Conference PaperPDF Available

New ways of managing the unexpected in megaprojects

June 2018

Conference: EURAM 2018
At: Reykjavik

Authors:

Andreas Nachbagauer

University of Applied Sciences BFI Vienna

Iris Schirl-Boeck

University of Applied Sciences BFI Vienna

This conceptual paper, based on literature review in the field of organizational theory, especially human factors, resilience and high-reliability organizations, argues that important lessons can be drawn from these researches fields for managing complexity and uncertainty in megaprojects. By combining theoretical concepts of decision-making based on systems theory, situational awareness and sensemaking, we aim to approach a more comprehensive discourse on ways of managing the unexpected. Expanding at the anticipation, the coping and the adoption phase both on the team and the project manager’s level, we show that managing the unexpected in megaprojects demands the combination of apparently opposites: both a high degree of flexibility and open communication and a culture of clear decision-making structures and responsibilities. We argue that megaprojects can make use of autonomy, an open and no-blame learning culture and enable autonomous decisions on the shop-floor level just because they can rely on unquestioned organisational structures: pre-determined communication paths, hierarchies, structures of orders, knowledge of one’s people and esprit de corps.

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NEW WAYS OF MANAGING THE UNEXPECTED IN MEGAPROJECTS

Andreas Nachbagauer

UNIVERSITY OF APPLIED SCIENCES BFI VIENNA -

Vienna, Austria

Iris Schirl-

boeck

UNIVERSITY OF APPLIED SCIENCES BFI VIENNA -

Vienna, Austria

Category: 10 PROJECT ORGANIZING >> 10_02 MANAGING MAJOR AND MEGA PROJECTS: THE IMPORTANCE TO BROADEN CLASSICAL PROJECT

MANAGEMENT APPROACHES

Acknowledgements:

This paper is based on findings from our ongoing research project

‘Der Beitrag der Human

Factors

Forschung zum Management von

Unsicherheit in projektorientierten Organisationen’

(

‘The contribution of Human factors research for managing uncertainty in project

oriented organisations’

)

at the University of Applied Sciences BFI Vienna, funded by the City of Vienna/Austria, MA 23.

Access to this paper is restricted to registered delegates of the EURAM 2018 (European Academy of Management) Conference.

ISBN 9782960219500.

ABSTRACT

This conceptual paper, based on literature review in the field of organisational theory, especially

human factors, resilience and high-reliability organisations, argues that important lessons can be

drawn from these researches fields for managing complexity and uncertainty in megaprojects. By

combining theoretical concepts of decision-making based on systems theory, situational

awareness and sensemaking, we aim to approach a more comprehensive discourse on ways of

managing the unexpected. Expanding at the anticipation, the coping and the adoption phase

both on the team and the project manager’s level, we show that managing the unexpected in

megaprojects demands the combination of apparently opposites: both a high degree of

flexibility and open communication and a culture of clear decision-making structures and

responsibilities. We argue that megaprojects can make use of autonomy, an open and no-blame

learning culture and enable autonomous decisions on the shop-floor level just because they can

rely on unquestioned organisational structures: pre-determined communication paths,

hierarchies, structures of orders, knowledge of one’s people and esprit de corps.

Keywords: megaprojects, uncertainty, unexpected

New ways of managing the unexpected in megaprojects

Abstract: This conceptual paper, based on literature review in the field of organizational

theory, especially human factors, resilience and high-reliability organizations, argues that

important lessons can be drawn from these researches fields for managing complexity and

uncertainty in megaprojects. By combining theoretical concepts of decision-making based on

systems theory, situational awareness and sensemaking, we aim to approach a more

comprehensive discourse on ways of managing the unexpected. Expanding at the anticipation,

the coping and the adoption phase both on the team and the project manager’s level, we show

that managing the unexpected in megaprojects demands the combination of apparently

opposites: both a high degree of flexibility and open communication and a culture of clear

decision-making structures and responsibilities. We argue that megaprojects can make use of

autonomy, an open and no-blame learning culture and enable autonomous decisions on the

shop-floor level just because they can rely on unquestioned organisational structures: pre-

determined communication paths, hierarchies, structures of orders, knowledge of one’s people

and esprit de corps.

Keywords: megaprojects, uncertainty, risk management, the unexpected, complexity, human

factors, high-reliability organizations, resilience, structures of expectation.

1 Introduction

Megaprojects become increasingly popular in recent years. Several (multi)billion-dollar mega

infrastructure projects get high attention from media and the public, such as the Øresund

bridge between Denmark and Sweden built between 1995 and 2000 with total costs of 1bn.

EUR, or the Elb philharmony in Hamburg built between 2007 and 2016 with total costs of

866mio. EUR.

What is striking is the still mediocre performance of such projects in terms of costs, time and

quality (Flyvbjerg et al., 2003) and in terms of economy, environment and public support

(Morris & Hough, 1987, Collingridge, 1992, Szyliowicz & Goetz, 1995). For example, the

construction project of Terminal 5 (T5) at London Heathrow Airport with total costs of

approximately 50 billion EUR was (surprisingly) both on time and to budget, but the

‘optimism bias’ by the top management led to chaos at the first day of its opening. Problems

with too few car parking spaces, delays in getting staff through security screening and low

staff familiarisation with the terminal resulted in the backlog of thousands of baggage which

then led to severe delays and flight cancellations. Even though staff had warned the top

management in advance that they were not fully prepared for the transition to T5, the top

management decided to open it (BBC, 2008).

While governance of megaprojects has become an increasingly favoured topic in project

management research, focussing on the organization and coordination of interactions between

multiple megaprojects stakeholders, project governing is still underrated, thereby ignoring

changes in governance and their effects on the project lifecycle. Sanderson (2012: 433) argues

that project governing as a spontaneous order rather than something made up should become

better included in the analysis of megaprojects. Following his call for future research, we will

concentrate our conceptual analysis on identifying both governing cultures and governance

structures that support effective management of uncertainty and trying to answer the first

research question: How can megaproject managers make ‘good’ decisions in times of

uncertainty?

Megaprojects are confronted with a particularly high level of uncertainty due to their high

complexity. While trying to deliver the desired strategic outcomes in a predictable manner,

some organisations nowadays increase direct control, and reduce trust and transparency when

faced with the unexpected. Against this trend, others believe the opposite to be promising in

uncertain situations: a high degree of freedom for the parties involved allowing for quicker

decisions and self-determined choice to successfully respond to unexpected events. Common

to both solutions is the opinion, that new procedures must be implemented to manage the

unexpected, focusing on the need to re-arrange structure and flexibility. Our second research

question thus addresses the requested balance between structure and self-organisation to

successfully manage the unexpected in megaprojects.

The paper is structured as follows: We first briefly describe the terms risk, uncertainty and the

unexpected as differing concepts, based upon which we will evaluate the ability of findings

from Human factors research, HRO studies and resilience research to approach the

unexpected in megaprojects. Our analysis of decision-making structures in projects will

follow Luhmann’s ‘structures of expectations’ based on systems theory and will concentrate

on the impact of the unexpected thereon. Finally, we try to identify the project manager’s, the

team’s and the top management’s options for action when being confronted with the

unexpected in megaprojects.

2 Conceptual clarifications

2.1 Risk and uncertainty

The concepts of risk and uncertainty are concerned with future predictability, and thus are

closely connected to information: Basically, the less information we have, the more difficult

are statements about future developments. Both are commonly used interchangeably, which

especially for complex projects is a risky endeavour as uncertainty is then ‘either treated in

the same way as risk or ignored’ (Sanderson, 2012: 434). Therefore, the distinction between

both is crucial for valuable decisions in contemporary project management.

The major difference between these concepts is predictability. Risk is, at least in principle,

calculable, and predictions can be expressed by a statistically or mathematically determined

probability. Risk can be seen as an a priori probability where the decision maker is able to

either assign objective probabilities to a known range of future events on the basis of

mathematically ‘known chances’ (Sanderson, 2012), or to assign objective probabilities on the

basis of empirical/statistical data about such events in the past.

Uncertainty, on the other hand demarks events in the future that are unknown and/or their

consequences cannot be estimated. In this case, we simply do not possess an appropriate

‘scientific’ method to ‘calculate’ probabilities or we do not have enough information to feed

our algorithm, or both.

