Risk Management Essay
RISK MANAGEMENT ESSAY
The following essay has been written by analyzing the risks associated from the construction managers/ project managers’ point of view. Citing the possible risks associated while working on international or varied geographical location. Risks are associated with almost all levels of the project life cycle and is mutually shared and mitigated by all parties employed within the construction industry. There are many evidences to state that poor risk mitigation leads to poor performance and hence establish risk management processes and practices are required to be adhered to in order to turn any project’s outcome into a success.
The 2000 edition of the Guide to the Project Management Body of Knowledge (PMI,2000) states that a project risk is :
‘An uncertain event or condition that, if it occurs, has a positive or negative effect on a project outcome’.
Risks can be broadly classified into 2 categories- speculative risk and pure risk. Speculative risks can be both positive and negative whereas pure risks are mostly negative by nature.
Risk can be defined as the ‘variability of return from an investment’ risk analysis play an important role in any project. All projects are prone to some kind of risk or the other. All projects are appraised making certain assumptions and such assumptions are unavoidable since no 2 projects are unique in all respects and hence a new project cannot be compared with an identical project that was executed in the past. Though there may be similarities in 2 projects, exactly identical projects do not exist.
KINDS OF RISK IN A PROJECT (in the built environment)
Projects face a host of risks such as,
PROJECT COMPLETION RISK
Completion of the project in time and within the estimated cost is itself a major achievement. A project that is delayed will result in time over run which will subsequently lead to a cost over-run. If the project promoters are not able to pump in additional funds required to meet the cost
The following essay has been written by analyzing the risks associated from the construction managers/ project managers’ point of view. Citing the possible risks associated while working on international or varied geographical location. Risks are associated with almost all levels of the project life cycle and is mutually shared and mitigated by all parties employed within the construction industry. There are many evidences to state that poor risk mitigation leads to poor performance and hence establish risk management processes and practices are required to be adhered to in order to turn any project’s outcome into a success.
The 2000 edition of the Guide to the Project Management Body of Knowledge (PMI,2000) states that a project risk is :
‘An uncertain event or condition that, if it occurs, has a positive or negative effect on a project outcome’.
Risks can be broadly classified into 2 categories- speculative risk and pure risk. Speculative risks can be both positive and negative whereas pure risks are mostly negative by nature.
Risk can be defined as the ‘variability of return from an investment’ risk analysis play an important role in any project. All projects are prone to some kind of risk or the other. All projects are appraised making certain assumptions and such assumptions are unavoidable since no 2 projects are unique in all respects and hence a new project cannot be compared with an identical project that was executed in the past. Though there may be similarities in 2 projects, exactly identical projects do not exist.
KINDS OF RISK IN A PROJECT (in the built environment)
Projects face a host of risks such as,
PROJECT COMPLETION RISK
Completion of the project in time and within the estimated cost is itself a major achievement. A project that is delayed will result in time over run which will subsequently lead to a cost over-run. If the project promoters are not able to pump in additional funds required to meet the cost
References: School of the built environment, Heriot Watt University, 2009, Value and Risk Management Project management professional study guide, 1998 Risk management and construction – Roger Flanagan & George Norman Modern construction management (5th edition) - Harris and Mc Caffer.