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A Critical Review of Effective Risk Management on Construction Project Success

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    A CRITICAL REVIEW OF EFFECTIVE RISK MANAGEMENT ON CONSTRUCTION PROJECT SUCCESS

    Abstraction

    Construction industry is a alone sort of concern associated with tonss of hazard which can non be eliminated but can be reduced on a undertaking if effectual hazard direction procedure is implemented at the origin phase of a building undertaking and runs through the lifecycle. Undertaking success is run intoing all stakeholders need on the undertaking as stayed at the origin of the undertaking. The intent of this work is to reexamine critically literatures on hazard, hazard direction and see their consequence on building undertaking success. Different literatures reviewed classified hazard from different positions to find the beginnings of hazard, how they can be best reduced and besides to find the relationship between building undertaking and hazard direction.

    It was discovered that for a building undertaking to be successful effectual hazard direction has be included from the undertaking origin and must be continuously undertaken throughout the lifecycle of the undertaking. The sort of hazard direction procedure adopted during a building undertaking has a direct impact on the success result of the undertaking be it positive and negative. Risk direction is proper tool and technique to accomplish success on building undertakings, pull offing hazard on building undertaking will assist present undertaking success in footings of cost, clip and quality which is non the lone determiner of undertaking success.

    Keywords: building undertaking, undertaking success, hazard, hazard direction

    Introduction

    Construction undertakings like any other concern is risk slope, due to their sizes, nature and because the plants are carried out by homo. Compared with other concern it is a alone field because activities carried out are capital intensive, complicated technological procedures, long continuance and vile environment ( Flanagan and Norman, 1993 ; Akintoye and MacLeod, 1997 ; Smith, 2003 ; Zou et Al, 2007 ) . It is of import to understand what hazard is about on a undertaking before it can be identified, managed or eliminated from a undertaking ( Azizi et al. 2014 ) . ( Sayegh ) 2007 defined Project hazard as the chance of something happen and when it does go on it has a positive or negative consequence on the aims of the undertaking. Risk direction can be defined as an attack of placing beginnings of hazard, their impact and developing how to pull off them throughout the life rhythm of the undertaking ( Zou, et Al. 2007 ) .

    It was argued that hazard direction is an of import tool which helps to add value to a undertaking in footings of cost, quality and clip if decently used ( Azizi et al. 2014 ) . It is a direction tool that helps to place hazard early plenty on a building undertaking, the chance of the hazard identified happening during the undertaking, to find the degree of impact this hazard will hold on the overall undertaking and besides how all stakeholders will response to the hazard ( Uher, 2003 ).

    Risk direction is hence an of import tool to manage all identified hazard on a undertaking by: ( a ) evaluating and finding if the undertaking will be feasible based on the hazard ; ( B ) monitoring and commanding hazard in order to minimise lost on the undertaking ; ( degree Celsius ) cut downing hazard by proper planning from undertaking origin phase ; and heightening undertaking satisfaction to concluding consumers and therefore heightening benefits on the undertaking ( Lam et al, 2007 ) . Using hazard direction at undertaking origin phase helps to better the concluding quality of the undertaking and besides help the cost applied scientist by extenuating hazard before the beginning of the building undertaking. Risk direction has a procedure that enables all stakeholders on the undertaking to be responsible for the hazard allocated to them and besides act in good clip so as to guarantee a successful completion of the undertaking ( Tinnirello, 2000 ).

    Risk direction rules increase squad engagement by supplying a mechanism for the coverage of possible jobs and increasing the team’s interest in the overall success of the undertaking. An estimation of ?97 billion across Europe has been lost as a consequence of failed undertaking bringing which can be traced to miss of effectual hazard direction on undertakings ( Boddy, 2006 ) . Many undertaking has suffered cost over tallies, forsaking, deficiency of specified qualify which all footings that the undertaking was a failure. Normally a successful undertaking is determined on the bases of clip completed, within client ceiling cost and quality.

