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Value of Uncertainty: The Lost Opportunities in Large Projects

Author

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  • Agnar Johansen

    (Technology and Society, SINTEF, Trondheim 7031 Norway)

  • Petter Eik-Andresen

    (Technology and Society, SINTEF, Trondheim 7031 Norway)

  • Andreas Dypvik Landmark

    (Technology and Society, SINTEF, Trondheim 7031 Norway)

  • Anandasivakumar Ekambaram

    (Technology and Society, SINTEF, Trondheim 7031 Norway)

  • Asbjørn Rolstadås

    (Faculty of Engineering Science and Technology, Norwegian University of Science and Technology, Høgskoleringen 1, Trondheim 7491, Norway)

Abstract

The uncertainty management theory has become well established over the last 20–30 years. However, the authors suggest that it does not fully address why opportunities often remain unexploited. Empirical studies show a stronger focus on mitigating risks than exploiting opportunities. This paper therefore addresses why so few opportunities are explored in large projects. The theory claims that risks and opportunities should be equally managed in the same process. In two surveys, conducted in six (private and public) companies over a four-year period, project managers stated that uncertainty management is about managing risk and opportunities. However, two case studies from 12 projects from the same companies revealed that all of them had their main focus on risks, and most of the opportunities were left unexploited. We have developed a theoretical explanation model to shed light on this phenomena. The concept is a reflection based on findings from our empirical data up against current project management, uncertainty, risk and stakeholder literature. Our model shows that the threshold for pursuing a potential opportunity is high. If a potential opportunity should be considered, it must be extremely interesting, since it may require contract changes, and the project must abandon an earlier-accepted best solution.

Suggested Citation

  • Agnar Johansen & Petter Eik-Andresen & Andreas Dypvik Landmark & Anandasivakumar Ekambaram & Asbjørn Rolstadås, 2016. "Value of Uncertainty: The Lost Opportunities in Large Projects," Administrative Sciences, MDPI, vol. 6(3), pages 1-17, August.
  • Handle: RePEc:gam:jadmsc:v:6:y:2016:i:3:p:11-:d:76708
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    References listed on IDEAS

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    1. Jay R. Galbraith, 1974. "Organization Design: An Information Processing View," Interfaces, INFORMS, vol. 4(3), pages 28-36, May.
    2. Asbjørn Rolstadås & Per Willy Hetland & George Farage Jergeas & Richard E. Westney, 2011. "A New Approach to Project Risk Navigation," Springer Series in Reliability Engineering, in: Risk Navigation Strategies for Major Capital Projects, chapter 0, pages 39-50, Springer.
    3. Packendorff, Johann, 1995. "Inquiring into the temporary organization: New directions for project management research," Scandinavian Journal of Management, Elsevier, vol. 11(4), pages 319-333, December.
    4. Hans Petter Krane & Asbjorn Rolstadas & Nils O.E. Olsson, 2011. "An empirical analysis of project risk in a time perspective," International Journal of Project Organisation and Management, Inderscience Enterprises Ltd, vol. 3(1), pages 36-56.
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    Cited by:

    1. Ole Jonny Klakegg, 2016. "Project Risk Management: Challenge Established Practice," Administrative Sciences, MDPI, vol. 6(4), pages 1-3, December.

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