You are on page 1of 13

Paper submission for the 14th IRSPM conference – Bern, 7-9 April 2010

Panel track: The Crisis of Risk Management in Public Infrastructure

Risk and uncertainty in infrastructure project management;

When heuristics cannot provide manageability
Martijn Leijten
Assistant professor
Delft University of Technology;
Faculty of Technology, Policy and Management
Jaffalaan 5
P.O. Box 5015
2600 GA Delft
The Netherlands
Tel.: +31-15-2783561

Despite growing proficiency in risk management, complex infrastructure construction
projects remain highly susceptible to manageability problems. An important ground for these
problems lies in uncertainty, rather than risk. Uncertainty has as problematic feature that
managers have a limited framework of reference to base their decisions on. As a
consequence, they (often unwittingly) apply coping behaviour that does give them a
framework of reference, but does not provide the required manageability. Perhaps even the
contrary. The holds managers grasp are mostly the ones that are most favourable to them
from a project management perspective, although they may overlook, ignore or neglect
implications that the project managers cannot oversee or understand. The direction of
exploration for possible solution that this article suggests is better understanding of the
functioning of the technical and organisational system the project consists of, without the
need of extensive additional engineering knowledge.

Keywords: risk management, uncertainty, bounded rationality.

1. Introduction

Despite a myriad of studies on project management, manageability problems in complex

infrastructure projects persist. This article reports on a study that attempts to understand how
involved project managers make their decisions. It takes as a point of departure that
manageability is primarily based in decision-making. Physical systems and their environment,
after all, obey the hard laws of physics. Deviation from expected outcomes occurs when
decisions are made wrongly, because information and/or its assessment was flawed. The
cause is then human. The purpose of this study is to understand how such unmanageability
Risk analysis has become a common element of preparation and implementation
processes, particularly in infrastructure projects. Despite this development, project managers
still face certain grades of unmanageability. Project management trade-offs are in fact events
in which the managers analyse and assess risks. If a trade-off does not include a certain level
of risk, it is not likely to be strongly related to the manageability of the project. Hence a focus
on risk. This article starts with a brief description of two of the cases studied. They are
exemplary for more cases, studied on a varying level of detail. These two have been studied
elaborately. A larger number of descriptions would not provide much more value to the article
in this stage of the study. The main questions that run through the remainder of this article
ƒ What characterises of the manageability problems relate to risks and uncertainties in
projects? (section 3 and 4).
ƒ How do managers cope with these limitations? (section 5).
ƒ How can this behaviour be explained? (section 6).
ƒ In which direction can we look for possible solutions? (section 7).

2. Empirical analysis: risk in complex infrastructure projects

To find out why manageability of complex infrastructure projects is a persistent problem, two
cases will be used: the RandstadRail light rail transport system in the Rotterdam-The Hague
conurbation in the western Netherlands and the Souterrain; a tunnel to facilitate RandstadRail
annex underground car park in the centre of The Hague. In both cases, project management
teams were confronted with manageability problems. The RandstadRail system was plagued
by many disturbances and four derailments within the first month of operation. The Souterrain
flooded during construction due to a breach in a subsoil strut component that was supposed to
keep groundwater out of the excavation during construction. Both cases are examples of
situations with impeded manageability and both are the result of decisions that involved the
consideration of risk.
The purpose of the study is to understand how managers act when making decisions
that involve risk. This requires some background information of the setting of project
management decisions. Decisions usually involve two types of actors1:
ƒ The superiors: actors who have decision-making authority, but usually less detailed
information on the technical system. They depend on the information provided by
subordinates. They are usually related to the client.
ƒ The subordinates: actors who work on behalf of the superiors (e.g. contractors or
specialist engineering staff) and who own most detailed information on the technical
system. They depend on the decision-making authority of superiors.

The study will in both cases be focused on a specific implementation risk on which the project
management had to make a decision, because that is where risk manifests. It is not risk itself
that causes unmanageability; after all, there are ways to mitigate risk. Deviation occurs
because known potential threats are not adequately solved or the threats are unknown or
overlooked. Project managers’ decisions on risk are therewith the nexuses of manageability.
The study of decision-making under risk and uncertainty was based on semi-structured
interviews with project managers of relevant actors (both superiors and subordinates). The
following central topics were explored:
ƒ The position and interests of actors in trade-offs with uncertainty;
ƒ The information available on the risk and the decision-making options;
ƒ The ratio behind the decision made.

