Management of value and uncertainty in construction projects

Uncertainties present opportunities as well as risks. By managing uncertainties projects can achieve better value, for example through avoidance of problems that reduce value; or through identification of efficiencies that lead to increased value. Traditional approaches to risk management seek to identify and eliminate risks early in the project. However, attempts to eliminate risks can have adverse consequences. For example designing for the worst case can lead to complacency since it will be assumed that every eventuality is covered. Conditions may transpire which were completely unexpected, and with no strategy for detecting and dealing with them, can lead to a hasty redesign or sometimes a project crisis. An alternative approach is to identify the uncertainties then monitor and manage them throughout the project life cycle. An approach used in geotechnical design provides a model for managing uncertainty. The observational method involves an initial assessment of the uncertain conditions followed by designs based on a prediction of the most likely manifestations of these conditions. Alternative designs or contingency plans are prepared to cover the worst conceivable conditions. When combined with value management the observational method can provide an integrated system for managing various project uncertainties.