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How to mitigate operational risk from project inception

operational risk mitigation

Infrastructure asset lifecycle – Operational risk mitigation from project inception

The lifecycle of a project consists of two phases, namely the development phase and the operational phase. The development phase entails planning, financing and execution of the project. Activities such as focusing on the business strategy, identifying business objectives, doing a market analysis and a feasibility analysis and conducting project due diligence are undertaken.

Once the feasibility of the project has been established, the objectives have been identified and the strategy has been laid out, procurement and financing of the project takes place. This entails structuring the finance of the project, estimating costs and implementing a governance structure. Appointing a contractor and all tender procurement also take place during this stage.

The development phase further includes the construction or the execution of the asset and involves all the elements of project managing including risk, information, human resources, environmental considerations, stakeholder management and quality management.

The operational phase involves commissioning and handover, operations and maintenance and decommissioning. The commissioning and handover includes evaluating the operational readiness of the project, handing the project over to the final owner, identifying lessons learnt and closing off the financial and contractual accounts.

The operational and maintenance stage and the decommissioning stage both entail monitoring and assurance processes, resolving any contract disputes, supply chain activities, cost reduction activities and finally, compiling any lessons learnt.

At every stage and phase of the project lifecycle, there are risks that need to be measured and mitigated. However, these risks change depending on which stage of the lifecycle the project is in and as indicated previously, such risks have historically only been evaluated in the operational phase. The long-term nature of infrastructure assets, together with the impact and often the irreversibility of these risks, poses a question as to the sustainable nature of this practice.

Download the full article . . . . How to mitigate operational risk from project inception

If you have any questions or require a more detailed discussion, contact Irina Unkovski (Capital Projects, Risk Advisory lead at Deloitte Risk Advisory) at +27 (0)11 209 6721 or


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David Graham

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