Compare for instance Cleland and King’s (1983) distinction between project managers and functional
managers and Jones and Deckro’s (1993) distinction between supervisors and functional specialists.
A key-decision in the RandstadRail project2

The RandstadRail lightrail project combined three different rail transport modalities to a new
lightrail system. The new system replaced an existing commuter railway service. The regional
authorities of Rotterdam and The Hague were the clients of the project. The main
complexities in the system occurred in the larger The Hague section of the project. The client
had no experience in any kind of engineering projects and did not have an extensive
engineering staff. Therefore, it hire the municipality of The Hague as contractor for the
implementation, arranged with a lump sum contract that transferred all risks to the contractor.
The political representative of the regional authorities retained the decision-making authority.
This set-up was possible, because the municipality of The Hague is the main constituent of
the regional authorities and its alderman chaired the client’s project management board.
Throughout the preparation process, the client made many scope changes. There were
a few reasons. First, the terms of reference were drawn up early due to a momentum in the
decision-making process in which central government funding could be obtained. They were
therefore somewhat premature and included requirements that could not be obtained with
existing lightrail technology, which was relatively sparsely known in the Netherlands.
Second, input from specialist contractors, such as the future operator, was restricted, because
privatisation urged the client to maintain a level playing field.3 Third, expectations of
transferability of existing systems appeared over-optimistic.
The numerous design changes hardly caused cost overruns, because construction
tendering had resulted in some windfall and central government’s lump sum subsidy for the
project was ample. The scope changes did imply extension of the conversion work, however,
while the implementation time for the conversion was not extended. The conversion required
a halt of operations and the client was committed to keeping the service stop to a minimum.
Functional specialists of the contractor’s project organisation (subordinates) warned for
unmanageability in the conversion works. The client’s decision-makers (superiors) – elected
aldermen from the constituent municipalities – had to make the decision whether they would
comply with these concerns, or they would stick to the original schedules. They asked the
specialists whether it was possible that all activities fitted in the tight conversion schedules.
The specialists could not deny this, although they had a gut-feeling that the manageability of
the project was compromised. But they could not objectify these concerns or make them
The client’s decision-makers reckoned that the main risk they were taking was that the
opening of the system would be delayed. But when operations were started (indeed with a
delay) the system was plagued with numerous disturbances and four derailments. After the
fourth derailment, with seventeen injured passengers, the Transport Inspectorate ordered a
halt of operations. This incident took place under special circumstances caused by occurrence
of one of the numerous disturbances. It took almost a year to solve all technical problems and
to reopen the system. Incident investigations concluded that the malfunctioning of the system
was due to a technical defect that originated probably in the chaos of the conversion works.
So in fact the applicable risk had been more than just a delay.
The frequent disturbances occurred predominantly in the switch and signalling
systems. Different contractors were responsible for different subsystems. All these
subsystems were proven and well-known technology, so none of the contractors would
acknowledge the possible cause of the disturbance to be in his subsystem. In the end it

The material for this case comes from the independent evaluation of the RandstadRail project carried out by
Delft University of Technology. The author was member of the research staff.
Only very late in the process the client got central government permission to use a non-public tender.
appeared that, although the individual subsystems were proven, the coupling of these
subsystems was not. The problem appeared to be in the interface.

