Risk Management in Design & Construction Projects - Case Study Example

The paper "Risk Management in Design & Construction Projects" is a great example of a Management case study. Managing risks in construction projects have been recognized as a very important management process in order to achieve the project objectives in terms of time, cost, quality, safety, and environmental sustainability. Most design and construction projects have been defective in the manner in which they have been managing risks. Instead of adopting a systematic and holistic approach in identifying risks and analysing the likelihood of occurrence and impacts of the said risks, most projects have focused on certain aspects of risk identification and management (Zoul et al, 2008).

This dissertation aims at following the project’s full life cycle in order to identify and analyse the risks associated with it and how much are mitigated. Analysis of the data collected using postal questionnaire surveys discovered that eighteen common risks residents in design and construction projects are mainly related to contractors, clients and designers, subcontractors/suppliers and external issues (Ovidiu et al, 2011). Most of the identified risk factors were found to be spread through the whole project life cycle, occurring at more than one phase.

CHAPTER 1: INTRODUCTION

• • Overview

The first chapter seeks to introduce the research area and discuss the formulation of the problem. Additionally, the aim and objectives, research questions, rationale, and the research strategy are described.

1.2. Background Information

Risk is the probability where the outcome has unfavourable effect. Probability indicates a lack of surety that a particular event will occur so that it is impossible to exactly state the outcome. Risk focuses on the departure of an event from its expected future result. Although in general, the expected results may be positive or negative, risk focuses mainly on the potential harm that may happen. Baker and Reid (2005) indicate that potential causes of risks reside in industrial accident, calamity, natural disasters, and deliberate attacks by potential rivals.

The process of managing risks in a project’s life cycle is called risk management. It may be looked at as “a logical way of checking for areas of a project where risks can occur and deliberately determining the manner in which to treat each risk. The aim of this process is to identify the causes of risk, assessing their effects, and devising suitable responses to them” (Ovidiu et al, 2011). According to Baker and Reid (2005), risk management can be profitably divided into: “risk identification and classification; risk assessment; risk response; and risk control”. Risk response on the other hand can be further sub-divided into the actions of “retaining the risk, reducing the risk, transferring risk, and avoiding the risk” (Hoyt et al, 2006).

Cassell and Gragg (2009) concur that risk management is the process of recognising, monitoring, and limiting risks to acceptable levels that are considered to be of zero harm. Additionally, Newton et al (2009) maintain that risk management has a big presence in both large and complex projects in the fields of IT, International collaboration, finance, geography, and construction. In recent times, medium-sized companies for all projects have joined the fray by increasingly partaking risk management as highlighted by Ovidiu and associates (2011) and Staveren (2009). However, Simu (2009) deviates from this by indicating that most small projects in the Construction Industry do not regularly make use of risk management.