7 Akintoye_Risk Analysis & Management in Construction

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Risk analysis and management in construction

ARTICLE in INTERNATIONAL JOURNAL OF PROJECT MANAGEMENT · FEBRUARY 1997

Impact Factor: 1.53 · DOI: 10.1016/S0263-7863(96)00035-X

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Akintola Akintoye

University of Central Lancashire

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P e r g a m o n

International Journal of Project Management

Vol. 15, No. 1, pp. 31-38, 1997

Copyright © 1996 Elsevier Science Ltd and IPMA

Printed in Great Britain. All rights reserved

0263-7863/96 17.00 + 0.00

S0263-7863 (96)00035-X

i s k a n a l y s i s a n d m a n a g e m e n t i n

c o n s t r u c t i o n

A k i n t o l a S A k i n t o y e

Department of Building and Surveying Glasgow Caledonian University Glasgow G40BA UK

M a l c o l m J M a c L e o d

1RISC Technical Services International Loss Adjusters 35 Seething Lane London EC3N 4AH UK

T he p ape r de s c r ibe s , on the bas i s o f a que s t ionna ir e s ur ve y o f ge ne r a l c ontr ac tor s and pr oje c t

man age me nt pr ac t i c e s , the c ons tr uc t ion indu s tr y s pe r c e pt ion o f r i s k as s oc ia te d w i th i t s ac t iv it i e s

and the e x te nt to whic h the indus tr y us e s r is k ana lys is and m anage m e nt te c hnique s . I t c onc lude s

that r i s k manage m e nt i s e ss e nt ia l to c ons tr uc t ion ac t iv it i e s in min im iz ing lo s s e s and e n hanc ing

pr of i tab i l i ty . Cons tr uc t ion r i s k i s ge ne r a lly pe r c e ive d as e ve nts tha t in f lue n c e pr o je c t obje c t ive s

o f c os t , t ime and qua l i ty . R i s k ana lys is and ma nage m e nt in c ons tr uc t ion de pe nd main ly on

intu i t ion , judge me nt and e xpe r ie nc e . For mal r i s k ana lys i s and manage me nt te c hnique s ar e

r ar e ly us e d due to a lac k o f knowle dge and to doubts on the s u i tab i l i ty o f the s e te c hnique s for

c ons tr uc t ion indus tr y ac t iv i t i e s . Copyr ight © 1996 E l s e v ie r Sc ie nc e L td and I PM A.

Keywords: Risk perception, risk analysis, risk management, project managers, contractors

Organizations from many industries have recognized the

increasing importance of risk management, and many

companies have established risk management departments

to control the risks they are, or might be, exposed to. The

construction industry and its clients are widely associated

with a high degree of risk due to the nature of construction

business activities, processes, environmen t and organization.

Risk in construction has been the object of attention

because of time and cost over-runs associated with con-

struction projects. Although, Porter', Healey2 and Perry

and Hayes3 have expressed risk as an exposure to economic

loss or gain arising from involvement in the construction

process; Mason 4 and Moavenzadeh5 have regarded this as

an exposure to loss only. Bufaied6 describes risk in relation

to construction as a variable in the process of a construction

project whose variation results in uncertainty as to the final

cost, duration and quality of the project.

It is generally recognized that those within the con-

struction industry are continually faced with a variety of

situations involving many unknown, unexpected, frequently

undesirable and often unpredictable

f a c t o r s 7

Ashley8 and

Kangari and Riggs9 have all agreed that these situations

are not limited to the construction industry; it is recognized

that risk is built into any commercial organization's profit

structure and is a basic feature of a free enterprise system.

Insofar as risk analysis and management is important to

the activities of the construction industry, little is known

*Author for correspondence.

P 1 5 / I I ]

regarding the industry response, and in particular the

techniques employed for risk analysis and management.

Simister ° investigated the usage and benefit of project risk

analysis and management in 1992, based on a questionnaire

survey of 37 members of the UK Association of Project

Managers. Simister's l° survey was comprised o f respon-

dents classified into five work-related groups: defence

industry (36%), management consultancy (36%), systems-

based information technology (12 %), telecommunications

(12%) and engineering contracting (4%). The objective

of the current study was to obtain feedback from con-

struction contractors and construction project management

practitioners on the following aspects of risk analysis and

management:

• Risk perception by the construction industry

• Organizational risk management

• Risk premium in construction projects

• Management of risk

• Current usage of risk management techniques.

T h e r e s e a r c h s u r v e y

The need to manage risks in construction is relevant to

all professionals and groups (client groups, design team,

project management team, contractors, etc.) in the con-

struction industry which are conc erned with cost, time and

quality. The current research concentrated on two categories

of respondents: contractors and project management prac-

tices. The sample for the survey was a total of 100 top firms

31


3/9

Risk analysis and management in construction A S Akintoye and M J MacLeod

i n t h e U K c o n s t r u c t i o n i n d u s t r y c o m p r i s i n g 7 0 g e n e r a l

c o n t r a c t o r s a n d 3 0 p r o j e c t m a n a g e m e n t p r a c t i c e s ~ . T h e

g e n e r a l c o n t r a c t o r s w e r e s e l e c t e d r a n d o m l y f r o m a l is t o f

1 0 0 co n t r ac to r s p u b l i sh ed in t h e ' C o n t r ac t o r F i l e 1 9 92 ' t2 .

T h e 3 0 p r o j e c t m a n a g e m e n t p r a c t ic e s w e r e t h o s e a d v e rt i s i n g

in Building d u r in g t h e p e r io d Ju n e 1 9 9 4 to A u g u s t 1 9 9 4 .

S u b j e c t t o l i m i t a t i o n o f t h e s a m p l i n g , t h e f i r m s s u r v e y e d

r e p r e s e n t a l a r g e p r o p o r t i o n o f th e U K c o n s t r u ct i o n i n d u s t ry

p o p u l a t i o n . T h e t o t a l t u r n o v e r o f th e f i r m s s u r v e y e d ( £ 7 0 0 0

m i l l i on ) r e p r e s e n t s 2 0 % o f U K c o n t r a c t o r s ' o u t p u t f o r 1 9 94

a n d h a d 5 0 , 0 0 0 e m p l o y e e s . A l l t h e p r o j e c t m a n a g e m e n t

o r g a n i z a t i o n s a r e bona fide p r a c t i c e s p r o v i d i n g a w i d e

r a n g e o f p r o j e c t m a n a g e m e n t s e r v i c e s .

T h e o v e r a l l r e s p o n s e t o t h e s u r v e y c o m p r i s e d o f 3 0

g e n e r a l c o n t r a c t o r s ( C T R ) a n d 1 3 p r o j e c t m a n a g e m e n t

p r a c t i c e s ( P M ) r e p r e s e n t i n g a 4 3 % r e s p o n s e r a te . T h e

r e s p o n s e r a t e r e s u l t e d f r o m a n i n it ia l m a i l i n g a d d r e s s e d t o

t h e m a n a g i n g d i r e c t o r o f e a c h f i r m a n d a r e m i n d e r l e t t e r ,

a f t e r t w o w e e k s , t o t h o s e o r g a n i z a t i o n s t h a t h a d n o t

r e s p o n d e d t o t h e o r i g i n a l r e q u e s t . T h e r e s p o n s e r a t e i s

t y p i c a l o f a c o n s t ru c t i o n i n d u s t r y q u e s t i o n n a i r e s u r v e y

a n d c a n n o t b e r e g a r d e d a s b i a s e d c o n s i d e r i n g M o s e r a n d

K a l to n ' s j3 a s se r t i o n t h a t t h e r e su l t s o f a p o s t a l s u rv e y co u ld

b e c o n s i d e r e d a s b i a s e d a n d o f l it t le v a l u e i f t h e r e t u r n r a t e

w a s l o w e r t h a n 3 0 - 4 0 % .

T h e q u e s t i on n a i re s w e r e c o m p l e t e d b y t o p m a n a g e m e n t

i n t h e o r g a n i z a t i o n s ( m a i n l y d i r e c t o r s a n d p a r t n e r s ) a n d

a l m o s t a ll o f t h e m ( m o r e t h a n 9 0 % ) h a d o v e r 1 0 y e a r s o f

co n s t ru c t i o n ex p e r i en ce . T h e r e sp o n d e n t s t h u s h av e r eq u is i t e

p r o f e s s i o n a l a n d a c a d e m i c q u a l i f i c a t i o n s . O n t h e b a s i s o f

p o s i t io n , w o r k e x p e r i e n c e a n d e d u c a t i o n a l a n d p r o f e s s i o n a l

b a c k g r o u n d , i t c a n b e i n f e r r e d t h a t t h e r e s p o n d e n t s h a v e

a d e q u a t e k n o w l e d g e o f t h e a c t i v it i e s a s s o c i a te d w i t h

c o n s t r u c t i o n a n d a s s o c i a t e d r i s k .

T w e n t y - t w o p e r c e n t o f t h e f i r m s s u r v e y e d ( a ll t h e 2 2 %

a r e p r o j e c t m a n a g e m e n t p r a c t i c e s ) h a v e t u r n o v e r l e s s t h a n

£ 1 0 m i l l i o n . F o r t y - n i n e p e r c e n t h a v e t u r n o v e r b e t w e e n

£ 1 0 m i l l i o n a n d £ 1 0 0 m i l l i on ; 2 9 % h a v e t u r n o v e r o v e r

£ 1 0 0 m i l li o n . F r o m t h is d i s t r ib u t i o n o f t h e r e s p o n d i n g

f i r m s , i t c a n b e c o n c l u d e d t h a t t h e s u r v e y c o v e r s a s p e c t r u m

o f s m a l l , m e d i u m a n d l a r g e f i r m s i n t h e U K c o n s t r u c t i o n

in d u s t ry .

