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Risk Management in Construction Industry
Abstract
Construction industry is mostly affected by risks. So, the people in the construction organizations need to manage the risks by using different techniques of construction management. In this study, the data is gathered through questionnaires from Vijayawada and Visakhapatnam in Andhra Pradesh State, India. SPSS software is used for evaluating results. The risk analysis methods in Vijayawada construction organizations results are about 45% using Direct Judgement Techniques, and in Visakhapatnam, Comparing Analysis Technique is used for about 42%. In Vijayawada, the risk response technique used is Risk Transfer resulting about 41.4%, and in Visakhapatnam, it is about 37.9%. Therefore, in Vijayawada the technology risk transferring method is used about 62.1% (often), and in Visakhapatnam, it is about 45% (often). Finally, in Vijayawada the financial risk transferring method is rarely about 69% and in Visakhapatnam it is rarely about 62%. Therefore, if all the above risk analysis techniques and risk response techniques are used properly in the construction organizations, then the project will be finished within the given time and budget.
... Such defensive strategies increase the duration and cost of projects [20]. According to risk management principles, risk should be allocated to the party that manages and reduces it best [21,22]. ...
Project risk is an uncertain situation or event that, if it occurs, may have a negative or positive effect on one or more project objectives, such as scope, schedule, cost, and quality. Major industrial projects are increasingly facing complexity and uncertainty. The scope of this paper is related to petrochemical projects, in which risks directly affect the approved time, cost, and quality of the project. In such projects, there are risks that neither the owner nor the contractor has the main role in the occurrence or prevention of, and it is not easy to determine who is responsible for them. In such projects, there are risks that neither the owner nor the contractor has the main role in the occurrence or prevention of, and for which it is not easy to determine responsibility. Therefore, predicting, identifying, analyzing, and determining of the optimal allocation of risk responsibility between contracting parties is one of the most important steps before the start of the project. Suppose it is not correctly allocated among project stakeholders, then, in that case, risk responsibility imposes costs on the project that must be paid by the owner, contractor, and partnership, causing, in general, many problems for project management. Therefore, this paper presents a model to calculate the optimal ratio of risk allocation between the project parties in the concluding contract stage, using the UTA-STAR technique to obtain the owner and contractor utility function to create as much of a win-win relationship between them as possible.
... Such defensive strategies increase the duration and cost of projects [20]. According to risk management principles, risk should be allocated to the party that manages and reduces it best [21,22]. ...
Project risk is an uncertain situation or event that, if it occurs, may have a negative or positive effect on one or more project objectives, such as scope, schedule, cost, and quality. Major industrial projects are increasingly facing complexity and uncertainty. The scope of this paper is related to petrochemical projects, in which risks directly affect the approved time, cost, and quality of the project. In such projects, there are risks that neither the owner nor the contractor has the main role in the occurrence or prevention of, and it is not easy to determine who is responsible for them. In such projects, there are risks that neither the owner nor the contractor has the main role in the occurrence or prevention of, and for which it is not easy to determine responsibility. Therefore, predicting, identifying, analyzing, and determining of the optimal allocation of risk responsibility between contracting parties is one of the most important steps before the start of the project. Suppose it is not correctly allocated among project stakeholders, then, in that case, risk responsibility imposes costs on the project that must be paid by the owner, contractor, and partnership, causing, in general, many problems for project management. Therefore, this paper presents a model to calculate the optimal ratio of risk allocation between the project parties in the concluding contract stage, using the UTA-STAR technique to obtain the owner and contractor utility function to create as much of a win-win relationship between them as possible.
... There are key elements of risk management body of the knowledge that Project Managers are required to know and be skillful, in order to properly manage the risks. Lack of such knowledge shall become a key source for aggravated exposure to risks (Ghale, et al., 2021;Sankar, et al., 2022). Thus, this brings the need for strategies to equip Sri Lankan Project Managers with necessary risk management knowledge. ...
Risk management often becomes a significant concern among the construction professionals especially due to the complex nature of the industry. Though it is a popular subject in project management discipline, it was observed that authentic application of the principles of risk management at times is arguable in practice. As a Project Manager who is a key role player in a project, it is vital to have a solid knowledge on risk management and its related arena. Evidence was found of limited risk management knowledge among construction professionals. Therefore, a study was conducted to find the status of risk management knowledge among the construction Project Managers in Sri Lanka. A mixed method approach was followed by a comprehensive literature review on elements of body of knowledge of risk management and later a questionnaire survey to contextualise the status of the knowledge gap of Project Managers in real. According to the findings of the study, it could be concluded that Sri Lankan Project Managers are not fully confident on their risk management knowledge. It was primarily likely to be due to the limited learning in the subject area when pursuing higher studies. The study also identifies the options to device appropriate strategies to improve risk management knowledge among the Construction Project Managers in Sri Lanka.
... These endeavours are called projects. Project is defined as any activity with definite beginning and definite end and with pre-determined objectives (Groak, 1994). Most times Projects are started at a definite time but lingers beyond the planned time, or without achieving the set objectives due to usually, improper strategy to achieve the objectives (Callahan, 2012). ...