    Kerzner ( 2001 ) sort a undertaking as successful when it efficaciously and expeditiously use all the resources allocated to it and the concluding consumer are satisfied with the undertaking. Client and concluding consumers desire that a undertaking must ever be successful and would non digest failure of a undertaking. Hazard as a undertaking direction technique together with clip, cost and quality will organize a cohesive bond to the success of a building undertakings ( Fewings, 2005 ; Al-Shibly et Al, 2013 )

    Categorization of hazard in building undertaking

    Tonss of literature reviewed on hazard direction on building undertakings has classified hazard based on different positions, sorting hazard is a cardinal portion of hazard direction procedure as it helps to prioritise different hazard impacting the result of a building undertaking. Abdou ( 1996 ) in his sentiment classified hazard into three groups, i.e. hazard based on building support, hazard based on continuance of the undertaking and hazard based on the design of the undertaking. He besides looked at these hazards in concurrence with the map of the design phase, development phase and the existent building phase of a undertaking.

    Chen et Al, ( 2004 ) looked at hazard from cost position and identified 15 hazards which he farther divided into three groups ‘resource factors, direction factors and parent factors’ . Hazard can besides be classified from the position of hazard which is retainable by the contractor on site, client and besides the advisers involved on the building undertaking ( Perry and Hayes, 1985 ) . Chapman ( 2001 ) classified hazard has depending on environment where the building undertaking is taken topographic point, the nature of the building industry, the client and besides the undertaking itself.

    Out of the 58 hazard identified to be associated with building industry Shen ( 2001 ) group this risks into technological hazard, political hazard, authorities policy hazard, market hazard, statutory authorization hazard and support hazard. Zou et Al, ( 2007 ) classified hazard on building undertakings from point of all stakeholders on the undertaking, and besides linked this hazard to their stakeholders as the beginnings of the hazard. Furthermore, there is small grounds that has examined hazard from the operational facet of building undertakings to find their influence on the success of a building undertaking. Despite all the categorization of hazard from different position building undertaking, there are some other things that determine building undertaking failures and success.

    Determinant of building undertaking failure and success

    Undertakings surround us as can be testified with the growing of the undertaking direction subject. All undertakings are hazard bound because of their singularity, engineering complexness, based on deliberate premises day of the month of completion, and the undertakings are performed by people ( APM, 2006 ) . Client and concluding consumers sees building undertakings to ever be successful and have zero tolerance to undertakings that fails ( Edwards and Bowen, 2005 ) . All eyes are fixed on undertaking directors to utilize their acquired accomplishments to understate the opportunities of undertaking failure. Kishk and Ukaga ( 2008 ) explained that increasing force per unit area for successful undertaking bringing suggest that it is prudent for anyone involved in a undertaking to be concerned about the associated hazards and how they can be efficaciously managed.

    Undertaking hazard direction must be included into the direction of undertakings, this should be done at the origin phase of the undertaking and must run throughout the lifecycle of the undertaking. Many undertakings fail because stakeholders assume that all the undertakings would be successful and they hence do non place, analyse, and supply extenuation or eventualities plan for the hazard elements involved in the undertaking. This is particularly true with the rapid alteration and increased competition ( Kishk and Ukaga, 2008 ) . Based on the literature reviewed from assorted writers, it was determined that the conventional position of undertaking win based on cost, clip and quality specifications.

    Stakeholders involved in a undertaking may each hold a different position of what determines a successful undertaking. Kerzner ( 2001 ) added two more standards to find the successful undertaking. First, the undertaking would be efficaciously and expeditiously use all allocated undertaking resources. Second, it should be accepted by the concluding client by run intoing their outlooks. Turner ( 2002 ) argued that this conventional position of the undertaking success based on clip, cost and quality aims is being seen from the point of position of the undertaking squad. He stated a broad scope of success determiner, reflecting assorted stakeholders’ involvement and judged over different clip graduated tables. These positions should be critically looked into in order to accomplish a successful undertaking ( Turner & A ; Simister, 2001 ) .

    There are some component which are seen within the context of the building undertaking which when controlled determines the success of the undertaking ( Kishk and Ukaga, 2008 ) . The presence of these elements in automatic that a undertaking has succeeded but their absence may lend to failure. Rozeneset Al.( 2006 ) is of the sentiment that the following are cardinal factors to the success of a undertaking: clear definition of undertaking range and ends, stakeholders support, elaborate undertaking program from the client brief, a defined control mechanism to accommodate the building undertaking, good communicating vehicle – client audience and credence throughout the undertaking, lifecycle, competent and experienced undertaking squad, flexibleness of the undertaking director to cover with uncertainness, and the client should take an involvement in the public presentation of the undertaking.

    Despite these full key factors to success on a undertaking Rozenes et Al. ( 2006 ) stated that undertaking will neglect when client comes up with fluctuations, range of the undertaking alteration, deficiency of experience on the contractor portion, hapless undertaking support and workers payment, handiness of labor, slow determination doing on the undertaking, deficiency of planning by contractor.

