3.3 Decision Making
3.3.4 Risk Decision making in mega projects
94 cost of raw materials which eventually leads to an underestimation of the cost required to run the project. It results in a halt of the project as well as massive cost overrun putting the professionalism of the project managers in question (Hoshino-Browne, 2012). Both underestimation and overestimation are a result of poor decision making that arises where one considers factors that ought not to be considered or fails to
consider factors that ought not to be considered. (John Eweji, 2012) Notes that decision making is the mother of overestimation and underestimation.
95 this makes it necessary to pump more resources into the project in order to ensure that the project does not stall an action that results to an eventual cost overrun (Kazaz, 2012). This subjects the owners into pumping more resources that were not budgeted for into the project and thereby resulting in a cost overrun.
Risk is however argued to be borrowing much from decision making since it is mainly remedied with decisions and at times avoided with decisions and that at many times it is within the limited scope of control by the project managers or other leaders since risks occur without notice and that no can tell or forecast what risk is likely to occur and when the risk will occur (Kazaz, 2012). Risk decision making is defined as a process which involves a series of basic steps which can add value to almost any situation especially when there exists the possibility of the occurrence of a serious catastrophic outcome. The fundamental point is completing each step in a simple and practical way to provide the information that the decision maker needs to make a decision.
The importance of risk decision making is that it gives a solution in instances where a particular situation relating to the mega-project is so complex that only a detailed risk assessment is needed to address the situation. The assessment shall avail the decision maker with all necessary information to be considered the information includes all possible risk occurrences as well as how to avoid an occurrence of the particular risk as well as how to mitigate the risk in case it occurs. Risk decision making also has the aspect of cases in which risk misinformation occurs. (Priemus, 2010) stated that risk misinformation is by deciding together at an early stage on how information should be treated. This decision includes deciding on what sources of information should be treated as authoritative sources of information. This is to ensure that there is
96 certainty in the flow of information. This extends to a decision on which source should take precedence in cases where information from two or more sources which are all authoritative conflict (Priemus, 2010).
Various theories explain risk decision-making theory (Priemus, 2010) these include the opportunity threat theory. This theory proposes that risk should be analysed as an opportunity and a threat component at the same time which allows the description of behavior as a combination of opportunity seeking and threat aversion (Van de Ven, 2008). This theory further holds that managers should not view risks as of a negative impact but should view risks as an opportunity to address problems arising within the project. Risks define the behaviours as well as the decision-making capacity of the project managers (Van de Ven, 2008).
The other theory is the Modern Decision Theory a theory that has developed since the twentieth century through contributions of various academic scholars and a product of the improvements occasioned on the traditional decision theory (Drennan, 2007). The theory provides that decisions and risks are fewer ones and the same thing that cannot be separated in any way (Drennan, 2007). The theory provides that it is decisions that overlook risks and that it is risks that communicates the quality of the particular decision (Drennan, 2007). These theories explain the shift occasioned on the world towards risks in the sense that risk is deemed as something that is part and parcel of a project that at all times it will always exist as long as projects exist.
Risk is also termed as a performance paradox that mostly results in negative effects on a project yet at many times the risk was not within the scope of control by the manager. The manager ends up bearing a burden he could not control (Drennan, 2007).
However, this burden is attributed to the manager on the ground that the risk could be
97 avoided through decision making (Drennan, 2007). Megaprojects with their
complexities, therefore, experience more complex risks that can only be addressed with a more complex decision-making process (Drennan, 2007). The procedure of making decisions in so far as risk is concerned varies from one person to the other. Reason being that various people perceive various things differently and that various people respond differently to different occasions (Drennan, 2007). What is risky to one person may be a normal thing to another person and a particular reaction deemed by one person to be appropriate may be inappropriate to another person (Drennan, 2007). On the other hand, the culture that a person subscribes to or that a person was raised in influences risk decision making in the sense that it gives people various differences perceptions towards the various thing.
Procedures for making decisions are also subjected to various challenges
especially in circumstances where the decisions are made to address risks likely to occur in the mega project. One of the major challenges is that human beings are reluctant to plan about future problems that once they occur may affect them in one way or another (Drennan, 2007). This has been termed as a fear of the unknown that has costed mega projects for failure to take necessary precautions in cases where risks occur (Drennan, 2007). The procedures of making risk decisions are not catered for at many times because of the blind eye that the subject has been given by project managers. Secondly, risk decision making is faced by the challenge that those that are mandated with risk management planning are an entity different from that entity mandated with the formulation of the plan of the project (Flyvbjerg, 2008). The risk management team at times makes decisions that at times conflict with the work of the project planning team
98 these conflicts make it difficult to synchronize the risk management plan with the
project plan (Flyvbjerg, 2008).