Risk Management in Residential Construction – An analysis of the risk management process of a Swedish construction company

Abstract: Risk can be described as the absence of information when a decision is to be made at any time throughout a process. The construction industry is often considered as complex and defragmented due to working in a project based format; with a unique product and a process where there are times when decisions need to be made with insufficient information. Therefore, proper risk management processes can be vital to minimizing risks, maximizing opportunities and securing a successful project process. This master thesis has been conducted at a large Swedish construction company that houses both a constructing unit and a residential development unit. Consequently, the focus of this thesis has been on analyzing the risk management process when a residential project is both developed and constructed by the same company. The purpose of this master thesis is to describe and analyze risk management in a project based organization within the construction industry. The thesis aims to provide a better understanding of how risk management is used in practice but also what underlying factors that can affect risk management processes. The study will include both the perspective of the developer and the constructor; as well as their separate and joint processes facilitating risk management. In regards to the purpose of this thesis, a general risk management model has been used to provide a framework for analysis. This model consists of four steps: risk identification, risk assessment, risk mitigation and risk monitoring. The results from this study indicate that risk management within residential construction heavily depends on the personal knowledge and experience of project members. In turn, this creates discrepancies between how risk management is described in internal documents and how it is utilized in practice. Furthermore, it was found that risk management is considered an important part of the overall project process. However, opinions varied to what extent risk management was actually applied in projects. A reason for this could be that there is no joint understanding within the company of what processes are considered as part of risk management – thus, project members sometimes practice risk management without being aware of it.