A key-decision in the Souterrain project4

The Souterrain project was developed to relieve traffic problems at an intersection in the
centre of the city of The Hague, where cars, bicycles, pedestrians and street trams cross in
four directions. The project also had to accommodate RandstadRail’s pass through the city
centre. To relieve the problems, the tram infrastructure had to be rebuilt underground. The
1250 metre tunnel was combined with a two-storey underground car park. The whole
construction would go 13 metres deep underground, under a busy shopping street that was
quite narrow for tunnel excavation. The municipality of The Hague was the client of this
project. It had limited experience with and knowledge of complex underground construction
projects. It hired a private engineering designer annex project director and a contractor
The Souterrain was built with the use of diaphragm walls, to reduce nuisance on street
level and to prevent possible collapse. The complex project environment required additional
technical measures in the engineering design to prevent cave-ins, particularly in the lower
parts of the excavation. Engineering designers presented a layer grout columns, injected prior
to excavation directly underneath excavation level, as the desired solution. This scope
extension did raise the costs of the project, however, and the client could not provide
additional budget. Therefore, cutbacks were necessary. Money for the grout layer was found
by exclusion of a separate watertight gel layer, also to be injected prior to excavation. The
layer had the purpose of keeping groundwater out of the excavation during construction. The
client’s managers reckoned, with the help of their engineering designers, that the grout layer
should also be able to stop groundwater.
Application of a grout layer to be used as a strut, for sealing off an excavation was
new and unproven. A sealing layer should be placed several metres below the lowest
excavation level to provide counter pressure, whereas a strut had to be placed immediately
below excavation level to minimise the chance of deformation of the excavation walls. The
client and its designer finally decided to place it immediately below excavation level, because
it would minimise the chance of damage to abutting structures and it provided the opportunity
to keep diaphragm walls relatively short, which was an attractive cost reduction.
When the project entered into the construction preparation process, the contractor
consortium and the insurance company expressed their doubts about the grout layer design. In
the design phase an independent consultant had also advised against the use of grout the way
intended in the Souterrain engineering designs. This put the client’s managers into a dilemma.
The client could not extend the budget and the inclusion of the grout layer did not allow for a
redundant technical component. Non-compliance with the requirements of the Building
Inspectorate or with the tight budget constraints would mean the end of the project. This made
the cut down design the only viable option for the client.
The client’s managers had two important reasons to continue the project with the
critisised engineering design:
ƒ They relied primarily on actors who supported or did not turn away from the design,
i.e. its engineering designer and the engineering department of the fund-providing
ministry of Transport and Water Management. The study of this project has shown
that there was some role ambiguity in this process. The client assumed the engineering
department’s involvement was a high-profile advisory role, whereas the department
itself perceived its role as distant and without real responsibilities.
This case is based on research executed by the author in Delft University of Technology’s Sustainable Urban
Areas programme.
ƒ They reckoned the critics of the engineering design had an incentive to be critical. The
contractor could criticise the designs to support demands for more slack and less
liability. The insurance company could use it to fend off possible future claims.
After the grout layer had been installed, a large breach occurred during excavation. It was
probably caused by a void between grout columns in the layer. After this event, the
excavation had to be flooded to prevent subsidence of abutting structures. It took two and a
half years to decide on an alternative completion technique, causing a heavily delayed
completion. The costs of the project doubled.

3. Characteristics of risk and uncertainty in infrastructure projects

Risk versus uncertainty

The concept of ‘risk’ has mainly developed in relation to gambling and, subsequentially,
economy (Bernstein, 1998). In both cases decision-makers had a need for computable data to
rationalise their decisions despite the uncertainty that is inevitably involved in both fields of
interest. This implies that managing risk is in fact giving a meaning to uncertainty.
The latter requires a distinction between risk and uncertainty. Gambling is an activity
in which the final outcome in terms of positive or negative assets can be calculated and the
chance of occurrence of these assets as well. Taking a risk then means trading off positive
against negative assets with the odds of gains or loss in mind. True uncertainty implies that
neither the possible outcomes, nor the probability of occurrence can be foreseen. Compare for
instance Jaafari’s characterisation of uncertainty implications as situations in which “not all of
the project variables are always identifiable at the outset or new variables surface during
project life or their probability of occurrence may shift over time” (Jaafari, 2001). This
corresponds to Williams’ (1999) addition of uncertainty to Baccarini’s elaboration of
‘complexity’ with the concepts of differentiation and interdependence (Baccarini, 1996). The
distinction is particularly important because the situations managers of complex infrastructure
projects encounter are often uncertainties rather than risks. The cases above are examplary.
That is problematic because project managers do execute risk analysis and risk management,
but not uncertainty analysis and management.
The RandstadRail trade-off is an example where uncertainty was mistaken for risk.
When deciding to maintain the schedules, the project managers could not estimate the
probability that they would succeed in completing the system on time. More importantly, they
reckoned that the main value they were challenging with this decision, was this timely
completion, while in fact the project has shown that the most important negative asset was a
flawed system that was plagued with numerous disturbances and derailments.