Ensuring conformance to time, budget and scope constraints is the maxim of traditional

project management. The idea is that formalised planning and controlling procedures allow

for a tighter control in order to be successful. In this vein, processes like risk management are

supposed to make it possible to transfer threats and opportunities into – basically calculable

and therefore decidable – risks. Traditional project risk management approaches are highly

rational and sequential, following a control-and-order logic. The concept of risk seeks to

calculate and thereby control risks. It even seeks to describe in detail such situations which

are not fully predictable and controllable and thereby calculate their probability of occurrence:

‘The typical way to incorporate this uncertainty in project modelling is by means of stochastic

networks where activity costs and durations are not deterministic but follow certain

probability distributions’ (Acebes et al., 2014: 424).

This is reflected in the prevalent risk discourse in project management. Eckhard Heidling

(2015) categorized three areas of concern:

 Standardized (risk) planning routines focus too much on the past, thereby hindering

the development of coping strategies for the management of uncertainty.

 Project environments are often not included in the project analysis, thereby ignoring

the historical and organisational contexts of the projects.

 Potentials of uncertainties as opportunities for raising project value are not fully

tapped.

2.2 The unexpected

The unexpected is that event, that one does not expect – that sounds trivial. Social

construction theory (Maturana, 1982, Foerster, 1984) informs us that the unexpected can only

be understood in relation to an observer. The expected (and the unexpected) are not entities in

themselves, but are ‘produced’ by and from the perspective of an observer, either an

organisation, an employee (Dorniok & Mohe, 2011) or a team based (Weick, 1993).

Observations are not deliberate, however; they are structured and these structures are based on

expectations. Within organisations, strategy, organisational rules, culture and so forth define

what is important and what has to be considered not so important.

Taking a closer look, we can differentiate between events that occur totally surprising, and

‘outcomes or events that actors have identified as possibly existing, but do not know whether

they will take place or not’ (Geraldi et. al, 2010: 553). This spectrum of growing uncertainty

is frequently known by the labels of known knowns, known unknowns, unknown knowns and

unknown unknowns (Winch, 2010, Winch & Maytorena, 2012, Sanderson, 2012, Cléden,

2009, De Meyer et al., 2002). Unknown knowns are events where we lack data necessary to

assign objective probabilities but are able to ground expectations in historical practices,

known unknowns are incidents that are possible in principle, but we do not know when, where

and how they will occur (Sanderson, 2012; Winch and Maytorena, 2012). Ultimately,

unknown unknowns demark the passage from uncertainty to the unexpected. The

conceptualization of the ‘unknown unknowns’ reflects ‘the actuality of projects as social

processes requiring ongoing construction of the appearance of certainty and clarity in the

midst of complex uncertainty and ambiguity’ (Atkinson et al. 2006: 696).

For unexpected situations that long for a long-term reaction only, organisation will have

enough time to search for additional information, calculate by sophisticated analysis methods,

and plan in-depth. The proper time of the organisation allows for an uncoupling from the

external pressures of expectation, groups can ‘muddle through’ or wait for the next ‘garbage

can’, and individuals will sense when the time for decisions (regarding their own interests)

has come. But issues become more complicated when time and urgency are an issue. The only

thing that is really scarce in organisations is time. Thus, time generates importance and

pressure; deadlines terminate decision processes; and timelines trigger communication and

including meetings (Luhmann, 1968). We will concentrate on the unexpected that urges short-

term reaction.

2.3 The unexpected in projects

Rather than following best practice project management models as starting point of research,

newer approaches, such as ‘projects-as-practice” (Blomquist et al., 2010), highlight the

everyday struggle of keeping projects on track while dealing with uncertainty. The exposure

to uncertainties requires an open approach less oriented towards planning: ‘projects are better

described as journeys of exploration in given direction, rather than strict plan-following

endeavors’ (Perminova et al., 2008: 74).

Traditional perspectives declare impulsive action, feelings and intuition as subjective

processes, which compromise coordination and decision-making. In contrast, recent studies

attach high importance to these subjective processes as a pre-condition for coordination. One

important strategy to manage uncertainty occurring in projects is based on experience: being

explorative, associative, sensual and in intense relation to the project environment (Heidling,

2015). Atkinson, Crawford and Ward (2006) suggested that uncertainty management asks for

trust building, sensemaking, organisational learning, and an appropriate organisational

culture.

More recent conceptions of project management like Agility (Beck et al., 2001) weaken the

predominance of time, budget and scope for project success by concentrating more on client

needs and involving stakeholder interests. This definitely has an effect on the significance of

risk and uncertainty for project management, i.e. replacing foresight and avoidance by

consciously allowing for insecurity in favour of a look forward (Drury et al., 2012: 1243).

Nevertheless, this shift to more open conceptions is very demanding. Decision in projects

must be acceptable not only within the organisation but more so beyond the organisation's

boundaries to meet the legitimacy requirements of the environment (Meyer & Rowan, 1977).

As long as relevant stakeholders, influenced by a vast body of literature and encouraged by

PM standards, understand ‘good’ project management as a clear application of the appropriate

toolset, i.e.: clear orders, precise and conscientious planning, setting up the right structures,

regular controlling, etc., project managers will employ traditional risk management methods.

2.4 Challenges in megaprojects

Megaprojects are characterised by being large-scale, delivering a substantial piece of

infrastructure or a capital asset with a life expectancy of many years, with a client being

mostly from the public or governmental sector, and the contractor(s) being mostly from

private companies (i.e. public-private partnerships). On the ‘soft’ side, megaprojects are

challenged by potentially severe conflicts between the various public and private stakeholder

groups, but also by high levels of complexity, uncertainty and risk (Sanderson, 2012)

Complexity in megaprojects is triggered by the following factors: the large scale, long time

span, multiplicity of technological disciplines, the number of participants, multi-nationality,

the interests of stakeholders, sponsor interest, escalating costs over time, high levels of public

attention or political interest, country risk, and uncertainty (van Marrewijk et al., 2008).

Sanderson (2012) identified three ways of explaining (poor) megaproject performance in

project management literature, pointing at typical challenges in megaprojects:

The first explanation type suggests that the main megaproject stakeholders, such as politicians

and contractors, systematically and intentionally under-estimate project costs and are over-

optimistic about project benefits and schedule in order to get the projects approved (Davidson

& Huot, 1989, Flyvbjerg et al., 2003). ‘[..]The problem with megaprojects is mainly one of

risk-negligence and lack of accountability induced by project promoters whose main ambition

is to build projects for private gain, economic or political, not to operate projects for public

benefit’ (Flyvbjerg et al., 2003: 142). Solution approaches to that argument include various ex

ante measures to improve the accountability of project decision-making, such as a limitation

of the role of politicians in formulating public interest objectives or thorough management

plans.

While this explanation type is based on the assumption of optimising one’s decision without

any barriers of time, information and cognitive capacity, the second explanation type accepts

those constraints but still tries to maximise the decision-maker’s best interests. Here,

problems are seen as resulting from misaligned or underdeveloped governance arrangements,

incapable of handling unforeseen megaproject turbulences (De Meyer et al., 2002, Loch et al.,

2006, Miller & Hobbs, 2009). A suggested solution is enhancing ex post governability by

designing sufficiently robust and flexible mechanisms that fit to the project context.

The third way of explaining megaproject performance concentrates on processes of social

construction: different discourses, cultures and rationalities of the project stakeholders

become obvious in day-to-day management practice and can endanger project performance:

‘[..] performance problems are an almost inevitable result of the normal day-to-day practice

of managers trying to cope with an organisational environment that is complex, ambiguous

and often highly conflictual’ (Sanderson 2012: 438). Therefore, a shared culture supported by

governance mechanisms, which encourage collaborative coordinated behaviour, should

become consciously created to improve project performance (Clegg et al., 2002, Pitsis et al.,

2003, Atkinson et al., 2006, van Marrewijk et al., 2008). This encompasses ‘generic

management processes associated with building trust, sense-making, organisation learning,

and building an appropriate organisational culture’ (Atkinson et al., 2006: 688). With

projects and project environments being socially constructed, project actors satisfice in their

decision-making by seeking self-interest in the context of differing cultures and rationalities

while having incomplete knowledge.

What all three explanation types have in common, is the belief of being able to consciously

design solutions ex ante. None of the explanation types gives sufficient attention to project

governing as spontaneous micro-processes of organising as the project unfolds, or gives an

account to cognitive decision-making limits beyond rational choice.

3 Beyond rational choice

Since the eve of modern times, the idea of action is dominated by action as rational choice.

Organisations display a special type of rational action: purpose-oriented, self-serving, and

calculable, often expressed by the means of value assignments.