With the supply of electrical energy in Nigeria not meeting its demand and also with the projected
rate of depletion of fossil fuel over the next 40 years and the environmental problems associated
with its use, seeking alternative ways of meeting and mitigating the envisaged problems and
challenges is of great importance. Previous research suggests that developing nations like Nigeria
need to take pro-active measures in ensuring that preventive sustainability intervention is put in
place rather than corrective action. To achieve this, the built environment professionals need to be
aware of their roles and prepared to effectively play their parts. Therefore the study appraises the
rate of application of renewable energy and the Quantity Surveyors‘ level of awareness and
preparedness in supporting the adoption of renewable energy technology in buildings in Nigeria.
Survey strategy was adopted for the study and responses were received from Quantity Surveyors
through an online questionnaire administration. Data were analysed using both descriptive and
inferential statistics. Findings revealed that: the rate of application of renewable energy in Nigeria
is low,. The level of preparedness of Quantity Surveyors in Nigeria to support the adoption of
renewable energy in buildings is also low, and. most Quantity Surveyors expertise lies more in cost
planning, and design compared to other essential areas that could enhance their skills to support the
adoption of renewable energy technology in buildings. The study recommends that there is need to
improve on Quantity Surveyor‘s‘ training Nigeria to support the adoption of renewable energy in
buildings.
This study examines the influence of project process management on sustainable project success in the construction sector, with a focus on the moderating role of risk management practices. Using a quantitative research design, data were collected from 328 professionals, including Managers, Project Managers, and Portfolio Managers, through structured questionnaires. The analysis, conducted using SmartPLS, revealed that effective project process management significantly impacts project time, cost, and scope, thereby enhancing overall project success. The findings highlight the importance of integrating risk management practices to mitigate potential delays and cost overruns, demonstrating a moderating effect on the relationship between project process management and project outcomes. However, the moderating effect of risk management was not significant for the project scope, suggesting that additional strategies may be required to manage scope changes effectively. These results underscore the need for comprehensive management approaches that incorporate both robust process management and proactive risk management to achieve sustainable success in construction projects. The study provides valuable insights for construction professionals and suggests avenues for future research, including the exploration of other management practices and the use of longitudinal data to capture the dynamic nature of construction projects.
The purpose of this study was twofold: (1) Identifying the risks that are critical for risk management of road construction projects in Sri Lanka on a life cycle basis and (2) defining the shares of the parties involved in projects in terms of handling the identified risks. A Delphi study was conducted among 33 Sri Lankan experts (consultants, project managers, contractors) in three rounds. The findings showed that the construction and design phases are prone to many major risks. Moreover, ‘delays in payment by the client’ was the most critical risk factor in the construction stage. Furthermore, it was established that some major risks could occur in more than one phase of the project life cycle, stressing the necessity of handling these risk factors as a prerequisite for project success. The discussions presented in this study would enhance the effectiveness of implementing risk management practices in Sri Lankan road construction projects. From a broader vantage point, it will also serve the risk management body of knowledge in the construction industry.
Keywords: risk management, construction industry, Delphi study, road projects, SriLanka
Risk is inherently present in all construction projects. Quite often, construction projects fail to achieve their time, quality, and budget goals. A risk model entitled construction risk management system (CRMS) is introduced to help contractors identify project risks and systematically to analyze and manage them. The CRMS model is a logical substitute for the traditional intuitive unsystematic approach currently used by most contractors. The influence diagramming technique and Monte Carlo simulation are used as tools to analyze and evaluate project risks. Alternative risk management strategies are suggested. Such strategies include: risk avoidance, risk transfer, risk retention, loss reduction, and risk prevention and insurance.
The aim of this paper is to understand the key risks in construction projects in China and to develop strategies to manage them. Risks were prioritized according to their significance of influences on typical project objectives in terms of cost, time, quality, safety and environmental sustainability, and then scrutinized from a joint perspective of project stakeholders and life cycle. Postal questionnaire surveys were used to collect data, based on which a total of 25 key risks were ascertained. These risks were compared with the findings of a parallel survey in the Australian construction industry context to highlight the unique risks associated with construction projects in China. Strategies to manage the risks were sought from the perspectives of project stakeholders and life cycle and in light of the Chinese construction culture. It is concluded that clients, designers and government bodies should take the responsibility to manage their relevant risks and work cooperatively from the feasibility phase onwards to address potential risks in time; contractors and subcontractors with robust construction and management knowledge should be employed to minimize construction risks and carry out safe, efficient and quality construction activities.
This paper outlines an approach to the management of project risk which was initially developed for offshore North Sea projects and was subsequently adapted for a range of projects in the USA, Canada and elsewhere. It has been used for assessing issues such as reliability, preferred technical choices, and economic and financial viability, but the emphasis here is project planning and associated costing.
Managers are often asked to consolidate and improve their organization's strengths without taking undue risks. The techniques and models of risk analysis can help managers chart a course through today's increasing uncertainty.
Engineering Construction Risks-A Guide to Project Risk Analysis And Risk Management
- P A Thompson
- Perry
Practical Risk Management In The Construction Industry
- L Edwards