Risk Management Essay

8019 Words33 Pages
CHAPTER-1 INTRODUCTION Construction projects are involved in heavy competition based only on price. This makes parties extremely reluctant and unable to invest any long-term development and learning. Relationships become adverbial since one individuals loss is another’s gain. The industry has to adopt a new approach to award experience and quality instead of lowest price. That would allow parties to invest into long-term development efforts. Partnering efforts should be made, to enhance long-term relationships. Risk management courses for all construction project parties to increase level of knowledge of formal risk management processes and understanding its benefits would increase the willingness to invest in risk management and capabilities to do it. In this field it is necessary to develop more concrete methods for co-operation. Financial gains will follow if more co-operative means are introduced, but that benefits are realized increasing only in long-term. All projects are subjected to risk. The world is in a state of constant change and survival relies on the ability to adapt to changes. Unfortunately, many projects managers have not yet realism that there is a need to include project risk as a management issue. It is a well-known fact that managing risk has two major objectives: to avoid the downside risks and to exploit opportunities. Experiences far show that the risk avoidance part of the risk management philosophy has attracted too much management attention, while the potential opportunities have been neglected. The risk avoidance strategy helps to secure the project objectives, which for many organizations is a giant step ahead. However, the major leaps in reducing project cost and time are results of innovative thinking with a focus on exploring opportunities by challenging the

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