Now, oftentimes we look for project managers or project management entities that are good at decision-making. Why? Because we equate making good decisions to success. And that's a very interesting link that I'd like to explore a little bit further. What does success mean for an engineering and construction project, or in the engineering/construction context? Well, first of all, we need to understand that oftentimes an engineering solution or a construction project is responding to a need, and a need for a functionality. So if you're building a highway, you're more likely responding to a traffic issue or to a mobility issue. You're defining the need to move vehicles from one side to the other. If there is an existing road, maybe you're defining the need to move more vehicles than currently is moving from one side to the other. If you're looking at waste water treatment plants, you're defining needs as treating all the effluence of residential commercial waters before they hit the natural resources again, and defining a cleaning process in-between. So, there is a functionality element related to this. And success versus functionality is measured by, does the ultimate project, construction or engineering solution fit and serve the greater purpose of this need? On the other hand, that functionality gets matched with expectations. And engineering and construction projects typically have a number of stakeholders that get either affected or affect in some way these projects. [COUGH] Now, they inherently develop their own minds and expectations, whether or not the project is defined it for them. And those expectations, typically, are [COUGH] related to quality of the finished product. That is more relevant to project owners or end users of the asset that we're building. Those expectations are related to the good use of the monies that are spent in these projects. And the good use of the time that is spent. Success is measured against meeting those expectations, exceeding those expectations. Or failure, as a contrast to success, is measured by not reaching or not meeting the expectations that were said at each one of the stakeholders. Now, we've talked about risk and risk management in various contexts up until now, but what is the definition of risk? And this is important because it's a contrast of what project managers do on a day-to-day basis. Project managers deal with issues, and we’re talking about risks. So what are to two differences? Risks are uncertain events. And this is important, they're uncertain, so they may or may not happen. And if they occur, if they do happen at some point, they have an effect or an impact on one of the project objectives. And those objectives could be cost, schedule, reputation, functionality. It could be the elements that we define as success to the project. Now, the difference between issues and risks is that issues are happening, there's no uncertainty on them. It may be uncertain on the impact or the consequences to the project, but the issue is happening. Risks, on the other hand, may or may not happen, so we're talking about potential scenarios. Now, when we talk about the form of risk management process and what this supports, it supports various areas that we have talked about in other modules of this course book. And that relates to the management of the construction project. Budgeting, for example, if you don't include, or don't consider risks in your budget, chances are, your budget will be deficient. And you'll have to go back, when something goes wrong, for additional budgets. Same with schedules. If we're going to be talking specific of how risk allocation, risk assessment, can get into the planning stage of the schedule. But if the schedules are done in a way that does not consider risk, or the optimistic schedule, chances are that those schedules will be deficient. And, at some point, will have to be changed, and will have to be impacted. The challenge of waiting for that to happen is that then we're going to be missing the expectations that were built in the beginning. And going back to our definitions of success, the expectations are typically stored in every stakeholder's mind. And once those are changed, there is a bad perception about the project. And as much as it is in reality, it's about perception perception, as well. Risk management is relevant to the concept of quality in the perception of quality. So, if there's a risk that quality may be jeopardized, you want to act proactively to it and not let the quality deficiencies happen. Functionality, we talk about, and reputation. Reputation is a very interesting one. And this is equally important for public organizations or private organizations, where they typically create an engineering construction solution that is not their main service. In other words, a transit system is built to carry people from one place to another. However, the construction of a transit system is just an element of that service. Now, when the construction of the transit system affects the reputation of the agency, it distracts the public's attention from their main function. Their main function being, transporting people from one place to another. And this is very important, and this is why risk management is getting more and more traction in later years. Now, when we talk about objectives, we mentioned decision-making before. And we mentioned supporting decisions that have limited information. Because timely decisions are very important, even when the information is not complete in a lot of the projects that we're going to be working on. Generating a risk management culture. We have seen, we have heard, that lingo in many places, we have read it in papers. But what does it really mean, generating a culture? Well, generating a culture means that everybody, whether it's a risk manager, a project manager, an engineer manager, design manager, safety official, an inspector in a project. Everybody [COUGH] thinks about risks and what ifs in a project as much as they think that their actions have caused unscheduled consequences. It's very intrinsic in our society to think, well, if I don't come to work today, there's going to be a lack of productivity and there's going to be some impact on the cost performance. But very few times we think about, what are the risks of our actions to the overall project? And once we create that mentality, and that risk evaluation process comes naturally for each one of the participants in a project, then we have reached a point where the risk culture is being mature and elevated. And it becomes part of our way to do business.