T w e n t y p e r c e n t o f t h e c o n t r a c t o rs , a n d 8 % o f t h e p r o j e c t

m a n a g e m e n t p r a c t i c e s , h a v e d e s i g n a t e d r i s k m a n a g e r s •

T h i s s u g g e s t s t h a t r i s k c o n t r o l i s c a r r i e d o u t a s p a r t o f

n o r m a l o r r e g u l a r a c t i v i t i e s o f t h e f i r m s r a t h e r t h a n b e i n g

d e s i g n a t e d , g i v e n t h a t a l l r e s p o n d e n t s c l a i m e d t o c a r r y

o u t r i s k a n a l y s i s a n d m a n a g e m e n t o f t h e c o n s t r u c t i o n

b u s i n e s s , p r o c e s s a n d a c t i v i t i e s in t h e i r o r g a n i z a t io n s . M o s t

o f t h e r e s p o n d e n ts ( C T R = 6 7 % a n d P M = 7 7 % ) d i d n o t

h a v e a n y f o r m a l r i s k m a n a g e m e n t t r a i n i n g . T h e y c l a i m e d

t o b e i n v o l v e d i n r i s k m a n a g e m e n t a n d t h e a n a l y s i s o f th e i r

p e r c e p t i o n s o f r i s k s i n v o l v e d i n c o n s t r u c t i o n d o e s i n f a c t

s u g g e s t a n a w a r e n e s s o f w h a t i s i n v o l v e d i n c o n t ro l o f r i s k

an d i t s co n seq u en ces .

isk perception

R i s k c a t a l o g u e h a s b e e n d e s c r i b e d a s a c o m b i n a t i o n o f

th rea t an d v u ln e rab i l i t y w h ich o ccu r s w h en th e tw o co n d i t io n s

o v e r l ap ~4. A th re a t i s s o m eth in g w h ich h as an ad v e r se

e f f ec t o n th e ac t i v i t i e s o f an o rg an i za t i o n . A v u ln e rab i l i t y

i s c h a r a c t e r i z e d b y a p h y s i c a l s y s t e m w h i c h , w h i l e b e i n g

in d ep en d en t o f an y sp ec i f i c t h r ea t , a l l o w s a t h r ea t t o b e

e x p l o i te d . T h e i m p a c t o f r is k f r o m t h r e a t c a t a l o g u e a n d

t h e f r e q u e n c y o f o c c u r r e n c e o f r i s k f r o m t h e v u l n e r a b i l it y

c a t a l o g u e d e t e r m i n e s t h e l e v e l o f e x p o s u r e t o r i s k .

W i l l i am ~5 o n th e o th e r h an d h as c a t eg o r i ze d d e t a i l s o f e ach

r i sk f ac to r i n to ev en t , im p ac t , ac t i o n s an d co n t r ac tu a l ; an d

u sed a p ro ces s o f p ro j ec t r i sk r eg i s t e r t o id en t i fy r i sk s an d

to i n i t i a t e t h e an a ly ses fo r p ro j ec t r i sk m an ag em en t •

R i s k p e r c e p t i o n i s g e n e r a l l y b e l i e v e d t o b e i n f l u e n c e d

b y p e o p l e ' s b e l i e f , a t t i t u d e s , j u d g e m e n t a n d f e e l i n g s . T h e

• 16

r e p o r t o f T h e R o y a l S o c i e ty c l a i m s t ha t r i s k p e r c e p t i o n

c a n n o t b e r e d u c e d t o a s i n g le s u b j e c t i v e c o r r e l a t e o f a

p a r t i c u l a r m a t h e m a t i c a l m o d e l , s u c h a s t h e p r o d u c t o f p r o b -

a b i l i t i e s a n d c o n s e q u e n c e s b e c a u s e t h i s i m p o s e s u n d u l y

r e s t r i c t i v e a s s u m p t i o n s a b o u t w h a t i s a n e s s e n ti a l l y h u m a n

an d so c i a l p h e n o m e n o n • C h o f f r ay an d Jo h n so n ~7 an d

R i t ch i e an d M arsh a l l ~8 h av e i d en t if i ed f ac to r s i n f lu en c in g

t h e f o r m a t i o n o f r i s k p e r c e p t i o n i n c l u d i ng e d u c a t io n a l

b a c k g r o u n d , p r a c t i c a l e x p e r i e n c e , a n i n d i v i d u a l ' s c o g n i t i v e

c h a r a c t e r i s t ic s , t h e a v a i l a b il i t y o f i n fo r m a t i o n , p e e r g r o u p

in f lu en ce , e t c .

W h i l e i t is g e n e r a l l y r e c o g n i z e d t h a t t he f o r e g o i n g f a c t o r s

m a y a f f e c t t h e r e s p o n d e n t s ' p e r c e p t i o n o f r i s k , t h e y a r e n o t

d i r ec t l y i n v es t i g a t ed i n t h i s s t u d y . H o w ev er , i n o rd e r t o

o b ta in t h e v i ew o f th e i n d u s t ry o n r i sk i n co n s t ru c t i o n , t h e

r e s p o n d e n t s w e r e a s k e d t o d e s c r i b e r i s k i n c o n s t r u c t i o n

p ro j ec t s .

T h e g e n e r a l c o n t r a c t o r s o f f e r e d d i v e r s i f i e d o p i n i o n s ,

q u o ted a s fo l l o w s :

• F a c t o r s w h i c h c a n a d v e r s e l y a f f e c t t h e s u c c e s s f u l c o m -

p l e t io n o f a p r o j e c t i n t e r m s o f b u d g e t a n d s c h e d u l e ,

w h ich i n t h em se lv es a r e n o t a lw ay s i d en t i f i ab l e (P ro j ec t

C o n t r o l M a n a g e r , T u r n o v e r = £ 1 0 0 m i l l i on , E m p l o y -

m e n t = 2 0 0 0 ) .

• C o n s t r u c t i o n i s a r i s k b u s i n e s s - - t h e m a i n c o n t r a c t o r

accep t s a l l r isk s r e l ev a n t t o a co n t r ac t i n t e rm s o f co s t ,

t i m e a n d q u a l it y o f p e r f o r m a n c e ( D i r e c t o r , T u r n o v e r =

£ 1 3 0 m i l l i o n , E m p l o y m e n t = 9 0 0 ) .

• T h e l ik e l i h o o d o f p h y s i c a l , c o n t r a c t u a l o r e c o n o m i c

c o n d i t i o n s b e c o m i n g m o r e d i f f i c u l t t h a n t h o s e a l l o w e d

f o r i n t h e p r i c e ( M a n a g i n g D i r e c t o r , T u r n o v e r = £8 0

m i l l i o n , E m p l o y m e n t = 6 0 0 ) .

• T h e o p p o r t u n i t y t o m a k e a p r o f i t o n a c o n tr a c t w h i l s t

s a t i s fy in g t h e c l i en t q u a l i t y , d e l i v e ry an d co n t r ac t p r i ce

r e q u i r e m e n t s ( D e p u t y M a n a g i n g D i r e c t o r , T u r n o v e r =

£ 1 0 0 m i l l i o n , E m p l o y m e n t = 5 0 0 + ) .

• L o s s o f m o n e y , l os s o f r e p u t a t io n , a n d a c h a n c e o f a n

a c c i d e n t o c c u r r i n g to p e r s o n s o n p r o p e r t y ( D i r e c t o r ,

T u r n o v e r = £ 2 5 m i l l io n , E m p l o y m e n t = 2 0 0 ) .

• T h e l i k e li h o o d o f u n p lan n ed ev en t s o ccu r r in g (D i r ec to r

o f B u s i n e s s D e v e l o p m e n t , T u r n o v e r = £ 4 5 m i l l i o n ,

E m p l o y m e n t = 6 8 ) .

• T h e d e g r e e o f c e r t a i n t y t h a t t h e f i na n c i a l o b j e c t i v e s f o r

e a c h p a r t i c u l a r p r o j e c t w i l l b e a c h i e v e d a n d t h e e x t e n t t o

w h ich r i sk f ac to r s can b e q u an t i f i ed a t b id s t ag e an d

m o n i t o r e d c l o s e l y ( G r o u p D i r e c t o r , T u r n o v e r = £ 2 5 0

m i l l i o n , E m p l o y m e n t = 2 0 0 0 ) .

• T e n d e r o r o n - s i te p e r f o r m a n c e m i s t a k e s l e a d in g t o

q u a l i t y u n d e r p e r f o r m a n c e , c o s t o v e r - r u n a n d a n i m p a c t

o n a l l o f th e s e f r o m a v a r i e t y o f u n f o r e s e e n c i r c u m -

s t a n c e s ( F i n a n c e D i r e c t o r , T u r n o v e r = £ 2 0 0 m i l l i o n ,

E m p l o y m e n t = 2 00 0 ) .

• T h e p r o b a b i l i t y o f a c o n s t r u c t io n a c ti v i ty c o s t in g m o r e

t h a n a l l o w e d f o r i n t h e t e n d e r ( C o n t r a c t M a n a g e r ,

T u r n o v e r = £ 2 0 m i l l io n , E m p l o y m e n t = 6 0 ) .

• C u m u l a t i n g l i a b i li t ie s t h a t a r i s e f r o m a p a r t i c u l a r s e t o f

c o n t r a c t t e r m s f o r a c o n s t r u c t i o n p r o j e c t ( M a n a g i n g

D i rec to r , T u rn o v er = £ 1 7 0 m i l l i o n , E m p lo y m e n t = 8 0 0) .

