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Key risks in the supply chain of large scale engineering and construction projects

Christian A. Rudolf (Department of Logistics Management, Wissenschaftliche Hochschule für Unternehmensführung – Otto Beisheim School of Management, Vallendar, Germany)
Stefan Spinler (Department of Logistics Management, Wissenschaftliche Hochschule für Unternehmensführung – Otto Beisheim School of Management, Vallendar, Germany)

Supply Chain Management

ISSN: 1359-8546

Article publication date: 5 July 2018

Issue publication date: 20 August 2018

2789

Abstract

Purpose

Large-scale projects are the typical delivery model in the engineering and construction industry, with their very own characteristics. Even though well established, only 1 in 1,000 large-scale projects is successful (Flyvbjerg, 2011). A lack of effective supply chain risk management (SCRM) has repeatedly been identified as one of the main causes. While the SCRM body of knowledge seems increasingly well established, a lack of effective methods meeting the specific requirements of large-scale projects can be observed.

Design/methodology/approach

This paper presents a structured and prioritized view on the supply chain risk portfolio in this sector: first, the authors identified and categorized the key supply chain risks in the recent literature. Next, the authors surveyed large-scale project managers across multiple industries, mainly coming from the domains of supply chain management and project management. Finally, the authors provide a contextualized risk taxonomy for engineering, procurement and construction (EPC) projects.

Findings

The identified risk portfolio deviates from generic projects significantly and shows a very high inherent risk exposure of large-scale projects. In particular, behavioral risks are identified as crucial. Additionally, a bias to considerably underestimate risks at project beginning is found.

Originality/value

The contextualized SCRM taxonomy offers a systematic and structured view on the key supply chain risks in EPC large-scale projects. The identified risks are considerably different in their characteristics compared to generic projects or classical SCRM approaches. The authors thus provide a new perspective on SCRM in this specific setting and complement traditional risk and project risk management techniques.

Keywords

Citation

Rudolf, C.A. and Spinler, S. (2018), "Key risks in the supply chain of large scale engineering and construction projects", Supply Chain Management, Vol. 23 No. 4, pp. 336-350. https://doi.org/10.1108/SCM-09-2017-0292

Publisher

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Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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