Abstract
The project development cost and schedule volatility that project developers face today is more multifaceted and complex than ever. Global sourcing of equipment has introduced coordination complexities. Raw material price volatility, new technology and implementation risks are just a few factors that power producers and utilities cope with while adapting to regulatory pressures.
In emerging markets, local engineering and construction service providers are scrambling to make the transition to working with multinational private owners. In order to improve their competitiveness, project participants that want to control their risk exposure more effectively need to address the project risks that financial instruments cannot hedge.
Much of the project development cost and schedule risk that power producers, investors and utilities face today can be addressed and managed by being identified and acted upon early in the project.
This article provides an understanding of typical project risk management concepts and methods and how they apply to projects in the power industry. A rigorously managed project risk program can convert unknowns into managed risks and significantly improve the predictability and outcome of any project development undertaking.
Author: Attila Boydak
