risk management

Topics: Risk management, Project management, Construction Pages: 15 (6343 words) Published: September 6, 2014
Journal of Surveying, Construction & Property Vol.3 Issue 1 2012-07-02 e-issn:1985-7527

Lee Chun Siang and Azlan Shah Ali
Faculty of Built Environment, University of Malaya
50603, Kuala Lumpur, Malaysia

Risk and uncertainty constantly plagued construction industry compared with other business activities due to its characteristics of complexity, dynamic and time consuming. As risk management is predicting the unpredictable, it is one of the most vital management tools to cope with project risks and uncertainties. Risk management is important to create values to a project and improve project performance in term of cost, time and quality. However, systematic risk management is not implemented in most of the existing construction companies in Malaysia. This situation leads to project failure such as cost overrun, schedule slip and poor quality performance. This article focuses on the implementation of risk management in Malaysian construction industry and attempt to establish the relationship between risk management and project performance. The data were obtained from desk works, followed by semi-structured interviews involved risk management personnel from 3 selected local construction companies. Findings concluded that risk management practices in Malaysian construction companies were relatively low and lack of standardisation. However, there were little evidence shows that project performance improved by implementing risk management exercise. Keywords: risk management; Malaysia; project performance

1.0 Introduction
It is essential to understand exactly what is meant by risk before it can be managed. Risk and uncertainty are inherent in all construction projects, regardless its size (Carr and Tah, 1999; Abdul Rahman Ayub, Nordiana Mohd Isa and Ilias Said, 2007). Construction project is plagued by risk due to their nature of construction business activities, processes, environment and organization (Akintoye and Macleod, 1997). They continue claimed that those within the construction industry are constantly faced with unpredictable and unfavourable factors. In general, construction project requires enormous amounts of turnover rate, resources and professionals from different fields and skills and they are interrelated to each other. Such complexity further compounded by the unique features which are distinctive end product and on site production. Thus, coordination and communication among the ad-hoc project team is essential when managing the risks.

The Association for Project Management (2000) stated that risk is unavoidable in construction projects and thus, risk management is a hastily developing management tool in construction project due to the realization of its importance as an integral part of project management. Risk management is one of the most vital procedures and capability way in coping with project risks and uncertainties. In order to rescue the poor reputation of construction industry in project performance, the right implementation of risk management is essential. With the implementation of risk management, the common problem in construction projects such as delay in project delivery, over budget, unsatisfactory product quality, unsafe working environment and etc. needs can be eliminated. Therefore, it could be argued that risk management is important especially during the decision making process with regard to risks.


Journal of Surveying, Construction & Property Vol.3 Issue 1 2012-07-02 e-issn:1985-7527

However, it is not easy to achieve effective risk management in a construction project. Effective risk management is the major challenges to the project managers. Although project managers cannot predict the future, they can anticipate risk that inherent in a project and manage the risk before it happens (Tserng et al, 2009). However, Chapman (1999) stated that the tendency for risk...

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