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R i s k a n a l y s i s a n d m a n a g e m e n t i n c o n s t r u c ti o n : A S A k i n t o y e a n d M J M a c L e o d

• I n s a f e t y t e r m s , a s a n y s e q u e nc e o f e v e n t s w h i c h a r e

l i k e ly to r e s u l t in th e p o s s i b il i t y o f i n j u r y ( C h i e f

E x ecu t iv e , T u rn o v er = £ 3 5 m i l l io n , E m p lo y m en t = 1 7 0) .

• P o t e n t i a l o v e r s p e n d i n g a g a i n s t t e n d e r p r o p o s a l s

( M a n a g i n g D i r e c t o r , T u r n o v e r = £ 5 0 m i l l i o n , E m p l o y -

m e n t = 6 0 0 ) .

• E v a l u a t i n g th e c o m p l e x i t y a s s o c i a t e d w i t h c o n t r a c t s ,

p r o g r a m m i n g p e r i o d a n d r e s o u r c e s c h e d u l i n g o f l a b o u r

a n d p l a n t a t t e n d e r s t a g e ( G r o u p M a n a g i n g D i r e c t o r ,

T u r n o v e r = £ 8 0 m i l l i o n , E m p l o y m e n t = 4 8 0 ) .

• F i n a n c i a l - - d u e t o v a g u e i n f o r m a t i o n , t e n d e r i n g p r o -

c e d u r e . L e g a l - - d u e t o a ct i o n o f o th e r s . S a f e t y p r o b l e m s - -

d u e to t h e n a t u r e o f c o n s t r u c t i o n b u s i n e s s ( G r o u p

M a r k e t i n g D i r e c t o r , T u r n o v e r = £ 1 3 0 m i l l i o n , E m p l o y -

m e n t = 6 0 0 ) .

T h e v i e w s e x p r e s s e d b y t h e c o n t r a c t o r s a r e g e n e r a l l y r is k

e l e m e n t s a s s o c i a t e d w i t h p r o j e c t o b j e c t i v e s 7 . I n s u m m a r y ,

t h e c o n t r a c t o r s p e r c e i v e d r i s k a s t h e l i k e li h o o d o f u n f o r e -

s e e n f a c t o r s o c c u r r i n g , w h i c h c o u l d a d v e r s e l y a f f e c t th e

s u c c e s s f u l c o m p l e t i o n o f t h e p r o j e c t in t e r m s o f c o s t , t i m e

a n d q u a l it y . O n e c o n t r a c t o r , h o w e v e r , s a w r i s k a s a n

o p p o r t u n i t y t o m a k e p r o f i t a n d n o t s o m e t h i n g t h a t w i l l

a l w a y s h a v e a n a d v e r s e e f f e c t .

T h e r i s k p e r c e p t io n o f c o n s t r u c ti o n b y t h e p r o j e c t m a n a g e -

m e n t p r a c t i c e s w e r e n o t m a r k e d l y d i f f e r en t f r o m t h e g e n e r a l

c o n t r a c t o r s . S o m e o f t h e i r c o m m e n t s a r e q u o t e d a s f o l lo w s :

• T h e a c t i v i t i e s / o c u r r e n c e s w h i c h t r a d i ti o n a l l y a r e l i k e l y

( o r t o s o m e d e g r e e w i l l h a p p e n ) t o h a p p e n , a n d t o h a v e

a n a d v e r s e e f f e c t u p o n p r o g r a m m e a n d / o r c o s t ( P l a nn i n g

M a n a g e r , T u r n o v e r = £ 5 m i l l i o n , E m p l o y m e n t = 3 5 ) .

• R i s k i s u n c e r t a i n t y w i t h r e g a r d to e v e n t s a n d t h e i r

e f f e c t s w h i c h a f f e c t s t h e p r o j e c t o u t c o m e i n t e r m s o f

c o s t , t i m e , q u a l i t y a n d a n y o t h e r r e l e v a n t p e r f o r m a n c e

c r i t e r i a ( D i r e c t o r , T u r n o v e r = £ 1 0 m i l l i o n , E m p l o y -

m e n t = 1 0 0 ) .

• S o m e t h i n g t o b e a v o i d e d o r t r a n s f e r r e d ( R e g io n a l

D i r e c t o r , T u r n o v e r = £ 6 m i l l i o n , E m p l o y m e n t = 7 0 ) .

• C o m e s i n v a r y i n g f o r m s - - m o s t p r o je c t s a r e h i g h

r i s k . P e o p l e f o r g e t t h a t c o n s t r u c t i o n i s a p e o p l e ' s b u s i -

n e s s ( C o m m e r c i a l D i r e c t o r , T u r n o v e r = £ 3 . 5 m i l l i o n ,

E m p l o y m e n t = 7 0 ) .

T h e p r o j e c t m a n a g e m e n t p r a c t i c e s , g e n e r a l l y , r e c o g n i z e d

t h a t t h e c o n s e q u e n c e s o f r i s k s d i r e c t l y a f f e c t th e c l i e n t a n d

h i s o b j ec t i v es r a th e r t h an t h e i r p r ac t i ces . T h i s i s n o t su r -

p r i s in g a s p r o j e c t m a n a g e m e n t p r a c t i c e s p r o v i d e c o n s u l t a n c y

s e r v i c e s o n a f e e b a s i s a n d d o n o t c o m m i t l a r g e v o l u m e s

o f r e s o u r c e s t o c o n s t r u c t i o n p r o j e c t s i n t h e m a n n e r o f

c o n t r a c t o r s .

r g a n i z a ti o n a l r i s k m a n a g e m e n t

T h e r e s p o n d e n t s w e r e a s k e d t o i n d i c a t e w h y r i s k m a n a g e -

m en t ( i d en t i f i ca t i o n , an a ly s i s , a s ses sm en t an d co n t ro l ) i s

i m p o r t a n t t o t h e i r o r g a n i z a t i o n s ' a c t i v i t i e s . T h e f o l l o w i n g

a r e a r e p r e s e n t a t i o n o f t he c o n t r a c t o r s r e s p o n s e s :

• T o an a ly se an d co n t ro l r i sk a s t h e k ey to p ro f i t , a s co n -

s t ru c t i o n i s a r i sk y b u s in es s .

• T o e n s u r e t h a t w e a r e r i g h t m o r e o f t e n t ha n w r o n g , a s

r i g h t m a n a g e m e n t o f r i s k i n c o n s t r u c t io n d e t e r m i n e s t h e

ab i l i t y t o m ak e p ro f i t .

• T o a s s e s s a n d a s c e r t a i n p r o j e c t v ia b i l i ty b e c a u s e c o n -

s t r u c t i o n d e v e l o p m e n t i s a b u s i n e s s w i t h a h i g h n u m b e r

o f v a r i a b l e s .

• T o m i n i m i z e l o ss b y r i s k m a n a g e m e n t i n a n i n du s t r y

w h e r e e v e n n o r m a l c o n t r a c t i n g c a u s e s d i f f i c u l t i e s .

• T o id en t i fy p ro j e c t r isk s an d q u an t i fy t h e p o t en t i a l co s t

o f e a c h r i s k a n d p l a n f o r i t ; o r w o r k a r o u n d i t t o a l le v i a t e

th e r i sk .

• T o d e t e r m i n e i f th e f i r m i s m a k i n g a n a d e q u a t e p r o f i t o n

a p a r t i c u la r p r o j e c t . T h e h i g h e r t h e r i s k th e g r e a t e r m u s t

b e t h e p o t e n t i a l r e w a r d .

• T o a v o i d u n s a ti s f a c t o r y p r o j e c t s a n d t o e n h a n c e m a r g i n s .

• T o c o n t r o l f a c t o r s w h i c h w i l l d e t e r c o m p l e t i o n o f p r o -

j e c t s w i t h i n b u d g e t a n d s c h e d u l e .

• T o k e e p i n s u r a n c e p r e m i u m s to a c c e p t a b l e l e v e l s , a nd

r e d u c e l o s s e s .

P r o j e c t m a n a g e m e n t p r a c t i c e s a n d c o n t r a c t o r s h a v e d i f -

f e r e n t r e a s o n s f o r us i n g r i s k m a n a g e m e n t . T h e f o r m e r s e e k :

• T o l i m i t p r o f e s s i o n a l in d e m n i t y c l a i m s .

• T o p r o v i d e a n u n d e r s t a n d i n g a n d c o n t r o l r i s k s in th e

p ro j ec t s .

• T o a l l o w a p p r o p r i a t e m e a s u r e s t o b e t a k e n , t o c o n tr o l

t h e e f f e c t s o f r i s k s a n d p r o v i d e c o s t c o n t i n g e n c y f o r

cl ien ts .

• T o p r o t e c t t h e f i r m ' s c r e d i b i li t y a n d r e p u t a t i o n - - n o t o f

m a j o r i m p o r t a n c e i n t h e p a s t , b u t e x p e c t e d t o b e c o m e

s i g n i f i c a n t . F a i l u r e t o m a n a g e r i s k s o n o u r c l i e n t s '

p r o j e c t s c a r r i e s s o m e c o m m e r c i a l r i s k a s w e l l a s l o s s o f

c red ib i l i t y an d r ep u ta t i o n .

