Uncertainty, risks, opportunities, and management of mega infrastructure projects

Research on project uncertainty and risk has emerged in parallel with the development of the use of public–private partnerships. This involves research on megaprojects (notably transport, electricity production, etc.) but not on more modest urban planning projects (subdivisions, malls, sports and cultural facilities, etc.). The allocation of risks between public and private partners and their monetarization have been the subject of work since the 1990s (Arndt 1998; Faruqi and Smith 1997; Forshaw 1999; Ward et al. 1991). The initial approach evolved toward the development of typologies of risks that could impact the project, and of optimized methods for identifying, analyzing, reducing, avoiding, or transferring risks (Grimsey and Lewis 2002), and then toward methods for evaluating complex interplay of actors specific to planning (Macharis and Nijkamp 2013).

Beyond that, research has also focused on taking into account unforeseen events such as conflicts in the conduct of long-term public–private partnership contracts (Gould 1998). A field of research has also been opened up on cooperation between actors within the framework of partnership contracts (Campbell and Harris 1993; Siemiatycki 2013).

Bent Flyvbjerg et al. (2003) have shown the risks inherent in major projects (Channel Tunnel, airports, dams, etc.). They link them to the difficulty of predicting construction costs and to more difficult planning due to changing investor and resident demand. According to them, the main risk is that the main purpose of these major projects may be diverted because of the poor compatibility between financial rationality driven by private investors and social and environmental objectives. This work was carried out using an economic approach.

More recently, research has focused on the decision-making process that accompanies the planning and design of major projects. In particular, work focused on the adaptation of planning modalities by actors and the impact of democracy on the progress of this process (Priemus and Van Wee 2013).

The consideration of risks and uncertainties in the planning, evaluation, and design of transport projects was the subject of international research² led by University College London (Bartlett School of Planning) between 2006 and 2013. This research made it possible to identify a set of good practices for risk analysis and treatment based on a review of the decision-making process of 30 transport infrastructure projects in 10 countries in Europe, Asia, and America. The central research question aimed to define what constitutes a successful project in relation to traditional criteria of time, cost, and quality and in relation to the context of the project (objectives emerging as the project progresses, social, political, and environmental change, different and evolving visions of the different actors, etc.).

The analysis of the decision-making and planning process of these projects has made it possible to identify “good practices” to deal with the risks and uncertainties resulting from the evolving nature of the projects and their contexts. We retain those relating to the different categories of actors (OMEGA 2012):

• – overall, the lessons learned from the case studies suggest the need for concerted action among partners, including a change in project thinking and development processes;
• – policies can lead to changes in schemes and programs in relation to the context and to the consideration of projects as open systems that are likely to be exposed to risks and uncertainties;
• – public partners can play an important role in assessing the key factors that can play a role in the success or failure of the project;
• – private actors can share their knowledge of planning and evaluation of major projects acquired through their various experiences, especially if the project is financed by public funds. They can also participate in the preparation and testing of different context scenarios to facilitate the development of adaptable and robust plans and programs.

Uncertainty as a potential for action in urban planning

In urban planning, research has gradually focused on uncertainty as a source of opportunity, proposing the course of action.

In a chapter entitled L’urbanisme dans l’incertitude published in 2004, Yves Chalas showed that “weak thinking” underlay the design of cities. This “weak thinking” is based on “uncertainty”, “movement”, and “incompleteness”. Uncertainty influences the identification of problems, decisions, and the values that motivate them. Movement means that contemporary solutions are not necessarily those of the past, that it is difficult to identify problems and appropriate solutions, and that innovation is needed instead. The incompleteness shows that uncertainty prevails and the objectives defined at the outset for projects are not always achieved. This “weak thinking” is potentially action-oriented. It is based on consultation and participation, is more strategic than interventionist, and leaves out models, as opposed to “strong thinking”.

After this formalization of the role of uncertainty in urban production in the early 2000s, Alain Bourdin (2014) developed the idea of uncertainty as a driving force for action in urban planning. In particular, he explains that the uncertainties encountered by metropolises and their stakeholders may be the evolution of urban uses, technical innovations, changes in economic actors, and so on. The answer to this context does not seem to be a multiplication of norms and procedures that are not very flexible, but rather an acculturation of the public sphere to risk³.

