Making tomorrow a more resilient place: on black swans in the project-based firm

Black Swan events are defined in the literature as events which have a major impact, which lie outside the bounds of prediction, and which are only rationalised in retrospect. While some may disagree, almost all failures, even catastrophic ones, are not really Black Swan events but a series of failures that alone may have a negative impact on the immediate out-comes but combined lead to catastrophic failure. It is surprising how often experienced managers of project-based firms, ignore the early warning signs of these failures and move forward despite serious problems in many areas that are keys to the firm’s success. This will ultimately lead to the Black Swan event materializing. Through a case study on the collapse of construction giant “Carillion”, this study finds that Carillion’s liquidation was an endogenous Black Swan, brought about by directorial negligence manifested in a failure to respond to early warnings.