The basic economic concept of rational action in organisations goes back to the neoclassical

approach to decision-making: Rationality is synonymous to an optimal choice of optimal

procedures by employing statistical decision analysis. This model is very useful for simpler

problems. Faced with relatively unstructured or less frequent decision situations, decision

makers lack information or appropriate methods to handle data, or both. The obvious solution

here would be to gather more information or develop better algorithms, or both. Nevertheless,

our proposition is that neither more information nor better algorithms are sufficient to solve

complex non-programmed or wicked urgent problems.

3.1 Problems in decision making

Herbert Simon (1981) introduced the concept of limited rationality: while individuals act

subjectively rational, the quality of the results is affected by the limits of the individual ability

to make ‘right’ decisions. Simon stresses the limits of information processing: Limits of

knowledge, limit of anticipation, and limits of behaviour choice alternatives. Individuals in

organisations thus have to make decisions based on insufficient knowledge. People solve the

dilemma by merely choosing the first viable (satisficing) solution (Simon, 1981, March &

Simon, 1958) and terminate further searching. Viability is defined by the individual level of

aspiration, which may vary depending on learning and experience.

Understanding decisions at the level of megaprojects asks for a thorough consideration of

institutional, political and psychosocial processes (Saint-Macary & Ika, 2015, Williams &

Samset, 2010). Many different factors can contribute to negative biases in decision-making

processes in megaprojects: sunk cost effect, reference points, underweighting probable losses

or self-justification of decision-makers (Kardes et al., 2013).

Charles Lindblom (1959, 1979) summarises that organisations, rather than embarking on

grand strategies and major changes, have a tendency to ‘muddle through’. Decision makers

restrict themselves to a small number of values and merely consider a few alternative policies.

These values and policies emerge simultaneously. While there may well be disagreement

about the priority of values, a good policy is determined whether different decision-makers

can agree on the policy itself.

Megaprojects in complex environments are often characterized by limited knowledge,

imperfect technologies, and inconsistent goals and preferences of the changing participants

(Steen et al., 2017). Cohen, March and Olsen (1972) label this situation ‘organized anarchies’.

Here, decisions result from complex interaction of four independent streams of events put in

one 'garbage can': problems, solutions, participants and choice opportunities, shaped by

agenda setting, elites with clear-cut ideas at the right time and bureaucracy to enact ideas in

practise. Cohen and colleagues show, that most solutions, if any are found, are suboptimal by

rational measurements; yet, some decision is made which allows the organisation to operate

further.

Simple models of rational choice depend on objective information about essential

circumstances of the action. Contrary to that, the literature highlights the inability of an

individual to evaluate and choose beyond the bias of one’s own, subjective perception (e.g.

Kahneman. 2011, Taleb, 2013, Chabris & Simons, 2013). The ‘truthful’ representation of an

objectively given situation is distorted by selective processing of information and the selective

memory, by cognitive constructs (such as person schemas, stereotypes and implicit

personality theories), by the form of presentation (e.g. positive vs. negative) and interactions

of the information (e.g. timing and embedding of presentations).

Recent approaches promote irrational perceptions as the major source of information, of quick

decision-making and of quality of actions. These approaches accept that information is not

only based on rational, analytic and conscious thought but also on sensual perception. One

could say that it has become rational to act irrationally (Neumer, 2009).

Summarising the findings, we conclude that the aim of controlling outcomes and steering the

organisation rationally and predictably can be met for trivial issues. But in complex situations

of uncertainty and urgency, it is more important to have a quick and acceptable decision than

an optimal one. Given the restriction of limited information processing capacities and the

urgency to act, individuals are (usually) unable to make 'rational' choices. A ‘good' decision

then depends more on the perception and abilities of individuals than on ‘objective” criteria.

Perception is framed and based on a small proportion of possible environmental data.

3.2 The end of planning heroism

Megaprojects are characterized by volatility, uncertainty, complexity and ambiguity – and

thus are prominent examples for the VUCA-world we live in (Bennett & Lemoine, 2014).

Volatile, fast-paced changes in the project environment exert increasing pressure to adapt.

Megaprojects emphasize highly flexible and dynamic links across company boundaries;

integrated value chains connect information and goods flows in real time across continents.

More and more tasks are being joined on a case-by-case and temporary basis without this

being planned in advance, leaving us with the widespread feeling of being still too late. In

order to be able to operate further, it is more important to have a quick decision than an

optimal one.

Complexity is defined as a state where more linkages exist than we (normally) can describe or

analyse (Luhmann, 2000). Complex systems are characterized by unstable input-output

relationships, changing system boundaries over time, and system behaviour that is not (fully)

depending on the past (Checkland, 1999, Stacey, 2011). Recursive effects in complex

environments can make the rational choice of actions impossible, the chance to observe

mutually influencing, simultaneous effects is limited, i.e. if one’s own action has implications

for the other's actions, but the other's action in turn is made up based on one’s own decision.

These descriptions are definitely true for large and complex projects with a variety of strong

and interdependent stakeholders. In this situation, individuals and organisations are

increasingly overwhelmed to describe and process complexity. Given there is no ultimate

level or rule of decision-making, different observers will end up with different explanations

and dissenting forecast for the same observations. With long-term outcomes being partly

emergent and partly intentional, interventions could be planned, but the outcome could not be

predicted.

Ambiguity, the lack of clarity related to any aspect of the project such as requirements, project

objectives, project constraints, is intensifying. For one thing, claims from diverse stakeholders

including a critical public triggered by social media increase. With projects spanning

organisational, cultural and professional boundaries, the diversity within organisations and in

cooperation between organisations is growing. Once clear-cut clues now are open to different

options of interpretation, every-day, self-evident knowledge is put to the test. Given these

obstacles, teams strive for acceptable decisions and not so much for ‘correct’ ones, as

maintaining social support and social trust is crucial.

Common tenor of these descriptions is the escalation of uncertainty and instability. Despite

the availability of management information and decision support systems, despite the support

by big data and data mining (Whyte et al., 2016, Han et al. 2011), despite the use of Monte-

Carlo algorithms (Hulett, 2017, Agarwall & Virine, 2017), simulations and system dynamics

(Chapman, 2017, Jo, et al., 2015), prediction in mega projects is increasingly difficult.

Nevertheless, planning remains necessary in megaprojects. But only naïve people believe

plans to come true, at least that is what we can experience when we go beyond simple and

short-term issues. Planning has to get a new status: ‘Project Plans are repositories of

expectations on which managers build their daily activities and hence there is a logical chain

where our expectations about the future guide our actions today’ (Söderholm, 2008: 81).

Plans set aims and thus help selecting means and operations. Plans depict interactions of

different actions of divergent actors, define a collective understanding for the project, and

enable people to detect and correct deviating developments. They focus on attentiveness.

Paradoxically enough, they inform organisations where to expect the unexpected.

At the same time, however, they make organisations structurally blind for the unexpected in

non-planned areas. Research on uncertainty (Perrow, 1984, Dörner, 1989) and on wicked

problems (Checkland, 1999) have shown that the advantages of (pre-)structured expectations

in organisations make it difficult to handle the complex unexpected reasonably. Even more so,

following rules at all events may cause disaster (Cavallo & Ireland, 2012).

Giezen (2013) introduced the concepts of adaptive and strategic capacity to optimize planning

in megaprojects. What he asks for, is active resilience as a way of creating a more open

planning process in which the possibility to adaptation is built into it: ‘The best way to do that

is to bring diverse actors and views into the process – thus organizing your own opposition –

and to bring the context into the project, through building into the process a redundancy of

actors and knowledge and thus proactive resilience’ (Giezen, 2013).

Thus, project managers need to ‘exercise the art of managing the unexpected parallel to

executing the plan’ (Söderholm, 2008: 81). Project governance as a consciously designed

form of organisation concentrates on building organisational infrastructure, capabilities and

culture to facilitate trust (Atkinson et al., 2006, Clegg et. al 2002, Pitsis et al., 2003).

Spontaneous governing in projects, partly considered in the ‘projects-as-practice’ approach,

focuses on how projects are carried out in a social and institutional context under the

influence of different socially situated activities, norms, values and routines, and people

(Hällgren & Söderholm, 2012). It emphasizes the importance of emergent, non-programmed

work activities for an understanding of project development (Sanderson, 2012). Söderholm

(2008) showed that project managers make use of innovative action (by creatively designing

action patterns such as re-shuffling of resources or outsourcing), extensive meetings keeping

up team commitment and urgency, detachment from other project activities, or negotiation of

project conditions to deal with unexpected events rather than just executing the plan.

