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Evolution of the Owner’s Role in Program Management – Activity: Risk Assessment & Contingency (#5 in the series Evolution of the Owner’s Role in Program Management)
By Robert Prieto

Traditional Owner Role:

Risk assessment activities are often conducted on a rule-of-thumb basis at the earliest program stages with more detailed risk assessments performed for discrete projects or project phases. Owner relies on inputs from others under his direct management.

Contingencies established as a result of these risk assessments are under the control of the Owner.

Owner Role Under Program Management:

Overall risk assessment activities are strengthened at an earlier stage to reflect the added complexity of a large scale program including the increased complexity associated with a reconfigured supply chain and internal program competition for limited resources and increased interface management. Owner will utilize the Program Manger to undertake a significantly more robust risk assessment on a programmatic as well as a project by project basis. Increased emphasis will be placed on interface risks across all program elements as well as event driven risks that arise out of the scope of the overall program. Risks associated with scale will take on increased importance.

Contingency management will be partitioned between the Owner and Program Manager with certain contingency elements retained by the Owner, reflecting his ability to best manage the associated risks, and other elements of contingency either under shared management of the Owner and Program Manager.

Program Manager’s Role Under Program Management:

Program Manger will undertake a significantly more robust risk assessment on a programmatic as well as a project by project basis. Increased emphasis will be placed on interface risks across all program elements as well as event driven risks that arise out of the scope of the overall program. Risks associated with scale will take on increased importance.

Contingency management will be partitioned between the Owner and Program Manager with certain contingency elements retained by the Owner, reflecting his ability to best manage the associated risks, and other elements of contingency either under shared management of the Owner and Program Manager. Contingency management by the Program Manager will be accomplished under a well structured process, any contingency releases reported to the Owner as part of periodic reporting and appropriate thresholds established for releases of contingency above which Owner concurrence is required.

Robert Prieto, Senior Vice President

Robert Prieto is senior vice president for Fluor, where he leads strategy for Fluor’s Industrial and Infrastructure group. Mr. Prieto focuses on the development and delivery of large, complex projects worldwide.

Prior to joining Fluor, Bob served as chairman of Parsons Brinckerhoff Inc. As head of PB’s board of directors, he was responsible for overseeing management performance, establishing top-level policies, and ensuring the firm’s continued long term success.

He is a member of the executive committee of the National Center for Asia-Pacific Economic Cooperation, a member of the board of directors of the Business Council on International Understanding, a member of the board of the Civil Engineering Forum for Innovation, and co-founder and member of the board of the Disaster Resource Network. He currently serves on the National Research Council’s committee framing the challenges on Critical Infrastructure Systems. Until 2006 he served as one of three U.S. presidential appointees to the Asia Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC) and served as chairman of the Engineering and Construction Governors of The World Economic Forum and co-chair of the infrastructure task force formed after September 11th by the New York City Chamber of Commerce. He is also a member of the board of trustees of Polytechnic University of New York, and was previously selected as alumni of the year by its New York Chapter.

He has had an executive sponsorship role in the World Trade Center Transportation Hub; West Coast Rail Modernization; Train Protection and Warning System; Level 3 Communications Long Haul Network and Superconducting Super Collider.

Prieto holds a master of science in nuclear engineering from Polytechnic University of New York and a bachelor of science in nuclear engineering from New York University.

Fluor Corporation (NYSE: FLR) provides services on a global basis in the fields of engineering, procurement, construction, operations, maintenance and project management. Headquartered in Irving, Texas, Fluor is a FORTUNE 500 company with revenues of $14.1 billion in 2006. For more information, visit www.fluor.com.

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