The Role of Intuition in Risk Management in the Construction Industry - Essay Example

Risk management has become a very vital tool in the construction industry. Issues on project completion, contractual obligations, design appropriateness, environmental regulatory issues legal aspects to be covered or operational problems are the typical domains where risks are present in a construction project. The level of risk in these type of projects are unique to itself and might be known or unknown at the start of the project. Hence, it is very crucial for the organizations to understand the type of the risk component in the activities involved and also initiate different ways for its mitigation. Effective communication between different parties like clients, the shareholders and the company has a major role in the reduction of risk impact. (Risk Management in Construction: White Paper: Using Web-Based Collaboration to Manage Project Risk. 2007). As these risks might ultimately lead to project cost and times overruns or even the termination of the projects, its management has become an inevitable component in any of the major construction initiatives. Thus the ultimate objective of risk management is to add value to the delivery of the projects and improve operational efficiency. Thus the research activities in exploring effective approaches of risk management in the construction sector have received greater attention all over the world (Wood and Ellis 2003, p 254-262). Even if the risk inherent in a project activity cannot be eliminated totally it could always be reduced, minimized, and retained in the routine sequence of construction events.

The very bad track record to meet the deadlines and failure to complete within the allocated budget prompted various construction managers and researchers to identify the possible reasons for such situations. These initiatives finally led to the identification of various risks or uncertainties that might adversely affect the project and hence take adequate precautions against the unfavorable events. In one of the earlier studies (Odeh and Battaineh 2002, p 67-73). identified seven significant reasons for the delay in projects, The reasons according to authors are owner interference; inadequate contractor experience, financing and payments, labor productivity, slow decision making, improper planning, and sub-contracting. Another investigation into the construction risks has proposed the importance of factors that are not easily controlled by the project contractor (Mills 2001, p 245-252). Weather, the productivity of labor and equipment, and the quality of materials are the factors identified in this connection. Also, the general pattern of risk trends along the course of the project shows clear stages of identification and impacts. Risk identification normally happens during the periods of feasibility assessment and planning stage. While ‘impacts’ are often experienced after the resumption of construction and production activities (Cohen and Parmer 2004). The detailed investigations into the complexities of the projects are conducted by (Dubois and Gadde 2001). The interdependence of tasks and uncertainly are identified as the two basic sources of the complexity of construction projects.

As the construction process turned more mechanized the decision process involved in the selection of appropriate equipment and machinery in the construction project became very critical. The errors in the process of selection have resulted in huge project costs and hence techniques for better selection are very component in the risk management process in this sector. The factors that influence this decision are often classified into two types one that deals with the quantitative aspects of the selection process like the technical specifications, building and site geometry, cost considerations, etc, and the qualitative factors like safety concerns, company policies, environmental constraints, etc. The former is called the hard factor and the latter soft. It is understood that these soft factors influenced by tradition, culture, intuition, and subjectivity play a key role in the decision-making process (Harris and McCaffer 2001). Therefore it would be worthwhile to undertake detailed research on the influence of factors like intuition on the construction decision-making process which becomes very important in the risk management of the project.