of tasks or process steps assisted by the experts that are not explicitly carried out in current practice.  1.9  Thesis Structure and Overview of Contributions  The following section provides a summary of each of the chapters that comprises this dissertation. Chapter 1 - Introduction This chapter presents the motivation for the research, research objectives, boundaries with respect to the scope of work and research tests that will be applied. The public sector client perspective in performing the risk management steps is taken in conducting this research.  Contributions that arise from this chapter include a current perspective on industry practice and challenges in carrying out risk management tasks in large infrastructure public sector projects.  Chapter 2 - Characterizing Canadian large infrastructure public sector projects 34  This chapter provides an overview of the unique characteristics of the public sector and the risk management practices carried out by public sector entities in the front-end planning stage of the project lifecycle of large public infrastructure projects. An overview of the complexities of public sector large infrastructure projects including the unique characteristics of the public sector as a procurer and manager of the project delivery process relative to its private sector counterpart are discussed.  Contributions that arise from this chapter are three fold. First, characteristics to describe a large public infrastructure project in Canada. Second, a description of the PPP project delivery mechanism employed in the Canadian federal context is outlined. Thirdly, an overview of the factors that differentiate, at the operational level in the delivery and management of a project in the planning and procurement phases, the public and private sector are described to further understand the context and complexity of the public sector client environment to which the thesis framework is developed. Chapter 3 - Risk management in the front-end planning phase: lessons of a large infrastructure public private partnership project This chapter first summarizes the state of the art in risk management processes, including commercially available software tools, based on a review of academic and industry literature. A case study of the Canada Line Rapid Transit Public Private Partnership (PPP) project to serve as a means to describe in detail the risk management process performed on a public sector PPP project and the associated strengths and challenges identified by practitioners involved in identifying risks in large infrastructure PPP projects. Findings provide useful insight to understand the shortcomings particularly relative to industry practitioner needs.  35  Contributions that arise from this chapter include a fulsome description of the risk management process undertaken by a public sector entity on a Canadian large infrastructure PPP project including a description of how a risk register was developed, its content, practitioners’ perspective on the strengths and weaknesses of the process and its application managing various reporting and accountability requirements at the project and organization level. This chapter informs chapters 5, 6 and 7 on the good practices that should be imbedded in processes and issues/objectives useful to address to improve risk management practices. Chapter 4 - Key risks managed in the procurement of the first Canadian federal real property public private partnership project Chapter 4 provides a description of risks managed in the front end planning stage by a Canadian public sector entity implementing the first federal real property PPP in Canada for the delivery of a large infrastructure project. Risk issues identified include both those explicitly identified upfront in the Project risk register in addition to those not explicitly identified but mitigation steps taken to reduce potential adverse impacts. This chapter highlights the multitude of stakeholders involved in the front end planning stage, how these stakeholders responsible for the review, implementation or approval drive risks and the consideration of both risks managed at the Project and organizational level on these large infrastructure projects.  Contributions that arise from this chapter include a description of key risk issues identified in the front end planning and procurement phases of a project, which if not dealt with due consideration could ultimately result in the failure of a Project. These risk issues tend to either not be  36  acknowledged or identified in industry and academic literature due to the qualitative nature and early stage in which they occur.  Chapter 5 - A stakeholder management framework for application on large infrastructure public sector projects Chapter 5 introduces a stakeholder management framework for application on large infrastructure real property projects including how this task may be integrated with the risk management process. Observations, data from a federal large infrastructure project and feedback from industry practitioners and senior federal executives served to guide the development of the framework. The framework includes templates or tools for each stage of the stakeholder management process that may assist users to identify stakeholders, their interests and relations with project objectives. The framework serves to support users involved in risk management tasks input data into the ‘Participant’ View of the Prototype tool and/or consider the Project risks driven by the multitude of stakeholders involved in the planning and delivery of large infrastructure projects.  Contributions that arise from this chapter are twofold. First, a standalone stakeholder management framework is developed for application to the decision making environment and reporting requirements on large infrastructure public sector Canadian projects, which is of direct benefit to practitioners. Second, the framework directs ways in which stakeholders may be characterized informing chapter 7.  37  Chapter 6 - A decision support approach for the identification of project objectives and improved decision making This chapter introduces a decision support approach designed for application on large public sector infrastructure projects and provides context of the respective project delivery decision environment including a motivating example of a failed decision process. The approach focuses on the identification of stakeholder objectives including multiple decision criteria and elicitation of performance metrics. Clarification of stakeholder objectives serves in performing risk management process tasks such as information and risk identification, analysis and allocation to appropriate project participants. The multiple decision criteria and performance metrics elicited from senior executive decision makers of a public sector entity are identified for a large infrastructure project in a decision problem to illustrate the application of the approach and opportunity to improve decision making processes and associated overall project risk management.  Contributions that arise from this chapter are twofold. First, a standalone decision support process and its application on a key decision in a large infrastructure project delivery process, site selection, are illustrated. The approach improves how practitioners manage risks at key decision points over the course of project delivery. Secondly, the approach assists the user collect inputs that populate information requirements for risk management tasks outlined in chapter 7 including the identification of stakeholder objectives, differences across stakeholder objectives and the development of relevant consequences/outcomes to assess risks against.  Chapter 7 - An integrated risk management process: a prototype application  38  Chapter 7 introduces a process and prototype to improve the risk management and decisionmaking processes carried out on large infrastructure public sector projects. First, the concept of characterizing Project context as it is applied in this research is introduced followed by a detailed framework that involves characterizing the components and associated attributes used to represent the four views of a project. These four views include the physical (what will be built), process (how it will be built including schedule), participant (organizations and individuals involved) and environmental (the natural and man-made environments in which it is being built). The application of the concept of characterization in the stakeholder view of a large infrastructure public sector project is then provided in further detail, as it is the focus of the research. How this framework can provide valuable insights to project managers and improve the overall risk management process is then discussed. An example from a large infrastructure public sector PPP project is used to illustrate application of the prototype at the front-end planning stage.  Contributions that arise from this chapter include a process to elicit expert opinion using an integrated view of the project context to populate an IT prototype and improve risk management tasks including identification, assessment and response to project risk events. In addition, this chapter introduces the concept of characterizing project attributes, with specific focus on stakeholders, and how this concept may be applied to improve the quality of risk management tasks.  Chapter 8 - Validation Results  39  This chapter describes the results of semi-structured interviews with senior executives of both the public and private sector to assess their view on the application of the prototype, the concept of characterization of risk attributes in their projects, issues and opportunities for knowledge management and integration with other project management tasks. This chapter serves as the validation of the research performed.  Contributions that arise from this chapter include a description of senior industry practitioners thought processes, features they like and dislike with the proposed approach and risk management practices in general on large infrastructure PPP projects.  Chapter 9 - Conclusion and Contributions This chapter outlines conclusions, contributions made from this research and recommendations for future research.  40  Chapter 2: Large Public Sector Infrastructure Projects This chapter presents an overview of the complexities involved in the delivery of large Canadian public sector infrastructure projects and relevant descriptions of the scope of work pertaining to the thesis. The thesis case studies, methodology and approach are specific to the Canadian context. However, the approach and lessons learned to improve risk identification and elicitation of expert opinion are applicable in other jurisdictions. It is well understood that the delivery of projects across construction industry sectors, organizations and international jurisdictions differs and there is no unified terminology that is applied consistently across the field. This chapter therefore describes the following key areas that bound the thesis and establishes its context as illustrated in Figure 1:  Infrastructure Projects: The identification and management of risk is applicable for all project types ranging from small infrastructure projects to large ones. The development and testing of the approach will be performed on a large civil infrastructure project type and therefore, characteristics, or attributes, of large infrastructure projects are defined. Organization: There are various perspectives in which the identification and elicitation of expert opinion of risk pertains in the delivery of large infrastructure projects, ranging from the user, Project Sponsor (Owner/Client), contractor, or the public at large among others. The primary perspective is that of a Canadian federal public sector project sponsor with signing authority for contract award for proceeding with the final design and construction phase. Differences across the decision-making, governance and project delivery environment of the public and private sector are outlined further in this chapter.  