Infrastructure Engineering - Research Publications

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The Risk of Power Imbalance in Project Delivery: A Study of Large Victorian Public Infrastructure Projects

Zarei, H ; Hui, K ; Duffield, C ; Wang, G (Atlantis Press, 2017)

In large public infrastructure projects, political risks due to the power imbalance between central and delivery agencies are often overlooked or underestimated. The primary motive of the delivery agency in distorting information for political gains should be deemed a risk that creates uncertainty for large projects planning the outcome. In this study, seven large infrastructure projects in the state of Victoria, Australia are examined through a workshop involving key stakeholders who had played active roles in these projects. The findings revealed that power asymmetry between central and delivery agencies exist and would lead to optimism bias, which in turn creates uncertainty and risk of overpromising in the business case. Power asymmetry exist in large infrastructure projects because the central agencies usually only have the responsibility but not the skill set needed to measure the robustness of the business case. These types of political risks are difficult to quantify and even detect. This paper recommends a few managerial strategies that have referential values and/or can be used to mitigate and circumvent this risk.