Technical risk versus implementation risk5

Two main sources of risk and uncertainty can be distinguished in complex infrastructure
construction projects. Both are connected with the behaviour of other actors. One concerns
unintended deviation from predefined terms of reference, the other concerns intended
strategic behaviour:
ƒ Technical risks: a technology or work processes to be applied is known or prescribed
to have a certain chance of failure; often indicated as a chance of occurrence in a
defined period of time. This truly concerns risk.
ƒ Implementation risks: apart from the possibility that technology or work processes fail
once in a certain period of time, failure can also occur because actors working with the
A comparable distinction is made by De Bruijn and Ten Heuvelhof in their categorisation of enforcement styles
and possible deviation by inspectees (De Bruijn and Ten Heuvelhof, 2005).
technology deviate from the expected work processes. This may be on purpose, as
coping behaviour that is inevitable in projects with a certain level of uncertainty, or
unwittingly, when an implementer attempts to stay within margins, but in fact exceeds
them. The latter occurs particularly in work processes that are invisible to the
implementer, for instance because they take place underground, in space etcetera.
Although being called a ‘risk’ here, it actually concerns uncertainty, because
particularly the probability of occurrence is difficult to determine in advance.

Common risk analysis methods and risk management activities focus on technical risks. There
is a good reason. If implementation risks are considered uncertainties, it is hard, if not
impossible, to foresee them; let alone their probability of occurrence. This does, however,
neglect the myriad of unmanageability features that can occur as a result of implementation
risks and that remain unattended.
Again an example can be found in one of the cases. In the Souterrain project, the
client’s project managers reckoned that other actors’ doubts about the grout layer technology
concerned the fallibility of the technology itself, which was relatively unproven. This can be
seen most particularly in the way a risk analysis was dealt with. The analysis said that failure
of the grout arch would likely result in “irrevocable collapse”. But the client’s managers
reckoned, in consultation with its engineering designer, that this could be managed with
specified margins and a firm obligation for the contractor to apply an extensive control
programme, implying that this would nullify the probability of occurrence of a negative event.
The contractor reasoned differently. Much more aware of complex construction projects in
practice, it knew that deviations can and do happen, even with the best intentions, and thus did
not accept probability considerations. It reasoned that if irrevocable collapse is the possible
negative consequence, the risk must be avoided. The grout layer construction procedure
required columns to be installed fifteen metre underground, by inserting an injection lance. It
is impossible to see whether the columns connect tightly to create a firm layer from the
surface. Just a very small deviation from an exactly vertical injection would be a much wider
deviation at fifteen metres deep.

Cohering versus deviating interests

Considering the above distinction, managers must take into account that deviation may not
only occur unwittingly. Implementing actors (usually subordinates) have interests that deviate
from the client’s (superior). That may be a reason for them to deviate from behaviour desired
by the client. They can do so because they generally have more specialist knowledge on
technology and work processes to be applied and because they know first hand about the
features and conditions of the actual work being done. The result is a principal-agent problem:
client’s managers have decision-making authority, but depend on better informed
implementers (cf. Jensen and Meckling, 1976). Clients, for example, have an interest in
efficient project deliverence, i.e. as much functionality and quality as possible for the least
possible costs and implementation time. Implementers such as engineers and contractors on
the other hand, have an interest in slack.
In the RandstadRail project, for example, managers of the contractor and engineering
specialists in the client staff warned about possible unmanageability of the conversion works
if the time scheduled for it was not extended. The client’s managers, on the other hand,
knowing that the implementers tend to be looking for room to maneuver, wanted to maintain
the schedules if all construction activities could theoretically be planned in these schedules.
The specific cases of unmanageability in the RandstadRail and Souterrain projects presented
above, are examples of implementation risks; so, in fact, uncertainties.
4. Bounded rationality in infrastructure projects

