Risk Management Of Construction Contracting

Working to understand the risks a project may endure along with the cost associated is critical in every project management plan. Understanding potential risks based on the project type, resources needed, timeline and budget still leaves gaps that creates uncertainty for actually predicating the outcome of the project. There is not a true way to predict when and where a project risk will occur but designing a plan to properly address and manage those risks will increase confidence while eliminating the element of surprise.

risks and determine the likelihood and consequence of that risk occurring during the project. The

A contract is an official agreement between two parties. There are different types of contract, such as sale and purchase of a business agreement, partnership agreements, lease of business premises, lease of plant and equipment and employment agreements. The format can vary too. It can be face to face, written, or distance selling. The specifications of a contract involve offer and acceptance, the intention to create legal relations, lawful considerations, capacity and legal formalities such as terms and conditions.

Identify a minimum of 10 project risks and when each will occur in the project life cycle, and then determine their impact and probability of occurrence.

The AS 4000 contract was developed through the joint Standards Australia & Standards New Zealand Committee OB/3. The contract was developed as a result of a consensus to push for the contract to become an Australian Standard. Organizations that were approached in the development of the contract were:

Risks management is an important step during the process of a project. Failing to manage a risk may result in unforeseen event happening and a project’s failure. For example, with limited budget, an unforeseen event or an accident occurs in the middle of a project and this matter has not been considered and needs a big sum of expense, then the project may be stopped because of this unexpected event. We should know it is necessary to understand how to identify risks and assumptions based on the information. After identifying risks, it is important for project managers to set contingency plans to prevent and deal with these risks when they occur. Of course, several problems may happen during considering

Risk or threat is common and found in various fields of daily life and business. This concept of risk is found in various stages of development and execution of a project. Risks in a project can mean there is a chance that the project will result in total failure, increase of project costs, and an extension in project duration which means a great deal of setbacks for the company. The process of risk management is composed of identifying, assessing, mitigating, and managing the risks of the project. It

A contract is an arrangement between two or more parties that creates rights and obligations to each party. The essential parts of a contract are as follows:

A contract is an agreement made with an intention of legal rights and obligations which the law will enforce. It contains the agreement, consideration and intention. It also have some other things to consider, like capacity of parties, genuine consent or legality of object.

Construction projects can be extremely complex and fraught with uncertainty. Risk and uncertainty can potentially have damaging consequences for the construction projects. Therefore nowadays, the risk analysis and management continue to be a major feature of the project management of construction projects in an attempt to deal effectively with uncertainty and unexpected events and to achieve project success. Risk is inherent on construction projects and disputes frequently arise. One in four construction projects results in a dispute that leads to arbitration or litigation. With large scale, complex projects the likelihood of serious, time-consuming and expensive claims increases.

In order for a home building project to survive its purpose, risk analysis is essential so that occurrences that may affect the projects in the end can be identified, analyzed, assessed, managed and monitored. Because of the risky processes that are involved in the projects of home building construction, risk analysis and mitigation is the most useful tool in achieving good project and planning in home buildings as well as other constructions. If good risks management procedures are well conducted, the team’s level of confidence will be boosted, and this will enable or project to run and smoothly achieve its goals while facing and tackling each risk. Risk management will also come in handy as time will be saved as well as the

Risk allocation is performed as part of the development of the project structure, which takes into account the distribution of responsibilities and risks during the planning, construction, financing and operating phases (Corner, 2006). The aim is to identify an efficient and effective structure that optimises the costs of the project and ensures that the risk occurrences do not damage the project (Delmon, 2009). According to Grimsey and Lewis (2007) risk allocation has two elements: optimal risk management and value for money. The first implies that the

This assignment is included in the 2014 session of the Risk Management module of the MSc in Project Management course at University of Aberdeen. The main purpose of the assignment is to demonstrate my understanding of the issues involved in Risk Management and how they are applied in my current Project environment. The assignment is split in to two questions as detailed below.

The research takes a case study approach. The case study analysis dwelt on risk management by Contractors who work on energy and utility construction projects, including strategies and supporting structures for managing risks, complete with an analysis of how these strategies and structures are implemented and supported by the Contractors resources base. The researcher specifically chose utility contractors for this study as the Energy and Utilities sector play an indispensable role in the global economy and in the UK, industry employs around 2% of the UK workforce (AGCAS, 2012). Moreover, the UK government identified the Utilities companies as companies that are heavily involved in risky incidents affecting their sector thus playing a crucial role in the preparation and planning for emergencies responsibilities (UK Government, 2013). According to Yip (2003) construction is risky as it almost always certainly involves loss of time and money. Above all, any denial of service during outage result in impact on communities (Lindman, 2008) and utility services are no exception. Against this background, it could be argued that contractors working on construction projects undoubtedly play a significant role in managing risks in order to stay in business.

When it comes to standard forms of contract this is basically a standard type of contract that has been drawn up to be used