41  Construction Segments: The construction industry may be broadly or narrowly defined into a number of segments. Each industry segment has both similarities and differences. The construction segments for which the approach is developed is that of the Transport and Social Infrastructure segments due to frequency of project segment delivery relative to other construction segment project type by the identified public sector entity. Delivery Mechanism: Large public sector infrastructure projects may be delivered using a number of procurement delivery mechanisms ranging from a Design Bid Build (DBB), typically identified as a traditional public sector form of delivery through to a Design Build Finance Maintain (DBFM), typically termed broadly a public private partnership (PPP). The procurement delivery mechanism considered herein, providing context for the activities, process stages and stakeholders of the planning and procurement phases, is for a public private partnership, specifically a DBFM, delivered by a Canadian federal public sector entity. Project Life Stage: Large infrastructure projects are delivered across a number of project phases notably front end planning and procurement, design, construction, infrastructure use and end of life. The focus of the approach is on the Project front end planning and procurement phases for a large infrastructure public sector project and prior to the award of a construction contract.  42  Figure 1: Illustration of thesis scope context  2.1  Defining Large Public Infrastructure Projects  Characterizing or defining a Project as a certain ‘type’ is a difficult task as there are a myriad of characteristics, definitions and associated interpretations applied in the construction industry. Generic approaches used to characterize projects include those of Obeng (1994) and Shenhar & Dvir (2004). Obeng (1994) considers the clarity of both the stakeholders and organization on both what is required to be carried out and how to do it. Shenhar & Dvir (2004) developed a framework termed the NTCP model to help understand the nature of the project and identify gaps relative to current capabilities based on an assessment of project complexity, novelty, technology and pace. In the case of large infrastructure projects, there is a number of synonymous terms to describe large infrastructure projects used in popular media, academic and  43  industry papers including Mega projects, Major Projects, superprojects and large-scale. Although multiple terms are used, there is no one universal definition and characteristics vary. For example, Fiori & Kovaka (2005) define mega projects as “A construction project, or aggregate of such projects, characterized by: magnified cost, extreme complexity, increased risk, lofty ideals, and high visibility, in a combination that represents a significant challenge to the stakeholders, a significant impact to the community and pushes the limits of construction experience.”. Others, such as Frick (2008) characterize transportation mega-projects according to the ‘Six C’s’ (Colossal, Captivating, Costly, Controversial, Complex, Control), characteristics that are also applicable to describing large infrastructure in other sectors. In this thesis, a large public infrastructure project may be broadly characterized by the participation of multiple stakeholders with differing value systems, technical complexity, aggressive and multi-year schedules and uncertainty in budgeting.  Characteristics to describe a large public infrastructure project in Canada are stated below for purpose of the thesis. Understanding the attributes of these large projects provides context of the complexity and scope relative to their smaller cousins. These attributes have been drawn from observations based on my professional experience executing these projects for public sector entities and a combination of attributes identified by a number of authors researching the field (Merrow, 1988; Miller & Hobbs, 2005; Bruijin & Leijten, 2008; Frick, 2008; Flyjberg et al., 2009). A range of attributes may characterize large infrastructure public sector projects; however, in this thesis the following seven attributes are selected as being pertinent and reflective of large infrastructure projects in Canada: 1) Unique  44  2) Broad Scope and Capital Dollar Size 3) Dynamic Stakeholder and Governance Network 4) Project Risk Profile 5) Long Front End Planning Timeline 6) High Political Partisan Participation 7) Highly Visible and Iconic  Unique: Large infrastructure projects are generally one-off projects in which the public sector organization and in many cases local industry professionals have limited experience. Participating in an individual large infrastructure project often occurs only once in a career for both public and private sector participants (Flyvbjerg et al., 2009). These projects may involve the consideration (by both the public sector and their private sector consultants) of new innovative technologies, design, materials or construction practices.  Broad Scope and Capital Dollar Size: The nature of large infrastructure projects tends to involve complex phasing, design solutions and financial scope. The project may be a bundling or aggregation of a number of projects of sufficient scope, typically in the order of capital costs that exceed $100 million in the Canadian context. Dollar values in the order of $500 million have been used to characterize mega-projects (Merrow, 1988); however, the lower dollar value is deemed appropriate to represent what Canadian public and private sector practitioners discuss as ‘large’. This value is not inclusive of the related budget required to cover the project front end planning that may evolve over a period of a decade resulting in costs rising considerably. A study of over 60 large infrastructure projects found that the cost of the development phase to  45  fund consultants, preliminary investigative and design work, project management and administration can reach 33% of the total budget (Miller & Hobbs, 2005). Large infrastructure projects are consistently underestimated and delays and exaggerated benefits are the norm due to a number of factors including for strategic and tactical reasons to improve business or political position or pleasing the hiring or proposing organization (Flyvbjerg et al., 2009). Overall, these large projects require considerable financial investments and related due diligence to ensure appropriate accountability and performance monitoring relevant to the broad scope and size.  Dynamic Stakeholder and Governance Network: Large infrastructure projects involve a complex network of public and private sector project participants often from multiple national, international, public and private sector organizations. The stakeholder list is often long and complex including the public at large and professionals representing sponsors, financiers, contractors, designers and developers across professional disciplines. It is common that the cross cultural and multi discipline project team members differ in their values such as how they make work-related and communication related decisions and practices including the level of centralization of authority, level of formalization of communication and the depth of the organizational hierarchy (Horii et al., 2005). In addition, different oversight parties providing infrastructure funding and governing project sponsors create a web of decision makers with differences in their interests and communication requirements. Within each of these participant organizations there are often participants (both groups or individuals) involved who have different, sometimes competing agendas both across and internal to an organization. Particular governance challenges arise where the multiple organizations serve as project sponsors or share the accountability for key project aspects such as joint funding (Ward and Chapman, 2008).  46  Differences in the organizational and cultural environment, project experience at the organization and assigned personnel level create a challenging environment for efficient, effective project controls and governance.  Project Risk Profile: Long time lines, diverse stakeholder involvement, broad financial and technical scope in the development, design, construction and operation phases expose a large infrastructure project to a series of risks that would not typically be seen in combination in smaller scale projects. In addition, large infrastructure projects typically monopolize considerable resources (human and financial) of the sponsoring organization and at an enterprise level require both tactical and strategic level consideration of the project on the organizational mission. For example, Miller & Hobbs (2005) found that regulatory or institutional changes were a critical part of the development process in 63% of the 60 large infrastructure projects studied.  Long Planning and Procurement Timeline: The front end planning stage of the project may develop over a long period of time, on average 7 years based on a research study by Miller & Hobbs (2005) and over a decade by Flyjberg el al. (2002). Based on my experience as a senior infrastructure director to a number of Canadian federal departments, large infrastructure projects can be in the planning stage for a decade, sometimes longer. For example, the case discussed in chapter 3 involving the delivery of a large transportation project, the Canada Line Rapid Transit Project, the project was identified as a solution to the regional transportation requirements over ten years prior to the construction start date (CEACA, 2004). Further, the case discussed in chapter 4 involving the first Canadian federal PPP large infrastructure real property project the front end planning stage was initiated over 20 years prior to the procurement. Large  47  infrastructure projects can monopolize a significant portion of an organization’s budget and present political challenges as the agenda of the leading political champion may change. In addition, over this long time period, the mandate of the organization leading or being the ultimate user may itself evolve in the front end planning phase resulting in changes in problem definition and appropriate strategy selection.  High Political Partisan Participation: The scale and scope of large infrastructure projects tend to have broad financial, social and environmental impacts at the local and national levels and often a high profile within the sponsoring organization and governing authorities. These projects therefore tend to be highly notable and attract political attention. The impact of the project is under scrutiny from various perspectives including financial, environmental, technical and social acceptability including for example potential to disrupt operations of nearby businesses, impact on the physical and built environment and economic development to a region. Political representatives from multi-levels of government (federal, provincial, territorial, First Nations and municipal) representing citizens become key participants depending on the reach of the Project as representatives of their constituents and/or in combination as project funders with public monies. The support of a political champion is identified as a condition essential to success specifically the tenure of the political sponsor and that there is no change in political will (NAP, 2000). Lack of support or alignment can result in extended time lines and inadequate financial resources to respond to concerns, perform necessary consultation, and communicate requirements and feasible technical/financial options under consideration. In some cases, lack of political support may result ultimately in the termination of the project.  