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A Review on Risk Management in Residential
Projects
S. T. Namitha Sheen* R. Shanmuga Priyan **
PG Student, Assistant Professor,
Department of Civil Engineering, Department of Civil Engineering,
Sri Ramakrishna Institute of Technology, Sri Ramakrishna Institute of Technology
Coimbatore Coimbatore
S.Sugumar***
Assistant Professor,
Department of Civil Engineering,
Sri Ramakrishna Institute of Technology,
Coimbatore
Abstract— Construction industry is highly risk prone, with It is important to distinguish the sources of risk form their
complex and dynamic project environments which create effects. Ultimately, all risk encountered on a project is related
an atmosphere of high uncertainty and risk. The main to one or more of the following:
objective of this review paper is to gain understanding of risk Failure to keep within the cost budget/ forecast/
factors that could be in front of building projects. The review estimate/ tender.
paper aims to identify the risks that have been more prone in the Failure to keep within the time stipulated for the
case of the construction practitioners. Consequently, the risks
play a crucial role for the completion of project within the time
approvals, design, construction and
schedule and planned budget. The critical risk factors and its occupancy.
assessment techniques were determined through a review of Failure to meet the required technical standards
various international construction projects. for quality, functions, fitness for purpose, safety
and environment preservation.
Keywords— Risk , Risk Management, Typical risks, Software. The effect of adverse events will be financial loss.
The professional advisors, contractors and suppliers aims to
I. INTRODUCTION determine the discrete sources of risk which cause to failure
The construction industry has a bad reputation for its occur, and to develop a risk management strategy that provides
work. The industry had experienced for time and cost for the most appropriate organizations to carry that risk.
overruns. This bad reputation is due to many reasons. One of
them is that the construction industry is one of riskiest of all B. Risk and Uncertainty
business types Risk is defined as the exposure to loss/gain, or the
probability of occurrence of loss/gain multiplied by its
A. Typical Risks on a Construction Project respective magnitude. Events are said to be certain if the
probability of their occurrence is 100% or totally uncertain if
Occurrence of accidents to operatives on site causing
the probability of occurrence is 0%. In extremes that have
physical injury.
found in between the uncertainty varies quite widely . Risk
Failure to complete within the stipulated design and
also can be defined as a characteristic of a situation, action, or
construction time.
event in which a number of outcomes are possible, the
Failure to obtain the expected outline planning,
particular one that will occur is uncertain, and at least one of
detailed planning or building code/regulation
the possibilities is undesirable. Risk is also defined as the
approvals within the time allowed in the design
presence of potential or actual constraints that could stand in
program.
the way of project performance, causing partial or complete
Unforeseen adverse ground conditions delaying the
failure either during construction or at time of use. It is also
project.
stated that there is no all encompassing definition of risk and
Unexpected rises for labor and materials.
provided his interpretation of what risk constituents:
Force majeure.
Risk = Hazard × Exposure
Failure to complete the project within the client's
Hazard is defined to be the way in which an event can
budget allowance.
cause harm and exposure as the extent to which likely
Loss of the contractor caused by the late production.
recipient of harm can be influenced by the hazard.
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C. Risk Management Process management processes with respect to cost efficiency, time
Risk management contains the schematic or properly and quality of highway and road construction projects using
arranged application of management policies, processes and SPSS to find out the different risk factors that have been
procedures to the tasks of establishing the context, identifying, occurred so far from questionnaires survey data for preventive
analyzing, assessing, treating, monitoring and communicating measures or mitigation techniques for various risks on
risk. construction site. Statistical dependency correlation analyses
Risk management process (RMP) is the basic showed that the use of risk assessment in the reported projects
principle of understanding and managing risks in a project. It has improved quality of project and construction management.