In the same vein, Inès Ramirez Cobo’s thesis (2016) considers uncertainty as a source of opportunity and not as a constraint. The thesis proposes a theoretical and operational reflection on the planning and design of the city in the form of an open stochastic urban project (SUP) instead of the classical urban project. The SUP is based, for example, on “permeable” and not “closed” roles of actors, “superimposed” and not “sequential” actions, “open” and not “standardized” methods, a “shared” vision and construction of objectives, and “flexible” and not “mandatory” indications (p. 408).

Territorialized risks and planning

The notion of “territorialized risk” appeared in the literature during the 1990s (Galland 1998). This is a risk that reveals conflicting interests “particularly around urban planning issues, as is the case with the technological risks generated by a particular hazardous industrial site (e.g. chemical plant)” (November 2010). There may be the interests of industrialists who wish to build and operate a plant, those of elected officials who may be in favor of the project if it creates employment but who may be against it if it is potentially dangerous, those of local residents who may be bothered by nuisances, the prospect of a devaluation of their property, the threat of a health risk, or those of nature protection associations. Stakeholders do not represent risk in the same way.

Territorialized risk involves two ways of accounting for the threat: identification by measurement (made by the expert) and unmeasured perception (by the layman), to which society attaches increasing importance and trust (Slovic 1981, cited by Kermisch 2010) and in which research is increasingly interested under the influence of “constructivist” works (Coanus et al. 1999; Faugères and Vasarhelyi 1988). The transition from a right to information to a right to participation in decision-making processes (Lascoumes and Le Bourhis 1998) also facilitates the expression of perceived risks. Work has focused, in particular, on technological and natural risks since the 1980s and the problems of urbanization in the vicinity of and within these sites, or the prevention of these risks (Gralepois 2012; Propeck-Zimmermann et al. 2007; Sierra 2004; Veyret 2003 and 2004), vulnerability (Ercole 1994; Gleyze and Reghezza 2007; Reghezza 2006, 2009; Rufat 2007), and resilience.

Territorialized risk also involves the notion of negotiating risks between actors (Gralepois 2012; Osadtchy 2014; Suraud et al. 2009), acceptance thresholds (Bernier 2007), and risk management practices, standards, and compensation. The construction and negotiation of a risk depend on the degree of threat that individuals give to an event (Veyret and Reghezza 2005). Geographical approaches to technological and natural risks have provided much work on this subject.

Positioning of the book

This book focuses on project risks and therefore not on natural and technological risks, which have already been addressed by a large body of literature. Development operations located in areas of natural risk are therefore excluded. It deals on an equal footing with mega transport projects and urban planning projects of all kinds, as common developments can be observed in the role that risk can have in formal and informal planning, design, and implementation practices and in the interplay of actors.

Project planning and development are approached as two interdependent processes. The schéma de cohérence territoriale (SCOT, a French territorial coherence scheme), the schéma régional des infrastructures et des transports (SRIT, the French regional infrastructure and transport scheme), and the reports of the French Infrastructure Policy Commission can be drawn up initially and then updated according to the evolution of a joint development zone (JDZ) or urban planning project and the evolution of internal rates of return or the need to carry out a given transport project.

Today, many factors develop risk and uncertainty as a reference in project planning, socio-economic assessment, environmental assessment, consultation, financing, and production.

Projects (especially in the case of contractualization) must value cost, deadline, and quality objectives, which put risk management at the heart of project management practices. There are many legal texts on the prevention of risks of all kinds, the limitation of the impacts of projects on natural and human environments, the preservation of natural sites and species, public participation, or deepening of studies.

In addition, stakeholders play an important role in defining a project’s impacts, acceptable or not, on the environment, and therefore in describing what may pose a risk during the consultation process.

Risk aversion is a constant, both in the banking sector and among investors (for whom the return on investment is important), as well as within civil society. It is more sensitive to risk, particularly to health risks or to natural and human environments, in parallel with a greater trust placed by society in the perceived risk. Events that are considered as a potential risk according to regulatory rules or standards are diversifying.

Uncertainty and risk can be measured by the expert or perceived by the “layman”. The risk (with its acceptability threshold) can be constructed and negotiated. This process developed initially with a societal awareness of technological and natural risks and then with an awareness of project risks. In the case of planning development projects, stakeholders can identify a territorial problem (such as an impact on the natural environment), pose it as an issue in the decision-making process, and possibly erect it as an uncertainty or even a risk if they consider that this problem may represent a threat to the ideas they defend (such as environmental protection) or their living environment. Risk can also be addressed through a process of identification, analysis, and control/transfer/avoidance. This role generally falls to the project owner or developer and sometimes to associations with the production of counter-expertise.