T h e c o n t r a c t o r s g e n e r a l l y a g r e e d t h a t t h e i n d u s tr y w i t h in

w h i c h t h e y w o r k i s a s s o c i a t e d w i t h h i g h r i s k a n d s a w r i s k

m a n a g e m e n t a s b e i n g e s s e n t i a l t o th e i r o v e r a l l c o n s t r u c ti o n

a c t i v i ti e s in o r d e r t o m i n i m i z e b u s i n e s s l o s s e s . B y m e a n s o f

a n a l y s i s a n d c o n t r o l o f t h e r i s k s t h a t t h e y a r e e x p o s e d t o ,

t h e y c a n m a x i m i z e t h e i r b u s i n e s s p r o f i ta b i l it y . A l t h o u g h a l l

r e s p o n d e n t s p e r c e i v e d r i s k i n t e r m s o f p r o j e c t o b je c t i v e s

o f c o s t , t i m e a n d q u a l i t y , t h e c o n t r a c t o r s r e s p o n s e s t o t h e

n e e d f o r r i s k m a n a g e m e n t s h o w e d m o s t e m p h a s i s o n r i s ks

a s s o c i a t e d w i t h c o s t , u n d e r s t a n d a b l y s o g i v e n t h a t t h is

a f f ec t s p ro f i t ab i l i t y .

A l t h o u g h t h e p r o j e c t m a n a g e m e n t p r a c t ic e s a r e c o n c e r n e d

w i t h r i s k m a n a g e m e n t i n r e la t i o n t o t h e c l i e n t ' s o b j e c t i v e s ,

t h e n e e d t o m a n a g e r i s k i s i m p o r t a n t t o t h e m b e c a u s e o f t h e

n e e d t o l i m i t p r o f e s s i o n a l i n d e m n i t y c o s t s a n d t o p r o t e c t t h e

o r g a n i z a t i o n ' s r e p u t a t i o n .

R i s k p r e m i u m i n c o n s t r u ct i o n

P e r r y a n d H a y e s 3 a n d M u s t a f a a n d A 1 - B a h a r 9 h a v e i d e n -

t i f i ed so m e r i sk s so u rces cen t r a l t o t h e co n s t ru c t i o n ac t i -

v i t ie s . T h e s e a r e p h y s i c a l , e n v i r o n m e n t a l , d e s i g n , l o g i st i c s ,

f i n an c i a l , l eg a l , p o l i t i ca l , co n s t ru c t i o n an d o p e ra t i o n r i sk s .

A s t h e s e r i s k s o u r c e s i n f l u e n c e p r o j e c t s p e r f o r m a n c e i n

t e r m s o f t im e , c o s t a n d q u a l i ty , i t i s n o t u n c o m m o n f o r

t h e s e t o b e a s s e s s e d i n d i v i d u a l l y a n d a p r e m i u m p l a c e d o n

e a c h o f t h e m . A r i s k p r e m i u m s t r a t e g y w h i c h i s o f t e n u s e d

i n c o n s t r u c t i o n p r o j e c t s i s c o n t i n g e n c y a l l o w a n c e . D e y

e t a l 2°

p r o d u c e d a c a t a l o g u e o f r i s k s a n d c o n t i n g e n c y

a l l o w a n c e i n p e t r o c h e m i c a l c o n s t r u c t i o n p r o j e c t . T h e

s t u d y b y D e y

e t a l 2 °

d e s c r i b e d a s y s t e m a t i c p r o c e d u r e f o r

a n a l y s i n g p r o j e c t r i s k f r o m t h e c o n s t r u c t i o n p e r s p e c t i v e .

y e o 2 , a n d D e y

e t a l 2 °

d e s c r i b e d t h e c o n t i n g e n c y a l l o w a n c e

f o r a h i g h r i s k p r o j e c t a s a c o m b i n a t i o n o f m a n a g e m e n t

c o n t i n g e n c y a n d t e c h n i c a l c o n t i n g e n c y ; b o t h o f w h i c h a r e

r e q u i r e d t o a c h i e v e a p r o j e c t o b j e c t i v e ( s ) .

T h e p r e m i u m p l a c e d o n e a c h o f t h e s o u r c es o f r i s k m a y

d e p e n d o n t h e r i s k e x p o s u r e f a c e d b y i n d i v i du a l f i r m s f r o m

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Risk analysis a nd management in construction. A S Akintoye and M J MacLeod

T ab l e 1 Pe r c e p t ion s o f p r e m i u m p l ac e d on th e s ou r c e s o f

risk (

of respondents

Contractors

4 3 2 1 0

Pr o je c t m an age m e n t p r ac t i c e s

4 3 2 1 0

Environmental (e.g. weather)

Political, Social & Econ omic (e.g. inflation)

Contractual agreement (e.g. responsibilities)

Financial

Construction (productivity, injury, safety)

Market/ind ustry (availability of workload)

Company (corporate)

Development in IT

Project (design information)

0 8 33 33 26

0 17 66 0 17

62 31 7 0 0

46 38 0 0 16

17 25 42 8 8

31 38 31 0 0

8 38 46 0 8

0 8 25 25 42

34 42 8 8 8

8 30 48 14 0

10 41 26 14 9

55 31 10 4 0

55 41 0 4 0

17 62 17 4 0

11 62 17 4 0

18 29 31 18 4

0 18 39 29 14

3 66 24 7 0

Exten t of risk prem ium: 4 = high; 3 = fairly high; 2 = low; 1 = fairly low; 0 = indifferent.

e a c h o f t h e s o u r c e s , t h e l i k e l i h o o d o f o c c u r r e n c e , t h e

e x p e r i e n c e o f t h e f i r m i n d e a li n g w i t h th e p a r t i c u l a r t y p e o f

r i sk , t h e a t t i t u d e o f t h e f i rm to r i sk , t h e ex t en t o f im p a c t

p o s e d b y t h e s o u r c e s , e t c . S o m e o f t h e r i s k so u r c e s a r e

m o r e i m p o r t a n t t o t h e c o n s t r u c t io n i n d u s t r y t h a n t h e o t h e r s

a n d t h i s i s r e c o g n i z e d b y t h e d i f f e r e n t p r e m i u m p u t o n

d i f f e r en t r i sk s a s so c i a t ed w i th co n s t ru c t i o n .

T h e r e s p o n d e n t s w e r e a s k e d t o i n d i c a t e t h e e x t e n t o f

p r e m i u m t h e i r o r g a n i z a t i o n s a p p l i e d t o e a c h r i s k s o u r c e .

T h e r e s p o n s e s a r e s u m m a r i z e d i n Table 1 T h e o r g a n i z a t i o n

r i s k p r e m i u m i n d e x , r e p r e s e n t i n g t h e o v e r a l l r e s p o n d e n t s

v i e w s o f t h e i r o r g a n i z a t i o n s p r e m i u m o n th e s o u r c e s o f

r i sk , i s sh o w n in Table 2

T h e t a b l e s s h o w t h a t b o t h t h e c o n t r a c t o r s a n d t h e p r o j e c t

m a n a g e r s a r e q u i t e s i m i l a r i n th e o r d e r o f i m p o r t a n c e

a t t ach ed to t h e so u rces o f r i sk . T h e f i n an c i a l an d co n t r ac tu a l

r i s k s a r e m o s t i m p o r t a n t . T h e s e a r e r e c o g n i z e d a s h a v i n g

m o s t a d v e r s e c o n s e q u e n c e s o n t h e s u c c e s s f u l c o m p l e t i o n

o f co n s t ru c t i o n p ro j ec t . B u i ld in g co n t r ac t s d ea l w i th t h e

r e l a t io n s h i p s b e t w e e n p a r t i e s i n t h e c o n t r a c t a n d t h e a l l o c a -

t i o n o f r i sk s . C a r r 22 an d A sh ley 23 ad v o ca t e b a l an c in g o f

r i s k a l l o c a ti o n w i t h i n c o n s t r u c t i o n p r o j e c t b y t h e t w o m a j o r

p a r t i e s t o t h e co n t r ac t (b u i ld in g o w n er an d th e co n t r ac to r )

b u t , b u i l d i n g c o n t r a c t s a n d p r o c u r e m e n t m e t h o d s s e l d o m

a c h i e v e d t h i s . C o n t r a c t u a l r i s k s a r e t h o s e a s s o c i a t e d w i t h

f l a w s i n c o n t r a c t d o c u m e n t s , i n a p p r o p r i a t e d o c u m e n t s , o r

i m p r o p e r c o n t r a c t u a l r e l a ti o n s h ip s . T h e r i s k c o n s e q u e n c e s

o r i m p l i c a t i o n s o f c o n t r a c tu a l r i s k s i n c l ud e c l a i m s a n d

d i s p u t e s , d i s r u p t io n o f w o r k , s t o p p a g e s o f w o r k , l a c k o f c o -

o rd in a t i o n , d e l ay s , an d in f l a t ed co st s 6'24. F in an c i a l r i sk t o

co n t r ac to r s i n c lu d es w h e th e r t h e b u i ld in g o w n er h as en o u g h

m o n e y t o c o m p l e t e t h e p r o j e c t , f i n a n c i a l f a i l u r e o f t h e

b u i l di n g o w n e r o r s u b c o n t r a c t o r s , a v a i l a b i li t y o f m o n e y t o

t h e c o n t r a c t o r i n a s u i t a b l e m a n n e r a n d t i m e t o e n a b l e t h e

c o n t r a c t o r t o p r o g r e s s w i t h t h e w o r k , e t c . F i n a n c i a l r i s k

in f lu en ces t h e cash f l o w o f co n s t ru c t i o n co n t r ac to r s ; i t i s

h a rd ly su rp r i s in g t h e re fo re t h a t th i s so u rce o f r i sk i s h ig h ly

i m p o r t a n t f o r t h e m .

