Risk Management in Construction Project

Abstract

This article is intended to describe the concise history of the first Portuguese cements companies (Mining and Industrial Company of Cabo Mondego, General Company of Lime and Cements of Rasca, Cement Company of Tejo, Company of Maceira-Liz, Company of White Cements, Northern Cement Company, South Cement Company) that contributed to the emergence of Cimpor SGPS (current Portuguese cement company).Risks have a significant impact on a construction project’s performance in terms of cost, time and quality. As the size and complexity of the projects have increased, an ability to manage risks throughout the construction process has become a central element preventing unwanted consequences. How risks are shared between the project actors is to a large extent governed by the procurement option and the content of the related contract documents. Therefore, selecting an appropriate project procurement option is a key issue for project actors. The overall aim of this research is to increase the understanding of risk management in the different procurement options: design-bid-build contracts, designbuild contracts and collaborative form of partnering. Deeper understanding is expected to contribute to a more effective risk management and, therefore, a better project output and better value for both clients and contractors. The study involves nine construction projects recently performed in Sweden and comprises a questionnaire survey and a series of interviews with clients, contractors and consultants involved in these construction projects. The findings of this work show a lack of an iterative approach to risk management, which is a weakness in current procurement practices. This aspect must be addressed if the risk management process is to serve projects and, thus, their clients. The absence of systematic risk management is especially noted in the programme phase, where it arguably has the greatest potential impact. The production phase is where most interest and activity are to be found. As a matter of practice, the communication of risks between the actors simply does not work to the extent that it must if projects are to be delivered with certainty, irrespective of the form of procurement. A clear connection between the procurement option and risk management in construction projects has been found. Traditional design-bid-build contracts do not create opportunities for open discussion of project risks and joint risk management. A number of drivers of and obstacles to effective risk management have been explored in the study. Every actor’s involvement in dialogue, effective communication and information exchange, open attitudes and trustful relationship are the factors that support open discussion of project risks and, therefore, contribute to successful risk management. Based on the findings, a number of recommendations facilitating more effective risk management have been developed for the industry practitioners.