Navigating Modern Volatility: The Renewed Importance of aHolistic PESTLE and All-Hazards Risk Framework forMega-Projects
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The new normal for mega-project development is now highly unpredictable due to the current environmental volatility. Volatility includes, inter alia, global pandemics; shock waves from inflation and interest rates; geopolitical conflicts; supply chain failures; cybersecurity breaches; and extreme weather events (climate). A common characteristic of these disruptions is their interconnectedness and ability to build on top of each other. However, traditional project risk management strategies based on discrete, internal to the project eventbased registers, and/or probability–impact assessments of individual risks and contingency reserve approaches remain focused on discrete project-specific risks. In addition, while both PESTLE analysis and all-hazards thinking have been available for decades as tools to help address project specific risks they have received relatively little attention until recently. Under the present circumstances of high levels of uncertainty, it seems likely that both will gain renewed attention and be used together. As such, the authors conducted an integrated review of the literature concerning project management, strategic management, and emergency management, and a documentary analysis of eight major international mega-projects that were documented prior to the emergence of COVID-19. They applied the PESTLE analysis matrix and an additional matrix for hazards outside of the PESTLE categories. Technological factors and legal issues were identified as the source of disruption for the majority of the mega-projects studied, with seven out of eight experiencing significant impacts resulting from an exogenous hazard. All eight mega-projects active since 2019 experienced at least one exogenous hazard, primarily caused by either COVID-19 or climate related disasters. Based upon this data, the study recommends that a hybridized model combining PESTLE and allhazards thinking be developed for use by sponsors of mega-projects and government agencies. The proposed model would allow for ongoing assessment of potential exogenous hazards through continuous external horizon scanning along with an evaluation of existing capabilities using a consequences-based approach across the entire lifecycle of a mega-project. Additionally, the model would include a composite measure of exposure (a combination of three measures) and an estimate of any gaps in capabilities that exist relative to the exposures faced by the mega-project. The recommended hybridized model should provide sponsors of mega-projects and government agencies a means to transition from reliance on risk controls toward developing proactive and resilient mega-project governance models in uncertain environments.
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