    Risk direction efficaciously carried out on building undertaking will heighten benefits for the client, concluding consumer and besides the contractor. Project benefits can be measured either qualitatively, e.g. in footings of client satisfaction and the concluding quality of the undertaking, or quantitatively e.g. in footings of net income or increase in feasibleness of the undertaking. The accomplishment of the undertaking success standards can be measured merely at the undertaking closeout and handover stage of the life rhythm while the benefits can merely be derived after this stage. This therefore means that the ownership of the benefit realization rests with the undertaking sponsor instead than the undertaking director. Cardinal Performance Indicators ( KPIs ) are quantitative steps of success standards and trailing of the KPIs would guarantee the undertaking is aligned towards success.

    For all undertaking to be successful all hazard classified and identified must travel through a hazard direction procedure which will heighten the beginning of a building undertaking.

    Risk direction procedure

    The procedure of pull offing hazard on building undertaking normally takes topographic point in four phases and this phases run through the life rhythm of the undertaking. Smith et Al, ( 2006 ) name these four phases as: ( a ) hazard designation ( B ) hazard appraisal ( degree Celsius ) hazard response ( vitamin D ) hazard monitoring. Using hazard designation is the first thing to be done in hazard direction procedure, Winch, ( 2002 ) argues that hazard designation on building undertaking is based on station rating reappraisal from past undertakings. When hazard are identified early plenty on a building undertaking before they existent occurred the hazard direction will be effectual ( PMI, 2004 ).

    Managing hazard on a undertaking is non all about cut downing cost overproductions, clip hold but besides reassigning hazard into chances which are profitable to the undertaking ( Winch, 2002 ) . Cooper et Al, 2005 stated that one time hazard has been identified it should be written in a list ranking from the most wedged hazard to the least wedged hazard on the undertaking and they must be documented. He furthered argued that one time this hazard has been identified this demand for them to be prioritise for farther probe, chance of go oning and their impact on the undertaking which he term as hazard appraisal. PMI, ( 2004 ) stated that when hazard on a undertaking is identified, analysed there is demand for a response program to be put in topographic point and one time a program is in topographic point there should monitoring to guarantee the success of the undertaking.

    Risk direction and undertaking success

    To heighten the success result of a proposed building undertaking, it is necessary for all stakeholders to hold an in deepness apprehension of possible hazards, to be after and look into the impact of these hazards, look intoing the likely causes of hazard and what effects it has on the undertaking, and so follow the best methods of covering with the identified hazard ( Mobey & A ; Parker, 2002 ) . To guarantee that all identified hazards are managed efficaciously on a undertaking, the hazard procedure demands to be clearly built into the decision-making procedure at the undertaking origin phase in order for a undertaking to be successful ( Kishk, and Ukaga, 2008 ) . Risk direction is an of import tool that helps to cover with identified hazards on undertakings by: ( a ) checking and finding the viability of the undertaking ; ( B ) analyzing and seting in topographic point a control step to cut down the hazards in order to minimise loss ; ( degree Celsius ) extinguishing hazards to minimum by proper planning ; and ( vitamin D ) avoiding undertakings that doesn’t run into the client’s brief in conformity to clip, cost and quality and therefore enhancing net income borders ( LametAl., 2007 ) .

    Using rules of hazard direction to building undertaking supports the quality betterment and improves cost appraisal by placing and put in topographic point a mitigating program against possible hazards before a undertaking begins Kishk, and Ukaga, 2008 ) . Risk direction helps to set procedures in topographic point to guarantee stakeholders receives organised hazard information early plenty via the hazard registry updated from clip to clip and use disciplinary actions that will let likely agenda and cost estimations and assure successful completion of the undertaking ( Tinnirello, 2000 ).

    Risk direction rules helps to increase undertaking squad engagement on a undertaking by supplying a mechanism by which possible hazard are reported and this builds up squad matrix because all squad members has a interest in the overall success of the undertaking. ( Hodge, 2002 ) argued that hazard direction is a uninterrupted exercising and runs through the life rhythm of a building undertaking, consideration must be giving to put on the line at the origin phase of the building undertaking when determination are been made. Fraser & A ; Henry ( 2007 ) concluded that when hazard is non identified early plenty on a building undertaking and besides good managed throughout the life rhythm it will ensue project failure.

