Effective Risk Management in Innovative Projects: A Case Study of the Construction of Energy-efficient, Sustainable Building of the Laboratory of Intelligent Building in Cracow

Abstract

Many construction projects fail to meet deadlines or they exceed the assumed budget. This scenario is particularly common in the case of innovative projects, in which too late identification of a high risk of delays and exceeding the assumed costs makes a potentially profitable project untenable. A high risk level, far exceeding the level of risk in standard non-innovative projects, is a characteristic feature of the realization phase of innovative projects. This is associated not only with greater complexity of the design and construction phases, but also with the problems with application of new technologies and prototype solutions, lack of qualified personnel with suitable expertise in specialized areas, and with the ability to properly identify the gaps between available and required knowledge and skills. This paper discusses the process of effective risk management in innovative projects on the example of the realization phase of an innovative, energy-efficient and sustainable building of the Laboratory of Intelligent Building in Cracow - DLJM Lab, from the point of view of DORBUD S.A., its general contractor. In this paper, a new approach to risk management process for innovative construction projects is proposed. Risk management process was divided into five stages: gathering information, identification of the important unwanted events, first risk assessment, development and choice of risk reaction strategies, assessment of the residual risk after introducing risk reactions. 18 unwanted events in an innovative construction project were identified. The first risk assessment was carried out using two-parametric risk matrix, in which the probability of unwanted event occurrence and its consequences were analysed. Three levels of risks were defined: tolerable, controlled and uncontrolled. Risk reactions to each defined unwanted event were developed. The following risk reaction types were considered: risk retention, risk reduction, risk transfer and risk elimination. Three-parametric risk matrix was developed to make it possible to assess risk after implementing risk reactions. The possibility of implementing risk management was inversely proportional to the probability of unwanted event occurrence and its contribution to the project outcome. Introducing this risk management strategy allowed to significantly reduce the risk of the innovative construction project. It proved to be an effective tool to reduce risk to an acceptable level. It had a significant contribution to carrying out the project within the assumed time, budget and quality standards.