Finally, risk can be used by actors to bring an issue (particularly territorial) into the debate and negotiation and thus defend a position or interests in relation to the project so as to accelerate not only the project and its implementation, but also its development, its blocking, or its cancellation. The risk then makes it possible to identify a favorable opportunity for the actors who bear it. It can also be used by the latter for the same purposes.

This book formalizes this paradigm shift and the evolution of the formal and informal practices of the actors who accompanied it. How do planning, environmental, socio-economic, and financial assessment, consultation, financing methods, and project management increasingly integrate project uncertainties and risks? How have the informal practices of actors (associations, inhabitants, elected officials, contracting authorities, developers, etc.) evolved? How do they identify or perceive areas of uncertainty? How do they negotiate (or not) a level of acceptability? How do they seek to take advantage of the risk to defend their views or interests in relation to the project? What power relations do the treatment and use of risk create for the actors?

These paradigm shifts and contemporary practices also lead to paradoxes in project planning and progress as additional uncertainties emerge, partly related to litigation and procedures. These paradoxes raise questions about projects’ territorialization practices, risk-taking in planning by the private, public, or associative sectors, the responsibility of stakeholders, and the societal and political choices to be made and followed between the implementation of (sometimes ambitious) projects and the protection of the environment.

Structure of the book

Chapter 1 formalizes the current uncertain context of project planning and management. In particular, it explains the influence of globalization on the practices of professionals, the influence of the economic and financial crisis on mobility and the demand of households and companies, on the phasing of projects, or on the use of private financing or contractualization. Environmental uncertainties, which explain a higher risk sensitivity, are analyzed. Uncertainty also depends on human factors, including information given to the public and how it is perceived. Finally, uncertainty also comes from the difficulty experts have in producing reliable forecasts (demographic, economic, traffic, etc.) to plan a project, the multiple interests of the actors involved, and the unpredictability of the consultation, which can lead to the acceptance of the project (possibly subject to conditions), a solvent controversy, or a potentially obstructing dispute.

Chapter 2 defines the uncertainties, hazards, and risks from a theoretical point of view. A general approach to uncertainty and risk is presented first. These notions are defined in geography (section 2.1.1), project management (section 2.1.2), and economics (section 2.1.3). A large part is devoted to the relationship between risk, territory, and actors by addressing territorialized risk, which refers to a negotiated conception of risk and the different interests of the actors, the risk chains in time and space, the risk identified, and the perceived risk. The production of opportunities is also processed. More specifically, the chapter then defines types of risks and opportunities external to the project (political and social risks and opportunities related to the choices and behaviors of households and companies, regulatory, archeological, environmental, technical, natural, market-related, force majeure, etc.) and types of risks internal to the project (construction, delay, financial, and commercial).

Chapter 3 provides a diachronic analysis of socio-economic, environmental, financial, consultation, contractualization, financing, and implementation practices for development, infrastructure, and urban planning projects. These have been integrating uncertainty and risk since the 1990s and, as much as possible, making projects less susceptible to attack and better integrated into their natural and human environments. These developments have resulted in more regulations and have required more in-depth studies while opening up the decision-making process more to the public.

Chapter 4 describes the analysis of 10 case studies of major transport projects in France (high-speed lines and highways), JDZs, a non-hazardous waste sorting center, and sports and cultural equipment, all of which have been used to deal with risks and uncertainties of all kinds. For each case study, the chapter shows the origin of environmental, political, social, economic, financial, regulatory, and technical (predictable or unforeseeable, favorable or unfavorable) events that the stakeholders considered to be an uncertainty, risk, or opportunity, their construction over time, as well as their impact on the project (blockage, delay, overspending, and modification) and the related actors’ actions.

Chapter 5 develops and formalizes these sets of actors who have been trained to deal with risk through formal or informal practices and/or to create areas of uncertainty (e.g. through issues of territories that are at risk) and use them to promote or defend a position in relation to the project. The chapter first frames the contributions of the Sociology of Organizations on the role of uncertainty in the relationships that actors can maintain between themselves. It then analyzes the practices of actors to deal with risk or use it to their advantage (risk construction, unpredictable behavior, etc.), and the power relations that these practices allow the actors to establish between themselves to demonstrate their interests. This analysis is based on the case studies in Chapter 4 and the legal framework for considering risk in assessment, consultation, and financing practices in Chapter 3.