C o n s t ru c t i o n r i sk s , o r j o b s i t e r e l a t ed r i sk s su ch a s av a i l -

ab i l i t y an d p ro d u c t iv i t y o f l ab o u r , so i l an d s i t e co n d i t i o n s ,

m a te r i a l sh o r t ag es an d q u a l i t y , s i t e s a f e ty , e t c . a r e im p o r -

t a n t t o t h e c o n t r a c t o r s u n l i k e t h e p r o j e c t m a n a g e m e n t

p r a c t i c e s b e c a u s e t h e s e r i s k s a r e r e l a t e d t o c o n s t r u c t i o n

p r o c e s s o n s i te . T h e a t t it u d e o f p r o j e c t m a n a g e m e n t p r a c -

t i c e s t o r i s k i s e x p e c t e d t o c h a n g e i n v i e w o f t he c u r r e n t

C o n s t r u c t i o n ( D e s i g n a n d M a n a g e m e n t ) R e g u l a t i o n s , 1 9 9 4

( C O N D A M ) o n h e a l t h a n d s a f e t y , t h a t d e m a n d s t h a t t h e

e m p l o y e r s a g e n t s re s p o n s i b l e f o r d e s i g n a n d s u p e r v i s i o n

s h o u l d p r o v i d e i n f o r m a t i o n o n d e t a i l s o f r i s k s a n d a v o i d

f o r e s e e a b l e r i s k s t o t h e h e a l t h a n d s a f e t y o f a n y p e r s o n a t

w o rk c a r ry in g o u t t h e c o n s t ru c t i o n w o r k , e t c . 25.

a na g e me nt o f r i sk

M e t h o d s o f r i s k a l l o c a t i o n t a k e a n y o n e o r c o m b i n a t i o n

o f r i sk r e t en t io n , r i sk tr an s fe r , r i sk r ed u c t io n , an d r i sk

a v o i d a n c e 26-29.

R i sk r e t en t io n , acco rd in g t o W i l l i am s an d H e im s 3°,

b e c o m e s t h e o n l y o p t i o n w h e r e r i s k p r e v e n t i o n o r t r a n s f e r

i s im p o ss ib l e , av o id an ce i s u n d es i r ab l e , p o ss ib l e f i n an c i a l

l o s s is sm a l l , p ro b ab i l i t y o f o cc u r r en ce i s n eg l ig ib l e an d

t r a n s f e r i s u n e c o n o m i c . R i s k a v o i d a n c e i n c o n s t r u c t i o n i s

g e n e r a l l y r e c o g n i z e d t o b e i m p r a c t i c a l a s i t m a y l e a d t o

p r o j e c t s n o t g o i n g a h e a d o r a c o n t r a c t o r s u b m i t t i n g a n e x -

ces s iv e ly h ig h b id fo r a p ro j ec t . R i sk r ed u c t io n t ech n iq u es

a s a r e s u l t , i n t e r m s o f p o te n t i a l i m p a c t o r p r o b a b i l i t y o f

o ccu r r en ce , i n c lu de t h e u se o f a l t e rn a t i v e co n t r ac t s t r a t eg i e s ,

d i f fe r e n t m e t h o d s o f c o n s t r u c t io n , p r o j e c t r e d e s i g n , m o r e

d e t a i l ed an d fu r th e r i n -d ep th s i t e i n v es t i g a t i o n s , e t c . 3~.

R i s k t r a n s f e r is d e s c r ib e d b y P e r r y a n d H a y e s3 w h o id en t i fy

f o u r m e t h o d s u s e d i n c o n s t r u c t i o n p r o j e c t s a n d c o n t r a c t s

in v o lv in g t h e r e l a t i o n sh ip s b e tw een c l i en t , co n t r ac to r , su b -

c o n t r a c t o r , d e s i g n t e a m , i n s u r e r a n d s u r e t y .

Table 3 s h o w s t h e v i e w s o f t h e r e s p o n d e n t s o n h o w t h e i r

f i rm s t en d to a l l o ca t e r i sk i n v o lv ed in co n s t ru c t i o n p ro j ec t .

T h e s t a n d a r d d e v i a t i o n s s h o w a w i d e v a r i a t i o n o n t h e

T ab l e 2 I n d e x o f

organization risk

p r e m i u m

C on tr ac tor s Pr o je c t m an age m e n t p r ac t ic e s

All firms

Environmental (e.g. weather)

Political, Social & Economic (e.g. inflation)

Contractual arrangement (e.g. responsibilities)

Financial

Construction (productivity, injury, safety)

Market/in dustry (availability of workload)

Company (corporate)

Development in IT

Project (design information)

2.33 1.69 2.05

2.52 2.20 2.37

3.40 3.54 3.44

3.50 3.55 3.50

2.93 2.50 2.71

2.90 3.00 2.95

2.50 2.58 2.56

1.89

1.71 1.81

2.69 3.08 2.88

i=4

Organization risk pr emium index (RPI) is defined as RPI = ~ E~ P~, where E = ith extent of premium; and P, = percentage of respondents.

i=

3 4


6/9


T ab l e 3 R e s p on d e n ts p e r c e p t ion s o f h ow c on s tr u ct i on p r o je ct s r i s k s ar e a ll oc a te d b y th e i r f i r m s (a s a p e r c e n tage )

S tr a te g ie s for r i s k a l l oc a t ion C on tr ac tor s Pr o je c t m an a ge m e n t p r ac t ic e s A l l f i r m s

(r isk response)

M e a n

( ) S.D. Mean ( ) S.D. Mean ( ) S.D.

Retention 24 23 27 23 25 23

Reduction 21 13 17 14 19 14

Tran sfe r 31 21 39 38 34 26

Avoidance 24 20 17 22 22 21

Total 100 100 100

a l l o c a t io n o f r i s k s a m o n g s t t h e f i r m s , s u g g e s t i n g t h a t f i r m s

w i th in t h e co n s t ru c t i o n i n d u s t ry t en d to t r ea t r i sk a l l o ca t i o n

d i f f e r e n t l y . H o w e v e r , t h e f i r m s s h o w m o r e t e n d e n c y t o

t r a n s f e r r i s k a s s o c i a t e d w i t h c o n s t r u c t i o n p r o j e c t s .

Table

s h o w s t h e f i r m s ' s t r a t e g ie s f o r t r a n s f e r r i n g r i s k s

i n v o l v e d i n c o n s tr u c t i o n p r o j e c t s . M o s t o f t h e c o n t r a c t o r s

( 6 3 ) u s e a ' b a c k - t o - b a c k ' s u b - c o n t ra c t a g r e e m e n t to t h e

m a i n c o n t r a c t w i t h s p e c i a l i s t a n d d o m e s t i c s u b c o n t r a c t o r s .

A n o t h e r m e t h o d p o p u l a r w i t h t h e c o n t r a c t o r s i s i n s u r a n c e .

T h e p r o j e c t m a n a g e r s c h o o s e t o t r a n s f e r r is k s u s i n g p r o f e s -

s i o n al i n d e m n i t y a n d t h r o u g h t h e w o r d i n g s o f c o n t r a c t

co n d i t i o n s w i th c l i en t an d d es ig n e r s . T h i s i s p o ss ib l e fo r

p r o j e c t m a n a g e m e n t p r a c t i c e s b e c a u s e t h e y p r o v i d e p r o -

f e s s i o n a l s e r v i c e s r a t h e r t h a n s i t e c o n s t r u c t i o n i n v o l v i n g

s u b s t a n t i a l d i r e c t r e s o u r c e c o m m i t m e n t .

ur r e nt usa g e o f r i sk ma na g e me nt t e c hn ique s

T e c h n i q u e s o f r i s k a n a l y s i s i n c o n s t r u c t i o n p r o j e c t s i n c l u d e

r i s k p r e m i u m , r i s k a d j u s t e d d i s c o u n t r a t e , s u b j e c t i v e p r o b -

a b i l it y , d e c i s i o n a n a l y s i s , s e n s i t i v i ty a n a l y s i s , M o n t e C a r l o

sim ulat io n , s tocha st ic dom ina nce , C asp ar and in tu i t ion 29-32 .

M e t h o d s o f d e c i si o n a n a l y s i s a r e a l g o r i t h m s , m e a n e n d

a n a l y s i s , b a y e s i a n t h e o r y a n d d e c i s i o n tr e e s . T h e s e p r o v i d e

d e c i s i o n - m a k i n g t o o l s i n a n u n c e r t a i n e n v i r o n m e n t . A n

a l g o r i t h m c o n t a i n s a s e q u e n c e o f i n s t ru c t i o n s f o r p r o b l e m

s o l v i n g . M e a n e n d a n a l y s i s i s a m e t h o d o f c l a r i f y in g a c h a i n

o f o b j e c t i v e s t o i d e n t if y a s e r i e s o f d e c i s i o n p o i n t s . T h e

d e c i s i o n tr e e s h o w s s e q u e n c e o f k n o w n c h o i c e s ( a n u m b e r

o f a l t e r n a ti v e s ) a n d t h e i r p o s s i b l e o u t c o m e s g r a p h i c a l l y i n

a t r e e f o r m s u c h t h a t t h e d e c i s i o n m a k e r c a n i d e n t i f y b e s t

a l t e r n a t i v e s t h a t a c h i e v e t h e o b j e c t i v e s o f a m a j o r p r o j e c t .

T h e d e c i s i o n t r e e m e t h o d i s u s e f u l i n d e c i d i n g m e t h o d s o f

co n s t ru c t i o n , ch o o s in g a l t e rn a t i v e p ro j ec t s , an d i n co n t r ac tu a l

p r o b l e m s s u c h a s w h e t h e r t o p r o c e e d w i t h a c l a i m a n d

asses s in g t h e l i k e l i h o o d o f a c l a im su ccee d in g 33.

