Sakshi Gupta, Post Graduate student, National Institute of Technology, Kurukshetra

Introduction

"No construction project is risk free. Risk can be managed, minimized, shared, transferred or accepted. It cannot be ignored." Risk is a state of uncertainty where some possible outcomes have an undesired effect or significant loss. Uncertainly is meaning that the lack of certainly due to limited knowledge that it is impossible to state the outcome exactly, perhaps, more than one possible outcome happens. Risk is a state of uncertainty where some possible outcomes have an undesired effect or significant loss. Uncertainly is meaning that the lack of certainly due to limited knowledge that it is impossible to state the outcome exactly, perhaps, more than one possible outcome happens.

Greene (2001) stated that there is no all encompassing definition of risk and provided his interpretation of what risk constituents:

Risk = Hazard × Exposure [1]

Risk Management refers to the culture, processes, and structures that are directed toward effective management of risks–including potential opportunities and threats to project objectives. Although risk is widely studied, it still lacks a clear and shared concept definition: risk is often only perceived as an unwanted, unfavorable consequence. Such a definition embodies two misleading concepts: first, among professionals there is an established consensus that risk needs to be viewed as having both negative and positive consequences. Second, risk is not only related to events, i.e. single points of action, but risk also relates to future project conditions. Conditions may turn out to be favorable or unfavorable. The point is that future project conditions are hard to predict in the early stages of the project life-cycle. In addition, conditions can change during the project life-cycle and the risk is that the conditions are different, and potentially more severe than was first estimated. Risks analyzed only as certain events are further criticized for not taking the degree of impact into consideration. Risks are seldom on-off-types, meaning that risks do not either happens or "not-happen", the impact of the risk varies greatly, depending on the conditions at the time of the possible. Variability and the level of predictability (uncertainty) of the future scenarios determine the quality of risk analysis done today.

Common Sources of Risk in Construction Projects

The common sources of risks in construction industry are listed below:

Changes in project scope and requirements; Design errors and omissions; Inadequately defined roles and responsibilities; Insufficiently skilled staff; Subcontractors; Inadequate contractor experience; Uncertainty about the fundamental relationships between project participants; New technology; Unfamiliarity with local conditions and; Force majeure.

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