48  Highly visible and iconic: Large infrastructure projects are typically under scrutiny with respect to both the technical and financial solution proposed. Aesthetics and ‘fit’ with the surrounding built environment become issues of interest by various project stakeholders. The scale and impact of these large projects also attract desires to use the project to symbolize the values (such as environment sustainability or design ingenuity) of the nation or region of impact. There is a tendency for a range of project participants, including those reviewing the project need, to desire to shape the infrastructure project as a public landmark or ‘history in the making’ demanding ‘extras’ in design, construction and operation/maintenance elements that push the project complexity and base budget and schedule in ways blind to the impact on the mantra ‘on time, on budget’ (Frick, 2008).  2.1.1  Factors Influencing Large Infrastructure Cost and Schedule Growth  The complexity, size and multi-year nature of the planning and delivery of large infrastructure projects makes it difficult to point to any one or combination of drivers for cost and schedule growth. Flyvbjerg et al. (2009) highlight a number of studies by authors that illustrate the commonality of major projects having cost overruns and that executives typically attribute underperformance to “numerous uncertainties such as project complexity, technological uncertainty, demand uncertainty, lack of scope clarity, unexpected geological features and opposing stakeholder voices”. Flyvbjerg et al. (2009 p. 172) in turn categorizes the reasons behind systematic forecasting errors into: delusions or honest mistakes; deceptions or strategic manipulation of information and processes; and, bad luck.  49  One of the factors identified to characterize large infrastructure projects is Broad Scope and Size in which the financial factor is identified as a large component. There are a number of ‘engineering’ factors which should be considered in ‘getting it right’ to complement the issues identified by Flyvbjerg et al. (2009). These factors developed to the Canadian context, identified in Table 1, contribute to cost escalation and schedule deviance and illustrate how it would be difficult for both those developing the numbers and those performing a due diligence review to highlight problems with cost estimates assigned in the front end planning phase.  50  Table 1: Factors contributing to cost and schedule growth in the front end planning stage of Canadian large infrastructure public sector projects (Adapted from Merrow, 1988) Factor Contributing to Cost and/or Schedule Growth Project Definition/Planning  Cost Estimating  Economic Assumptions Technological Innovation  Project Execution  Project Changes Resource Requirements for Due Diligence  Project Team  Comments • Multiple parties involved with often competing objectives and needs requires engagement and communication to ensure project definition is scoped appropriately and ‘extras’ or ‘nice to haves’ (which escalate costs) are minimized; • Difficulties in consolidating project information sourced from multiple stakeholders to define requirements, budget and anticipated schedule allowances and overlapping project phases. • Complexity in modeling correlation across components and difficulty to identify base cost components, monitor cost changes relative to evolution of scope and forecasting over long time periods with confidence. • Long time periods in project delivery present challenges in modeling currency, inflation and interest rate fluctuations in addition to commodity prices. • Lack of precedence in the implementation of new design, materials, technologies or construction methods and/or limited experience of working professionals applied or integrating the project solution present challenges in both estimating anticipated costs and time requirements in performing work; • Large infrastructure project often involve new Information Technology components, which also present challenges as outlined above. • Multiple projects within the overall project requiring implementation and monitoring resulting in increased resource requirements, consideration of overlapping activities and correlation of risk events. • Projects planned, designed and constructed over long times over which regulatory or client requirements may change likely impacting budget and schedule allowances. • High resource uptake in select periods of planning, procurement, design and construction; • Specialty resources required to plan and procure project, perform design or construction work due to one-off nature and/or broad size/scope of the project. • Projects often involve project team members across cultures and countries of origin over extended time lines. Continuity of project team members over project phases, work style and communication approaches may differ resulting in miscommunication, interpretation or integration challenges.  51  Each of these factors identified in Table 1 highlight the importance to consider the project context when assessing risks, and developing, monitoring and reviewing project costs and schedules. Specific risk issues identified in a large public sector infrastructure project being procured using a PPP are highlighted in chapter 4. They illustrate other process and stakeholder factors that are drivers of cost and schedule growth in the front end planning phase of a project life cycle. 2.2  Public Private Partnership Delivery Methodology  Governments worldwide have been rethinking how public assets are procured and operated driven by their infrastructure deficit and the need to achieve value for money. This has led to the consideration of alternative procurement approaches such as Public Private Partnerships (PPP), in particular for the large infrastructure projects (Koppenjan, 2008). The Government of Canada has identified the intent to expand the use of PPPs in Budget 2011 (Canada, 2011), which states: Federal departments will be required to evaluate the potential for using a P3 for large federal capital projects. All infrastructure projects creating an asset with a lifespan of at least 20 years, and having capital costs of $100 million or more, will be subjected to a P3 screen to determine whether a P3 may be a suitable procurement option. The Government of Canada support for the delivery of infrastructure programs and projects in Budget 2011 follows previous announcements, including Budget 2007 (Canada, 2007), where funds were allocated for the creation of a dedicated national PPP office and national projects. The unique and complex governance and contractual terms of a PPP, a focus on risk management in the front end planning and procurement phases, and the interest of the Canadian government to further apply PPP as an asset delivery methodology were drivers to focus this thesis on large public infrastructure projects delivered through the PPP mechanism. PPPs are 52  seen to result in cost certainty, an effective approach to transfer risks to the private sector, improved efficiencies, innovation, and timely delivery of projects (Joyner, 2008). Since there is no universal definition of a public private partnership (UN, 2004) the definition adopted in this thesis is that of PPP Canada Inc. (P3 Canada Fund: Round Three Application Guide) which incorporates the definition by the Canadian Council of Public Private Partnerships (CCPPP, 2011) as: A cooperative venture between the public and private sectors, built on the expertise of each partner that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards. The “partnership” is a contractual relationship that spells out the roles, responsibilities and accountabilities of both the public and private sector parties to the contract. The contract sets out the allocation of project risks between the parties. The typical length of the PPP contract term is known as the concession period, which ranges between 15 to 30+ years in the Canadian market. Broadly speaking, PPPs are characterized by the integration of two or more phases of a project, performance based contracts, a completion payment upon delivery of asset (for some projects), financing in part or whole by the private sector and project delivery stewardship by private sector professionals. The contractual arrangement of a PPP assigns co-responsibilities for the delivery of an infrastructure asset and associated services between a public and private sector entity and typically involves the private sector party responsible for the design, build, finance and maintenance (DBFM) of a project over a specified term at the end of which the asset is transferred back to the public sector partner. The contractual agreement between the public and private entities typically outlines a performance payment mechanism, performance standards and  53  delegation of power to collect user charges over the contract duration. A traditional approach to infrastructure delivery involves contracts with multiple parties such that there is no integration of private sector contracts over the project life cycle. For example, a private sector entity involved in the design of the infrastructure is not involved in the operations or maintenance stage. It is believed that through PPPs the private sector has a greater incentive to meet cost and schedule goals and provide a reliable well operated/maintained infrastructure over the long term since it has a financial stake in the project and is profit driven. Value for money is anticipated based on the transfer of risk from the public to private sector and opportunities for private sector innovation, management efficiency and integrated whole life design efficiencies.  Key to the evaluation of whether a PPP offers better value for money than a traditionally procured project is the identification and optimal transfer of risk from public to private sector. Optimal risk allocation is considered to occur where “identifiable risks are allocated to whomever is best able to manage them at the lowest cost to government, taking into account public interest considerations” (ACT, 2003). In a PPP, some risks once covered by the public treasury in projects delivered via a traditional delivery mechanism are identified and quantified explicitly and may be transferred to the private sector. In general, there appears to be a greater attention placed on the risk management process in PPPs by both the public and private sector relative to the level of effort in traditional projects. The private sector tends to be interested in taking risks which can be appropriately priced, managed and mitigated from their perspective and the public sector tends to be interested in governance issues such as ensuring that ‘it got it right’ at the procurement method selection stage and achieved value for money overall to the taxpayer.  54  2.2.1  Public Sector Drivers For PPP Methodology Adoption  The trend to increase infrastructure spending to meet these growing concerns of infrastructure deficit communicated by public citizens and representatives has resulted in increased consideration of alternative project delivery mechanisms that leverage private sector investments termed public private partnerships. As required investments in infrastructure are large, many governments are increasingly looking to private sector investment and expertise through public private partnerships to assist in addressing the infrastructure deficit and realize gains in economic development. This trend is not unique to the United States and Canada but also in developing countries such as India where the role for public private partnerships is larger than past infrastructure development to improve efficiencies in a competitive environment, lower costs and provides capital (GoI, 2011). Joyner (2007) summarizes ideological and pragmatic motivations driving public sector entities to consider public private partnerships to meet the increasing demand for new infrastructure. Drivers included: demand exceeding capability of public sector to deliver; access to private sector capital, skills and risk bearing capabilities; improved quality, accountability and speed in delivery of capital needs; and opportunity for public sector entity to focus on core capability.  