4 Approaches to address uncertainty

4.1 Concepts in organisation theory

In organisation theory capabilities to deal with abrupt changes in the environment have been

investigated from various theoretical viewpoints, in particular research on High-reliability

organising, resilience and sensemaking, organisational improvisation and Human Factors.

High-reliability organising has originally focused on safety-critical environments only and on

absolute reliability: Well-known application fields are nuclear power plants, aircraft carriers

and air traffic control systems. These organisations share some characteristics, i.e.: their

technologies are risky and present the potential for error, the scale of possible consequences

from errors or mistakes precludes learning through experimentation, they are characterised by

complex technologies and complex work. High-reliability organisations (HRO) emphasize the

necessary mindfulness and organisational preparation for the unexpected incident, as well as

learning effects from such events. High-reliability organisations, as described by Weick and

Sutcliffe (2007), strive for flexibility and delegate decision-making responsibility to the shop-

floor level. Weick, Sutcliffe & Obstfeld (1999) recommend five principles for managing the

unexpected: (1) preoccupation of failure, (2) reluctance to simplify, (3) sensitivity to

operations, (4) commitment to resilience, and (5) deference to expertise.

HROs strive for flexibility, because unlike anticipation, which encourages thinking first and

acting then, flexibility encourages action while thinking so that we can think more clearly

(Weick & Sutcliffe, 2007). This elasticity also comprises decision structures which put

knowledge and skills above hierarchy, and which delegate decision-making responsibility to

the shop-floor level. In retrospect, project managers should take their teams through decision-

making involved by using systematic review procedures, and reflect on how to handle the

event more mindfully (Weick & Sutcliffe, 2007). One method for reflection is the after-action

review (AAR) built around four questions: What did we set out to do? What actually

happened? Why did it happen? What are we going to do next time?

Välikangas (2010, Hamel & Välikangas, 2003) defines resilience as the ability of a system to

resist major changes and thus endure perturbation without systemic change, while Ortiz-de-

Mandojana & Bansal (2016) stress the organisation’s ability to sense and correct maladaptive

tendencies and cope positively with unexpected situations. Research focuses on

(organisational, individual and team-based) reactions to unexpected, potentially (life)

threatening events (Duchek, 2014, Farjoun & Starbuck, 2007, Starbuck & Farjoun, 2009).

Group resilience (in our case project team resilience) can arise from a team’s positive

orientation towards acquiring new skills, mastering new situations, and improving

competences and from collective efficacy, i.e. a group’s shared belief in its conjoint

capabilities to organise and execute the courses of action (Bandura, 1998).

Organisational resilience is the ability of the organisation to rebound from adverse and

unexpected situations towards the right path to success. Resilient organisations are

characterised by ‘conceptual slack, ad hoc problem solving networks and [...] rich media to

communicate’ (Sutcliffe & Vogus, 2003: 101). They reduce the degree of control; they lessen

immediate activity and increase their requisite variety. Tasks are not understood as

instructions or fixed responsibilities, but are formed by coordinating activities (enacted).

Against the backdrop of the shared goal, team members are encouraged to track possible

misassumptions and to question known routines (Darkow & Geiger 2017). Resilience on

organisational level also stems from processes that encourage mindfulness (Sutcliffe et al.,

2016). The project team needs to understand the situation and to have the feeling of

manageability. This asks for options of influence and actions for every individual, for

transparency of goals, impact factors, events and situations (Borgert, 2013: 21).

Sensemaking can be understood as coping with, or even dissolving, ambiguous events

(Merkus et al. 2017). Ambiguity can be both an inherent aspect of social reality (an event

being ambiguous in itself, ‘intrinsic ambiguity’) and something made by the actors who give

different meanings to it (an event being made ambiguous, ‘constructed ambiguity’). Team

members react with different modes of collective sensemaking depending on the context and

time available. In urgent situations, shared sensemaking is important, whereas with more time

available collective sensemaking could become negotiated.

Research on organisational improvisation has been strongly inspired by the performing arts

(Barrett 1998, Kamoche et al., 2002). Moorman and Miner (1988: 698) define improvisation

'as the degree to which composition and execution converge in time.' Improvisation is a

paradox: It is music that is not composed, but the musician needs a very good knowledge of

composing structures and principles (Böhle, 2017, Böhle & Porschen-Hueck, 2014). Even

more so practical skills must be reproduced on the spot based on well trained rearrangement

of elements. Good musicians react immediately on clues in the music and on each other.

Thus, implicit and explicit shared knowledge can be supportive for the coherence and the

novelty of improvisations. Within organisations, for instance, the incident-command system,

characteristic for armed forces and emergency aid organisations, is more viable and successful

in unexpected situations when there is also space for role-switching, authority migrating, and

system resetting (Bigley & Roberts, 2001).

Human factors research as an interdisciplinary field of studies aims to understand how

individuals, teams and organisations can interact with each other in a technical environment

(Badke-Schaub et al., 2012). Central is the conviction that problems are primarily caused by

human error: Humans might take decisions that lead to wrong developments or even accidents

due to wrong perception, misinterpretation or erroneous assessment of risks, limitations

within communication and errors in the decision-making processes (Giesa & Timpe, 2000).

Human errors include ‘operator error, organisation error, maintenance error, design error,

installation error and assembly error’ (Aven & Guedes Soares, 1998). Hackman (1993: 49)

adds that, ‘It is the team, not the aircraft or the individual pilot, that is at the root of most

accidents and incidents.’ Both human error and the importance of effective teamwork are

critical, and a failure in a team in organisations such as aviation, nuclear power, offshore oil

production or health care has the potential to be fatal (Håvold et al., 2015).

Lessons learned point to the need for a culture of social communication and decision-making,

openness and transparency, readiness for curiosity and the acceptance of people as they are

with all their mistakes. Recommendations involve how to avoid sources of error, which safety

aspects have to be taken into account (Dekker, 2015), how to improve social processes or

which trainings should be applied to new employees (Schaub, 2012). Some of the findings

useful for project management may include (Weiss, 2017): (1) Situation awareness, decision-

making and creating a common mental map; (2) Questioning one’s own view; (3) Creating a

non-blaming culture; (4) Creating a culture of trust in the team; (5) Creating a culture that

makes individual responsibility possible, but at the same time avoiding to blame individuals

for mistakes; (6) Display of the existing diversity.

4.2 High-Reliability Projects and Project Management Adhocracy

All these approaches have focused primarily on organisations whose main preoccupation is

‘continuously to operate complex, demanding technologies without major failures while

maintaining the capacity for meeting intermittent periods of very high, peak production, for

example, peak traffic, power demand loads or maximum air operations’ (La Porte, 1996: 61).

Saunders, Gale and Sherry (2016) analysed project management responses to project

uncertainty taken from high-reliability practices. In an empirical study based on 47 vignettes

of safety-critical civil nuclear and aerospace projects, they found out that project manager

adopted high-reliability practices for managing uncertainty in projects (Saunders et al., 2016):

 They worked with assumptions and drew on all expertise available both within and

beyond the project organisation to try to reduce uncertainties;

 They took visible actions that rewarded openness and knowledge sharing and had

received decision-making powers delegated from top management;

 They were allowed to flexible and staged conformance to project processes and to

encourage the team to negotiate their way to a situation-specific action plan.

 They emphasized the need to understand what they did not know by actively asking

simple questions and having regular meetings and status reports to help uncover the status

of specific issues.

 They adopted a ‘risk mind-set’ that enabled them to deal with ambiguity, to balance the

tension between being in complete possession of all information required and the need to

drive project progress.

However, some of the practices were fragile, with structural factors, such as complex

ownership structures or short-term incentive mechanisms, threatening high-reliability project

organising.

Even though high-reliability organising has originally focused on safety-critical environments

only and on absolute reliability, we believe that important lessons can be drawn for managing

complex projects, with regard to an open and no-blame learning culture, decentralised

decision-making processes and mindfulness. When drafting ‘high reliability project

organising’, Saunders (2015) has generated the following hypotheses:

 High-reliability projects have clear high-level decision-making rules to enable the project

team to make progress even in uncertain situations. A strong sense of mission needs to be

developed and articulated in the team.

 High-reliability projects have a strong organisational culture built on openness,

communities of practice, team learning from mistakes, knowledge sharing,

multidisciplinary problem solving and trust.

 In high-reliability projects, the team is encouraged to discuss and negotiate its way to a

plan of action matching the specific project situation; a flexible and staged conformance

to project processes is possible.