Galbraith (1974, 1977) defines uncertainty as the gap between the information required (to
complete the project successfully) and the information available in the project organisation.
Project managers can often not determine the size and characteristics of this gap satisfactorily;
because they may not be aware what it takes to carry out the project successfully and/or
because they do not know the amount and characteristics of the information available to all
the actors in the project organisation. If the principal-agent problem is added to the latter, we
can speak of two dimensions of uncertainty: the lack of information and the limited
assessment abilities.
The existence of uncertainty in projects, and specifically the inability to foresee
deviations from the expected implementation process, disables managers to make rational
decisions. Rational decisions require the ability to include all relevant aspects (cf. March and
Simon, 1993). The inability to do so urges for alternatives to be able to realise the project.
That brings managers in the field of limited or bounded rationality.
When project managers have to make decisions in a situation of bounded rationality
they tend to attempt to simplify their work by detecting patterns and apply rules of appropriate
behaviour to the situations they encounter (March, 1994: 12-14). But there is a problem with
such a strategy in decision-making processes that take place in the inevitable uncertainty of
complex infrastructure construction projects. The projects studied have a few features in
common that limit rationalisation abilities and determine the occurrence of bounded
rationality in these projects:
ƒ They have relatively inexperienced clients as the main decision-makers;
ƒ There is a principal-agent problem, because the decision-makers depend on better
informed subordinates (contractors, engineers) with potentially conflicting stakes;
ƒ The actors involved are dealing with innovative technology.
As a consequence, the project managers have two doubts that can make heuristics relying on
false friends:
ƒ The client’s project manager’s inability to rely on his interpretation of the information
that he receives. They lack experiences or ‘rules of thumb’ that can frame their
ƒ The possibility that other actors in the process provide information strategically for
their own good.
This means that the use of heuristics is limited. That raises the question how project managers
do make decisions.

Determining the level of uncertainty in projects

The most important problem of uncertainty is that it is very hard to record in a project. A few
mechanisms prevent recognition:
ƒ Uncertainties may be misperceived as risks. In such a case project managers may
unjustly think they have nullified potential adverse effects when defining all
‘knowables’, while unknowns remain neglected.
ƒ Uncertainties may be underestimated or ignored, for instance because they could be
mere instruments of strategic behaviour of subordinates such as contractors or other
engineers. This results from ‘blind information’. This is information that is known to
the agent (contractor, engineer), but not to the principal (client’s project manager).6
This type information can be used by agents for strategic purposes.

Cf. Winch, 2002: 209.
ƒ Uncertainties may be overlooked due to ‘unknown information’. Unknown
information is information that is neither available to the principal, nor to the agent.7

5. Empirical analysis: how managers make decisions in uncertainty

The cases presented in section 2 and comparable cases provide material that can serve to find
out how project managers do make decisions in these situations if it is not heuristics that can
help them. The examples show that if decision-makers cannot use knowledge or experience in
the heuristic method of decision-making, they tend to overvalue certain aspects in project
management. This is a (non-exhaustive) list of some of these aspects, found in the empirical
study of the projects mentioned above. It is important to note that they cohere strongly.
Because it is based on two empirical cases, it has no statistically founded value, but it does
present a few mechanisms that are recognisable in many events of dealing with uncertainty.

Dominance of decision-makers’ values

First, values for which decision-makers themselves are held primarily accountable are easily
overvalued. It gives these values priority over the subordinate’s values, although the
subordinate is the better informed actor on whom the decision-maker depends heavily.
Subordinates, such as engineering designers and contractors, have a dominant responsibility
for delivering a well functioning system. They have the best abilities to do so (and to get a
nice profit out of the project) if the scope to be realised is limited and means (time and
budget) are ample. Decision-makers on the client side, however, are primarily held
responsible (for instance by the general public in government-funded projects) for timely
completion, tight budgets and for meeting these schedules. In the RandstadRail project, we
see that the decision-makers waive manageability concerns of the contractor in favour of
timely completion. In the Souterrain project the decision-makers waived concerns of
contractors about the reliability of the grout layer with its double function, because the grout
layer solution was the only option to implement the project within the pre-established budget.

