Risks with construction project risk management : An insight into how professionals within the construction industry manage risk

University essay from KTH/Ledning och organisering i byggande och förvaltning

Abstract: In one of the largest and most important industries in Sweden, the construction industry, the success of the projects can be closely related to how uncertainties of outcomes or risk are managed. For a construction project to be successful, different individuals and organizations need to provide their knowledge and experience to fulfill the project scope. Risk is something that, if properly managed, will make the project achieve and perhaps surpass these goals and if not, make the project underperform. There exist frameworks for how risk should be managed and also theories for how past experience influence future decisions. How risk within construction projects are managed is related to the experience of the team members as well as top management’s insight in the risk management process. Through a qualitative approach, based on literature as well as interviews, this master thesis provides an insight into how the key project participants are managing risk. Further, this study examines possible shortcomings with risk management practices and proposes management strategies for these. In this study, consultants working with both developers and contractors have been included to share their view. The results of this study show that current risk management practices deviate from the practice proposed within research and industry related literature. This makes the construction projects to rely heavily on individual’s knowledge and there is a risk that lessons learned will not be spread within the organization or the society. Further, risk and opportunities are often managed within the same framework which does not provide for risk to be managed accordingly and opportunities to be exploited. It is proposed that professionals within the industry have a risk propensity that is rather unchanged by gaining more experience but there exists a shift in how risk is perceived. These findings are closely related to how much insight top management within the organization have. Today, most efforts are concentrated on how the project is performing in relation to the budget and schedule which makes risk management a reactive rather than a proactive measure.

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