 Complacency is a threat to project success: the project team is resilient and reluctant to

simplify interpretations of project situations. Reflection, robust debate and even elements

of anarchy are fostered in high-reliability projects.

 With an ‘ability to prosper in the paradoxes’, high-reliability project organising is

encouraging redundancy and conceptual slack in terms of processing multiple

interpretations of events.

Recent methodologies of work organisation such as agile and lean project management,

design thinking, holacracy or the open-source movement are proposing other ways of

coordination to deal with uncertainty as a central feature for projects. What they all have in

common, is summarized by Bernstein, Bunch, Canner, and Lee (2016, para. 17): ‘Members

share accountability for the work, authority over how goals are met, discretion over resource

use, and ownership of information and knowledge related to the work.’

As all these forms are short-cyclical and inspire participative and responsive structures

(Bernstein et al., 2016), customer or stakeholder feedback being received quickly. This allows

for a more flexible approach towards managing uncertainty. A no-blame culture and high

transparency of task fulfilment ensure permanent and joint learning.

A good example of this new thinking is the megaproject to build a 20-km long tunnel under

the area north of Sydney Harbour, stated as having been broadly successful, managed to

create ‘a project culture that was explicitly designed and crafted to encourage shared

behaviours, decision-making, and values.’ (Pitsis et al., 2003: 576). This project culture

included rather agile (or adhocratic) values by projecting the desired ends and visualizing the

means to achieve the projected future, both being subject to constant revision. A formal

statement of collaborative values was shared with the team focusing on producing solutions

‘best for project’ and having a ‘no blame’ culture, combined with monetarized KPIs and a

risk/reward scheme, that fostered project team collaboration.

5 Decision-making premises in (mega)projects

There are many ways to define organisations. We would like to introduce Luhmann’s systems

theory approach (1984, 2000), especially his ‘structures of expectation’, to explain dealing

with uncertainty from an organisational perspective.

The complexity of the world cannot be represented within the organisation, not even the

complexity of life in organisations themselves. Thus, the organisation is forced to restrict the

relations, to select. Structures of expectations accomplish that. They condense ‘the open

complexity of possibilities to connect each element with each other in a tight pattern of

‘valid’, common, foreseeable, repeatable, or however preferred relations’ (Luhmann, 1984:

74). Selectively re-used cascades of decisions build up structures of expectations.

Organisations use them as decision-making premises of what to observe, how to decide and

what to do.

Social structures are always structures of expectation, thus they are more than the

arrangement of positions depicted mostly in organisation charts; generally, all expectations

and expectations of expectations, which regulate the decision process – rules, regulations,

standards, habits, insights, experiences, bindings, the frames and models of mind and or

principles of conduct.

One first structuring element is plans. Planning is the attempt to fix the future characteristics

of the system, to formulate expectations of (positive) future state(s) of the organisation and

the environment, together with a specified way to achieve this state. Purposes and plans must

be translated into the language of the organisation. This could be done directly by decisions

based on plans, which is a very unstable and cumbersome procedure. Plans can gain speed

and stability effects, when they condense into the following (Luhmann, 1988, 2000)

Structures of expectations:

Decision programs (rules, regulations, procedures, standards) try to individually predefine

individual decisions. Two forms: Conditional programs, appearing in the form of (clear)

instructions, application of standard procedures and programs, check lists, and so on,

resemble the efficiency of a machine. Target programming like project objective definitions,

control by mission, vision and strategic context, definitions of soft targets, empowerment, and

so on, seems to be better suited to react quickly to the unexpected, and it is more open to

innovation.

Communication paths restricts how information circulates and which information has binding

effects in the system. All researchers agree that more and open, especially face-to-face

communication is crucial to address the unexpected (Weick & Sutcliffe 2007). However, to

avoid information overflow and allow for quick reaction, the communication must be

restricted at the same time (Sutcliffe, & Vogus, 2003). It is necessary to communicate at the

same time more intensely, but also more specifically and selectively (Barton & Sutcliffe,

2010).

Hierarchies distribute decision-making power. Power of the individuals or positions are

regulated and on the other hand, cooperation and information flows are defined. Most authors

make the case for flat hierarchies and liquid, at least adjustable responsibilities. Furthermore,

these concepts react to the prevalence of informal structures: Not acting against informality,

but incorporating them can be understood as intelligent handling of formalized structures.

Typically, rules and hierarchies have a relieving effect for decision makers, both

subordinations and supervisors: Individuals must not care about everything that is going on in

the organisation, but they need to take into account those facts only, that are within their

formal (or informal) discretion (Baecker, 1999).

In organisations, persons are a bundle of expectations, e.g., you usually know what to expect

from a supervisor or an expert with a given organisation. We assume to be able to predict the

behaviour of a person based on these assumptions. Persons can act in a very timely manner. In

this sense, a person is the flexible counterpart to planning. The person as an organisational

member is normally connected to a position in an organisation, and hence in possession of

defined responsibilities, authorized to decide and enact on programs, and controlling a distinct

node in the communication network. Sometimes, especially in crisis situations, persons are

chosen to convey confidence and trust, and to promote certain programs or ideas. Relying on

people can also have downsides: We all have witnessed disillusionment when observing

‘competent’ people confronted with surprise. The advantage of flexible reaction is lost, if

people set absolute existing knowledge, beliefs, expectations, skills and so forth and are even

not aware of their ignorance. This threat is especially prominent for experts, but also top

management.

(Organisational) Culture defines what is understood as self-evident and taken-for-granted

matter of course that everyone who is familiar with the organisation understands and accepts.

The importance of organisational culture is based on the observation that all other structural

elements are interpreted (framed) against the background of (more or less) jointly shared

considerations how the world and its events are to be understood. Reality, according to the

organisational psychologist Karl Weick (1995), is not perceived, but enacted.

Learning from the incidents in the confrontation with the unexpected requires an

organisational and team culture that allows talking about mistakes and failures instead of

concealing them, a culture that accepts mistakes. However, norms, values, beliefs and, above

all, organisational culture are normally resistant to learning. This makes it difficult to initiate

changes and enable learning from failure and successes. Absolutely vital for this cultural

change are structural changes in human resource systems, especially in reward and career

systems.

6 Successfully managing the unexpected in megaprojects

Saunders, Gale and Sherry (2016) concluded that complex projects, similar to HROs, where

one mistake can lead to major loss, need clear decision-making rules. Within such high-level

decision making rules there should still be enough flexibility to act according to the demands

of the situation. This has to be accompanied by a strong organisational culture based on an

open error culture and multidisciplinary problem-solving, and by a team which has developed

resilience in crises situations and is trained in dealing with a sudden rise in urgency and speed.

We expand on these ideas addressing the relevant roles in projects, namely project managers,

project teams and the organisation (top management) and identify their options for action

when being confronted with the unexpected along the timeline:

(1) Anticipation: the phase before an unexpected event occurs,

(2) Coping: the phase during the handling of the unexpected and

(3) Adoption: the phase after having managed the unexpected.

In the phase of anticipation, individuals, the team and the organisation focus on observation,

identification and preparation for the unexpected. This is accompanied by the construction

and application of a wide range of observation tools, including weak signals, by the

willingness to be surprised and by the reluctance to explain everything with well-known

patterns – a mode that is particularly difficult for experts (Barton & Sutcliffe, 2009).

Focussing on possible misconceptions, on the questioning of known routines and on errors in

general, various perspectives are deliberately included. Barton, Sutcliffe, Vogus, and DeWitt

(2015) talk about anomalizing, taking proactive steps to become attentive to deviations, to

understand them better and more fully, and to be less attached to history. Of importance is the

awareness of the contingency: Any opposing decision or action could be equally acceptable in

the first place.

The phase of coping starts with accepting the unexpected. While not every unexpected event

triggers a crisis, the potentially threatening unexpected that requires a short-term response

breaks up the organisation's normal operations. Especially for stable organisations and strong

organisational cultures accepting a serious problem or a potential crisis is difficult. Denying

and repressing the need for change are common mechanisms. The core of the second part of

this phase, the search for and implementation of solutions is a combination of sensemaking

and targeted action (Barton & Sutcliffe, 2017).

The focus of the final phase, adaptation, is reflection, evaluation and learning from the event.

Christianson, Farkas, Sutcliffe, and Weick (2009) differentiate between learning for rare

events as result-oriented consideration (lessons learned) and learning through rare events

while dealing with the unexpected (experiencing). The second mode addresses the individual's

and organisation's ability to permanently anchor learning experiences in new organisational

structures and structures of mind as well as in actions.

