Project Risks

Actions Around Uncertainty in Urban Planning and Infrastructure Development

Geneviève Zembri-Mary

• Publisher: Wiley-ISTE
• Year: 2019
• ISBN:
  9781119671114
• Edition: 1
• Topic: Technik & Maschinenbau
• Subtopic: Bauingenieurwesen

Those tasked with the planning and construction of infrastructure and development operations face an increasingly uncertain context in which they must address risks across a number of different fields. These range from the environmental and archaeological to the social, political and financial. As a consequence, the formal and informal practices of stakeholders often incorporate projections of risk and opportunity. Project Risks analyzes this paradigm shift. It reviews the origin and nature of these uncertainties, and the practices implemented by the actors to mitigate or take advantage of them. Paradoxically, these practices generate new risks and power relations that are not compatible with the collaborative planning model. These paradoxes force the rethinking of practices such as project territorialization, risk taking in planning and the responsibility of actors, as well as the societal and political choices that must be made between the realization of projects and the protection of the environment.

1
The Uncertain Environment of Project Planning and Production Process

1.1. A risk society?

In a reference book, Ulrich Beck (2003) defines what he calls the “risk society”. He developed the idea that society had moved from a distribution of wealth (a class society) to a distribution of risks from the 1870s onward, under the influence of technological progress and the rationalization of work and organizations (Fordism, Taylorism, and Lean management). This modernization would also pertain to lifestyles, forms of political participation, and so on. Modernization would produce changes, uncertainty, and, therefore, risks for society, which does not have sufficient knowledge to limit the impact of changes. This notion of uncertainty and concern among the public is also due to the current triple economic, environmental, and social crises. This context would put the notion of risk at the forefront of the decision.

The risks would be globalized. They would concern all social classes, fauna, and flora (e.g. impacted by technological risk) on a global scale, which appears with, for example, the storage of nuclear waste and global warming.

For Beck, there are always more risks because the definition of a risk depends on the perception of the society and the importance it gives to it. If a risk is defined in terms of subjective criteria of fear or mistrust, the term can also be used by pressure groups that can exploit fear in the form of a risk trying to win a case. The role of the media should be highlighted in this process, as a relay of collective fears, a factor that amplifies these fears, or a forum for exposing the risks expressed by groups or lobbies.

Jérôme Méric et al. (2009) criticize this characterization of our current society as a risk society. They argue that while probabilities are widely used today, fear and risk predate our contemporary societies and that U. Beck forgot to take into account the history of humanity, through which other great fears are found, to base his theory. Our current society cannot, therefore, be more of a risk-taking society than before. The authors hypothesize that “risk is a momentary form of the relationship maintained by ‘modern’ society between its fears and money”. A risk economy is being developed, based on risk insurance and risk control (reinforced by the subprime crisis), which allows an organization to resell its best practices as soon as it finds its emergence from a crisis. The authors note that risk management takes an increasingly important place in organizations today. Services dedicated to this function are created. Risk management refers to particular values, specific procedures, and a sense of performance. Risk prevention can be compared to a market commodity, which organizations may have an interest in selling. The risk society creates fears, stages them (e.g. in the media), and sells them when it presents itself to control them.

Does this “risk society” play a role in the more circumscribed field of planning and production of development projects? The answer to this question can be considered as positive. It is based on the two previous positions.

On the one hand, the mistrust of certain associative or political groups in France toward technical progress in general (the development of nuclear power and the use of genetically modified organisms) have been led to the development since the 1970s of a political ecological discourse that advocates reasoned economic growth and a refusal to accept infrastructures and equipment that are likely to have a negative impact on the environment. The impact of this discourse is reinforced by sustainable development objectives (limits on greenhouse gas emissions and policies for the densification of urbanization) which are now included in the legislative corpus of some countries (to mention in the French case only the so-called Grenelle 2 Law No. 2010-788 of July 12, 2010 on national environmental commitment).

Moreover, consultation procedures appear to be tools intended to facilitate public information and the consideration of the public’s opinion in a broad sense in a decision-making process that was originally the domain of the expert and the politician. They can also be perceived by project owners as a tool to limit the risk of opposition to a project. This was the case with the consultation of the TGV Mediterranean, which had the effect of interrupting the project between 1990 and 1992 and led to another route with more tunnels for environmental reasons and because of the refusal of local residents to suffer the nuisances generated by the project. Financial risk assessment is part of developing public–private partnership contracts and concession agreements for urban development.

International construction groups sell technical solutions and know-how that guarantee, as far as possible, compliance with the clauses of the contract (deadlines, costs, and project characteristics). Insurance also plays a role in these contracts, for example, to cover a technical risk. A risk economy in the sense of Méric et al. (2009), therefore, seems to exist. Is it based on fears created by society? There is a risk aversion on the part of banks that lend capital to project owners for these projects. The mistrust that a technical project can generate among the public or elected officials is also likely to be based on fear (such as nuisances, the price of tolls for the household budget, the partial loss of turnover for traders penalized by public works, etc.).

1.2. Globalization and uncertainty

Globalization is characterized by a reduction in obstacles to international trade, such as customs duties, transport costs, and the development of means of communication. Companies also tend to develop strategies on an international or even global scale, for the production and marketing of their products or services. It is accompanied by economic reforms (such as competition), an increased role for international economic institutions, changes in the capital structure of companies (which led to a stronger shareholders’ role), or productive strategies in a context of greater competition.

However, globalization can create uncertainties for economic activities. Economic growth is characterized, in particular, by an emphasis on the rate of returns on capital and strong competition in the context of internationalization of markets. The inconstancy of financial markets, which are subject to multiple constraints, can become a factor of uncertainty for both companies and employees (Plihon 2002).

This context makes the environment less predictable. Rapid irreversible changes can generate instability for the planner, project owner, or construction company.

Planning can be conducted in the context of rapid socio-economic changes in cities. For example, what planner knows if a company in a business park will not have been relocated six months or two years later? How can the flexibility of business location be taken into account in planning? How can we accurately estimate flows for future transport projects in 10 or 20 years when it is difficult to establish assumptions about the evolution of socio-economic conditions?

Construction and public works companies that respond to calls for tenders for partnership or concession contracts, such as Vinci, Eiffage, and Bouygues (French companies), operate on an international basis. This leads them to respond to calls for tenders all over the world. The multiplication of project management or operation of similar projects leads them to standardize their working methods – which also reassures banks. This allows them to rationalize costs to be more competitive. Knowledge and feedback can help reduce uncertainty around projects. However, financial market volatility can increase market risks. The price of raw materials required by the site may vary according to the volatility of financial markets and speculation strategies, which are not necessarily identifiable in advance.

1.3. The recent economic and financial crisis context

A crisis context, as we experienced in the years 2007–2014, can influence planning in several ways.

1.3.1. Crisis and mobility practices

Economic conditions can influence household incomes, and therefore their mobility practices, choice of modes of transport, or reasons for travel. For example, the decrease in the income of some peripheral private car-using households causes them to group their trips together to limit their mileage, avoid commuting to and from home, and consume less fuel or encourage them to carpool. This drop in income may also encourage households to limit their travel for chosen reasons (shopping, leisure, social life, etc.) and to use the car only for forced travel (work, studies, etc.) (Motte-Baumvol et al. 2012, p. 49). There is also a tendency for some households to use public transport rather than cars due to rising fuel prices.

These findings, if confirmed in the future, could encourage local transport policies in remote peri-urban areas to strengthen adapted public transport services (on-demand transport or low-capacity feeder transport services toward main stations).

1.3.2. A wait-and-see demand from households

The crisis context can i...