In Canada, based on my industry experience in the public sector, drivers for consideration of alternative procurement modes (such as a PPP) in the context of delivery of large federal public sector projects arise from a number of objectives of the lead public sector entity delivering the project. Presented are those objectives typically identified by Canadian federal entities and associated attributes of a PPP:  55  Alignment with Government of Canada Direction •  Reviewing opportunities for alternative delivery mechanisms on a portfolio basis is in line with Corporate and Central Agency Objectives;  •  Canadian federal departments and agencies focus on ‘core’ public sector activities by applying alternative procurement mechanisms such as a PPP.  Efficient and Effective Project Delivery •  Private sector project delivery capacity, expertise and innovation mobilized in public sector projects;  •  Synergies of integration of design/construction/operation and maintenance across project phases;  •  Increasing scope of work drives opportunity for comprehensive market competition across projects.  Consistent Project and Program Delivery •  Contract documents focus on outputs and outcomes in the development of the design and maintenance protocols over long time lines.  Decreased Cost and Time Variances •  Performance based contracts are found to result in on-time, on-budget projects;  •  Reduce risk of lapsing department or agency funds over fiscal periods enables improved budget projections;  •  Service delivered to public within anticipated schedule.  Increased Effectiveness of Public Service Management and Delivery •  Contract structure drives private sector to complete to required performance standards;  •  No payment made until Asset complete and/or to standards;  56  •  Contract clauses automatically force actions for non-performance including deductions for not meeting Key Performance Indicators (KPI) and or space unavailability.  2.3  Defining Large Infrastructure Sectors  The infrastructure sector is broad and diverse in asset type membership and there are a number of approaches used in industry to categorize the sector from broad (Sunke, 2010) to inclusive (PPP Canada, 2011). The breakdown adopted by InfraDeals, an international industry publication focused on public private partnership deals with a public and private sector target audience, is identified as representative and applicable in this thesis. InfraDeals broadly divides the infrastructure sector into five categories: transport, social infrastructure, renewables, environment and power (InfraDeals, 2011) illustrated in Figure 2 and into subcategories of similar asset types. Sunke (2010) introduces a generic representation of the construction industry segments with the construction industry broadly segmented into general building construction and engineered works. Sectors included in this broad categorization include commercial buildings (retail stores, private sector office buildings and shopping malls) and industrial buildings (power generation plants, refineries), which are asset types not explicitly included in the broad segments illustrated in Figure 1 due to the public sector involvement in PPPs.  In this thesis the Canadian infrastructure segments applicable to public private partnerships are included where the public sector performs the function as the Project Sponsor. Broadly, these public sector projects are typically divided into horizontal (social infrastructure) and vertical infrastructure (transport) projects. The framework and case studies conducted in this thesis consider the risk management approach applied on both public sector social and transport infrastructure. Although aspects of the framework introduced are applicable in all infrastructure 57  sectors, the nature of engineered works for Power, Environment and Renewables sectors are considered unique with some attributes not considered in this thesis. Figure 2: PPP construction industry sectors (Source: InfraDeals (2011))  Transport	
   • Airports	
   • Bridges	
  and	
   Tunnels	
   • Car	
  Parks	
   • Light	
  Rail	
   • Ports	
   • Rail	
   • Roads	
    2.4  Social	
   Infrastructure	
   • Accommodation	
   • Defense	
   • Education	
   • Healthcare	
   • Leisure	
   • Prisons	
   • Social	
  Housing	
   • Street	
  Lighting	
    Renewables	
   • Solar	
   • Wind	
    Environment	
   • Waste	
   • Water	
    Power	
   • Energy	
   Transmission	
   • Energy	
  Storage	
   • Energy	
   Generation	
    Characteristics of the Public Sector  The public sector is often described to operate at an institutional and project level much differently than the private sector. Relative to their private sector counterparts, the operating environment is one in which objectives and/or mission statements tend to change as per the changes in the governing political agenda and departmental funding decisions are often influenced by competition for funding, lack of available resources and compromises across departments. Also, the public sector is often seen as slow moving, rigid, operating in an environment of ever changing priorities directed by their political masters and responding to multiple stakeholders in hierarchical institutional management. Euske (2003) summarizes differences identified by scholars across public, non-profit and private sectors including “profit focus versus political focus, measurability of objectives, attitudes, accountability, the social good versus the bottom line, rational versus political decision making, contrasting personnel systems, the degree of control of the executive, time as available, duration of projects, and the concept of agency”. Euske (2003) follows with a comprehensive comparison of the differences across 58  public, private and non-profit sectors at the institutional level categorized relative to the following factors: Environmental: Markets, Revenues, Constraints, Political Influence Transactional: Coerciveness, scope of impact, public scrutiny, ownership Organizational Processes: Goals, Authority limits, performance expectations, incentives Differences, at the institutional level as well as similarities may serve to inform and improve learning and processes carried out in infrastructure project delivery. In the context of infrastructure project delivery, understanding the differences at the operational level in the delivery and management of a project across the public and private sector is important in understanding the context and complexity of the environment to which the thesis framework is developed.  The delivery of large infrastructure projects by the public sector differs from that of the private sector by a number of attributes. The factors identified by Euske (2003) in addition to those identified by Nutt (2005) form the basis to differentiate the infrastructure delivery context of a public and private sector organization and the relative impact on public sector delivery of large infrastructure projects. These factors are adapted from Euske (2003) and Nutt (2005) to the Canadian context and are illustrated in Table 2. The project context within which the public sector operates is subject to political pressures, public scrutiny and procedural accountability and is characterized by uncertainty and stakeholder management issues that are multifaceted and complex with specific emphasis on governance (Crawford & Helm, 2009). Public sector government organizations operate in a political environment subject to changes in government mandate and direction. Operations are conducted within complex legislative and compliance  59  frameworks (such as Heritage, cultural and labor legislation) requiring participation and/or consideration of multiple stakeholders that may not otherwise be involved in a private sector project. The ‘client’ of a public infrastructure project includes the Parliament and Government from elections, taxpayers, and users of the asset. Activities and perceived success in the performance of these activities are with very few exceptions subject to significant scrutiny by the media. In addition, the compliance and audit requirements in the governance framework of the public sector tends to result in processes, activities and risks that differ from its private sector counterpart. Identification of the differences across the public and private sector project delivery environments, as illustrated in Table 2, establishes the context for the risk management approach presented in the thesis.  60  Table 2: Factors to compare public and private sector organizations delivery of large infrastructure Projects. Adapted from Euske (2003) and Nutt (2005) to compare public and private sector organization delivery of large infrastructure projects Factors ENVIRONMENTAL Market  Data Availability  Political Influence  Project Personnel  Constraints  Public Sector Organizations  Private Sector Organizations  Impact on Public versus Private Sector Delivery of Large Infrastructure Projects  Absence of competition operating with ‘clients’ being public sector agencies, departments, public at large and politicians. Performance and intelligence data are limited and not recent.  Operating in a competitive market where clients originate from the public or private sector.  Delivery agents involved in limited variety of clients needs, public sector has clear understanding of other public sector requirements.  Performance and intelligence data tend to be available and recent particularly where project personnel have experience on similar past projects. Political influence indirect and internal.  Access to recent, useful data is more difficult in the public sector where large infrastructure public projects are typically unique and one-offs and public sector project teams do not move from one project to another.  Personnel typically have deep or repeat experience in the delivery of projects of similar scale and type.  Knowledge retention and transfer in a public sector project is limited due to turnover at the project and senior decision making level resulting in challenges on time and resources. Staffing in public sector also tends to be lengthy to meet hiring government protocols and policy.  Decision making limited only by legal requirements and internal consensus. Risk taking is often rewarded.  Need for consensus increases in public sector delivery including the consideration of multiple performance factors (including qualitative factors). Requirement to balance multiple stakeholder requirements (oversight, citizen, user).  Political influence based on authority tree of both the public sector provider and client. Project team members typically have limited experience on large infrastructure delivery of asset scale and type. Revolving door phenomena among project personnel at all levels is common in public sector. Mandates and Parliamentary obligations limit flexibility in decision making. Risk taking is often not  More time is required to perform communications across decision-making and oversight networks across the public sector.  61  Factors  TRANSACTIONAL Scrutiny  Ownership  Accountability  Time Horizon  Public Sector Organizations rewarded.  Private Sector Organizations  Impact on Public versus Private Sector Delivery of Large Infrastructure Projects  Projects tend to be under constant media attention and include consultation above private sector industry norms. Citizens often act as owners and demand their interests regarding a department’s activities and the manner in which activities conducted are considered. Higher degree of procedural accountability and transparency requirements instituted by legislation and or regulatory requirements. Long-term horizon on performance objectives.  Limited media attention and public consultation performed as per oversight, regulatory or stewardship requirements. Ownership is vested in shareholders whose interests are typically interpreted using financial indicators.  Project information is subject to Access to Information requirements with project information more apt to be disclosed as they are identified and considered. Public interest in creating iconic and nation building assets also require addressing. More stakeholders involved in a public sector project with varying interests and expectations.  