Are the external resources I need to deal with this much larger project available?
Whether that's skilled labor or some other critical material or equipment.
And then finally a known unknowns grow.
Think of these large projects as a series of activities
with white space between the activities.
As these projects grow in scale, that white space grows as well.
and in that white space live unknown unknowns.
And in that white space are where black swan risks, nests, and breed.
So controlling the growth of unknown unknowns is
a particular challenge as projects scale and yet
well-executed projects of scale produce outstanding results.
So that risk, reward point Is something you need to be sensitive to and
understand what scal- type risks, as a contractor for example, have you taken on?
And what scale-type risks would you as, let's say,
the owner of the facility still be retaining?
And this becomes very important.
Internationally, you'll work in many areas where there is not adequate capacity,
not adequate skilled labor, not adequate management talent.
And so you'll go about not only trying to find that capacity,
but also help create new capacity in the market.
You'll do that by running training programs,
you'll do that by actually helping create companies.
And in some instances, even helping create new industries in those country.
So over the years, I've seen the learning of how
to use a hammer by somebody that was going to be a carpenter.
Training him to use that hammer the right way was an important first
step in capacity building of the local construction labor force for
a multi-billion dollar project that was going to go into that setting.
Intellectual property growing in importance.
You can't log onto anything today without, in effect,
saying you're gonna respect the intellectual property of others.
And you're gonna use it per all of the constraints that they impose on you in
the use of that intellectual property.
That intellectual property can include patents and
trademarks and copyrights and limitations on usage or license of usage.
All these become very, very important but so does counterfeiting.
And as a contractor, it is important to understand that the equipment that you're
buying, the critical equipment that you're buying in particular,
is not counterfeit equipment.
That it's what you thought it was and
it's gonna perform in a way that you expect that equipment to perform.
And that you're not dealing with a counterfeit which may or
may not perform with equal capability.
So we've gone through a very extensive discussion on understanding risks.
I'm gonna touch briefly on the allocational risks, and
then we'll come to the final topic on managing risks.
So on allocating risk,
there are a range of potential risk managers around this construction project.
You can see a number of them on the slide.
I'm gonna touch just on two of them,
which are much more common around development-type projects.
Which again will tend to be the larger projects that you might encounter in
an international setting.
So the government is a potential risk manager,
it can play that role in a number of different ways.
There may be a set of multilateral or
bilateral agreements that the government is party to.
And those agreements help define how you might be treated a dispute, for example.
There may be international lending agency money in the projects and
those carry with it certain risk mitigating aspects to it.
They also offer some payment protections if it is structured right and
offers another level of oversight and
another check on the threat of corruption in the project, if you will.
You'll see quasi-government corporations,
government departments in other levels of government.
All are potential risk managers.
Each is also a potential source of risk.
But I think in this context, they're really also potential risk managers.
But that means understanding the risks that they are capable of mitigating, and
then bringing that thinking forward as you identify risks.
So that you can understand where you may have risk mitigation strategies
with government as the risk mitigator.
Similarly with sponsors, sponsors can include public,
private partnerships, non-governmental organizations or NGOs,
financial institutions and many other benefiting type parties.
Each of the parties that has an interest in the facility that's
being constructed represents a potential retainer of risk,
Aa potential assumer of risk, a mitigator of risk.
And being aware of what their capabilities are, what their appetites are,
and what the risks are that they can best help mitigate becomes very important.
Before you've ever initiated this project in an international setting.