The three phases of organisational stress are interdependent and closely interlinked (Barton &

Sutcliffe, 2009); in reality, neither the linear sequence nor clear demarcations of the phases

are given. Nevertheless, it is helpful to consider the phase transitions in order to be successful.

Obviously, different capabilities and mindsets are necessary, both of the organisation and the

individuals involved (Duchek, 2014). Initially, attention and empathy for the little things are

needed, while later clear and decisive actions and interactions should take place (Barton et al.,

2015). Responsibilities also shift across the phases: although situation awareness is a task for

the entire organisation, intertwined data often requires a central hub with specialized

observation tools and clear guidelines, thus centralized intelligence. However, as soon as an

unexpected event occurs, decision-making powers within the organisation should be able to

move to those individuals who are actually on-site and competent in the specific situation.

The subsequent learning process should again include the entire organisation.

6.1 Project manager’s perspective: Empowering others

Before the unexpected occurs, the project manager should become aware of the inherent

complexity and uncertainty of megaprojects. Planners can fight this complexity and

uncertainty, ignore it or try to use it. When trying to use it, seeing complexity and uncertainty

as irreducible to a great extent, project managers should follow ‘a science of navigation in

which there is a balance between opening and closing a process and the content, between the

certain and the uncertain, the simple and the complex’ (Giezen, 2013).

In the same vein, Bertolini and Salet (2007) recommend to make use of ‘strategic

incrementalism’ when dealing with the uncertainty and complexity. Megaproject managers

should be ‘keeping in mind and frequently testing and actualizing the strategic mission of the

project on the one hand and being adaptive, flexible and inventive in muddling through all

small steps and daily worries on the other hand’ (Bertolini & Salet 2007: 6). What makes that

even more difficult, is the variety of different stakeholders, with their different values,

interests and power positions, which makes megaproject management a variable subject

instead of an ‘independent variable where all cognitive framing and organized action may

sprout off in a sort of shared mission’.

While encouraging trust and openness within the team, the project manager should strive to be

undisputedly accepted as team leader – and not just as (project) manager (Kotter, 1990).

Charles Pellerin, former NASA astrophysicist, developed a team performance analysis tool

named ‘4-D System’ which targets technical project teams and overcomes their assumed

reluctance to social team building processes. He did so based on a far-reaching incident:

When he was the responsible person for the Hubble Space Telescope project, he and his team

oversaw that Hubble was launched with a flawed mirror. An installed Failure Review Board

identified a leadership failure by unnoticing social shortfalls in the project. Pellerin’s model is

based on the power of social context to drive technical team behaviour and ability to perform.

Pellerin simplified leadership into four dimensions which have to be addressed to be an

effective leader (Pellerin, 2009):

 Cultivating: Leaders appreciate and care for others and want a better world.

 Including: Leaders include others and bring integrity to relationships and build teams.

 Visioning: Leaders vision the impossible while acknowledging difficult realities, and

constantly create, needing to be best.

 Directing: Leaders take organised action and direct others toward results.

Project managers should create a constructive team atmosphere in the beginning and empower

the team to define its way to reach the project goals by itself. According to the learnings from

human factors research, project managers are responsible for creating a non-blaming culture

and a culture of trust, depicting the existing diversity and reinforcing the awareness that every

single person is of importance.

Ex ante team building efforts and face-to-face interactions in crisis situations help generate

intersubjective meaning and develop a common situational model for action. Ex ante team

building is necessary, as there is simply no time left to create a common sense and a collective

situation model of what happens during crisis situations. Weick (1993) gives us an impressive

example of the importance of sensemaking in his famous interpretation of the Mann Gulch

disaster. Structure, he concludes, is bound to fail when people don’t understand what is going

on in their environment and even more so, when they cannot make sense of the other one's

actions. This process is necessarily in need of constant interaction with others. People in

organisations spend much time on negotiating what is considered a decent representation of

what's going on and what reality ‘really’ is (Weick, 1995).

Since communication is crucial, it is important to have a clear picture of one’s (virtual)

communication network in advance. The form of communication should be clarified, i.e.

when to use one-way or two-way communication, when and how to use feed-back loops, the

preferred communication channel for which (kind of) information and whom to inform on

which aspects, to name but a few. It is equally important to have clear and comprehensive

language at hand, i.e. common technical terms and concepts, mutual understanding of the

semantic field – which might be a huge challenge in international projects.

During the management of the unexpected, project managers need to ‘exercise the art of

managing the unexpected parallel to executing the plan’ (Söderholm, 2008: 81). This is not to

say that it is automatically the project manager’s responsibility to take all decisions. Rather,

the project manager should quickly delegate the decision power to the one team member that

can contribute the most to solving the problem by knowing the most about the unexpected

situation. And it’s the project manager’s task to encourage fast solutions, as fast responses are

worth more than correct but too late actions.

Söderholm (2008) showed that project managers, while initiating extensive meetings to keep

up team commitment and urgency, regularly detach from operative project activities. In the

same vein, practices in resilient organisations such as the search for gaps, distancing (both

physical and psychological) from the events, shifting of priorities and time-outs, are central to

coordination and replace – at least in part – traditional coordination means (Darkow & Geiger,

2017).

A second very important task of project managers is to stabilize the emotional situation.

Especially in crisis, leaders should convey confidence and trust, and promote certain

programs or ideas, allowing bypassing the difficulty of casting disputed values into binding

targets formally. Barton and Sutcliffe (2017), based on their study of expedition racing teams,

emphasize the need for two simultaneous and mutually dependent regulatory processes: Drift

management as maintenance of a team's responsiveness to external and physical requirements

and meaning management as stabilizing the emotional situation in the team and sensemaking

of the (interacting) actions. The maintenance of interaction and engagement is important in

order to facilitate the mutual reinforcement of drift and meaning management, while isolation

and the feeling of vulnerability have a negative effect on this connection. Resilience is then

not a resource but a constant process of relating to the environment through a process of

understanding, responding to and absorbing variations.

All researchers agree that more and open communication is crucial to address the unexpected;

especially face-to-face interactions seem to be important to generate intersubjective meaning

(Weick & Sutcliffe, 2007). However, the tighter the time horizon, the more restricted

communication must be to avoid information overflow and allow for quick reaction (Sutcliffe

& Vogus, 2003). To gain valuable information in a timely manner and to secure the co-

ordinated action in response to the unexpected, it appears necessary to communicate at the

same time more intensely, but also more specifically and selectively (Barton & Sutcliffe,

2010).

Because top management support is necessary, it is important for the project manager to

communicate with executives in an efficient and direct way, with oral reporting rather than

lengthy reports in written form.

After handling the unexpected, the project manager needs to make sure that learning processes

are brought into action so that the team can better deal with similar situations in the future.

Too often, lessons learned are just seen as formal und unloved duty. It is up to the project

managers to instil a sense of utter utility of lessons learned and documenting mistakes.

6.2 Project team perspective: Shared situation awareness

Before the unexpected occurs, team building efforts should become of utmost importance,

with the goal to achieve shared points of reference for decisions and to become mindful and

open towards uncertainty. There is a need to create a team culture that is sensible for the

unexpected, closely connected to a no-blame or just-action attitude, a high transparency of

task fulfilment and permanent and joint learning, especially with regard to developing

resilience.

To assess team and individual behaviour, Pellerin (2009) identified eight behaviours which fit

into the 4-D model presented before. With his system, Pellerin aligns team and individual

measurements with development processes towards desired team cultures. What we can learn

from Pellerin’s research, is that team members need to feel valued and included, need to have

a realistic and hopeful future and to know what is expected of them and have the resources to

succeed.

Shared situation awareness allows the team to understand the initial situation in a collective

image, to make appropriate conjectures and take the actions the new situation requires

(Endsley, 2003, Schaub, 2012). Shared situation awareness requires three things: appropriate

visual preparations which are understood by all parties concerned; the willingness to raise and

to allow critical questions on the team level, and an organisational culture that calls for

contradictory observations and views and welcomes the opinions of unconventional thinkers.

Within megaprojects, creating shared situation awareness is probably one of the severest

challenges, given the multiplicity of layers, team members coming from diverse backgrounds

and stakeholder with conflicting interests. Somewhat contradictory, a better understanding of

the unexpected can only be achieved by a diverse team with different views and approaches –

and at the same time grounded on a shared view about aims and actions.

Merkus et al. (2017) conducted a case study research on ways in which members of

interorganisational teams collectively make sense of unexpected events and how they decide

upon engaging in action. They identified two different kinds of ambiguity in inter-

organisational teams, being characteristic for megaprojects: intrinsic ambiguity, when urgent

unexpected situations arise, which leads to shared collective sensemaking, and constructed

ambiguity, which is made up by the team, when collective sense becomes negotiated.

