Coming to grips with political risks

There are happy and sad cases of projects that take off and those that would never see the light of day. You know the successful cases: their inauguration rites are flashed on television and find themselves on choice pages of newspapers.

And, soon enough, these projects would begin doing the business they know best – churn out products or provide public services.

Projects that fail. It is not so with projects that failed. They also hit the headlines alright, but these are photos of protesters brandishing placards in a barricade, news on legislators summoning project officials in a congressional hearing and, worse, a banner story of court of law or a regulatory agency ordering the project suspended!

Meanwhile, all forecasts of revenue go hay wire, and shareholders are shocked by the impunity by which government executives, proving the Shakespearean lament on the “insolence of office,” abuse their discretion.

Project proponents, particularly the multinational partners, usually have two choices: one, pack their bags and try friendlier host countries or, two, seek redress from an international court where justice, alas, also grinds so slowly.

The third way. There is a third alternative. They should wise up to the situation and deal with something they at first failed to do: use corrective measures, come to grips with political realities locally and nationally. More specifically, they must, this time, include “political risks” in their risk assessment.

Let’s face it. Engineers and construction experts may build an engineering marvel, harness the best project management methods, complete the project on schedule and within budget, go through scientifically tested simulation exercises, even perfect technical information dissemination among themselves – and yet the projects are delayed or mothballed because they are met with great resistance by people.

We are not lacking at all in books and journals on project management and risk assessment. But, a cursory reading of such books and investigation of other data bank shows a very limited appreciation of the crucial importance of reaching out to the community, listening to their hopes, identifying with their aspirations.

Political risks cannot be ignored. Often, project managers realize a little too late that beyond technical, financial, construction and other risks are the more unpredictable but very important “political risks.”

Helga Odden Resknes of Norway, in a speech before risk managers, cited the need to “establish binding contact between social sciences and natural sciences in order to create the best possible platform for risk communication.”

She meant that real communication must complement the comfort zones of engineers. “A project is never without risks,” said Daniela Van Well-Stam, co-author of “Project Risk Management,” adding that “performing risk analysis and management is actually necessary to maintain control over a project.”

Engineering precision and predictive techniques must be accompanied by honest-to-goodness stakeholder communications, and thus come to grips with community, political – even regulatory – risks.


Communities predisposed to support. Host communities – and even the usual suspects that make it difficult to put up a plant or establish a tollway – do not actually want to squander valuable time opposing worthwhile projects. After all, they would benefit more from a project that creates jobs, brings forth allied industries, and promises a much-delayed prosperity in the area.

Project managers who turn a “blind eye” to and dismiss political risks as a needless distraction to their perfect engineering marvel will get a surprise of their lives. But, if you heed these project risk analysts and spend time on “people issues,” the usual distraction of engineers, your efforts would be rewarded by the community folk themselves, choosing pro-existence or, at the very least, co-existence.

So, the next time you are called upon to do a project, or a friend tells you about his dream infrastructure, advise him to do some environmental scanning in the area, do some thinking out of the “engineering box” – and deal with people issues in the area. Who knows, when his project succeeds, he may reward you with a fat contract – or, at the very least, a steaming hot coffee! (dantemvelasco@yahoo.com)