Accountability requirements follow that mandated by best practice or industry norm.  Higher degree and frequency of project monitoring and reporting to meet accountability requirements which require evidence based decision making  Short-term horizon on performance objectives.  Public sector decision-making tends to focus not on the next quarter or year but nation building and/or developing a program/project conscious of activities in the future, institutional/cultural considerations. Factors that in private sector organizations may be considered unnecessary expenses.  62  Factors  Public Sector Organizations  ORGANIZATIONAL PROCESSES Goals Goals are often shifting, complex and include perspectives of multiple stakeholders including the enactment of public policies. Authority Limits Limits are contingent (Funding Limits) upon stakeholders competing priorities and tend to be set by regulatory requirements. Delivery Process Regulations and accountability requirements set forth in public sector projects limit discretion for quick decision making of project personnel at the project level.  Private Sector Organizations  Impact on Public versus Private Sector Delivery of Large Infrastructure Projects  Goals are succinct with typically clear financial and efficiency criteria for performance.  Delivery of an infrastructure project in an environment with shifting and sometimes competing goals in the public sector increases the time required to ensure consideration and inclusion in the project documents and delivery mechanism of Government of Canada and departmental priorities. More time and resources are required to conduct feasibility studies, need identification and costing to justify funding, respond to governing authority questions and concerns.  Clear authorities included in the decision to proceed.  Limited regulations and accountability requirements allow project personnel to have considerable autonomy in bidding processes and decision-making.  Project personnel on a public sector project operate in a hierarchical decision making environment. Acquiring approvals to proceed or a change scope are required at the senior departmental executive or even political level therefore requiring more time and resources to brief while competing with other priorities of the day in accessing decision makers attention.  63  2.5  General Project Delivery Phases  An infrastructure project has a long life (on average 50 years) with multiple phases over the project lifecycle in which the project objectives, risks and stakeholders change. The Project Management Institute (PMI, 2008) defines a project life cycle as “a collection of generally sequential and sometimes overlapping project phases whose name and number are determined by the management and control needs of the organization or organizations involved in the project, the nature of the project itself and its area of application”. The PMI generic lifecycle structure includes four phases and associated project management deliverables: •  Starting the project (deliverable: project charter)  •  Organizing and preparing (deliverable: project management plan)  •  Carrying out the work (deliverable: Accepted deliverables)  •  Closing the project (deliverable: Archived project documents)  These PMI phases are generic, applicable across project types and sectors. For the purpose of this thesis the definition of the project life cycle by PMI is adopted. However, the phases applicable for a large infrastructure project have been further elaborated upon for the social and transportation sector and long-term nature of the delivery of public sector projects delivered through a PPP procurement mechanism.  The lifecycle process implemented across organizations is similar on projects (i.e. that defined by the PMI), but the specific steps and tasks performed vary depending on the nature of the organization and infrastructure type, procurement method selected and organizational approvals, oversight and governance requirements. For example, Levitt et al. (2010) identify four phases of 64  the project life cycle notably the project shaping phase, design phase, construction phase and operation phase. The Construction Industry Institute (CII) divides the project cycle into four distinct stages: perform business planning, perform pre-project planning, execute project and operate facility. In the context of a large infrastructure project a project delivery lifecycle is broken down into the five phases illustrated in Figure 3 for purposes of discussion of key activities in a large infrastructure public sector PPP federal project.  Occupation	
   Operation	
   Management	
   and	
   Administration	
   Servicing,	
   Maintenance,	
   Refurbishment	
    End	
  of	
  Life	
    Programming	
   Design	
   Development	
   Construction	
   Commissioning,	
   Hand	
  Over	
    Infrastructure	
  Use	
    Document	
   development	
   Tender/ Negotiation	
    Design	
  &	
  Construction	
    Need	
   Assessment	
   Project	
   Identi1ication	
   Project	
   De1inition	
   Business	
  Case	
   Analysis	
    Procurement	
    Planning	
  	
    Figure 3: Project lifecycle phases and generic activities performed  Deconstruction	
  	
   Refurbishment,	
   Re-­‐use,	
   Recovery	
    There is no consistent use of terminology or definition of activities that are performed prior to the project Design and Construction phase. Terminology will vary depending on procurement mechanism adopted, country of origin, industry sector and asset type. Broadly, Yu et al. (2006) defines the early stage for the building sector the briefing process involving the gathering, analyzing and synthesizing of information needed. The Construction Industry Board (CIB, 1997) divides this ‘briefing process’ into two stages. The first stage, strategic briefing, involves the definition of the scope and purpose of the project and its key parameters including overall budget and program. The second stage, project briefing, involves the translation of the requirements set 65  out in the strategic brief in performance, spatial and construction requirements on which the design is developed. Gibson et al. (2006) define the project delivery process between project initiation and the beginning of detailed design as the ‘Pre-Project Planning Process’ involving four steps: (i) Organize for pre-project planning; (ii) select project alternative; (iii) develop a project definition package; and, (iv) decide whether to proceed with project. Consistent with Canadian public sector terminology and drawing upon these definitions, the two phases of project delivery Planning and Procurement are used in this thesis to define the front end planning stage or what other authors define as the ‘briefing’ stage.  The front end planning of a project is of great importance to the success of subsequent project lifecycle phases in the execution of a large infrastructure project. Gibson et al. (2006) summarize findings of a number of authors and highlight that “poor scope definition in the early planning stage of a project results in final project costs tend to be higher because of changes that interrupt project rhythm, cause rework, increase project time, and lower the productivity as well as the morale of the field work force.” Defining the activities that are performed in each phase is therefore important to ensure that roles and responsibilities of project team members are adequately performed. Other authors such as Samset (2008) break the project life cycle into the Front-end (commences when the initial idea is conceived and completes at the decision to finance), Planning and Implementation (commences upon decision to finance and includes planning, mobilization of resources, and implementation), and Operation (commences upon handover of outputs and operation commences) phases. Samset (2008) highlights that there are different stakeholders with different interests and perspectives on the project in these project phases. 66  The five project phases and key activities performed (illustrated in Figure 3) are described in the following text. The phases Design and Construction, Infrastructure Use, and End of Life are considered outside the scope of the thesis and therefore detailed descriptions of related activities are not included. For the purpose of the thesis, definitions of the activities and deliverables for the front end planning and procurement phases are developed based on my experience in the delivery of large infrastructure public sector projects and the work and/or guidelines of Gibson et al. (2006), CIB (1997) and the project management framework of the department responsible for procurement of assets in the Canadian government termed the National Project Management System (NPMS) for Real Property Project and Business Projects. The NPMS framework defines key principles and provides the directives, roadmap, deliverables and tools for the successful delivery of Canadian public sector projects and was therefore deemed most relevant.  First, activities and associated descriptions for the planning and procurement phases are described: Planning Phase: The planning phase is pre-launch to the procurement and the output of this phase is the approval of the public sector entity with expenditure authority to proceed with project procurement. This phase involves a number of sub-activities notably: •  Project Definition – Following a needs assessment, a project is identified and capital funding sources are identified, client requirements and project objectives are defined and a preliminary review of the project complexity and risk is performed. The output of this activity is a Statement of Requirements.  67  •  Project Initiation – The project team is selected, the project charter including the governance regime is identified and preliminary project scope, estimates, schedule and control plan is developed. The output of this activity is a Preliminary Project Plan.  •  Project Feasibility – The project scope, cost estimates and schedule are further refined, a market sounding exercise and a procurement delivery options analysis are performed and a preliminary risk assessment is carried out. The output of this activity is a Feasibility Report.  •  Analysis – The project scope, cost estimates and schedule are developed to sufficient detail to allow for the analysis such that decision makers can commit funds to proceed with the project execution. The analysis includes establishing the case for the investment relative to alternative options, defining the preferred method of procurement delivery, provide complete financial and funding analysis including an analysis of risk, and highlight specific needs pertaining to communications and public consultation. The output of this activity is a Final Business Case (Funding Submission).  •  Preliminary Project Approval – Project director and team liaise with the approval and funding authorities and seek preliminary approval of the project. Multiple levels of decision-making hierarchy require consultation and signoff of the Final Business Case. The output of this activity is Signed Preliminary Project Approval.  Procurement Phase: The procurement phase occurs upon preliminary project approval to commence the release of procurement documentation to potential proponents. This phase includes: •  Project Documentation Development: Upon approval to proceed, the Project team develop project documentation including the Request for Qualification (RFQ) and 68  Proposal (RFP), a framework for evaluation and the Project Agreement. The Project Agreement includes specifics such as design and construction output specification, service, energy, security and insurance requirements and mechanism for payment. Outputs from this stage include the RFQ, RFP and the Project Agreement in such detail to enable market engagement and procurement initiation. •  RFQ Process: The RFQ Process includes the release of the RFQ document to the market, performance of information meetings and responding to Request for Information queries from potential proponents and the evaluation and pre-qualification of potential proponents for the RFP process. The output of this activity is a short list of proponents that may proceed to the RFP Process.  •  RFP Process: The RFP Process includes the release of the RFP document to the shortlisted proponents, collaborative meetings between the Project team and short listed proponents, technical and financial proposal evaluation, and selection of preferred proponent. The intent of collaborative meetings is to permit formal discussions between for the Project team and the shortlisted project proponents on terms and feedback with respect to the Project Agreement and financial ‘affordability’ limits set and innovative solutions the Proponent may be considering in their proposal. The output of this activity is the identification of the preferred proponent.  •  Negotiations and Approval: Outstanding issues with the Project Agreement terms and conditions are negotiated with the preferred proponent. Project director and team liaise with the approval and funding authorities and seek approval of the project. Multiple levels of decision-making hierarchy require consultation and signoff of final agreement  69  and terms. The output of this activity is Signed Effective Project Approval for proceeding with Contract Award. •  Contract Award: On Contract Award, the Preferred Proponent is assigned contractual authority to proceed with the design, construction and implementation of the project. The output of this activity is a signed contract between the respective public sponsor and the preferred proponent.  Other project phases in the project lifecycle, but not central to the thesis, are described in the following: Design and Construction Phase: The design and construction phases may occur concurrently with the design phase overlapping the procurement phase where the preliminary design is completed in collaborative meetings with the Project sponsor. Infrastructure Use Phase: Infrastructure use phase includes the transition period after construction and the period in which the asset is operated and maintained. The phase may occur over a long period (average: 25-30 years) in a public private partnership transaction. End of Life Phase: It is important to note that decisions at one stage of the project lifecycle can hamper future alternatives available and compromise financial, environmental and socio-political sustainability in subsequent stages (Levitt et al., 2010). 2.6  Public Sector Stakeholder Roles and Responsibilities in the Front End Planning and  Procurement Phases The roles and responsibilities of public sector stakeholders in large infrastructure projects delivered by public sector entities through traditional mechanisms such as the DBB approach are unlike the activities of a PPP delivery mechanism. This is because, traditional projects are 70  relatively mute on collaboration across project participants and phases (Guo et al., 2010), and the length and approach to the procurement differ in that a PPP tends to be lengthy, complex requiring multi-stakeholder input (Loosemore, 2007). Understanding the roles and responsibilities of stakeholders and required processes is critical as one considers the importance of project governance in the management and delivery of a project. Samset (2008) notes that this issue has only recently become an issue in the project management community and highlights that understanding of these processes and governance regimes is of mutual benefit to both the public and private sector participants involved in Project delivery. The complexities of public sector large infrastructure project delivery, in particular the activities, requirements and reporting protocol in the planning and procurement phases, are often not well understood by both public and private sector practitioners alike and construction research in this field is limited. There are two key reasons why practitioners lack a holistic understanding of the process, stakeholders and accountability requirements. First, the long timelines and one-off nature (unique characteristic) of these large infrastructure public sector projects result in few practitioners having the opportunity to participate and team turnover. For many practitioners working on a large infrastructure public project occurs once in a career and the sharing or documentation of lessons learned is not typically formalized (Hertogh & Westerveld, 2010). Second, the planning and procurement phases require the involvement of practitioners across disciplines (planning, architecture, finance, communications etc.), where individuals outside the project management field play key roles and each typically having a clear understanding of their own tasks but few have an understanding of all required task timelines, deliverables and interrelationships within the complex web of project delivery activities and reporting requirements. A focus of the thesis is that modeling of the project context assists in improving the quality of risk identification and 71  elicitation of expert opinion tasks. Processes to support the identification of project stakeholders, their objectives and associated tasks required in delivering a project under the governance and accountability requirements of public sector practices are therefore introduced in chapters 5 and 6. This information gathered supports a model of the project context in the research prototype introduced in chapter 7, which facilitates improved risk identification and elicitation of expert opinion sessions. Application of a risk management process early in project planning and delivery is critical in meeting governance and accountability requirements for the complex public sector project decision making environment.  The following descriptions of the typical public sector project delivery decision-making governance and reporting structure, key project activities in the planning and procurement phases and the associated tasks for one key project activity are provided to highlight the complex environment including the multiple stakeholders, their inter-relationships and activities which necessitate clear and structured support processes to improve the risk management tasks. The hierarchy across stakeholders in the overall governance structure of decision making in the public sector is illustrated in Figure 4 in a series of Tiers with stakeholders acting as either Principals (key decision maker) in the specific Tier or Agents (supporters to decision makers in a particular Tier). This complex web of bureaucrats involved in the delivery of a project requires understanding to ensure the positive communicative interplay, collaboration and clarity of roles and responsibilities of stakeholders across Tiers. Delay or failure to include one of the many decision makers can have serious repercussions to project delivery (e.g. delay, lack of commitment and support, political etc.).  72  Figure 4: Public sector hierarchy of decision making governance  Chapter 5 introduces a framework to identify and document these stakeholders, their interests and engagement approach while chapter 6 introduces a decision support process to clarify objectives and improve decision making across multiple stakeholders. A description of the activities, roles and responsibilities of public sector decision makers in the front end planning 73  and procurement phases are outlined in Table 3 for a federal public sector PPP delivered project. Table 3 illustrates the roles and responsibilities of the multiple stakeholders involved and specific stages of activities to highlight the complexity of upfront planning and procurement decision making. In Table 3, two milestones are identified that public sector senior executives note as indicating progress in large infrastructure delivery being ‘Initiate Treasury Board Approval Process for Preliminary Project Approval’ and ‘Initiate Procurement Process’. Further detail is provided in Table 4 for one of the key activities identified in Table 3 being the specific activities and stakeholders involved in receiving ‘sign-off’ by the Minister for the project stage outlined in ‘Project Analysis Final’. Table 4 highlights that this one key activity involves over 12 sub-activities. Recognizing the differences and complexities in the process steps and stakeholders involved in the delivery of a public sector large infrastructure project relative to a private sector infrastructure project is critical to the identification of associated risks and understanding the project context.  74  Table 3: Description of activities, roles and responsibilities of stakeholders in the Front End Planning phase of Project delivery Responsible Project Stakeholder Sponsoring Department Project Team Sponsoring Department Project Team  Sponsoring Department Investment Board Sponsoring & Client Department (Jointly)  Treasury Board Secretariat Staff  Treasury Board  Treasury Board Secretariat Staff  Sponsoring Department  Description of Project Phase and Activities Project Definition – Review of proposed project to ensure that it is in alignment with Sponsoring Department portfolio strategy and objectives. Project Initiation, Feasibility, and Analysis– Preparation of Preliminary Project Plan, Feasibility Report and Investment Analysis Report (Business Case) including recommendation of procurement option. Project Analysis (Final) - Sponsoring Department Investment Board, Chaired by Assistant Deputy Minister (ADM), Real Property approves Investment Analysis Report and recommends it proceed to Treasury Board Project Analysis (Final) - Prepare Treasury Board (TB) Submission and review with Treasury Board Secretariat (TBS) staff. Task can be completed in tandem with preparation of Investment Analysis Report. Initiate Treasury Board Approval Process For Preliminary Project Approval Preliminary Project Approval - Consult applicable program areas and policy centers as required. Prepare a Précis and recommendations. Brief TBS Executive and President of TB on TB Submission Preliminary Project Approval - Treasury Board considers the proposals during TB meeting and provides approval (or not). Investments are prioritized in the Department’s Investment Plan and funding must be available within Departmental reference levels. Approval, with any conditions, is documented by way of a TB Decision Letter. Preliminary Project Approval - Prepare a Decision Letter to the Sponsoring Department for approval of Preliminary Project Approval Initiate Procurement Phase Project Document Development – Project team develops project documents including  Responsible Project Stakeholder Approval Requirements Approved by Client & Senior Leader, Portfolio Management Approved by Client, Senior Leader, Strategic Solutions & Delegated Authority  Approved by Sponsoring Department Investment Board (In Tandem with Client Investment Board) Approved by Sponsoring Minister - Ministr(ies) sign off at Ministerial Level on TB Submission  Approval to proceed to Treasury Board by Treasury Board Secretariat Executive Treasury Board approves requested project expenditures and approval terms  Decision Letter created and approved by Treasury Board to issue to sponsoring department(s) Project procurement documentation approved by 75  Responsible Project Stakeholder Project Team Sponsoring Department Project Team Sponsoring Department Project Team  Sponsoring Department Project Team  Description of Project Phase and Activities  Responsible Project Stakeholder Approval Requirements output specifications, Request for Sponsoring Department Qualification (RFQ) and Request for Project Leader as ready to Proposal (RFP) proceed RFQ and RFP Process - Issue RFQ, Approved by ADM to issue Shortlist Proponents from RFQ, Issue RFP RFQ, shortlist RFQ, issue RFP to shortlisted Proponents and concurrence from Client Department Negotiations and Approval - Receive final Approved by ADM and bids and recommend preferred proponent. concurrence by client. Joint Negotiate final terms. Update the Minister sign off on TB Investment Analysis Report and develop TB Submission Submission