Project Management

How to Build Sound and Trustworthy Risk Models: Winning the Reluctance to Risk Management in Megaprojects

Northern Italy Chapter

Francesca Bodini, a member of the PMI Northern Italy Chapter, is a project control specialist, cost estimator and risk manager at Eni SpA, one of the largest global oil and gas majors. With almost 15 years of project and portfolio experience, she has worked in oil and gas companies active in upstream, midstream and downstream sectors. She is an active member of Performance Forum, Joint Industry Forum sponsored by the key players in the global upstream oil and gas industry, focusing on project control and benchmarking themes. She holds a master's degree in management engineering from Politecnico di Milano.

Even if, in literature, risk management is unanimously mentioned as an essential part of project management, in the daily routing of companies delivering megaprojects—like major oil and gas companies—it is not always easy to build consensus around the necessity to implement a structured risk management process. There is typically a lot of effort and cost involved in risk model implementation, and there is a tendency for top management to be optimistic regarding their ability to recover failing projects. These two elements are often the main barriers to overcome. This article suggests how to build an effective and efficient risk model, and shows how to gain top management’s trust on it.

Oil and gas projects can surely be classified as megaprojects when characterized by size and cost. They are large-scale projects that are being undertaken around the world (Altshuler & Luberoff, 2003). In literature, many different definitions of megaprojects can be found: a mega-infrastructure project that costs many billions of dollars (Flyvbjerg et al., 2003; Koppenjan, 2005; Turner, 1999); usually delivered by private enterprises on behalf of a government; and involving uncertainty, complexity, and a wide range of partners (Clegg, Pitsts, Rura-Polley, & Marosszeky, 2002). All these definitions suit a typical oil and gas development project that implies …

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