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Risk Management in Construction Project Networks

Risk Management in Construction Project Networks

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of risks

Identified risks were divided in these four groups according to the primary
cause of the risk in question. Group A includes risks that are related to a
single actor’s knowledge, or in this case, lack of risk management
knowledge and other risks that are caused because of one actor’s practice
of using for example foreign workers or unqualified workmen. Risks that
are caused because of the construction industry’s business culture and
working practices are in the group B. These are high price competition and
traditionally adversial relationships, lack of risk management motivation is
also common to the whole industry, at least a motivation to co-operative
risk management was non-existent except from main contractors side.
Group C- risks are caused because of the many actors must work on one
site. Information flow may be jeopardised, increasing with the number of
subcontractors as many other coordination tasks become more
challenging. In the last group (group D) belong the ‘traditional’ risks, risks
that are surprises. These are the risks that can be managed with traditional
risks management means, they are also easiest to identify as risks. These
are the risks that are the most followed in the industry and at the moment
the most risk management efforts are targeted to manage these risks.

Group A:Risksrelatedto single
actor’sknowledgeand practices

Group B:Risksrelatedto the
constructionindustry’sworking
practicesand a lackof risk
management motivation

Group C:Risksrelatedto the large
numberof actorsat site

Group D:’pure risks’; surprises,
hazards, etc.

Lack of experience and professionalpride

Incomplete designs

Lack of risk management knowledge

Force majeure

Lack of risk management motivation

Competition based on the lowest bid
Adversial relationships

Extensive subcontracting
Subcontractors’subcontractrors

Information flow breaks

Foreign workers

A1

B1

B2
B3

C1

C2

C3

D1
D2

A2

A3

Group A:Risksrelatedto single
actor’sknowledgeand practices

Group B:Risksrelatedto the
constructionindustry’sworking
practicesand a lackof risk
management motivation

Group C:Risksrelatedto the large
numberof actorsat site

Group D:’pure risks’; surprises,
hazards, etc.

Group A:Risksrelatedto single
actor’sknowledgeand practices

Group B:Risksrelatedto the
constructionindustry’sworking
practicesand a lackof risk
management motivation

Group C:Risksrelatedto the large
numberof actorsat site

Group D:’pure risks’; surprises,
hazards, etc.

Lack of experience and professionalpride

Incomplete designs

Lack of risk management knowledge

Force majeure

Lack of risk management motivation

Competition based on the lowest bid
Adversial relationships

Extensive subcontracting
Subcontractors’subcontractrors

Information flow breaks

Foreign workers

A1

B1

B2
B3

C1

C2

C3

D1
D2

A2

A3

Lack of experience and professionalpride

Incomplete designs

Lack of risk management knowledge

Force majeure

Lack of risk management motivation

Competition based on the lowest bid
Adversial relationships

Extensive subcontracting
Subcontractors’subcontractrors

Information flow breaks

Foreign workers

A1

B1

B2
B3

C1

C2

C3

D1
D2

A2

A3

Conclusions and Discussion

- 86 -

If these two lists (table 15 and figure 7) are compared, it can be seen that
many of my findings here are not new, but for the first time are presented
collectively. For example a lack of experience, a lack of risk management
knowledge and subcontracting has already been referred to as risk sources
in previous studies. Empirical findings are in accordance with the earlier
literature.

If detected construction project risks are compared with the project
success factors presented by Phua and Rowlinson170

(table 12, section
3.2.1), it is shown that factors very similar to those that aid in the success
of a project success also impede its progress. The success of a project is
limited if performance in these areas not sufficient. Success factors are, for
example, good communication channels (compared to the information
flow breaks named to be the one of the main risk sources), co-operation
and personal friendships between project firms (compared to the adversial
relationships of project participants in the current situation).

Many of these risks related to the network can be further characterised as
conditions that jeopardise the project risk management process. These
risks could be seen as continuums of management practices, where at the
one end are the risks caused by the inefficient management practices or
improper environment and at the other end the success factors that result
from the good management practices and favourable conditions. For
example extensive subcontracting and a large foreign workforce can be
turned into opportunities that respond to the problem of an unskilled
workforce and the lack of employees by using the right methods of
management. These methods would be for example the kind that would
guarantee the level of employees’ competence. In the next subchapter I
develop these ideas by presenting a co-operative model of risk
management and how it is linked to the identified risks.

170

Phua, F.T.T., Rowlinson, S., 2004

Conclusions and Discussion

- 87 -

6.2Co-Operative Risk Management

In this section I introduce my suggestion for risk management model in
project networks. The purpose of the model is to enhance co-operation in a
project network and lead towards more efficient risk management. Next,
I’ll present the model more in detail and how it relates to the identified
risks in the project networks. In the final section I discuss more about the
benefits it could provide to project risk management.

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