Analysis On Risk Management By Contractors Who Work On Energy And Utility Construction Projects 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.

For the unit 6 assignment on case analysis, I will be conducting a case study on two clients.

In part one of the project I focused on two potential risks, power outage and work stoppage. As a contractor constructing a facility as massive as the Empire State Building, I would need to be aware of many other risks in order to prevent them from becoming events. Anytime an event occurs, it requires resources to be realigned in order to fix the problem and get the project back on track. This results in a slip in the schedule and unnecessary funds being expended. If I am able to appropriately determine potential risks and build an effective Risk Management Plan, I can minimize the

Research questions in case study design begin with ‘how and why’ (Yin, 2003) and determine the type of case study. The main function of the questions is to keep the researcher focused and on track (Zucker, 2001).The following questions fit the planned instrumental, and exploratory/descriptive single case study design:

The other research method being conducted in the form of case studies has the advantages that it does not rely on sampling, as it studies a social unite in entire perspectives. It is a useful method for forming a hypothesis for further study, furthermore it increases the knowledge of the researcher to have a higher analytical power (Farooq: 2013). They are also a beneficial choice of research method due to their flexibility, case studies can be conducted at any point of the research process.

It is believed that case study was first introduced by Frederic Le Play in 1829. The popularity in case study in testing theory has developed in recent decades. A case study is a report about a person, group or situation that has been studied. They are produced by following a formal research method. There are three types of case studies: Linear, Process-oriented and Grounded. Under the generalized category of case study exists sub-divisions based on goals and objectives of the investigator. They are:

According to (Yin 2003) a case study allows investigators to focus on a case and retain a holistic and real word perspective with (Simons 2009) adding that its primary purpose is to generate in depth understanding of a specific topic. To put it differently, (Stake 1995) states “a case study is both a process of inquiry about the case and the product of that enquiry.

One of the most capital intensive and globalized industries is the energy sector because of its operations that are inherently complex. As such, the oil and gas projects experience overruns of costs that exceeds 100 percent at times, which have created the need for adoption of new contracting strategies (Schramn, Meibner, & Weidinger, 2009). The risks in most cases are contractually distributed and shared among the energy project stakeholders instead of leaving it to the owner. Some of the risks include the reputational risk, environmental risks, and the disasters experienced and which exposes the companies to the costly process of litigation. Accordingly, the oil and gas industry fails to achieve different aspects of the overall strategic business goals because of the challenges that occur in the projects undertaken (Chanmeka, Thomas, Caldas, and Mulva 2012). Such problems might be categorized around the allocated budget and at the level of quality within set schedules.

I have chosen to approach my research by using a case study approach which builds up a rich picture of a case using different kinds of data collection and gathering the views, perceptions and ideas of diverse individuals relating to the case. (Yin, 2009, p.15) states “The case study method is most likely to be appropriate for ‘how’ and ‘why’ questions”. This supports

The completion of any project depends on the execution of various parameters mostly set at the beginning of the project. In order to complete the project to satisfactory levels, the project must be completed within the stipulated timelines, fall within the approximate budget and be of the required quality standards. However, most of the projects are affected by adverse changes and unforeseen events that occur during the execution period. Research shows that the magnitude of change is dependent on the size of the project, with large projects experiencing more uncertainties due to several factors including; planning and design complexity, interest groups having deferring opinions, resource availability, Economic and political climate and statutory regulations, which may necessitate change of plan. Most of the uncertainties are known to occur in the concept phase and if not intervened, they may affect the entire project. The burden falls on the management of such risk as some managers choose to ignore the uncertainties since they call for additional costs. Other inherent risks may go unnoticed and therefore remain unsolved,

According to my understanding the project manager in the construction industry is a person assigned by an organization to run, control, and manage a team to achieve the final project execution goals. Where as in actual view “A project manager is the person who has the overall responsibility for the successful initiation, planning, design, execution, monitoring, controlling and closure of a project.’’ (Duncan Haughey, 2014)

Handover is where a project, commonly its facilities, are transferred or ‘handed over’ to the operator – which can be a third-party, government agency, another oil & gas company, or another division within the same company. Project turnover can be very difficult in not properly managed due to its vast complexity. Hundreds, often thousands, of documents must be finalized and prepared for handover with the facility, and this is sometimes the last thing that is on the project team and/or contractor’s agenda. A project can be fully commissioned and in operation but it cannot, and likely will not, be accepted by the operator if all required documentation is incomplete in the final handover package.

Risk ( the effect of uncertainty on objectives, whether positive or negative) the probability of unfortunate events . Risks can come from uncertainty in financial markets, project failures, legal liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attacks from an adversary. Project finance is different from traditional forms of finance because the financier principally looks to the assets and revenue of the project in order to secure and service the loan. In contrast to an ordinary borrowing situation, in a project financing the financier usually has little or no recourse to the non-project assets of the borrower or the sponsors of the project. In this situation, the credit risk associated with the

“Risk is defined as exposure to loss/gain or the probability of occurrence of loss/gain multiplied by its respective magnitude” (3). “Risk management is a systematic approach of dealing with different types of risks at any stage of the project” (7). There are a number of risks occurring from the beginning of the project to the end so risk management plays a vital role throughout the project. This article is a review on the different types of risks faced in the construction industry and whether the various solutions adopted for it are enough.

This article describes the effective management of project risks in an educational institution. In this article I’ll be talking about the information that are useful to the board members as well as the team with their risk management efforts.