Risk management in construction projects

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ABSTRACT

Risk is intrinsically there in every project that a business does, in the same there is risk in the construction projects. Right from the word start, the process of construction is composite and qualified by huge uncertainty. More often than not, a project of construction fails to deliver what they had promised and waste their time, quality, and budget. This failure is usually because of the happenings of unforeseen events, which a contractor had failed to discover, examine, and manage in a proper manner. Therefore, the process of risk management in a construction project is very important. Risk arises from uncertainty and we can manage uncertainty to a certain extent by analyzing the risk factors. There are qualitative methods to measure risk and quantitative methods to analyze risk. Each method has its own pros and cons.

ACKNOWLEDGEMENT

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

Signed __________________ Date _________________

TABLE OF CONTENTS

ABSTRACTII

ACKNOWLEDGEMENTIII

DECLARATIONIV

LIST OF TABLES AND FIGURESVII

CHAPTER 1: INTRODUCTION1

1.1 Introduction1

1.2 Background2

1.3 Problem statement3

1.4 Research questions4

1.5 Significance of the study4

1.6 Scope and Limitations5

CHAPTER 2: LITERATURE REVIEW6

2.1 Risk6

2.2 Risk Management Concept- An Overview7

2.3 Risk management as measurement of uncertainty9

2.4 Risk Management11

2.5 The Nature of Uncertainty in Construction Industry11

2.6 Application of Risk Management in Construction Projects12

2.6.1 Research Conducted from 1960-1997 and Suggestions12

2.6.2 Research Conducted from 1998 -Present13

2.7 Risk Management Best Practices in the Construction15

2.7.1 PRAM15

2.7.2 RAMP15

2.7.3 PMBoK16

2.8 Risk Management: A Systematic Approach16

2.9 Risk Management general steps and strategies in the construction industry17

2.9.1 Risk management planning18

2.9.2 Risk Identification18

2.9.3 Risk Classification19

2.9.4 Risk Analysis & Assessment20

2.9.5 Risk Prioritizing21

2.9.6 Risk Management and Response22

2.9.7 Risk Monitoring and Control22

2.9.8 Closure23

2.10 When to Apply RM23

2.11 Risk Classification24

2.11.1 Acts of God Risks27

2.11.2 Physical Risks28

2.11.3 Financial and Economic Risks28

2.11.4 Political and Environmental Risks29

2.11.5 Design Risks30

2.11.6 Construction - Related Risks30

2.11.7 Weather30

2.11.8 Labour31

2.11.9 Soil, Site and Other Changed Conditions32

2.11.10 Material Shortages and Quality33

2.11.11 Equipment Failure33

CHAPTER 3: METHODOLOGY34

3.1 Philosophy35

3.2 Research design35

3.3 Justification of secondary research method36

3.4 Criteria for searching literature37

3.5 Keywords37

3.6 Ethical Considerations37

CHAPTER 4: DEVELOPMENT OF A RISK MANAGEMENT MODEL IN THE CONSTRUCTION INDUSTRY39

4.1 Risk Management Policy Statement (Step 1)43

4.1.1 Objectives and Strategies44

4.1.2 Duties and Responsibilities:46

4.2 Assign project risk management responsibility (Step 2)46

4.3 Develop/obtain project definition (step 3)48

4.4 Apply Standard Risk Management Model for Each Project Phase (Step 4)49

4.5 Identify Stakeholders: Select Risk Management Team (Step 4.1)49

4.5.1 Activities49

4.5.2 Stakeholders50

4.5.3 Risk Management Team50

4.6 Identify Risks (Step 4.2)50

4.6.1 Brainstorming Sessions52

4.6.2 Interviews53

4.6.3 Check lists53

4.6.4 Prompt lists54

4.6.5 Risk Charting55

4.6.6 Grouping Risks55

4.7 Assess Risks (Step 4.3)55

4.7.1 Qualitative risk analysis56

4.7.2 Assumptions analysis57

4.7.3 Delphi57

4.7.4 Risk Matrix58

4.8 Risk Treatment (Step 4.4)58

4.9 Risk avoidance59

4.10 Record/Document Project Risk Information (Step 5)59

4.11 Evaluate Project Risk Management Programme (Step 6)60

4.12 Summary60

4.13 Global Best practices in construction project risk ...