Risk Management and Construction
Risk Management and Construction
Aug 1993, Wiley-Blackwell
DescriptionThe construction industry is subject to more risk and uncertainty than perhaps any other industry. Yet, surprisingly, managerial techniques used to identify, analyse and respond to risk were not applied in the industry until the 80's. Existing texts deal with the theoretical concepts of risk and the techniques that identify and manage it. This book provides a set of tools that enable these management techniques to be put into practice in the construction industry.
List of figures; List of tables; Forward; Introduction; The aim of the book; Part 1 - Putting risk into perspective:; Introduction; Risk and reward go hand in hand; Risk and contruction; Risk - another four letter word; AGAP (All goes according to plan) and WHIF (What happens if); The people, the process and the risks; Clients of the industry; Have clients' needs changed? Privately financed infrastructure projects; What do clients want?; Investment in property; Consultatns and risk; Contracting and risk; Part II The background to risk and uncertainty:; Introduction; Defining risk and uncertainty; The uncertainty of life and construction projects; Dynamic and static risk; A threat and a challenge; Some fo ther basic rules for risk taking; Risk 'Place your waterline low'; The risky shift phenomenon - what happens when groups make decisions; The risk of not risking; Risk styles; Removing ignorance - and risk; Probability; Converting uncertainty to risk; Decision-making in the construction industry; Intuition; Bias and intuition; Experts and experience; Rules of thumb; Making a model; Reacting to information; Looking at the past to forecast the future; Types of information; Building a decision model to solve a problem; Part III The risk management system: Introduction; Developing a risk management framework; Risk identification; Sources of risk; Dependent and independent risk; Risk classification; Types of risk; Impact of risk; The risk hierarchy; Risk and the general environment; The market/industry risk; The company risk; Project risk and individual risk; Consequence of risk; Risk reponse; Risk retention; Risk reduction; Risk transfer; Risk avoidance; Risk attitude; Summarising risk management; Risk management; Part IV Some of the tools and techniques of risk management: Introduction; Seeing the big picutre and tthe detail; Decision-making techniques; The risk premium; Risk-adjusted discount rate; Subjective probabilities; Decision analysis; Algorithms; Means-end chain; Decision matrix; Strategy; Decision trees; Bayesian theory; Stochastic decision tree analysis; Multi-attribute value theory; Specify the utility function; Case study; Summary; Sensitivity analysis; Spiider Diagram; Monte Carlo simulation; Portofolio theory; The aplication of portfolio analysis in the construction industry; Stochastic dominance; Cumulative distributions of illustrative portfolios; Conclusion; Part V Utility and risk attitude: Introduction; Risk exposure; Utility theory; Expected monetary value; Payoff matrix; The utility function; General types of characteristics of utility functions; The difference between EUV and EMV in practice; The use of utility theory in construction; Basic principle for the aplication of the theory; Part VI Risks and the construction project - money, time and technical risks: Introduction; Money and delivery sequence; Investment and development sequence; Cost considerations; Operational/revenue considerations; The influence of taxation; Value considerations; Design and construction sequence; Time delivery sequence; Contractors and specialist contractors; Technical delivery sequence; A case study of the technical risks faced by the building surveyor; Part VII Sensitivity analysis, breakeven analysis, and scenario analysis: Sensitivity analysis; Breakeven analysis; Scenario analysis; Sensitivity analysis - an application to life cycle costing; Part VIII Risk analysis using Monte Carlo simulation: Probability analysis - extending the sesitivity technique; How it works; Using Monte Carlo simulation in the cost planning of a building; Estimating and price prediction an overview of current practice; Cost planning and risk analysis; Interdependence of items; Risk analysis using probabilities; Risk analysis using Monte Carlo simulation; Considering some probability distributions; Comon distriubtion types; Uniform distribution; Triangular distribution; Normal distribution; A step by step approach to Monte Carlo simulation; Using Monte Carlo simulation on a live project; The result; Questions and Answers; Part IX Constracts and risk: Disagreement and conflict; The purpose of the contract; The fundamental risks - liability and responsibility; Transferring and allocating the risk in the contracts; The principles of control - the theory; The contractual links; Risk avoidance by warrannties and collateral warranties; The types of contract; Contracts and risk tactics; Part X A case study of an oil platform: A practical application of resourced schedule risk analysis; Background; The model; Comparison with deterministic plan; Data; Weather; Project variables; Processing of data; Confidence in the data; Initial results; Conclusion; References and bibliography; Index
* risk management a new 'hot' topic for the construction industry * no book on the subject specifically for the industry * growing student market for such books for final year and MSc courses