Risk management in independent Water and Power Plant (IWPP) projects in Saudi Arabia : a grounded theory study to improve effectiveness

Abstract

The global demands for water and power services are rapidly increasing. In this context, Saudi Arabia (SA) has one of the highest water consumption rates per capita worldwide, and its energy requirements continue to grow. In terms of producing drinking water, SA ranks first, representing 22.4% of world capacity. However, that production is not unproblematic, and typically, the Water and Power Plant (WPP) projects following the Independent Water and Power Plant (IWPP) approach have involved a plethora of risks, as they rely on long-term arrangements to transfer project risks traditionally borne by government, to the private sector. Additionally, some risk factors apply generally to all construction projects, others are specific to WPP projects, and yet others apply only to IWPP projects. Unfortunately, three of four IWPP projects in SA have failed to meet their specified objectives; hence, there is an urgent need to implement effective risk management (RM) within these projects, as this represents an important success factor in their on-time delivery. In this study, water and power practitioners in the Saudi public and private sectors, were interviewed as key informants, and related their experience. The Grounded Theory (GT) approach was adopted whereby three rounds of semi-structured interviews were performed to establish factors causing the poor implementation of RM in IWPP projects in SA. Whilst the research focused on IWPP projects, it also explored WPP projects (undertaken by government), due to the state’s long experience of such activities. After analysis, the interview data was presented in propositional diagrams, fully grounded according to the practitioners’ experiences. The findings indicate that all practitioners agree on the importance of RM in IWPP projects since these are complex undertakings that require effective RM for their success, but that currently, RM knowledge within this industry is lacking, and where RM is implemented, it is done so informally. Practitioners identified three clear factors that affect the behaviour of every single IWPP stakeholder in respect of risk, these being: the uniqueness of the Saudi Arabian culture, the high subsidies paid by the government to consumers and organisations, and the low attention paid to RM by top managements. An emergent model is proposed expressing the complex reality of IWPP projects in SA, and illustrating three major phenomena, nine categories, and 26 sub-categories affecting RM implementation in these projects. This provides a strong foundation for further research aimed at securing the effective RM implementation in IWPP projects, and developing greater insight into the risk factors involved.