consists of the main phases: identification, assessment and
analysis, and response as shown in Figure . All steps in RMP K.Jayasudha, Dr.B.Vidivelli and E.R.Gokul Surjith,
should be included when dealing with risks, in order to Construction of bridge projects results in complex and
efficiently implement the process in the project. Many dynamic problems in circumstances of high uncertainty and
variations of RMP are available in literature, but most risk, which are compounded by demanding time and cost
commonly described frameworks consist of those mentioned constraints. This research seeked to identify the risk factors
steps. In some models there is one more step added, and the that affect the performance of bridge projects as a whole and
majority of sources identify it as risk monitoring or review. analyzed by using SPSS software and other appropriate tools
For the purpose of this paper the model of RMP will be used and techniques to develop a risk management framework. The
for further analysis. study was mainly performed using the questionnaire survey
which was collected from the various multi project
construction contractors and project manager of different sizes
by mail or by personal meeting. The study mainly focused to
assist management tin identifying activities where there is a
risk of time and financial aspects and hence provide a basis for
management to take objective decision on the reduction of risk
to an agreed level. These findings are very important for
Fig. Process of Managing Risks implementing further effective measures to ensure the right
direction of future development.
II. LITERATURE REVIEW
Alfredo Serpell, Ximena Ferrado et al; mentioned Dr.R.K.Kansal and Manoj Sharma, There are many
that today every organization faces uncertain events that occur risks in any type of the project particularly in construction
in different environments and with different characteristics and project. Risk is a negative term referring to loss and impact of
impacts. Uncertain events with negative impacts are called loss, but there is also positive risk involving favourable results
risks. The Construction industry is being exposed to these and their impact is known as opportunity. It is necessary to
uncertainties, which are complex and diverse risks. Risk include risk management in project planning and management
management is a positive and proactive process intended to so as to identify, assess, manage and control the risks that
mitigate or eliminate the risk we count on risk management would be adverse to the project goals. The study aimed to
which is an integral part of project management. Risk assess the degree of knowledge and utilization of risk
management in both construction business and construction identification techniques in the construction projects. The
projects should be a part of the organizational culture. This paper suggested risk assessment approaches such as brain
would allow its development and implementation and to storming, checklist, flowchart, delphi method and risk
become a standard for planning and implementation of significant index method which are applied in various areas
projects. Important part of this is to generate an effective and the problems are solved. It was observed that currently
management of knowledge to have a system which can keep used risk assessment methods can be integrated into new
the lessons learned so that they can be spread and reused in approach that can aid the decision makers applying the risk
future projects. During the realization of this research it has assessment effectively.
been observed that the lack of knowledge about risk
management within the domestic construction industry has Shankar Neeraj and Balasubramanian.M,
become a barrier that has prevented the participation of some Construction projects are generally used in complex and
companies that have been not willing to contribute to the dynamic environments resulting in circumstances of high
study. uncertainty and risk, which are compounded by demanding
time constraints. The construction companies need to include
K.Abhinaya and S.Priscil Nidhu explained that, Risk risk as an integral part of their project management. Decision
management is the systematic process of identifying, making such as risk assessment in construction projects is very
responding and analyzing to project risk. Risk is an important in the construction management. The identification
uncertainty inherent in possibility and plans of something and assessment of project risk are the critical procedures for
happening that can affect prospects of achieving, business and projecting success. The study determined the key factors of
project goals. Risks that have occurred in the construction of risk in construction industry and were analyzed through pilot
road and highway projects have a major impact on issues survey which include experts of academic, governmental
related to cost, time and quality of project delivery. The study sectors and construction industry were interviewed. It also
investigated the use and awareness of risk assessment and addressed the limitation and gap in the current literature and
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provide a framework for determining optimal risk assessment paper suggested the most useful way for implementation of
model. The approach provided a more effective, accurate and risk management in construction industry, to consider the
organized decision support tool. different types of risk management techniques applied to
alleviate risk, to identify the use of implementation of the risk
V.Sathishkumar, P.N.Raghunath and K.Suguna, Risk management, to determine the factors that can influence the
is said to be an event that occurs uncertain or condition that, if applications of risk management in the project life cycle,
it occurs has a positive or a negative effect on a project wherein to categorize the principles adopted in risk
objective. Risk management is the systematic process of management. The study was clearly described based on the
identifying and analyzing and responding to project risk. Risk case study of British Airways Authority.