    Decision and recommendation

    From reviewed literatures, hazard and building undertakings can non be separated because of the complexness of the industry, it was besides found out that hazard on building undertakings can merely be reduced but non wholly eradicated. It was besides discovered that undertaking success is non merely based on cost, clip and quality entirely but can be viewed from different positions. Risk direction is a great tool and technique in heightening undertaking success and it must be implemented at the origin of building undertaking. A elaborate hazard direction procedure implemented on a building undertaking helps to construct a relationship between hazard direction and the concluding undertaking result. It can besides be concluded that the more effectual hazard.management is carried out continuously on a undertaking the higher the success result of the undertaking. Effective hazard direction procedure was divided into four-phase procedures which were designation of hazard, appraisal of hazard, hazard response, hazard monitoring and all four procedure plants in a consecutive mode to heighten undertaking success.

    Arguments put frontward so far have emerged from an extended reappraisal of different literature on hazard direction and how they affect building undertaking success, none of this research has looked at hazard from the position of operational building where by assorted hazard are associated with different trades in the building industry. Further research could take at sing consequence of hazard direction on building undertaking success from the position of operational building because different trades in building industry is associated with its ain sort of hazard which I think will further heighten building undertaking success.

    Mentions

    Abdou, O.A. ( 1996 ) Pull offing Construction Risks,Journal of Architectural Engineering,2 ( 1 ), 3-10.

    APM ( 2006 )APM Body of Knowledge. 5ed, ISBN-1-903494-25-7.

    Chapman R.J. ( 2001 ) The Controlling Influences on Effective Risk Identification and Assessment for Construction Design Management,International Journal of ProjectManagement,19, 147-160

    Dooley, L, Lupton, G and O’Sullivan, D ( 2005 ) . Multiple project direction: a modern competitory necessity.Journal of Manufacturing Technology Management, 16 ( 5 ) , 2005, 466- 482.

    Edwards, P J, and Bowen, P A ( 2005 ) .Risk Management in Project Organisations. Oxford: Butterworth- Heinemann.

    Hodge, N ( 2002 ) Power to the people.Internal Auditing and Business Risk, 18-22.

    Kerzner, H ( 2001 )Project Management: A Systems Approach to Planning, Scheduling and Controlling. 7ed. New York: John Wiley & A ; Sons.

    Kishk, M. & A ; Ukaga, C. ( 2008 ) . The impact of effectual hazard direction on undertaking success.In:Dainty, A ( Ed )Procs 24th Annual ARCOM Conference,1-3 September 2008, Cardiff, UK, Association of Researchers in Construction Management, 799-808.

    Lam, K C, WANG, D, Lee, P T K and Tsang, Y T ( 2007 ) . Modeling hazard allotment determination in building contracts.International Journal of Project Management,25( 5 ) , 485- 493.

    Mobey, A and Parker, D ( 2002 ) . Risk Evaluation and its Importance to Project Implementation.Work Study,51( 4 ) , 202-206.

    Patrick, Guomin and Jia-Yuan, ( neodymium ) . Identifying Cardinal Risks in Construction Projects: Life Cycle and Stakeholder Positions

    Perry, J.H. and Hayes, R.W. ( 1985 ) Hazard and Its Management in Construction Projects,Proceedings of the Institution of Civil Engineering, Part I,78, 499-521.

    Tinnirello, P C ( ed. ) ( 2000 )Best Practices Series- Project Management. United statess: Auerbach.

    Turner, J R and Simister, S J ( 2001 ) . Undertaking Contract Management: A Transaction Cost Perspective.In:Williams, T M ( ed. )PMI Europe 2001: a undertaking directionodyssey. London: Marlow Events.

    Turner, R ( 2002 ) Undertaking success standards.In:Stevens, M ( ed. )Undertaking directiontracts. Sarin: APM. ISBN 1-903494-01-X.

    Rozenes, S, Vitner, G and Spraggett, S ( 2006 ) Undertaking control: literature reappraisal.Undertaking ManagementJournal, September 2006,37( 4 ) , 5-14.

    Shen, L.Y. , Wu, G.W.C. and Ng, C.S.K. ( 2001 ) Risk Assessment for Construction Joint Ventures in China,Journal of Construction Engineering and Management,127 ( 1 ), 76- 81.

    Uher, T. ( 2003 )Programing and Scheduling Techniques, UNSW Press, Sydney

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