Managing Risk : In Construction Projects

by Smith, Nigel J.; Merna, Tony; Jobling, Paul

• ISBN13: 9781405130127
• ISBN10: 1405130121
• Edition: 2nd
• Format: Paperback
• Copyright: 2006-03-06
• Publisher: Wiley-Blackwell

Summary

Written by a group of academics and practitioners, this guide is for construction practitioners having to manage real projects. It shows how the risk management process improves decision making in conditions of uncertainty. This new edition includes the input of the Turnbull report, as well as to introduce the concept of corporate, strategic business, and project level risk. The authors cover: * a description of risk management and decision making in the context of a construction project * the human dimension * tools and techniques available to the risk analyst * the problems of procurement and finance * the practical application of risk analysis, including the principles of risk modelling and simulation, together wit case studies. A thorough understanding of these concepts will provide the project manager with the basis for effective decision making. From the reviews of the first edition: 'This book should be compulsory reading for all concerned with the management of risk in construction - whether academics or practitioners.' Chartered Surveyor Monthly 'A valuable addition to the literature ... which helps condense, simplify and provide practical advice on how to implement risk management on construction projects.'

Author Biography

Nigel Smith is Professor of Transport Infrastructure & Project Management at the School of Civil Engineering, University of Leeds.

Tony Merna is a lecturer in Civil & Construction Engineering, School of Mechanical, Aerospace and Civil Engineering., University of Manchester.

Paul Jobling is a Senior Professional Associate and Project Director Risk Management at Parsons Brinckerhoff

Table of Contents

Preface	ix
Authors Biographies	x
Acknowledgements	xii
Projects and Risk	1	(8)
Construction projects	1	(1)
Decision making	2	(3)
Risk management strategy	5	(1)
Project planning	6	(1)
Summary	7	(2)
The Project Environment	9	(15)
Projects	9	(2)
The project constitution	11	(2)
Project Organisation	13	(2)
Project phases	15	(3)
Effect of project phase on risk	18	(2)
Project appraisal	20	(2)
Summary	22	(2)
Understanding the Human Aspects	24	(12)
Risk management -- people	25	(1)
Risk management -- organisations	26	(1)
The risk management process	27	(1)
Some guidelines to the risk management process	28	(2)
The risk workshop	30	(3)
Communication	33	(1)
Summary	34	(2)
Risk and Value Management	36	(21)
Introduction	36	(1)
Approaches to the management of risk	37	(3)
The standard risk management model	40	(1)
Applying risk and value management	41	(2)
Value management processes	43	(1)
Understanding the project risk	44	(8)
Applying value and risk management	52	(2)
Iteration of the process	54	(1)
Summary	55	(2)
Qualitative Methods and Soft Systems Methodology	57	(21)
Qualitative risk assessment	57	(1)
Review of project programmes and budgets	57	(3)
The risk log	60	(2)
Using a risk log to formulate risk management strategy	62	(2)
Qualitative methods	64	(2)
Soft systems methodology	66	(2)
Case study: SSM in the use of the placement of construction projects	68	(9)
Summary	77	(1)
Quantitative Methods for Risk Analysis	78	(24)
Sanction	78	(1)
Project appraisal and selection	79	(3)
Project evaluation	82	(2)
Engineering risks	84	(3)
Risk management	87	(2)
Probabilistic analysis	89	(3)
Response to risks	92	(1)
Successful risk management	93	(1)
Principles of contingency fund estimation	94	(8)
The Contribution of Information Technology to Risk Modelling and Simulation	102	(34)
Purpose of RMS	103	(1)
When to use RMS	103	(2)
Requirements of the analyst	105	(1)
Modelling and simulation	105	(2)
Modelling using RMS	107	(1)
Data management	108	(1)
Analytical mechanisms	108	(2)
Classification of RMS	110	(1)
Selection of RMS	111	(2)
Modelling a project for risk management	113	(2)
Data requirements for realistic modelling	115	(2)
Choice of variable distribution	117	(1)
Case study	118	(7)
Case study simulations	125	(3)
Analysis of the result	128	(6)
Discussion of findings	134	(1)
Summary	134	(2)
Risk Allocation in the Contracting and Procurement Cycle	136	(28)
Typical contracting and procurement processes	136	(4)
Value planning case study	140	(2)
Known and unknown risks in contracts	142	(3)
Risk allocation strategies	145	(11)
Risk allocation according to payment mechanism	156	(4)
Contract award	160	(3)
Summary	163	(1)
Managing Financial Risks in Major Construction and PFI Projects	164	(23)
Project financing	164	(2)
Types of finance	166	(5)
Appraisal and validity of financing projects	171	(3)
Typical financial risks	174	(2)
Promoter	176	(1)
Financial risk in concession contracts	177	(3)
Global and elemental risks in concession contracts	180	(6)
Summary	186	(1)
Risk Management of Corporate, Strategic Business and Project Levels	187	(15)
Introduction	187	(1)
Risk management	188	(1)
The risk management process	189	(2)
Benefits of risk management	191	(1)
Recognising risks	191	(2)
Why risk management is used	193	(1)
Model for risk management at corporate, strategic business and project levels	194	(6)
Summary	200	(2)
Case Studies	202	(27)
Introduction	202	(1)
Case study -- cruise ship design and fabrication programme risk assessment	203	(1)
Risk identification	204	(4)
The Channel Tunnel Rail Link (CTRL)	208	(1)
Brief history of the CTRL	209	(3)
The risk management process	212	(7)
Risk assessment, analysis and response	219	(6)
Summary of the preliminary schedule risk analysis results	225	(4)
Guidance in Practical Risk Management	229	(11)
Decision making	229	(1)
Preparation for risk management	230	(2)
Risk identification	232	(1)
Risk analysis	232	(1)
Risk outputs	233	(4)
Models	237	(1)
Communication	238	(1)
Summary	238	(2)
Index	240