An important condition in these preferences is that the opposite values of the contractors and
other subordinate actors were unobjectifiable. Engineers in the RandstadRail project were
worried about manageability of the project if so many activities had to be done in such a short
conversion period, but they could not indicate where this unmanageability might effectuate.
Comparably, the contractor of the Souterrain worried about the consequences of possible
grout layer failure, but could not substantiate or justify the possibility of deviance in the
predefined work processes. The layer consisted of some eight thousand injected columns that
must connect tightly to prevent leakage. The contractor knew from practical experience that it
is not unlikely that in an eight thousand times repeated activity, an unintentional deviation can
occur, even though the terms of reference included measures to prevent malfunction. Even
just one such event would be catastrophic with the indicated consequence of failure of
“irrevocable collapse”.
As the examples show, unobjectifiable information includes the ‘implementation risks’
mentioned in section 3. Here applies that only the wearer knows where the shoe pinches.
Convincing someone else to whom the shoe fits nicely is very difficult. To the decision-
makers, budgets and schedules are visible, quantifiable and therefore objectifiable. Tacit
concerns on manageability are not. In practice this leads to overvaluing of budgets and time

schedules (the measurable main assets of decision-makers) and ignorance of tacit
manageability issues, often related to technology.

Fear for strategic behaviour

An important reason for overvaluing objectifiable information lies in principals’ fear for
agents’ strategic behaviour. Decision-makers on the client side are afraid that the values,
interests and concerns that agents such as contractors and other engineers put into the
decision-making are strategically motivated and that the real interest lies in easing the job or
increasing the gains. The Souterrain’s client could not figure out whether the contractor’s and
insurance company’s opposition to the terms of reference of the grout layer were sincere or
just strategies to hedge against possible future liability claims. It was therefore an easy step to
rely on allies. At that time it was not a subject of consideration that the practical knowledge of
these allies may have been less than the opposition’s, and that they did not have an incentive
to provide countervailing power.

Decision-makers’ overconfidence of own abilities

These issues can become particularly troublesome because of the client’s decision-makers’
overvalued ability to make good judgements when they are largely based on intuition rather
than an extensive framework of reference. Due to a lacking framework of reference, decision-
makers on the client side of the project organisation often cannot oversee all the possible
outcomes of their decisions and the probability of occurrence. They may perceive a trade-off
as if the conditions are the same for them as they are for engineers, contractors and the like,
because they have the same information at their disposal. But it is the framework of reference
– the main mode of heuristics – that is often fundamentally different. The decision-making on
the continuation of the conversion planning in the RandstadRail project, despite the numerous
scope extensions, is exemplary. Engineers provided all relevant information, but came to a
different outcome of the same trade-off. Intuitively, the decision-makers of the client will
attach less value to unobjectifiable information, which may include strategic interests.
Another example is found in the Souterrain project. A risk analysis of the grout layer
concluded that failure would lead to “irrevocable collaps”. The client’s managers wanted to
solve this problem by including extensive margins in the grout column specifications. The
contractor’s managers, however, reasoned from their perspective that any technology that
includes the chance of irrevocable collapse, while redundant options are available, should be

Preference to stick to earlier plans

Principals tend to overvalue information that requires the least radical changes to the original
plans. Once the project is running, changes may have far-stretching impact on other activities
in the project. Therefore, decision-makers on the client side tend to stick as much as possible
to existing plans and terms of reference, like the client of RandstadRail did. This is not a
generically applicable observation though. If the client sees opportunities for scope extension
that do not affect their other core values, they are likely to pursue them, regardless of
manageability or uncertainty consequences. In many projects this is rare, because scope
extensions will usually require costly additional work. In the case of lump-sum contracts,
however, such as in RandstadRail, the implications of scope extension for implementers are
largely neglected, even if the latter express worries.

It is important to observe the coherence in these project managers’ strategies. The strategies to
counter expected strategic behaviour and to bolster against unobjectifiable information are
very strongly interrelated. The latter is the main instrument to filter strategically
‘manipulated’ information from information flows. Client’s project managers may think they
can do this because they have more confidence in their assessment skills than may be
justified, given the observation that they do not have a framework of reference available that
it is comparable to the framework of reference of contractors or other engineers. The purpose
of such strategies lies in the preference to hold on to existing plans and schedules and client’s
project managers’ awareness of the values on which they will be assessed: timely completion,
respecting budgets. Coincidently these two values are also the values that are best
quantifiable. Objectifiability and the dominance of own values therefore strenghten each