Therefore, in urgent situations, it is important to have a common interpretation of the grade of

urgency in order to share the same awareness for the intrinsic ambiguity of the situation to

cope with.

On an individual level, mindfulness is highly welcome, i.e., paying attention to internal and

external present-moment events, provides a basis for experiencing minor deviations from the

normal course of action, that could be – in the long run – proven harmful (Sutcliffe et al.,

2016).

The advantage of flexible reaction during the handling of the unexpected is lost, if persons set

existing knowledge, beliefs, expectations, and skills absolute. If perception is a constructive

process, we then should be critical and question, why certain information is communicated

redundantly and intensively, while another one is completely overlooked. Especially in

situations of operational hustle and bustle, relevant information is ignored, action is more

oriented towards re-acting as quickly as possible, rather than approaching issues actively and

plan-based. The team therefore needs a mental model that helps to portray reality fast and

appropriate. For once, the ‘wisdom of doubt’ protects persons to apply existing knowledge

without reflection to new situations (Weick & Sutcliffe, 2001).

In the context of uncertainty and complexity, professional toolsets should be expanded to

include professional improvisation, understood as an unplanned, occasional regulation. While

in good times the possible room to manouver should be agreed upon between different

stakeholders, it should be clear in urgent situations where and to what extent improvisation is

permissible and whether there is trust in the other person. ‘When we cannot predict cause and

effect any longer, we need to experiment’ (Borgert 2015: 70, English translation). Good

improvisation lives from creativity, experiences, but also from good preparation, and mutual

(blind) understanding and confidence – pointing at the importance of trust, courage in

decision-making and also a culture of compensation of losses. It is essential to make the

decisions comprehensible for all team members in order to ensure understanding and

commitment.

Not only project managers should apply interpersonal skills to manage stakeholders’

expectations (building trust, resolving conflicts, active listening, and overcoming resistance to

change) (Littau et. al, 2015), but also the project team needs to engage better with external

stakeholders, especially the affected public, environmental groups and regulators (Brookes et

al., 2015). However, in urgent unexpected situations, communication paths to external

stakeholders need to be defined well in advance, so that quick team reactions are possible.

What is inherent in megaprojects is their dilemma between control and commitment (van

Marrewijk, 2005). While the project team might have no real power to act, the sponsor,

mostly a public or governmental institution, might use its control power for his own sake and

thereby provoke low project team commitment.

Through mutual feedback, project teams can prepare themselves after having managed the

unexpected to avoid similar mistakes in the future. We need a ‘culture of errors’ that allows

talking about errors, failures and near misses rather than displacing them, a culture in which

mistakes are accepted.

6.3 Organisational perspective: Accepting ‘illegality’

To be able to decide fast, it is important to have a clear picture of one’s communication

network before the unexpected occurs that could be activated in crisis situations. It's equally

important to know both power and expertise within the project and its relevant environment.

Many authors ask for flat hierarchies and liquid, at least adjustable responsibilities.

Approaches like Agility (Beck et al., 2001) or concepts like Holacracy (Robertson, 2015)

promise to be better suited for a complex and fast-changing world with a bunch of daily

surprises just because they reduce traditional hierarchies, duties and fixed responsibilities.

For managing unexpected situations, organisations should allow for flexible teams along

informal knowledge and adaptable responsibilities. Decision power should migrate to the

persons with the most expertise of the specific uncertain situation. This asks for a new

hierarchical understanding where informal networks are given the competence to act. And

shared situation awareness requires the willingness to raise and to allow critical questions,

even invite team members to take the position of a ‘devil's advocate’; and an organisational

culture that calls for contradictory observations and views and welcomes the opinions of

unconventional thinkers.

In a stressful situation, we cannot always easily draw a clear line between acceptable

improvisation and illegal action. Thus, recommending professional improvising, we have to

go one step further and tolerate a certain degree of illegality, if this illegality is useful

(Neuberger, 1995). In fact we can see that ‘useful illegality’ or ‘creative disobedience’ is

widely accepted in business life – and embedded in still clear (formal and informal)

structures.

A closer look at flexible or ‘flat’ concepts shows that they do not abolish hierarchy in the

original meaning, i.e.: defined area of accountability, functional responsibility and

communication flow patterns (Luhmann, 2000). Rather they re-define them away from stable

and formal norms to learning and adaptable structures. Even with flat hierarchies and open

communication, coordination and common orientations are still necessary. Just because the

unexpected can disrupt structures, it is even more important to have a clear basis to act on.

One viable way of modelling that approach comes from Stephanie Borgert (2015). What she

calls ‘Holistic management’ could help find the balance between structure and autonomy by:

(1) considering relationships, (2) simultaneously working on micro and macro level, (3)

varying the scaling of views and choosing the right detail, (4) changing one’s perspective and

taking other positions, (4) creating full transparency for all stakeholders, (5) enabling change.

To reach that, leaders need courage, curiosity, the willingness to learn, experimentiveness and

enthusiasm.

Reducing the impact of more formal decision-making premises must be accompanied by a

growing importance of persons (leaders, figure heads) and (organisational, team) culture.

These culture changes must be accompanied by a structural change in HRM systems, most

notably reward and career systems. Organisations and managers must concentrate on

rewarding team performance and organisational reliability rather than pure individual

performance.

To reach out for high-reliability project organisations, single loop learning, i.e. correcting

individual error corrections, or double loop learning, i.e. development of new working

methods or optimize prevailing work routines will not suffice. Deutero-learning means

questioning previous patterns, values and strategies (Argyris & Schön, 1978). But norms,

values, beliefs and worldviews are unwilling to learn. Initiating change is hard and constant

work, and an ongoing process to be kept alive all along and deliberately.

7 Conclusion

Decision-making in megaprojects, with their inherent complexity and uncertainty, and their

dilemma between control and commitment, is a complex endeavour, not only because of the

various stakeholders involved. To make good decisions in unexpected situations of

megaprojects, megaproject managers and the organisation have to better understand the

human factor, make use of flexible and resilient organisational structures and acknowledge

the importance of mindfulness and organisational culture. We showed that megaprojects have

to enact (at least) three equilibria to better face the unexpected: Communication vs. time

restriction; hierarchy vs. autonomy; and culture and vision vs. structure.

Intense and fast communication is crucial. To avoid messy communication and information

overload, we need clear communication structures, a shared language and responsive

managers when faced with high time-pressure. Thus communication should be selective,

specific and intense but in an efficient and oral manner according to a predefined

communication form for each type of information.

The same holds true for decision-making structures: Intelligently handling formalised

structures does not include abolishing them altogether, but redefining hierchary. We need new

chains of responsibilities, and a few, clear rules which empower the teams to act within them

also in the case of unexpected events. This allows the project team to negotiate its way to

actions adequate for handling the uncertain situation. And if necessary, a certain form of

‘illegality’ and breaking of rules should be accepted by the organisation to find new solutions.

Because the unexpected can disrupt structures, it is even more important to have a clear basis

to act on: Vision, aims and culture serve as a guide in the organisation members’ minds, when

the organisations architecture gets fluid. Planning, ex ante team building efforts and face-to-

face interactions in crisis situations help generate intersubjective meaning and develop a

common situational model for action (sensemaking), combined with the ‘wisdom of doubt’.

To manage the unexpected demands the combination of apparently opposites: We ask both for

a culture of clear decision-making structures and responsibilities and a high degree of

flexibility and open communication. Combining centralisation with decentralisation is one of

the cornerstones to mindful organising. This cannot be solved in an either-or-manner, but

deserves a unique equilibrium of structure and autonomy for each project.

8 Limitations

With this conceptual paper based on the selected publications from various fields, our

intention was to advance the theoretical discourse on megaproject management. But empirical

research is needed to analyse megaprojects’ processes of organising and decision-making in

the context of uncertainty. Future research may stress the effects of a megaproject’s complex

organisational structure, with many different layers and autonomous entities involved in

building megaprojects, on managing the unexpected. The organisation’s need to fully

understand how to make best use of Special Purpose Entities in their megaproject governance,

and on partnering processes with external stakeholders, such as subcontractors, could be

analysed further in this regard. Additionally, the long durance of megaprojects with changing

central participants, shifting contextual conditions and dilution of initial project aims, must be

tackled if we are to gain a fuller understanding of successfully managing the unexpected in

megaprojects.