M o n t e C a r l o a n a l y s i s i s a f o r m o f s t o c h a s t i c s i m u l a t i o n .

U s i n g t h i s m e t h o d t h e p r o b a b i l i t y o f p r o j e c t o u t c o m e i s

o b t a i n e d b y c a r r y i n g o u t a n u m b e r o f i t e r a ti o n s , d e p e n d i n g

o n t h e d e g r e e o f c o n fi d e n c e r e q u i r e d . C a s p a r i s a c o m p u t e r

a i d e d s i m u l a t i o n f o r p r o j e c t a p p r a i s a l a n d r e v i e w . I t i s a

p r o j e c t m a n a g e m e n t t o o l d e s i g n e d t o m o d e l t h e i n t e r a c t i o n

o f t i m e , r e s o u r c e s , c o s t a n d r e v e n u e t h r o u g h o u t t h e e n t i r e

T ab l e 4 H ow r i s k s ar e t r an s fe r re d b y fi r m s

l i f e o f a p r o j e c t a n d i t h a s c a p a c i t y t o e v a l u a t e t h e c o n -

seq u en ce s o f f ac to r s su ch a s d e l ay an d in f la t i o n , an d ch an g es

to t h e m ark e t o r t o p ro d u c t io n

ra te s 34.

S u c h c o m p u t e r - b a s e d

m e t h o d s r e c o g n i z e t h e d y n a m i c p r o j e c t e n v i r o n m e n t . T h e

u s e o f t r a d i t io n a l m e t h o d s w h i c h a s s e s s r i s k i n v o l v e d i n

p ro j ec t s i n a d e t e rm in i s t i c w a y h as b een c r i t i c i zed fo r f a i l i n g

to t ak e i n to acco u n t t h e seq u en t i a l n a tu re o f co n s t ru c t i o n

m a n a g e m e n t p r o c e s s 35. H u s e b y a n d S k o g e n 35 a r e o f t h e

o p in io n t h a t i n a r ea l i s t i c r i sk m o d e l , p ro j ec t u n ce r t a in ty

m u s t b e m o d e l l e d a s a d y n a m i c p r o c e s s i n w h i c h t h e

d e c i s i o n - m a k e r c a n r e v i s e h i s / h e r p l a n s a s t h e p r o j e c t r u n s .

S u b j e c t i v e p r o b a b i l i t y u s e s t h e e x p e r i e n c e g a i n e d f r o m

s i m i l a r p r o j e c t s u n d e r t a k e n i n t h e p a s t b y t h e d e c i s i o n -

m a k e r , w h e r e d e c i s i o n - m a k i n g i s c h a r a c t e r i z e d b y r i s k , t o

d e c i d e o n t h e l i k e l i h o od o f r i s k e x p o s u r e a n d t h e o u t c o m e s .

R i s k p r e m i u m s i n c o n s t r u c t i o n p r o j e c t s t a k e t h e f o r m o f

c o n t i n g e n c i e s o r a d d e d m a r g i n s t o a n e s t i m a t e t o c o v e r

u n f o r e s e e n e v e n t u a l it i e s. T h e a m o u n t o f t h e p r e m i u m v a r i e s

b e t w e e n p r o j e c t s a n d i s m o s t l y d e p e n d e n t u p o n a t t e n d a n t

r i s k a n d t h e d e c i s i o n - m a k e r ' s r i s k a t t i t u d e .

T h e r e s p o n d e n t s w e r e a s k e d t o i de n t i f y w h i c h o f t he s e

r i s k a n a l y s i s t e c h n i q u e s t h e y a r e f a m i l i a r w i t h , a n d o n e s

t h a t a r e b e i n g u s e d b y t h e i r f i r m s f o r p r o j e c t r i s k a n a l y s i s

a n d m a n a g e m e n t .

Table 5

sh o w s th a t th e u se o f r i sk an a ly s i s

t e c h n i q u e s b y t h e r e s p o n d i n g f i r m s i s g e n e r a l l y l o w i n c o n -

s t ru c t i o n p ro j ec t s w i th t h e ex cep t io n o f i n tu i t i o n / ju d g e -

m en t / ex p e r i en ce . T h i s t en d s t o su p p o r t B i r ch an d M cE v o y j4

t h a t th e a p p r o a c h t o r i s k a n a l y s i s i s l a r g e l y b a s e d o n t h e u s e

o f c h e c k l i s t b y m a n a g e r s , w h o t r y t o th i n k o f a l l p o s s i b l e

r i s k s a n d t a k e a p p r o p r i a t e a c t i o n . J a m i e s o n a n d

LOW 6

h a v e f a u l t e d t h i s m e t h o d o f r i s k a n a l y s i s b y m a i n t a i n i n g

th a t , a l t h o u g h i t i s p o ss ib l e t o m ak e a l o n g l i s t t h a t i s

r e a s o n a b l y c o m p r e h e n s i v e , t h i s a p p r o a c h g i v e s l i t t l e c o n -

f id en ce t h a t a l l r i sk s h av e b een id en t i f i ed . T h e t ab l e sh o w s

th a t m o s t o f t h e r e sp o n d en t s a r e f am i l i a r o n ly w i th sen s i t i v i ty

a n a l y s i s t e c h n i q u e ( C T R = 5 3 , P M = 6 9 ) . T h i s i s f o l -

l o w e d b y d e c i s i o n t r e e s , M o n t e C a r l o s i m u l a t i o n a n d

su b jec t i v e p ro b ab i l i t y .

C h eck l i s t s b ased o n i n tu i t i o n / ju d g em en t / ex p e r i en ce w h ich

r e c o r d e d t h e h i g h e s t f a m i l i a r it y w i t h r e s p o n d e n t s c a n n o t b e

r e g a r d e d a s a f o r m a l t e c h n i q ue . A l t h o u g h t h e s a m p l e f r o m

p r o j e c t m a n a g e m e n t p r a c t i c e s i s s m a l l e r , t h e r e s u l t s t e n d

t o s u g g e s t t h a t t h e p r o j e c t m a n a g e r s , c o m p a r e d w i t h t h e

C on tr ac tor s Pr o je c t m an age m e n t p r ac t ic e s

No. No.

To subcontracting (including specialist contracto rs)--on back-to-back

subcontract agreement

Contractual terms--qualification of tender, procurement route and contractual

exclusions where possible

To design teams/consultants

To clients

To insurance/professional indemnity

Contractors

19 63 0 0

5 17 2 15

6 20 2 15

4 13 1 8

10 33 4 31

0 0 3 23

35


7/9


T a b l e 5 T e c h n i q u e s o f r i s k m a n a g e m e n t ( o f r e s p o n d e n t s )

C o n t r a c t o r s

R e s p o n d e n t f a m i l i a r U s e w i t h i n o r g a n i z a t i o n

P r o j e c t m a n a g e m e n t p r a c t i c e s

R e s p o n d e n t f a m i l i a r U s e w i t h i n o r g a n i z a t i o n

R i s k p r e m i u m 2 7 3 3 2 3 8

R i s k a d j u s t e d d i s c o u n t r a t e 1 7 7 8 0

S u b j e c t i v e p r o b a b i l i t y 1 7 2 3 3 8 4 6

D e c i s i o n a n a l y s i s

A l g o r i t h m s 3 0 8 0

M e a n e n d a n a l y s i s 7 0 0 0

D e c i s i o n t r e e s 2 7 1 3 3 8 2 3

B a y e s i a n t h e o r y 7 0 0 0

S e n s i t i v i t y a n a l y s i s 5 3 5 3 6 9 3 8

M o n t e C a r l o s i m u l a t i o n 2 0 3 4 6 3 1

S t o c h a s t i c d o m i n a n c e 0 0 0 0

C a s p a r 0 0 0 0

I n t u i t i o n / j u d g e m e n t / e x p e r i e n c e 7 7 7 7 1 0 0 1 0 0

c o n t r a c t o r s , h a v e m o r e a w a r e n e s s o f r is k a n a l y s i s a n d

m a n a g e m e n t t e c h n i q u e s .

A l m o s t a l l o r g a n i z a t i o n s d e p e n d o n i n t u i ti o n / j u d g e m e n t /

e x p e r i e n c e t o m a n a g e r i s k s i n v o l v e d i n c o n s tr u c t io n . T h i s i s

f o l l o w e d b y s e n s i ti v i ty a n a l y s is ( C T R = 5 3 % , P M = 3 8 % ) .

T h e p o p u l a r i t y o f s e n s i t i v i t y a n a l y s i s c o m p a r e d w i t h a n y

o t h e r f o r m a l t e c h n i q ue s o f p r o j e c t r i s k a n a l y s i s a n d m a n -

a g e m e n t i s p r o b a b l y b e c a u s e i t p r o v i d e s a n s w e r s t o a w h o l e

r a n g e o f ' w h a t i f ' q u e s t i o n s , i t i s c o m p a r a t i v e l y s i m p l e t o

u se a n d h as t h e ab i l i t y t o fo cu s o n a p a r t i cu l a r e s t im a te 28.