management includes maximizing the probability and
consequences of adverse events to project objectives. The Krantikumar Mhetre, B.A.Konnur,
study aimed in the identification of risks that are caused in Amarsinh.B.Landage, Construction industry is a highly risky
various construction projects and calculating the risks severity area, which contains complex and dynamic project
to personal and property. The paper describes largely on the surroundings which create an atmosphere of high uncertainty
survey questionnaire which was collected from various and risk. Risks and uncertainties inherent in the construction
sources and it seeks to identify and assess the risk and develop industries are more than any other industries. Risk
a management framework which the investors/ developers/ management is a process which is used to identify the project
contractors can adopt when contracting construction works risks, analyze them and determine the actions to avert the
and the data's were analyzed by descriptive statistics & threats on any project. It covers the concepts of risk
ANOVA. management and various risk analysis techniques to be used
for the one stop solution for all the types of hazards most
V. Sakthiniveditha and Pradeep.T, The second largest likely to occur during any construction project life cycle.
industry that is existing next to agriculture is the Construction
industry. It makes a significant contribution to the national Advantages of risk management
economy and provides employment to large number of people. Less uncertainty
It is estimated that the high-rise or multi storey buildings are Achievement of objectives
the most important part of the construction for the greater Reliability
development. The risk involved in this part also rates higher in
the construction industry. The study was based on the risk
Reduction of capital cost
assessment in the construction of high rise buildings based on Creation of value
literature review and a questionnaire survey. From the review
it was found that the major part of risks in high-rise buildings Limitations of risk management
are caused due to technical, financial, physical and If risks are improperly prioritized and assessed, time
constructional problems. The maximum risk rating factors and can be waste in dealing with risk of losses that not
least risk rating factors given by project engineers in relation likely to occur
with government departments, local protectionism and Spending too much time managing and assessing
industrial disputes were discussed. unlikely risks can divert resources that could be more
profitably.
Alfredo Federico Serpella, Ximena Ferrado et al;, Unlikely events to occur, but if the risk is unlikely
One of the major roles undertaken by a project manager is the enough to occur, it may be better to simply retain the
management of risk of a project. An effective and efficient risk risk & deal with the result if the loss does in fact
management approach requires a proper and systematic occur.
methodology and more importantly knowledge and III. CONCLUSION
experience. Based on a three-fold arrangement a knowledge The construction industry is known to have
based approach and a methodology was made that includes the complexity in its activities and dynamic project environments
modeling of the risk management function, its evaluation and generating an atmosphere of risks that must be taken into
the availability of a best practice model in order to overcome consideration in the decision process. For this reason, we have
the problems faced in the risk management of construction developed this treatise to elucidate the fundamentals of risk
projects. It is also suggested that the proposed approach management through a concise new proposal of literature
allows clients and contractors to develop a projects risk review for risk management in construction. Our explanation
management function in order to overcome the drawback in of this is venture is that over the years, this area has been
Chile which was that both owners and contractors do not acknowledged as a crucial process in the business institutions
systematically apply risk management practices as they found and the most discussed subject among experts and researchers
it resulting in negative consequences for projects performance. in the construction sector. The paper have presented the most
A.Suchith Reddy, Risk management process consists recent studies considering the impossibility to present all
of identification, assessment and setting preference for risk definitions of the concept of risk. This study was mainly a
mitigation. This may include a synchronized and cost effective review; it looked at the literature relating to the concept of
way of using the materials and resources in an order to risk, risk management in construction as well as methods used
minimize the hazards that may arise along with monitoring in construction industry.
and controlling the unfortunate events they may occur. The
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Published by : International Journal of Engineering Research & Technology (IJERT)
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Vol. 6 Issue 11, November - 2017
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