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The purpose of the paper is 1) to address the importance of contingency at the right level when defining project control baseline, including cost reserves / “room to manoeuvre” and 2) present proactive uncertainty management as a regime to ensure cost effective management of project reserves and contribute to project success.

The paper is a combination of literature study and quantitative research on how contingency develops during the lifetime of a case project. The investigation into the case project includes document study into quantitative material from the case project. The combination of empirical material and theory makes the discussion robust.

Unrealistic low cost uncertainty will lead to unrealistic low contingency. The case study from a Norwegian mega project shows a contingency of 15 per cent in addition to expected costs. The case study shows that by continuous opportunity management and risk reduction, the needs for management reserves are systematically reduced and the contingency is controlled.

This research is limited to one case study. A higher number of cases are necessary to generalise the findings. However, the authors would claim that the systematic mapping of need for management reserve towards the project contingency, and a continuous uncertainty management system will help to obtain cost effective management. The findings from the case study could be applied on similar cases.

The case study shows a way of setting contingencies and managing contingencies through systematic uncertainty management.

Improved management of project provisions will increase the value of future projects.

The goal of this paper is to analyze the views of Frank Knight and Ludwig von Mises on the topic of uncertainty and how it influences the theory of individual decision-making and to trace out the implications of the same for the theories of entrepreneurship, equilibrium, and the firm. The paper adopts a historical approach in its analysis of the theory of uncertainty, with an extended discussion of the primary writings of Knight and Mises on this topic. It then uses the insights gleaned from this discussion in order to address issues and topics that have found a prominent place in the modern literature on entrepreneurship, equilibrium, and the firm that draws its inspiration from the Austrian School. The paper offers three main findings: in the realm of entrepreneurship it argues that there can be no theory of the entrepreneur without the concept of uncertainty provided by Knight and Mises, whereas with regard to the theory of equilibrium it focuses on highlighting the concept of an equilibrium with error prevalent in the Austrian tradition and on the implications that an explicit introduction of uncertainty has for the existence of a process of equilibration that pushes the economy toward a state of general equilibrium in real time. As regards the theory of the firm we find that a proper understanding of uncertainty ultimately reverses the direction of any causal explanation of economic organization, making the firm an outcome of dealing with uncertainty rather than a means to do so.

Our notion of project control is based on the five-by-five model and constitutes a comprehensive control model including control of results, time and work control, resource control, financial control, and contract management.

The task of project control is determined by uncertainty and complexity and calls for improvisation and ingenuity in order to be able to maneuver the project. The notion of forward-oriented follow-up is introduced.

Traditional or technical risk management practices have been observed in local governments since the early 1960s. These practices tended to focus on the management and control of insurable risks (fires, thefts, and liability suits), as well as responsibility for insurance purchasing, for occupational safety and health, security, and similar matters. Later, financial risk management became a rather distinct technical practice, among other technical additions.

Chapter Three focussed on developments since the late 1980s, notably a general trend of expansion and extension of risk management followed closely by a rapidly evolving view – both in academia and in practice – that risk management should take an organisation wide and integrated stance and that this integration would be demonstrably value adding. Recent legal, regulatory, and best practice initiatives have further accelerated the expansion of risk management. But while this expansive view, ultimately emerging as enterprise risk management (ERM), is well advanced in the private sector, it has not penetrated the public sector in any significant way. And, indeed when it has been applied, it has revealed several fundamental problems. As a result, the current state of risk management is somewhat less easily summarised than might be expected. Traditional (hereafter ‘technical’) practices remain uneven, though widespread; holistic ERM-like efforts are somewhat widely – but inconsistently – implemented in the private sector while in the public sector technical practices are seen, though to a lesser degree, and there have been very few ERM adoptions. Nevertheless, as sometimes happens, the presence of an idea (ERM) has been highly influential and sufficient to reorient thinking about risk management.

For discussion and clarity purposes, this chapter introduces the concept public organisation risk management (PORM). Clarity is important, but the concept PORM serves a second function here. It provides a label that allows actual technical practices to be linked to the ERM ideas that shape thinking about risk management in the public sector. Furthermore, this concept also allows for the inclusion of some even more recent developments (beyond ERM) that will lead to an alternative framing of risk management in the final chapters. PORM, therefore, ultimately involves an inclusion of past, present, and future thinking about risk management in public sector organisations.

This chapter describes the scenario technique used for the integrative methodological approach (IMA) of the German global change project GLOWA Elbe. It is outlined how regional scenarios are systematically derived to analyze water use conflicts and their resolution in the context of global change for the German Elbe river basin. Through the combination of frameworks of development and policy strategies a consistent set of developmental scenarios can be generated that makes it possible to examine the regional impact of policy strategies under conditions of different future global change development paths. The scenario analysis of the framework of development starts on the global level with qualitative IPCC storylines, translates them to the regional level, and quantifies their regional effects by means of modeling and statistical estimation methods. The policy strategies are derived in close cooperation with regional stakeholders.

For approximately a century and a half after their dramatic deflation, the South Sea and Mississippi Bubbles of 1710–1720 had discredited finance. With the exception of government bond markets and a few chartered companies, the rapid rise and fall of fortunes associated with the South Sea Company, in Britain, and the Mississippi Company in France, had made the joint stock system of corporate finance almost synonymous with fraud and financial debauchery. (The most authoritative account of these schemes is given in Murphy, 1997.) The joint stock system of finance was seen as seriously flawed, and an indictment of the theories on credit money of the schemes’ instigator, John Law. During those one hundred and fifty years, classical political economy rose and flowered. Not surprisingly finance then came to be considered for its fiscal and monetary consequences. This pre-occupation left its mark on twentieth-century economics in an attitude that the fiscal and monetary implications of finance, eventually its influence on consumption, are more important than its balance sheet effects in the corporate sector. This attitude is apparent even in the work of perhaps the pre-eminent twentieth century critical finance theorist, John Maynard Keynes.