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New Approach to Managing Infrastructure Project Risk Will Reduce Costs by $5 Trillion by 2030 – Oliver Wyman

Dépèche transmise le 14 mars 2012 par Business Wire

New Approach to Managing Infrastructure Project Risk Will Reduce Costs by $5 Trillion by 2030 – Oliver Wyman

NEW YORK--(BUSINESS WIRE)--Governments and businesses can reduce the cost of their infrastructure investments by more than $5 trillion by 2030 if they improve how they manage the risks inherent in large projects, according to a new report by Oliver Wyman. Maximizing Returns on Large Investment Projects estimates that 200 public and private capital investment projects each worth at least $500 million are under way globally. Many are suffering from cost overruns and delays. In total, $53 trillion needs to be invested in public infrastructure by 2030 to keep the global economy on a firm path to recovery, according to a recent OECD study sponsored by Oliver Wyman.

“Enabling organizations to understand the full economic impact of risks inherent in capital investments as well as to target efforts to avoid them better improves projects’ financial performance significantly”

The financials of these large infrastructure projects can be improved significantly by developing greater transparency around the risks involved in them – and then tracking mitigation efforts closely. Large-scale infrastructure projects come with large-scale delays (carrying large-scale costs), e.g., a company can lose $1 billion if a nuclear reactor vessel does not meet required specifications since it takes three years to build a new one.

To avoid such catastrophic errors and capitalize on savings, Oliver Wyman recommends a new framework for managing the risks involved that provides critical guidance at three key points of a project’s life cycle: the initial assessment of the investment, the design of the plan for building it, and the project’s execution.

“Enabling organizations to understand the full economic impact of risks inherent in capital investments as well as to target efforts to avoid them better improves projects’ financial performance significantly,” says report co-author Alexander Franke, a partner in Oliver Wyman’s Global Risk & Trading practice.

“Identifying and mitigating risks enable governments and companies to reduce cost overruns and delays by 20 percent, and sometimes much more,” says Kristina Gerteiser, an associate partner in Oliver Wyman’s Corporate Finance & Restructuring practice.

Report details are at: www.oliverwyman.com/large_investment_projects.htm.

About Oliver Wyman

Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 25 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, organizational transformation and leadership development. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].