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Managing the Unexpected in Complex Unique Projects: Are Humans the Key to Success or the Main Source of Error?

Chapter

Dec 2018

Grounded in convictions about humans to be either valuable resources or main sources of errors, recommendations to handle the unexpected favour either calculative (planning/controlling) or ecological rationality (heuristics/simple rules). Other authors argue that the best way depends on objective conditions of task and environment, with standard operating procedures to be better for routine projects while for non-standard, complex, non-repetitive projects flexibility and improvisation is said to be more applicable. According to social construction theory, complexity and urgency are no given facts but interpreted by the observer (sense making). We argue that the patterns of action to manage the unexpected in complex unique projects are depending both on basic assumptions on the "nature" of human decision making and activity and the framing of internal and external conditions of the respective project. A comparative case study of municipal organisations confronted with the unexpected in their routine work (fire brigade, permanent technical service, emergency medical services) shows different patterns of actions to manage the unexpected successfully, all being result of a long-term, path dependent adaption to available resource and environmental demands, passed on by professional identity. Insights from these organisations are transferred to address the unexpected in complex unique projects through four steps of assessment on project and organisation, environment and acting personnel. Ideal types for managing the unexpected in projects are built based on resilience research and Human Factors research. While 173 humans are possible sources of error, they are at the same time the most valuable resource to manage the unexpected successfully.

Chapters from the Academic Aspect of Project Management-Research and Teaching Methodologies Volume II

Book

Dec 2018

INTRODUCTION – FROM THE EDITORS: This book contains the recent research papers, educational methods and practical experiences of PMUni members. The aim of this book is twofold. The first is sharing the recent founding within the organizations, the second is to serve as a base for practitioners to improve their current level of project management. The editors and authors do believe this book could help them to increase their project management effectiveness and efficiency. All of the authors think the importance of this book is derived from the increased complexity of the world. I.e. the complexity of projects, the surrounding internal and external environment could cause complications even for experienced project managers without comprehensive researches or guidelines. Thus, the papers found in this publication cover topics which belong to managing complex projects, organizational features and environmental characteristics. In this way, this book can provide help for readers seeking advice in any element of project management. The editors and the lecturers of the book would like to express their gratitude to the authors of the chapters acknowledging their huge effort to write their papers. However, the editors and the lector do not hold the responsibility of the ethical issues committed by the authors, but of course, if any of it come to the editor’s notice, they will act according to the seriousness of the issue. The Editors

Improvisation durch objektivierendes und subjektivierendes Handeln: Muster zur Innovation sozialer Systeme

Chapter

Full-text available

Jan 2017

Fritz Böhle

Um in komplexen und dynamischen Umwelten agieren und diese aktiv gestalten zu können, sind formalisierte Arbeitsabläufe und geronnene Strukturen oft nicht hilfreich. Wir benötigen ein performatives, fließendes Verständnis von Organisation und die Beherrschung agiler Prozesse: Das oft versteckte Erfahrungswissen (tacit knowing) wird zur Grundlage der heute benötigten »Kunst« der Improvisation. Die Beiträge zeigen: Implizites und intuitives, vorausschauendes Wissen und experimentierend-spielerisches Handeln sind die Grundlage für Innovation und agiles Lernen in Organisationen und sozialen Systemen. In der Analyse von »organizational patterns« und »musikalischem Denken« entsteht ein neues Verständnis flexibler und dynamischer Organisationen.

A Storm is Coming? Collective Sensemaking and Ambiguity in an Inter-organizational Team Managing Railway System Disruptions

Article

Full-text available

Aug 2016

This paper studies the ways in which members of inter-organizational teams collectively make sense of unexpected events and how they decide upon engaging in action. Frequently, ambiguity dominates such change processes aimed to create common understanding. Using the notion of the duality of intrinsic and constructed ambiguity, a detailed analysis of the collective sensemaking efforts of an inter-organizational team of railway coordinators in the Operational Control Center Rail was conducted. Building on team meetings observations during the days preceding a large and potentially disruptive winter storm in December 2013, the case study describes the process of collectively making sense of the disruptiveness of the storm. The findings show that contextual and temporal factors determine whether collective sensemaking unfolds as either a shared or a negotiated process.

Managing Project Uncertainty

Book

Mar 2017

David Cleden

Safety Differently: Human Factors for a New Era, Second Edition

Book

Jun 2014

Sidney Dekker

Symbols, Sublimes, Solutions, and Problems: A Garbage Can Model of Megaprojects

Article

Dec 2017
Proj Manag J

In this article, we deploy Cohen, March, and Olsen's (1972) garbage can model of decision making to produce a different lens on the performance of megaprojects. Using a sample of firms involved in hydrocarbon megaprojects, we show that the problems given the most public attention by the industry are different from those responsible for budget overruns. Furthermore, the attribution of reasons for exceeding project budget differs between project owners and supply chain firms. This is consistent with garbage can model predictions around problem latency when the multifaceted symbolism of these projects drives divergent prioritization of problems in project execution.

Institutionalized organizations: Formal structure as myth and ceremony

Article

Jan 1983

Nichtwissen als vernachlässigte Variable im Verhältnis von Organisation und Umwelt

Chapter

Jan 2011

Ignorance in organizations is currently often excluded and ignored, while the negative consequences of ignorance are recorded as collateral damage of decisions. This paper will discuss the thesis that ignorance is linked structurally to knowledge, and is therefore always present and has to be included as an independent factor in environmental monitoring and subsequent decisions. This relationship means that the integration of ignorance and an adequate handling of it become important variables of the monitoring of environment and organizational decision-making. Consequently, great importance is attached to the ability to make decisions under ignorance. Due to structural conditions, this cannot primarily mean the complete clearance of ignorance, but mainly concerns absorbing the uncertainty and insecurity which result from ignorance and constituting and teaching security and confidence. Those who possess this ability can legitimize decisions despite ignorance. For organizations, this skill is becoming, in consequence of the rapid growth of ignorance, a key competence for the sustainment of their decision-making ability and thus for their survival.

Monte Carlo Project Risk Analysis

Chapter

Jan 2017

Monte Carlo simulations of project schedules have become one of the foundations of quantitative projectrisk analysis. Monte Carlo method helps to determine the chance that project will be completed on timeand on budget, expected project cost and finish time given risks and uncertainties, as well as identifycritical risks and crucial tasks. There are a number of ways how Monte Carlo schedule risk analysis canbe conducted. "Traditional" Monte Carlo schedule analysis is performed based on statistical distributionsof task duration, cost and other input parameters. Event-based quantitative risk analysis incorporatesrisk events, which can affect project schedules. The chapter discusses a number of important conceptsrelated to Monte Carlo simulations: statistical distribution, sampling process, convergence monitoring,sensitivity analysis, probabilistic and conditional branching and others.

Monte Carlo Simulation for Integrated Cost-Schedule Risk Analysis:

Chapter

Jan 2017

David Todd Hulett

Evidence shows that project costs and schedules often overrun their initial plans. The purpose of thischapter is to illustrate the most recent tools and methodologies available today in the application ofMonte Carlo simulation techniques to quantify possible overruns in cost and schedule and to understandthe sources of those overruns to facilitate risk mitigation actions. Notable methods described includethe Risk Driver method, collecting risk data using individual confidential interviews, and use of iterativerisk prioritization that facilitates risk focused risk mitigation. Emphasis is placed on the quality ofthe project schedule and on the quality of the risk data used. The use of prioritization of pre-mitigatedfor risk mitigation strategies shows how the methodology can be used as a dynamic tool of successfulproject management.

Complexity Theory and System Dynamics for Project Risk Management

Chapter

Jan 2017

Robert J. Chapman

As a consequence of the consensus that projects are growing in complexity from ever ambitious goalsthere is a perpetual search for methods aimed at pinpointing and describing the source of complexity withthe objective of subsequently reducing uncertainty, managing risk and improving project performance.An area of study that has engaged enquiring minds for over fifty years but has not yet been accepted intomainstream project management is the study and application of systems thinking and system dynamics.The purpose of this chapter is to promulgate the view that the mapping of projects as systems should bere-examined as a means of articulating and responding to complexity. The chapter examines generalsystems theory, systems thinking and systems dynamics with examples of causal loop diagrams as anaid to describe and respond to risk exposure. It includes simple causal loop diagrams as a means ofillustrating how risks may be identified and addressed. The emphasis is on seeing the 'big picture' toavoid gaps and omissions in the management of risk and uncertainty.

New ways of managing the unexpected in megaprojects

Abstract

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