T h e t e c h n i q u e p r o v i d e s i n f o r m a t i o n o n t h e p r o j e c t r i s k

v a r i a b l e s w h i c h a r e c o n s i d e r e d t o b e o f p o t e n ti a l l y s e r io u s

i m p a c t o n p r o j e c t c o s t a n d t i m e e s t i m a t e s . O t h e r t e c h n i q u e s

s u c h a s s u b j e c t i v e p r o b a b i l i t y a n d M o n t e C a r l o s i m u l a t i o n

r e q u i r e q u a n t if i c a t io n o f p r o b a b i l i t y o f o c c u r r e n c e a n d

p r o b a b i l i t y d i s tr i b u ti o n o f r i s k f a c t o r s b e f o r e t h e p r o c e d u r e s

i n v o l v e d i n c a l c u l a t io n s c a n b e u n d e r t a k e n . T h e c o m p u t e r -

b a s e d t e c h n i q u e s l i k e s t o c h a s t i c d o m i n a n c e , C a s p a r , m e a n

e n d a n a l y s i s a n d a l g o r i t h m s a r e n o t u s e d b y t h e f i r m s . W i t h

th e ex cep t io n o f ch eck l i s t s an d sen s i t i v i t y an a ly s i s , t h ese

resu l t s g e n e ra l l y co n t r ad i c t t h o se o b t a in ed b y S im i s t e r t °,

t h i s c o u l d b e e x p l a i n e d b y t h e w o r k - r e l a t e d b a c k g r o u n d

o f h is r e s p o n d e n t s w i t h s o m e s k e w n e s s t o w a r d s I T - r e l a t e d

f ie lds .

T h e r e s p o n d e n t s w e r e a s k e d f o r t h e r e a s o n s w h y s o m e o f

t h e s e t e c h n i q u e s a r e n o t u s e d i n th e i r f i r m s . T h e r e s p o n s e s

f r o m t h e c o n t r a c t o r s h a v e b e e n s e p a r a t e d f r o m t h e p r o j e c t

m a n a g e r s .

T h e r e a s o n s p r o v i d e d b y c o n t r a c t o r s f o r n o t u s i n g t h e

t e c h n i q u e s o f r is k a n a l y s i s a n d m a n a g e m e n t w e r e :

• L ac k o f f am i l i a r i t y w i th t h e t ech n iq u es .

• T h e d e g r e e o f s o p h is t i c a ti o n i n v o l v e d in t he t e c h n i q u e s

i s u n w a r r a n t e d f o r p r o j e c t p e r f o r m a n c e .

• T i m e p lu s l a c k o f i n f o r m a t i o n a n d k n o w l e d g e .

• D o u b t s w h e t h e r t h e s e t e c h n iq u e s a r e a p p l i c a b l e t o t h e

co n s t ru c t i o n i n d u s t ry .

• M o s t c o n s t ru c t i o n p r o j e c t s a r e s e l d o m l a r g e e n o u g h t o

w a r r a n t t h e u s e o f t h e s e t e c h n iq u e s o r r e s e a r c h i n t o t h e m .

• T h e y r e q u i r e a v a i l a b i l i t y o f s o u n d d a t a t o e n s u r e

co n f id en ce .

• T h e v a s t m a j o r i t y o f r is k s a r e c o n tr a c t u a l o r c o n s t r u c t i o n

r e l a t e d a n d a r e f a i r l y s u b j e c t i v e , h e n c e t h e y a r e b e t t e r

d e a l t w i t h b a s e d o n e x p e r i e n c e f r o m p r e v i o u s c o n t r a c t s

u n d e r t a k e n b y t h e f i r m .

• I t is d i f f icu l t to see the bene f i t s .

T h e r e a s o n s p r o v i d e d b y t h e p r o j e c t m a n a g e r s w e r e p a r -

t i c u l a rl y r e f l e c t i v e o f t h e s e r v i c e s t h e y p r o v i d e t o t h e i r

c l ien ts :

• R i s k a n a l y si s o f c o n s t r u c t io n p r o j e c t s is s e l d o m f o r m a l l y

r e q u e s t e d b y c l i e n t s - - c li e n t s e x p e c t p r o j e c t m a n a g e m e n t

p r a c t i c e t o s e t u p p r o j e c t s r i s k - f l e e .

• R i s k a n a l y s is in c o m m e r c i a l t e r m s i s n o t a l w a y s v i a b l e

o n p ro j ec t s .

• P r o j e c t r i s k m a n a g e m e n t i s a b o u t p e o p l e n o t s ci e n ti f ic

m o d e l s .

• L a c k o f e x p e r t i z e in th e t e c h n iq u e s .

L a c k o f f a m i l i a r i t y f e a t u r e d p r o m i n e n t l y a m o n g s t t h e

r e a s o n s p r o v i d e d b y t h e r e s p o n d e n t s f o r n o n - u s e o f f o r m a l

r i s k m a n a g e m e n t t e c hn i q u e s . T h i s i s fo l l o w e d b y t h e c la i m

th a t t h e am o u n t o f ca l cu l a t i o n s i n v o lv ed u s in g t he t ech n iq u es

i s u n w a r r a n t e d i n o r d e r t o m e e t t h a t p r o j e c t ' s o b j e c t i v e s o f

t i m e , c o s t a n d q u a l i t y . T h e c o m m e n t s a r e n o t p a r t i c u l a r l y

s u r p r i s i n g c o n s i d e r i n g t h e l a c k o f f o r m a l t r a i n i n g i n r i s k

a n a l y s i s a n d m a n a g e m e n t t e c h n i q u e s b y m o s t o f th e r e s p o n -

d en t s .

S c h o n s 37

a s s e r t i o n , s u p p o r t e d b y t h e r e s p o n d e n t s '

c o m m e n t s , b e c o m e s r e l e v a n t i n t h e si t ua t io n t h at M a n a g e r s

h a v e b e c o m e a c u t e l y a w a r e t h a t t h e y a r e o f t e n c o n f r o n t e d

w i t h u n i q u e s i t u a t i o n s t o w h i c h t h e y m u s t r e s p o n d u n d e r

c o n d i t io n s o f s t r e s s a n d l i m i t e d t i m e w h i c h l e a v e n o r o o m

f o r e x t e n d e d c a lc u l a t io n o r a n a l y s i s . T h e e v i d e n c e t h a t th e

c o n s t r u c t io n i n d u s t r y b u s i n e s s m a n a g e m e n t d e c i s i o n s , l i k e

m o s t d e c i s i o n - m a k i n g p r o c e s s e s i n v o l v i n g p r o f e s s i o n a l s

( see R ef l ec t i v e P rac t i t i o n e r s3 7 ) , d ep en d s su b s t an t i a l l y o n

in tu i t i o n an d ex p e r i en ce , r a th e r t h an q u an t i t a t i v e an a ly s i s

i r r e sp ec t iv e o f ed u ca t io n a l an d p ro fes s io n a l q u a l i f i ca t i o n ,

i s su p p o r t ed b y t h e f i rm s ' a t t i t u d es t o r i sk an a ly s i s an d

m a n a g e m e n t t e c h n i q u e s .

i s c u s s i o n a n d c o n c l u s i o n

R isk e l em en t s a s so c i a t ed w i th co n s t ru c t i o n p ro j ec t s i n f lu en ce

t h e t i m e , c o s t a n d q u a l i ty p e r f o r m a n c e o f th e p r o j e c t . R i s k

m a n a g e m e n t t h e r e f o r e b e c o m e s a c o n t i n u i n g a c t i v i t y i n

p r o j e c t d e v e l o p m e n t , f r o m i n c e p t i o n a n d t h r o u g h o u t t h e

l i f e o f t h e p ro j ec t .

T h e r e sp o n ses t o t h e s t r a t eg i e s fo r d ea l i n g w i th r i sk s i n

co n s t ru c t i o n su g g es t t h a t t h e i n d u s t ry i s m o s t ly r i sk av e r se .

T h e co n t r ac to r s t r an s fe r r i sk s t o t h e i r d o m es t i c an d sp ec i a l i s t

s u b - c o n t r a c t o r s a n d t h r o u g h i n s u r a n c e p r e m i u m s . P r o j e c t

m a n a g e r s r e s o r t t o p r o f e s s i o n a l i n d e m n i t y i n s u r a n c e t o

t r a n s f e r r i s k s a s s o c i a t e d w i t h s e r v i c e s p r o v i d e d t o c l ie n t s .

A l th o u g h , i t i s g en e ra l l y r eco g n ized t h a t r i sk sh o u ld b e

t r an s fe r r ed t o t h e p a r ty t h a t i s i n t h e b es t p o s i t i o n t o d ea l

w i th i t , t h e p ro cess w h ere a co n t r ac to r t r an s fe r s a l l r i sk s

i n v o l v e d i n a p r o j e c t d o e s n o t b o d e w e l l f o r i n n o v a t i o n

in i t i a t i v e w i th in t h e i n d u s t ry . C o n t r ac to r s h av e a t en d en cy

t o c o n t r a c t o u t a l l th e w o r k p a c k a g e s i n v o l v e d i n a p r o j e c t

3 6


8/9

R i s k a n a l y s i s a n d m a n a g e m e n t i n c o n s t r u ct i o n : A S A k i n t o y e a n d M J M a c L e o d

t o s u b - c o n t r a c to r s a n d u n d e r t a k e c o n t r a c t m a n a g e m e n t a s

pa r t o f a s t r a t egy t o r educe o r e l i mi na t e t he i r r i sk . T he

i mpl i ca t i on t he r e f o r e i s t ha t t he gene r a l con t r ac t o r s w i t h t he

means t o do so , e i t he r f a i l t o o r have no i ncen t i ve t o

u n d e r t a k e r e s e a r c h a s p a r t o f t h e s t r a te g i e s t o r e d u c e t h e

r i sks a s soc i a t ed w i t h t he i r cons t r uc t i on bus i nes s ac t i v i t i e s .

