Project risk management and design flexibility: Analysing a case and conditions of complementarity

We explore how risk management and design flexibility interplay in major (infrastructure) projects, using the £4.2bn Terminal 5 project to expand London's Heathrow airport. By juxtaposing these two conceptual frames, we unearth the conditions under which they can be complements for managing the tension between efficiency and effectiveness central to these projects. Building design flexibility – through modular or safeguarded integral architectures – increases adaptability to accommodate evolving requirements which is necessary to attain effectiveness. Efficiency, in turn, demands risk management to deliver the project ‘on time, within budget’. We explain variation in the interplay between the two approaches, highlighting the moderating role of the developer's relationship with the customer. Strong co-operation, particularly in a stable environment, encourages investments in design flexibility. Risk management practices prevail when co-operation breaks down. Another insight is that co-location and continuity of key project staff are themselves inadequate conditions to sustain co-operation.

Research highlights▶ Unique inductive study grounded on a major infrastructure development project. ▶ Unearthing of complementarity between risk management and design flexibility. ▶ Unearthing of moderator's role of quality of developers’ relationship with customers. ▶ Resolving debate between reconciling efficiency and effectiveness in major projects. ▶ Uncovering role of intermediary units to liaise developers and customers.