Risk Analysis for International Projects (Best Practice)

The IPRA can provide numerous benefits to the project team. These include uses as:

• A checklist that a project team can use for determining potential project risks
• Standardized risk terminology for international ventures
• A process for identifying and assessing risk that will also facilitate prediction of disruptions, potential for disputes and other potential issues
• A means to monitor progress in addressing risk control at various stages during the project’s life cycle
• A tool that aids in communication and promotes alignment by highlighting poorly defined areas of risk for investors, owners, and design or construction contractor

A detailed list of the risk elements that impact the project’s life cycle (planning, design, construction, and operations) of international facilities was developed. The breakdown of the 82 risk elements grouped into 14 categories are not equal in impact to the threat/opportunity – as hypothesized by the team. Project characteristics affect the level of impact based on locale, project type, resource availability, government, and other specifics. Hence, the team created a standard guidance to assign the level of impact of a certain risk if no baseline previously existed based on a project’s characteristics. 

Refer to RS181-1 for a list of the categorized risk elements. (RS181-1, p. 5)

RT-181’s research (case studies, interviews, surveys) showed that assessing risk was a project management activity to be done throughout the project life cycle. This is key to effectively managing the risks. The relative importance of any specific risk depends on the respective stakeholders, and could be different for different stakeholders. Therefore it is essential to get a broad range of perspectives when assessing risk in order to arrive at a consensus on relative importance of risks (IR181-2, p. 22).

The likelihood of occurrence combined with the relative impact at the time of the assessment determines the relative importance of the risk (RS181-1, p. 23).

The top five critical go/no-go risk elements (RS181-1, p. 23):

1. Sources and form of funding
2. Business case
3. Economic model/feasibility
4. Political stability
5. Contract type and procedures

For international construction projects, the following risk response is proposed as a critical phase of the overarching risk management process. These are suggested actions that can help the project team effectively implement the IPRA:

1. Organize and formalize a risk management process and keep it as simple as possible.
2. Begin early to be most effective.
3. Keep a broad perspective to get the diversified input required.
4. Undertake adequate pre-project planning, analysis, and engineering.
5. Partner with owner and contractor management.
6. Recognize that certain projects are more prone to risk and that experience in a jurisdiction is important.
7. Risk documentation is critical.

(RS181-1 p. 27)

IR181-2, Integrated Project Risk Assessment (IPRA) 

The International Project Risk Assessment (IPRA) tool focuses on the risks typically encountered during the life cycle of international capital projects.