Systematic Risk Management Approach for Construction Projects

Abstract

Risk is inherently present in all construction projects. Quite often, construction projects fail to achieve their time, quality, and budget goals. A risk model entitled construction risk management system (CRMS) is introduced to help contractors identify project risks and systematically to analyze and manage them. The CRMS model is a logical substitute for the traditional intuitive unsystematic approach currently used by most contractors. The influence diagramming technique and Monte Carlo simulation are used as tools to analyze and evaluate project risks. Alternative risk management strategies are suggested. Such strategies include: risk avoidance, risk transfer, risk retention, loss reduction, and risk prevention and insurance.