Timeous management of operational risk and uncertainty is necessary from the very inception of a project.

According to a new report by Deloitte, this approach to operational risk management is beneficial on a national level, in the context of South Africa’s intensive investment in new infrastructure. Taking a proactive view of the operational risks and sources of uncertainty during the development phase can lead to lower operational costs and higher operational performance in the long run.

The report titled “Infrastructure asset lifecycle: Operational risk mitigation from project inception” says that operational risk management from the inception phase has both short and long term benefits.Short term benefits include making sure the project is built and completed on time and within budget. Long term benefits include maintaining and optimising the efficiency of the asset throughout its life.

There are risks that need to be measured and mitigated at every stage and phase of the project lifecycle. Such risks have historically only been evaluated in the operational phase, but these risks change depending on which stage of the lifecycle the project is in. “The long-term nature of infrastructure assets, together with the impact and often the irreversibility of these risks, poses a question as to the sustainable nature of this practice,” says the report. Often, a number of risks faced in the operational phase could have been avoided if they had been considered during the development phase.

“With risk being a ‘make or break’ factor for the success of massive infrastructure projects, institutions can, by taking an Asset Lifecycle Management approach, identify and structure projects to ensure sustainable performance – right from the very start. In our view, this is one of the ultimate goals in future-proofing infrastructure on which so much socio-economic growth depends for billions of people on the African continent,” the report concludes.