Figure 1: Coherence of coping strategies for project manager’s decision-making under uncertainty

6. Synthesis: project managers behaviour explained

There are two generic steps necessary to deal with project managers’ behaviour in decision-
making under uncertainty when heuristics do not provide a proper framework. The main step
is to provide some holds to create better understanding of the project’s features to create an
alternative framework of reference. This will be done in section 7. First, however, it may be
important to understand why project managers behave the way they apparently do.
A few generic types of conduct can be distilled:
ƒ Bolstering against dynamics. Dynamics are often inevitable in complex projects, but
they devaluate existing plans. Because broader politics depend on these plans and
administrators are assessed on their ability to carry out the plans, there is
unwillingness to accept changes.
ƒ Overestimation of the value of ‘hard’ data. Quantified information is likely to be more
objective and less susceptible for strategic behaviour than information based on
contractors’ or engineers’ heuristics, because it is controllable. But not all relevant
manageability aspects can be captured in quantified data. There also seems to be some
kind of perception among managers on the client side that once a project is properly
laid down in plans, engineering designs and schedules, the main trade-offs are made;
particularly if these plans, designs and schedules have been approved by an
authoritative party. Managers tend to emphasise that safety (i.e. quality) is not a trade-
off issue, because it cannot be compromised.8 In their perception, once the required
quality has been defined, this implies that trade-offs during implementation concern
time and money issues. There appears to be little awareness among these managers
that project management values time, costs, scope and quality are strongly interrelated
and that changes in one likely have implications for the other.

In the cases, many of the managers of RandstadRail have most particularly emphasised this.
ƒ Managing uncertainties as risks. Superiors, especially when they are untrained
administrators, think they can largely foresee what the possible outcomes of their
policy is. Unforeseen outcomes are serious hazards. Since client’s managers are
preoccupied with quantifiable data on which they are being assessed (time and cost)
they may easily overlook implicit quality compromises in the possible outcomes that
result from budget or schedule considerations. Engineers can hardly substantiate
worries about this, due to the unquantifiability. As a result, project managers may rely
on weak profundities.

7. The required project management efforts to deal with uncertainty

Ideas on solutions are rudimentary and untested. The main aim is to create alternative
heuristics by increasing managers’ insight in their projects without the need for much
additional engineering knowledge. The ideas are aimed at dealing with the uncertainty. The
first notion in this section is that uncertainty is to some extent apprehensible. This means that
not only aspects can be known to be unknown, but also that the existence of some
uncertainties is unknown (‘unknown unknowns’). The solution proposes a confined
anatomisation of the project.
How to record something that is unknowable to at least some extent? This requires
anatomisation of the projects. Projects are multi-actor organisations realising physical
systems. Multi-actor organisations and physical systems can both be approached with system
analysis. Systems consist of elements with interconnections. Multi-actor organisations consist
of actors with diverging backgrounds, resources and interests. The relations between these
actors are defined by contracts, trust and potentially cohering or conflicting interests (cf. Jones
and Deckro, 1993; Kazanjian et al., 2000). Physical systems consist of subsystems, parts and
units that are interconnected to create certain functionalities (Perrow, 1999). These two
systems should be anatomised. This brings us back to Baccarini’s definition of complexity
(Baccarini, 1996). Complexity in these systems is defined in terms of differentiation (number
and variety of components and interrelations) and interdependence (level to which
components and interrelations depend on each other to create a functioning whole). The
differentiation defines the required span of control of project managers, in which variety
indicates the potential for conflicting values, interests and resources; a major source of
uncertainty. The uncertainty related to interdependence often effectuates in interfaces, which
is the topic of next sub-section.

