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See discussions, stats, and author profiles for this publication at: http://www.researchgate.net/publication/222498862
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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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
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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
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Risk analysis and management in construction A S Akintoye and M J MacLeod
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
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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
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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 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 .
e f e r e n c e s
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2 0 De y , P , T a b u c a n o n , T a n d Og u n la n a , S O 'P l a n n in g f o r p r o j e c t
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Risk analysis and management in construction A S Akintoye and M J MacLeod
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Management (April 1986) 23-26
28 Flanagan, R and Norman, G Risk Management and Construction
Blackwell, UK (1993)
29 Raftery, J Risk Analysis in Project Management E & FN Spon, UK
(1994)
30 Williams, C A and Heims, R M Risk Management and Insurance
McGraw Hill, New York, USA (1989)
31 Toakley, A R and Ling, S M C 'Risk management and the building
procurement process' Innovation and Economics in Building
Conference Brisbane, Australia, (September 1991) 63-67
32 The Association of Project Managers, 'Pro ject risk analysis and man-
agement' in Project The Bulletin of the Association of Project Managers
(Compiled by Norris, C, Perry, J and Simon, P) 4 (April 1992)
33 Thompson, P and Perry, J Engineering Construction Risks--A Guide
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
36 Jamieson, R and Low, G 'Local area network operations: a security
control and audit perspective' Journal of Information Technology 5
(1990) 63-72
37 Schon, D A The Reflective Practitioner: How Professionals Think in
Action Basic Books, USA (1983)
38 Ho, S S M and Pike, R H 'The use of risk analysis techniques in capital
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.
8
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