with Client Department and TBS staff. Contract Award - Treasury Board Approval Treasury Board Provides Process for Contract Award and related Approval to Sign Agreement contract approvals (Real Property Approved by Sponsoring Transaction, Project Agreement, Minister to Sign Agreement Construction Contract as applicable) as per for Contract Award process outlined above for Preliminary Project Approval Initiate Design and Construction Phase Post Financial Close and Project Implementation  76  Table 4: Sign off activities to receiving Minister approval for project approval 1 2 3  4 5 6 7 8 9 10 11 12  Activity Senior Departmental Leaders signoff Submission documentation by both Client and Sponsor Departments concurrently. Briefing note prepared to accompany Submission documentation. Assistant Deputy Minister (ADM) signature acquired from both Departments concurrently  Preparation of Letter for Senior Executive Decision Makers signature Deputy Minister signature acquired on Letter from both Departments concurrently Sponsor Department Minster office is briefed on project and contents of submission Sponsor Minister Signature Signed Letter and Submission is sent to Treasury Board Secretariat from Sponsor Minister Office Client Minister Office Briefing by Project Team and Senior Executives Client Minister Signature Signed Letter and Submission is sent to Treasury Board Secretariat from Client Minister Office Submission ready for review by Treasury Board  Stakeholders Involved Client Dep’t Project Leader Sponsor Dep’t Project Leader Communication Manager, Client Communication Manager, Sponsor Assistant Deputy Minister (ADM), Client Department ADM, Sponsor Department ADM Senior Advisors, Client Department ADM, Senior Advisors, Sponsor Department Communication Manager, Client Communication Manager, Sponsor Deputy Minister (DM), Client Department DM, Sponsor Department Minister Advisors, Sponsor Minister, Sponsor TBS Senior Staff Minister Advisors, Client Minister, Client TBS Senior Staff TBS Senior Staff  77  2.7  Chapter Summary  This chapter presented descriptions of large infrastructure public sector projects attributes, activities and the complexity of the public sector project delivery environment to bind the scope of the thesis. First, as there is no universal definition of a large infrastructure project, attributes were identified and defined specific to the Canadian context including a description of the Canadian PPP market place. The dynamic and complex environment of the public sector was then discussed including differences relative to its private sector counterpart. Key activities involved in the delivery of large infrastructure public sector projects were then described with a focus on activities performed in the front end planning and procurement phases of a project.  78  Chapter 3: Risk Management in the Procurement Phase: Lessons of a Large Infrastructure Public Private Partnership Project This chapter describes the risk management process carried out during the procurement phase (Request for Qualification through to Financial Close) on the Canada Line Rapid Transit project constructed in Metro Vancouver, British Columbia, Canada. The Canada Line is one of the largest rapid transit projects constructed in Canada in recent years and was delivered through a public private partnership procurement mechanism. The project team developed a detailed Risk Register as a component of its risk management plan and used this Register throughout the multi-year planning and procurement phases of the project lifecycle, as well as during the construction phase. The focus of the chapter is on examining the process carried out to develop the project Risk Register, explore its contents and changes made over the procurement phase of the project, and identify the benefits and challenges experienced by project team members in its development and use. Lessons can be learned through its development and application with other project management tasks that are adaptable to other infrastructure project types. The chapter concludes that the development of a Risk Register and its use on an ongoing basis is critical in meeting project objectives and that it is best created early in the front end planning and procurement phases particularly for large infrastructure projects. 3.1  Introduction  Risk management is an essential project management task in the delivery of an infrastructure project. It is important for ensuring that technical, contractual, financial, organizational, operational and other performance requirements are met. A Danish study (Andersen, 2001) asserted that savings in the range of 800 million Euros could be achieved annually in the Danish 79  construction industry through the introduction of formal project risk management. A survey (Voetsch, 2003) of more than 150 respondents from various industries, including information and communications, energy, and construction, highlighted that there was a positive relationship between the frequencies of formal risk management practices and project management success. Project risks are managed irrespective of project procurement mode, but risk management is particularly important in the early stages (Maytorena et al., 2007) and to the success of projects delivered through a public private partnership (PPP) procurement mechanism. The value for money of the PPP procurement approach relative to a traditional form is often attested to private sector innovation, efficiencies and the transfer of risk. The value identified at risk (both in quantitative and qualitative terms) across delivery mechanism holds considerable weight in the decision of which procurement delivery mechanism holds ‘best value’ and in the public interest. Therefore, there is increasing attention on ensuring the risk management process is performed with due diligence and accountability in the early phases particularly for PPP projects.  Numerous academic authors including (Akintoye et al., 2001; Patterson & Neailey, 2002; Chapman & Ward, 2003), government bodies (Partnerships Victoria, 2011a,b; HM Treasury, 2011; PMG, 2011) and associations and institutions (PMI, 2008; AS/NZS ISO 31000:2009) have proposed ways to undertake risk management applicable to the construction industry and identified tools to assist with the process (e.g. content categories of a project Risk Register). For example, Partnerships Victoria, an Australian government department with expertise in the delivery of PPP projects, provided an example of a Risk Register to assist in developing a public sector comparator (PSC) to link bid-value-for-money with the most efficient form of public delivery (Partnerships Victoria, 2011a,b). Other authors (see Patterson & Neailey, 2002 and Hall 80  et al., 2001) developed risk management software and recommended suitable contents (such as categories) of a Risk Register. For the most part, there appears consensus across industry and academia that Risk Registers are useful tools in risk management, but relatively little guidance is provided on how to facilitate and develop input into these Risk Registers. Also, it is surprising that in spite of strong advocacy to develop Risk Registries in construction projects no comprehensive study was found to exist on experiences gained on the implementation of risk management and Risk Register development in PPP infrastructure projects in the planning and procurement phases when critical project decisions on budget, design and construction methodologies, partner selection and other factors that impact lifecycle costs and performance are made.  Presented in this chapter is a case study of a major infrastructure PPP, the Canada Line Rapid Transit project (hereafter referred to as the Project) constructed in Metro Vancouver (British Columbia, Canada) connecting the City of Vancouver, City of Richmond and the Vancouver International Airport and Sea Island. Observations and lessons learned are examined from the risk management process used by the public entity during the procurement phase in order to develop best practices that can inform engineering and other practitioners, researchers and students and support tools introduced in chapters 5 and 6 and an enhanced research prototype in chapter 7. The following activities have been conducted: (a) identification of the approach taken to develop, monitor and manage a comprehensive list of risk events and mitigation measures; (b) exploration of how the expectations of different project stakeholders (e.g. project team, public, board of directors, municipal/provincial/federal government representatives) impacted the development and management protocols for the Risk Register; and (c) capturing of lessons 81  learned and observations in the Risk Register development process. A broad definition of ‘stakeholder’ is adopted in this chapter as provided by PMI (2008) as “persons and organizations such as customers, sponsors, the performing organization, and the public that are actively involved in the project, or whose interests may be positively or negatively affected by the execution or completion of the project”. It is believed that the documentation of the process carried out and content of the Risk Register will stimulate discussion and improve understanding of risk management processes during the procurement phase of a large infrastructure project in addition to other project delivery phases.  A number of project characteristics were important in the selection of this project as a case study. The Project was considered high profile with a fixed completion date necessary as a key component to transit improvements required before the opening of the 2010 Winter Olympics. In addition, there was strong senior level support to follow industry best practice for corporate governance including risk disclosure and management. Corporate management emphasized to the project team the importance of allocation of both financial and human resources in order to ensure risks were identified and managed appropriately. It was recognized that the Project was unique in that it was technically complex and being procured as one of the first and largest (dollar value) public private partnerships in the country. This complexity in combination with a fixed deadline and high profile emphasized that risk management best practices be followed. 3.2  Method of Investigation  The Canada Line project was selected as a model PPP project because of its scale and the involvement of several levels of Canadian government stakeholders (Federal, Provincial, 82  Municipal and Agency), which added more risks and greater dimensionality to them to the Project. Based on my experience leading risk management processes for Canadian public sector large infrastructure projects, this project implemented industry current best practices in risk management to meet governance requirements. It was also one of the first PPP projects in the Region and was one of the largest projects in capital dollars ever built in Canada.  A three-step approach was applied in developing this case study (Yin, 1999). First, literature was reviewed related to the Project including newspaper articles, project documentation, conference and journal papers, industry publications, and websites. Second, a series of face-to-face, semistructured interviews with senior project team members who were responsible and accountable for project decision-making was conducted. Lastly, follow up interviews and literature reviews to address gaps and unanswered questions were performed.  