Chapter 6 deals with the paradoxes of these practices. It shows that they are both flexible and under the constraint of many regulations, particularly environmental ones. There are two such paradoxes: while formal practices integrate uncertainty and risk to make projects more achievable, other uncertainties and risks emerge. While project planning seems to be part of a collaborative context between actors and seeks to make projects less susceptible to attack, relationships that are not collaborative appear in the form of disputes, zones to be defended, or virulent oppositions, even against very local projects. These paradoxes raise questions about contemporary planning and project management practices.

Methodology

The information comes from interviews with those involved in managing public and private projects, associations, representatives of local authorities, local public development companies, private developers, and promoters. These interviews (30 in total) resulted in the production of a corpus of transcripts of about 600 pages, sometimes with confidential content. We used the semi-directive interview method with a questionnaire based on the following themes:

• – interviews on the types of risks identified by the experts and on the impact and severity of these risks by using an assessment scale;
• – interviews with the project owners, associations, and residents on the opportunities produced by the hazard (modification of the project, new consultation, better consideration of the environment, etc.);
• – interviews on risk management. These interviews focused on methods and procedures for identifying and dealing with risk (environmental and socio-economic assessment, consultation, risk matrix, risk management, etc.) with public and private contracting authorities. The interviews were also intended to analyze the effectiveness of methods to identify, analyze, and treat the risk or find an opportunity;
• – interviews on how the stakeholders are taking advantage of the risk. The purpose of these interviews was to find out the nature of the territorial issues raised by the project and identified by the inhabitants, elected officials, or associations. The interviews were also useful to know the risks perceived by these actors in relation to the issues, assessing the impact and seriousness of these risks and understanding the relationship between the perceived risks and the interests of the actors;
• – interviews on power relations. Owners may seek to control risk in order to carry out a project. Elected officials, associations, and residents can take advantage of the risk to make the project evolve according to their interests. The interviews with the three types of actors aimed to analyze the power relations created by the control and use of risk (periods of agreement, coalitions, conflicts, opposition, negotiations, etc. between actors) and the impact of these power relations on the project (new consultation, modification, blocking, delay, etc.).

The people we met belong to the Vinci, Eiffage, and Bouygues groups (and their subsidiaries), member associations of France Nature Environnement, SNCF Réseau (formerly RFF), RATP, SNCF Mobilité, Ingerop, Espelia, universities, local authorities, and local public development companies.

The information also comes from the existing literature:

• – for transport infrastructure: public inquiry files, impact studies, socio-economic assessments, LOTI assessments, audit reports of the Conseil général des Ponts et Chaussées, assessments produced by the Mission d’assistance aux partenariats public–privé, ministerial decisions, communiqués from associations for nature protection, environmental protection, and site protection;

• – for JDZs and urban planning operations or public infrastructure projects: file on the creation of JDZs, impact study, public inquiry file, local and regional press, press releases from associations, minutes of general assemblies of local associations, local by-laws, decisions of the administrative court, and minutes of municipal councils’ deliberations.

Some limitations of the exercise are as follows.

In the case of transport infrastructure, stakeholders were asked about periods 10, 15, or 20 years ago. They did not necessarily remember exactly the details of the vicissitudes of a decision-making process, the hazards of a project, the actors involved, and the details of the working methods used. Anachronisms may also have been unintentionally committed. The crossing of sources was, therefore, essential. In addition, two trends can be noted for these individual interviews. On the one hand, some parts of the interview may lead to a rationalization or a subsequent reconstruction of the decision-making process that needs to be monitored. On the other hand, some parts of the decision-making process, often old, can be swept away quickly during the interview because of the lack of precise memory of facts known some time ago. In this case, we can refer to the official documents of the decision-making process – ministerial decisions, studies, public inquiry files, and commissioner–investigators’ reports – which provide guidelines for the decision but not necessarily “the background” or details of the process. However, the information obtained for the recent phases – generally since 2005 – is quite detailed on the events that marked them.

The subject of risks, their identification, and their treatment may relate to crisis situations or events on which a private company or the services of the State or a municipality do not want to communicate for legal, economic, or communication strategy reasons. For example, a legal recourse may be ongoing, discreet political interventions may have taken place, financial negotiation has been difficult, or an arrangement has not been made for the benefit of one of the partners.

As we were interested in the positions and risk perception of actors with very diverse interests (associations for the protection of nature, the protection of a site, and the protection of the environment; elected officials; public and private contracting authorities; promoters; developers, etc.), it was also necessary to maintain an objective view of statements made from time to time by activists or corporate representatives, which may be the result of external communication work in a crisis situation or which ensure the image of a company or an event. In this case, we have tried to either report these positions when it may be useful for the demonstration, or not refer to them.