Risk Assessment and

Management in Construction
Industry

Project
An endeavor undertaken to create
a unique product or service.

Project Management
The application of knowledge,
skills, tools, and techniques to
project objectives to meet
stakeholder needs and
expectations.

Project Management Scope

The PMBOK Guide recognizes
nine knowledge areas typical of almost all projects
1. Project integration management
2. Project scope management
3. Project time management
4. Project cost management
5. Project Risk management
6. Project human resource management
7. Project communications management
8. Project cost management
9. Project procurement management

Risk
An uncertain event or condition
that, if it occurs, has a negative
effect on at least one project
objective

Types of Risks
1. Technology Risk
2. Financial Risk
3. Procurement Contractual Risk
4. Political Risk
5. Operational Risk
6. Environmental Risk
7. Engineering Risk
8. Social Risk

Construction Industry Overview

1. In India, it is an important indicator of
development providing jobs to > 30mn
people directly or indirectly
2. It has contributed an estimated
6708 billion to the national GDP in 201112 (a share of around 8%)
3. Globally too, it is one of major economy
drivers in the developed nations

Risks in Construction Industry

1. Misunderstanding of Contractual Terms
2. Design Changes and Errors
3. Legal Risks pertaining to govt. policies and
decisions
4. Political Risks pertaining to the reversal of
decisions under new circumstances
5. Operational Risks in executing the
construction project in challenging environment
6. Environmental Risk
7. Social Risk

Risk Management
1. Risk identification Determination of risks that
are likely to affect the project
2. Risk Quantification - Evaluating risks to asses
range of possible outcomes
3. Risk Response Development Determining
enhancement steps for opportunities and
responses to threats
4. Risk Response Control Responding to
changes over the course of project

Why Risk Management Study

in Construction Industry?
1. Construction Industry is Heterogeneous and
enormously complex thus creating an
atmosphere of high uncertainty and risk
2. Huge amount of Resources (Men, Material
and Machines) are at risk
3. Cost Overruns can be of huge magnitude in a
project involving a large amount of money

Studies Conducted - Overview

1. An extensive review of international project
risk assessment and management has been
conducted during initial phase of the research
effort
2. Researches suggest in affirmative that
construction industry faces more risks than other
business activities because of complexity
3. There is an absence of good literature on Risk
assessment and management for Indian
Construction Projects

Studies Conducted - Example

Ling and Hoi (2006) investigated the risks faced by
Singapore based architecture, engineering and
construction (AEC) firms in India. They also
investigated the techniques used for risk response by
these firms. Their in-depth interviews with
Singaporean experts working on AEC
projects in India revealed that the main risks faced by
AEC firms were; huge differences of culture between
the expatriates and Indians, exchange rate of
currency and its fluctuations, high financing cost,
political and social risks. The techniques used for
responding to risks were to obtain effective insurances
and carefully plan and manage all risk response
activities

Thank You !!