The use of interviews allowed for the capture of many of the risk dimensions and events of the Project and identifying the challenges and benefits of risk management in the procurement phase when critical decisions are made. The case was limited to interviewing project participants who either were accountable to the risk management approach required by governance or were involved in the development or review of the project Risk Register. The interview questions were pilot tested with personnel within the University of British Columbia Department of Civil Engineering’s Construction and Project Management group. The primary contact for the study was the Chief Financial Officer (CFO) of the Project who supplied relevant project documentation and the most recent and past versions of the project Risk Register, risk management plans and other supporting risk documentation. The CFO recommended the most 83  suitable project team members to interview and in turn, these individuals suggested other personnel whom they thought might provide further insight to the project risk management processes. This commonly used cascading or snowballing approach of interviewee selection allowed for the interviewing of people whose participation was not obvious before work was initiated (Wells et al., 1995).  Interviewees included the CFO, the Finance Director (who also assumed the Risk Manager role), Project Manager Construction, Rapid Transit Cost Consultant, Financial Advisor, and two individuals from the contributing public sector agencies and over 18 hours of interviews. The professional experience of the interviewees was diverse, including expertise in finance, engineering, law, environment and construction project management. Each was a senior decision maker in the Project and all represented the ‘project sponsor’ perspective of the Project.  Interview questions and formulated statements were developed after a review of the risk literature as it pertained to the delivery of public private partnership projects and infrastructure delivery. As seen in Table 1, questions focus on the risk identification, quantification and management processes, the challenges and benefits of a formal risk management process, and lessons learned. Each interview lasted between thirty minutes and four hours depending on the time that the interviewee had dedicated to the development of the Risk Register, interest in the research questions and time available. It must be noted that consistency was applied across interviews in that all questions listed in Table 5 were asked to the interviewees. The interviews were conducted during the construction period when many were busy with responding to day-today requirements. The Project CFO and the Finance Director made a commitment to this 84  research and allocated time to assist with the transfer of information and added many personal perspectives to their participation. Follow-up interviews were conducted when further clarification was required. Time was also allocated for interviewees to review the research findings prior to analysis and publication of the results.  85  Table 5: List of questions asked to case study interviewees 1. General questions relating to the development of the risk register a. What was the process for developing the risk register? b. Is the risk management process governed by organizational policy? c. Are project participants involved in all stages of the risk management process? d. How much time has been spent on developing the risk register? (week, month..) e. How does the procurement option selected (public private partnership) impact the content and level of detail expected, required or desired in the risk register? 2. A common problem in the development of a risk register is the identification of a comprehensive list of risks, risk events and mitigation measures. a. How were risks identified (group or individual elicitation exercise)? b. What background preparation was done and by whom? (names not important) c. What was told beforehand to participants involved in developing the risk register i.e. what homework did they have to do? d. What sources of information were used to assist in the identification process (commissioned reports, past project risk registers etc.)? e. Who was involved in the risk identification process and what was their expertise? (names not important) 3. Quantifying the probabilities and consequence of risk events is a difficult exercise to develop meaningful values. Participants often disagree on the values assigned and terminology. a. How were values elicited from participants? b. How were the experts around the table calibrated in terms of specifying probabilities and outcomes? c. How was consensus achieved, or did the process rely on the values specified by the one with the most expertise for the topic at hand? d. Which risks were most difficult to assess? 4. This project is complex and unique in which the project context is constantly changing. a. What was the most effective approach found to update the risk register as new information became available? b. How were project participants informed of the changes? 5. A risk register cannot only be used by an organization for managing project risk but also for improving communication with other project stakeholders. a. How has the development of the risk register assisted the project team in other aspects of the project (decision making, communications with other stakeholders etc)? 6. The development of risk registers is not new in construction management; however, best practice now requires a higher level of detail, as that which is illustrated in the CLCO risk register a. What do you think the weaknesses of the process were, or put another way, what would you do that is different if you did it again? b. Did you use any risk software tools – if yes, what and how did they assist? 86  3.3  Case Study Project  The Canada Line rapid transit project, constructed in Metro Vancouver connecting the City of Vancouver, City of Richmond and the Vancouver International Airport and Sea Island (the “Project”) was delivered through a 35-year (inclusive of the construction phase) Design-Buildpartially Finance-Operate public private partnership. The Concessionaire, under the Concession Agreement, was responsible to partially finance, design, construct then operate the Canada Line over this 35-year term. Procurement and construction occurred over a seven-year time period, commencing in November 2002 and completing in August 2009. The Concessionaire assumed a number of risks subject to certain compensation events, the occurrence of which required the public party to make compensatory payments. The public entity made milestone payments over the construction period and monthly payments, termed availability payments, over the operations period based on the achievement of pre-determined performance metrics.  The Project was both capital and operationally intensive. To date, it is the largest infrastructure project in the history of British Columbia, with the total construction cost at Financial Close of $1,889 million ($2003 real) and a construction period in excess of four years. The project was complex involving design and construction of components over three water crossings, bored and cut-and-cover tunnels (including through a densely populated urban centre) and elevated and atgrade level components (Infrastructure Journal, 2010). The Project constitutes a transit network improvement outlined in transportation plans developed over the preceding decade to provide a corridor connecting Vancouver and Richmond, identified as one of the region’s busiest areas and home to 1/3 of the region’s jobs and 20% of its population (Information Bulletin, 2009). The Project involved the design and construction of 19.5km of rapid transit rail line with 16 stations 87  designed to carry 15,000 passengers per hour per day and was required to be in service by a fixed date (November 2009) some 2-3 months before the opening of the 2010 Winter Olympics. The Project completed early, was recognized as a successful innovative project, received a Gold Award for Infrastructure from the Canadian Council for Public Private Partnerships, and was selected by an independent judging panel of Infrastructure 100 as one of the top 100 infrastructure projects of 2010 based on scale, feasibility, complexity, innovation and impact on society. These features were important in the choice of the Project for this case study.  Canada Line Rapid Transit Inc. (CLCO) is a special-purpose wholly owned subsidiary of the Greater Vancouver Transportation Authority/Translink (GVTA) and created specifically to oversee the procurement, design, construction and implementation of the Project. This public sector counterparty formed to oversee the Project, signed a concession contract with InTransit BC, the private sector proponent (synonymous in this case as ‘concessionaire’) responsible for constructing, operating and maintaining the entire project. InTransit BC (ITBC) is a joint venture company equally owned by SNC Lavalin (SNC) and two pension funds, the Caisse de Dépôt et Placement du Québec (CDPQ), and the British Columbia Investment Management Corporation (BcIMC). ITBC contributed C$656 ($2003 real) million towards the project and through the concession contract availability payments are made from the public sector to ITBC based on its performance with respect to vehicle availability and schedule performance, quality of service (passenger accessibility, comfort and convenience, and maintenance and upkeep of vehicles and stations) and meeting ridership thresholds.  88  CLCO was a separate independent governed company with governance endorsed by four public funders and it represented several contributing and participating public agencies from three levels of government in Canada specifically: Government of Canada (GoC); Province of British Columbia (the Province); Greater Vancouver Transportation Authority (GVTA); Vancouver International Airport Authority (VIAA); and the City of Vancouver (CoV). CLCO and the Authority entered into various agreements with the GoC, the Province, VIAA, and the CoV, each providing funding towards costs related to the procurement and construction phases of the Project. Figure 5 illustrates the stakeholder relationships in the execution of the Project. The stakeholders contributions ($2003 real) were: $419 million from the GoC, C$235 million from the Province; C$311 million from GVTA; C$189 million from VIAA for the airport line, and C$50 million for common costs; and C$27 million from CoV (Canada Line Rapid Transit, 2006). All public funding was contributed in the form of grants, although each portion was dedicated to a particular part of the project. Each agency financed its contributions differently and individually reported their cost of financing contributions to CLCO. In turn, CLCO provided regular updates to the public funding agencies on the project risk reserve (CLCO Reserve) and the sufficiency of the CLCO Reserve to address retained risks in the construction phase. The contributions from the public agencies accounted for a significant portion of the project costs highlighting the need to ensure appropriate reporting and systems in place for risk management by CLCO.  89  Figure 5: Canada Line stakeholder relationship diagram (Adapted from Canada Line Final Project Report, Competitive Selection Phase, April 12, 2006).  CLCO managed a multi stage competitive selection procurement process commencing in November 2002 with the issuance of a Request for Expression of Interest (RFEI) to hundreds of companies. Ten consortia of international and local firms (“Proponents”) responded and a short list of four proponents was prequalified and received a Request for Proposals (RFP) (Translink, 2003). One proponent withdrew and the three remaining proponent teams submitted responses to the RFP in Jan 2004. Two of these proponent teams were invited to participate in the Best and Final Offer (BAFO) stage and by December 2004 CLCO entered into final negotiations on terms and conditions of the contract. Upon completion of the negotiation, the contract was awarded in July 2005 to the successful proponent (“Concessionaire”). The procurement process was  90  completed in two years and eight months. Figure 6 illustrates this procurement process and key project milestones.  Operating Period  Construction  Negotiation And Award  Procurement Competition  Figure 6: Canada Line project time line Nov 2002  Request For Expressions of Interest Issued  Aug 2003  Request for Proposals (Provided to four proponents)  Jan 2004  Proposals Submitted  Mar