Abstract
In this rapidly changing and fast-growing world, sustainability is an important paradigm. However, the constantly growing level of uncertainty leads to increased strain in decision making. This results in a growing need for a more effective and extensive approach for identifying project risk in particular events that are not easily detected but can have a severe impact, sometimes referred to as Black Swans or “fat tail” events. The VUCA meter is a normative approach to identify project risk by assessing in a structured way events that may be volatile, uncertain, complex, and ambiguous and might contribute to the project risk. In this study, the VUCA meter is benchmarked against a traditional risk identification process as recommended by PMI®. Firstly, two workshops, each referring to the respective risk identification method, were conducted. Secondly, a Delphi survey was run to investigate if the VUCA meter would capture Black Swan risk events that are bypassed by the traditional risk identification approach. The results clearly indicate that the VUCA meter can be developed to be a significant addition to the conventional risk identification process for large projects that are at an early stage. The VUCA meter facilitates a discussion that gets people to think beyond the traditional framework for identifying project risk factors. As a consequence, “fat tail” events, that are not apprehended with the conventional technique, are captured by the VUCA meter.
Highlights
The Vadlaheiðargöng project is a 7.5 km mountain tunnel at the north coast of Iceland connecting the city of Akureyri with Fnjoskadalur
The main goal of the workshops was to apply and compare two different approaches for identification of risk factors in the selected project: firstly, a conventional risk identification as presented by PMI, where the main risk factors are identified on the basis on given focus questions and rated on a scale for the likelihood of them occurring and the impact they would have; secondly, the VUCA risk identification method, where the main risk factors are identified based on five focus questions for each part of the term VUCA, 20 questions in total
The conventional method for risk identification delivered a total of 52 risk factors whereas 119 risk factors were obtained using the VUCA method, see Figure 1
Summary
The Vadlaheiðargöng project is a 7.5 km mountain tunnel at the north coast of Iceland connecting the city of Akureyri with Fnjoskadalur. The initial business model for the tunnel project was presented in 2002. It was assumed that the construction and the operation of the tunnel would be a private-public enterprise with high feasibility and limited technical difficulties [1]. 2008, the arrangement was modified and the Icelandic government guaranteed a loan to make the construction possible. The Vadlaheiðargöng project soon hit some serious unforeseen problems. In the beginning of 2014, a major hot water leak, due to unexpected geothermal activity in the mountain, was detected making drilling impossible due to heat and steam. To be able to proceed, the contractor had to move the equipment to the other side of the mountain and continue drilling from there
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