I t i s t he r e f o r e unsur pr i s i ng t o hea r t ha t t he cons t r uc t i on

i ndus t r y r anks poor l y i n t e r ms o f r e sea r ch ac t i v i t i e s .

T h e q u e s t i o n n a ir e s u r v e y o f c o n t r a c t o rs a n d p r o j e c t m a n -

agem ent p r ac t i ces w i th i n t he UK cons t r uc t i on i ndus t ry shows

t ha t bo t h pe r ce i ve r i sk i n cons t r uc t i on a s t he l i ke l i hood o f

u n f o r e s e e n e v e n t s o c c u r r i n g w h i c h c o u l d a d v e r s e l y a f f e c t

t he po t en t i a l com pl e t i on o f t he p r o j ec t , i . e . i n t e r ms o f cos t ,

t i m e a n d q u a l i ty o f p e r f o r m a n c e . A l t h o u g h r i s k m a n a g e -

m e n t t e c h n i q u e s h a v e b e e n u s e d i n o t h e r i n d u s t r i e s f o r a

l ong t i me , t he cons t r uc t i on i ndus t r y has appr oached r i sk

m a n a g e m e n t i n t e r m s o f i n d i v i d u a l in t u i ti o n , ju d g e m e n t a n d

e x p e r i e n c e g a i n e d f r o m p r e v i o u s c o n t r a c ts . O n e m a j o r

d r a w b a c k o f r i s k a n a l y s is t e c h n i q u e s i s t h a t th e m o r e

p o w e r f u l a n d s o p h i s t ic a t e d t h e t e c h n iq u e , t h e m o r e d a t a a n d

t i me i s r equ i r ed . Cons t r uc t i on i ndus t r y ac t i v i t y i s con-

s t ra i n e d b y t i m e b e c a u s e c o n s t r u c t i o n p r o d u c t i o n i s m o s t l y

emp l oyed j us t- i n - ti me f o r t he c l i en t s p r od uc t i on r equ i r ement .

I t is unsur pr i s i ng t ha t som e of t he r e sponden t s hav e i den-

t if ie d p r o j e c t t im e c o n s t r a in t a s o n e o f t h e m a j o r r e a s o n s f o r

n o t u s i n g r i s k a n a l y s is a n d m a n a g e m e n t t e c h n iq u e s .

T h e i n c r e a s e d a v a i la b i li t y o f c o m p u t e r s , w h i c h h a s

a l l owe d t he t op i c o f p r o j ec t r isk ana l ys i s t o ma t ur e i n o t he r

r e l a te d f ie l d , d o e s n o t a p p e a r t o h a v e m a d e m u c h i m p a c t o n

t he t oo l s be i ng used f o r r isk ana l ys i s and man agem ent i n the

c o n s t r u c t i o n p r o c e s s .

T h e n e e d f o r t h e r i s k a n a l y s i s a s s e s s m e n t a n d m a n a g e -

m e n t p r a c t i t i o n e r s t o d e v e l o p p r o v e n t e c h n i q u e s ( s u c h a s

r i sk s i mul a t i on t echn i ques ) o t he r t han i n t u i t i ve me t hods i s

e n d o r s e d b y H o a n d P i k e 38 wh o as se r t ed t ha t r i sk ana l ys i s

s h o u l d f o r m a l iz e m a n a g e r s j u d g e m e n t s a b o u t p r o j e c t u n -

c e r t a i n t y i n a m o r e p r e c i s e w a y a n d s h o u l d a l l o w t h e m t o

m o d i f y t h e i r j u d g e m e n t i n t h e l i g h t o f i n f o r m a t i o n a v a i l a b le

t o t h e m .

M o s t o f th e r e s p o n d e n t s a r e a w a r e o f w h a t i s i n v o l v e d i n

r i s k m a n a g e m e n t . H o w e v e r , d u e t o l a c k o f f a m i l ia r i ty , t h e

i n d u s t ry u s e s f e w f o r m a l t e c h n i q u e s o f r i s k a n a l ys i s a n d

manag ement i nvo l v i ng ca l cu la t i ons due t o l ack o f f ami l i a r it y .

Ho and P i ke 3s a l so f ou nd t ha t t he ma j or l i mi t a ti ons m os t

f r equen t l y f ound f o r app l i ca t i on o f r i sk ana l ys i s i nc l ude

m a n a g e r s i n a d e q u a t e u n d e r s t a n d i n g o f t h e ri s k a n a ly s i s

a p p r o a c h . T h e s e f i n d i n g s m a y h a v e i m p l i c a t i o n s f o r t h e

c u r r i c u l u m i n C o n s t r u c t i o n M a n a g e m e n t e d u c a t i o n . T h e

i m p l e m e n t a t io n o f p r o j e c t r i s k a n a ly s i s a n d m a n a g e m e n t , i n

v i ew o f the i mpl i ca t i ons f o r con s t r uc t i on bus i nes s p r o f i t -

a b i li t y , m a y d e m a n d e d u c a t i o n a n d t r ai n i n g o f t h e c o n -

s t r uc t i on p r o j ec t manager s and p r of es s i ona l s i n r i sk

m a n a g e m e n t t e c h n i q u e s t o b r i d g e t h e g a p b e t w e e n t h e o r y

and p r ac t i ce .

Var i ou s op t i ons f o r dea l i ng w i t h t h is cou l d be i n t he f o r m

of f o r m a l an d / o r i n f o r ma l edu ca t i on and t r a i n i ng 39. F or m a l

educa t i on cou l d be pos t g r adua t e s t ud i e s in r i sk managem ent ,

whi ch m anager s cou l d unde r go on a pa r t -t i me bas is ; G l asgow

C a l e d o n i a n U n i v e r s i t y , f o r e x a m p l e , c u r r e n t l y r u n a f u l l -

t i m e / p a r t - t i m e p o s t g r a d u a t e p r o g r a m m e i n C o n s t r u c t i o n

M a n a g e m e n t w i t h a n o p t io n i n R i s k M a n a g e m e n t . I n f o r m a l

e d u c a ti o n a n d t r ai n in g c o u l d b e i n f o r m o f C P D p r o g r a m m e s

o r g a n i z e d b y a c a d e m i c e s t a b l i s h m e n t s o r i n t e r e s t g r o u p s

wi t h i n p r o f es s i ona l bod i es such a s t he Assoc i a t i on o f

P r o j e c t M a n a g e r s . I t m a y n o t b e e x p e c t e d t h a t th i s w i ll b e

an i mm edi a t e panacea , bu t i t is a mo ve i n t he r i gh t d i r ec t i on

t o r e - e n g i n e e r t h e i n d u s t r y . H o a n d P i k e 38, for example,

a r e o f t h e o p i n i o n t h a t t h e i n c r e a si n g w i d e s p r e a d u s e o f

mi c r o com put e r s i n f inanc i a l mod e l l i ng packages w i l l add t o

t he po t en t i a l , ea se o f use and e f f i c i ency o f r i sk ana l ys i s i n

cap i t a l budge t i ng . T he ex t en t t o whi ch t h i s can be ach i eve d

i n t he cons t r uc t i on i ndus t r y hasA), et t o be s een i n v i ew of

l o w u s a g e o f I T i n c o n s t r u c t i o n s .

T h e r e s p o n d e n t s d o u b t s t h a t r i s k an a l y si s a n d m a n a g e -

ment t echn i ques a r e app l i cab l e t o t he cons t r uc t i on i ndus t r y

ca l l s f o r conce r n . Cons t r uc t i on t ex t s and cons t r uc t i on

r esea r ch i n r e l a t ed f i e lds shou l d add r es s t h i s i s sue i f such

t echn i ques a r e t o be o f p r ac t i ca l va l ue t o t he cons t r uc t i on

i ndus t r y .

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(1985) Vol . 78 , 499-521

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Civ i l Engineer ing , Stanford Universi ty (1973)

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(Compiled by Norris, C, Perry, J and Simon, P) 4 (April 1992)

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to Project Risk Analysis and Risk Management Thomas Telford

Services, London, UK (1979)

34 Willmer, G Development of Risk Models for Engineering Construction

Projects Ph.D. Thesis, University of Manchester, UMIST (1988)

35 Huseby, A B and Skogen, S Dynamic risk analysis: the DynRisk

concept'

International Journal of Project Management

10 (1992)

160-164

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control and audit perspective' Journal of Information Technology 5

(1990) 63-72

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Action Basic Books, USA (1983)

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investment appraisal' in Risk Analysis Assessment and Management

(Edited by Ansell, J and Wharton, F) John Wiley and Sons, NY

(1992) 71-94

39 Akintoye, A 'Construction management education in UK-- A survey

of the content of postgraduate taught courses' Construction Papers

The Chartered Institute of Building, No. 45 (1995)

40 McCellar, T EDl in the UK Construction Industry Unpublished M.Sc.

Dissertation, Glasgow Caledonian University, UK (1995)

Dr Akintola Akintoye is senior

lecturer in construction cost studies

in the Department of Building and

Surveying Glasgow Caledonian

University. He has presented papers

at international conferences and has

published widely in the subject areas

of construction economics and con-

struction management. His research

interests include construction price

and market modelling construction

risk management and construction

procurement.

Malcolm J MacLeod holds a master

degree from the Glasgow Caledonian

University. His educational and pro-

fessional background is in quantity

surveying. He has worked with UK

construction firms and quantity

surveying practices on major projects.

His research interest is in risk man-

agement of construction projects. He

is currently working with an inter-

national firm of loss adjusters as a

construction risk analyst.

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7 Akintoye_Risk Analysis & Management in Construction

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