A system dynamics approach to risks description in megaprojects development

The inherent risks and their interactive impacts in megaproject development have been found in numerous cases across the world. Although risk management standards have been recommended for the best practice, there is still a lack of systematic approaches to describing the interaction among social, technical, economic, environmental and political (STEEP) risks with regard to all complex and dynamic conditions of megaproject construction for better understanding and effective management of the management mechanism in terms of the nature risks, including their dynamic interactions and impacts in megaproject development. Purpose – Present a model to describe STEEP risks and their interactions in megaproject development. Design/methodology/approach – A case study methodology is adopted. Following comprehensive literature review, qualitative data were gathered from case studies through interview conducted on Tram Network Project in Edinburgh. Casual loops of typical evolution of key indicators of risks were then developed and a hypothesised model of social and environmental (SE) risks was derived using system dynamics (SD) modelling technique. The model was then set up in accordance with British Standards on risk management in order to provide a generic tool for risk management in megaproject development. Findings – The study reveals that cost and time overruns at the developmental stage of the case project are caused mainly by the ineffectiveness of traditional risks assessment techniques used in assessing risks on timely basis and accurate information from the early stages of the project. Evidences collected are used to explain the nature of STEEP risks in particular, the SE risks in the past stages of project development. Further research is also discussed for applying SD methodology in risk management in megaproject development.