A risk breakdown structure for public sector construction projects

The UK Government invests billions of pounds annually in infrastructure projects to support more effective public service provision. However, numerous major projects have failed to meet expectations, or have delivered only with significant budget increases and extensions to project timetables. This research aims to close the feedback loop in the risk management process on public sector construction projects so that previous experience is used to inform and improve performance on future projects. Risk source data from 25 National Audit Office (NAO) reports has been synthesised to create an evidence-based risk breakdown structure (RBS) to assist the identification phase of the risk management process. The NAO Value for Money (VFM) reports in the dataset present case studies of both traditional and PFI projects. They represent a rich source of data on the types of risk source that characterise construction projects in the public sector, and the status of project management and risk management systems. Due to the departmental orientation within NAO, these reports have not been cross-analysed before. The VFM reports were analysed using a textual analysis software (QSR N6). The research process was cyclical - five reports were coded in each phase, followed by a review of all coded material. Elements of the developing coding framework were amended, extended or discarded as risk source themes emerged from the data. The results of the textual analysis are presented in a hierarchical risk breakdown structure (RBS). The final RBS contains 234 different risk sources and extends across six levels. The RBS is divided into four level 1 categories - Process, Structure, Governance and Context - which sub-divide into more detailed risk sources at the lower hierarchical levels. For example, the Governance section contains sub-categories for finance, procurement and contracts. The RBS presents the full range of risk sources from previous construction projects - it does not refer to the probability or impact of risk sources. The most striking finding in the current analysis is that the majority of risk sources in the RBS (over 75%) originate within the project organisation and relate to internal management issues. Numerous risk sources refer to procedural and methodological performance - issues which are the proper responsibility of the project manager. Consequential risk sources were also identified, that is, risk sources created as a direct result of risk treatment actions. It is clear that client departments need to get their house in order - and the evidence suggests that it is largely within their control to make the necessary improvements to enhance project delivery. Comparison of traditional and PFI projects shows that both procurement arrangements are equally risky. However, statistical analysis revealed significant differences in the types of risk source that characterise each procurement route - the reports on traditional projects feature many more risk sources from the Structure section of the RBS, while significantly more risk sources from the Governance section are cited in the PFI project reports. The value of the RBS lies in the fact that it is empirically derived, based on a rigorous analysis of an extensive dataset. It may be operationalised as a comprehensive risk list to support risk identification on future projects, while the database of coded text that underpins the RBS offers an evidence base for the development of targeted initiatives to bring continued improvements in construction project performance.