Interfaces are most particularly susceptible to unmanageabilities, because they represent a
certain interrelatedness that is tacitly present, but invisible. Therefore, they are the key factors
to map out. Several examples of relevant interfaces can be found in the two systems:
ƒ Multi-actor systems: there must be awareness of the positions of actors in the project.
If there is reason to assume that any of these positions (including the client’s own)
may lead to dominance, this must be managed with countervailing powers, such as
contract incentives. This should neutralise both strategic behaviour of subordinates
and undesireable dominance of certain values by superiors. Some interfaces must be
made explicit:
ƒ Project management values (time, costs, scope, quality). For example, scope
extension normally implies cost growth and a longer implementation time.
ƒ Resources. For example, information from different sources may be contradictive.
To prevent unmanageability, negotiation on knowledge could be attempted.
ƒ Backgrounds. Engineers may perceive risk and uncertainties differently than
managers or politicians.
ƒ Physical systems: this requires an anatomy of the engineering design. Project
managers may need engineers with no strategic interest in the project. This should
identify crucial interfaces. This may be important to understand the effects of coupling
different subsystems or the implication of design changes. This must be combined
with an organisational incentive for the client’s project managers to be receptive to the
input, even if required action conflicts the managers’ perceived core values (see the
multi-actor system measures).

8. Summary: towards more detailed understanding of decision-making under


This article has presented a few explorative steps in the understanding of managebility in
complex infrastructure projects by focussing on the way managers’ have dealt with risk and
uncertainty. It is based on a few theoretical notions that have led to some informative
observations. The most important notions:
ƒ Uncertainties may be mistaken for risks, although they have fundamentally different
ƒ Complex infrastructure construction projects include both technical risks and
implementation risks. The latter actually have uncertainty characteristics and are easily
ƒ Uncertainties limit managers’ possibilities to rationalise their decisions.
The observations have not been part of a study with statistical value, but the empirical study
does mark off some first, explorative management mechanisms that may be worthwhile to
explore further in depth:
ƒ Aversion to dynamics;
ƒ Objectifiability: preoccupation with ‘hard’, objectifiable data and ignorance or
negligence of implicit consequences on unquantifiable values, particularly related to
technical manageability (safety/quality), when focussing on these hard data;
ƒ Weak profundities: dealing with uncertainties as if they were risks, which produces
ostensible but unfounded knowledge.
Possible solutions might be found in a relatively basic analysis of the systems characteristics
of the project at hand. This should create some deeper understanding of interrelations and
their potential implications for the manageability of the project. Interfaces in both the multi-
actor organisational system and the physical system require special attention. In addition to
the mechanisms that determine manager’s decision-making behaviour under uncertainty,
future research could elaborate on the mapping organisational and physical system interfaces
to mitigate the adverse effects of uncertainty.

This publication is a result of the Centre for Sustainable Urban Areas of Delft University of


Baccarini, D. (1996) The concept of project complexity – a review, International Journal of Project
Management, vol. 14 (4), pp. 201-204.
Bernstein, P.L. (1998) Against the Gods; The remarkable story of risk, Wiley, New York.

Bruijn, H. de, E. ten Heuvelhof (2005) Handhaving; Het spel tussen inspecteurs en inspectees Enforcement; The
game between inspectors and Inspectees), Lemma, Utrecht (in Dutch).

Galbraith, J.K. (1974) Organization design: An information processing view, Interfaces, vol. 4 (3), pp. 28-36.

Galbraith, J.K. (1977) Organization design, Addison-Wesley, Reading MA.

Jaafari, A. (2001) Management of risks, uncertainties and opportunities on projects, International Journal of
Project Management, vol. 19, pp. 89-101.

Jensen, M.C., W.H. Mecking (1976) Theory of the firm; Managerial behavior, Agency Costs and Ownership
Structure, Journal of Financial Economics, vol. 3 (4), pp. 305-360.

Jones, R.E., R.F. Deckro (1993) The social psychology of project management conflict, European Journal of
Operational Research, vol. 64 (2), pp. 216-228.

Kazanjian, R.K., R. Drazin, M.A. Glynn (2000) Creativity and technology learning: The roles of organization
architecture and crisis in large-scale projects, Journal of Engineering and Technology Management, vol. 17. pp.

March, J., H.A. Simon (1993) Organizations, Blackwell, Oxford.

March, J. (1994) A primer on decision making, Free Press, New York.

Perrow, C. (1999) Normal accidents; Living with high-risk technologies, Princeton University Press, Princeton,

Williams, T.M. (1999) The need for new paradigms for complex projects, International Journal of Project
Management, vol. 17 (5), pp. 196-273.

Winch, G.M. (2002) Managing construction projects; An information processing approach, Blackwell, Oxford.