Risk And Uncertainty In Construction ProjectsPrepared By: Engr. Ahmad Sameer Nawab

Kardan University Civil Engineering Department

ContentsDefinitionDEFINITION OF UNCERTAINTY AND RISKDifference Between Risk And UncertaintySOURCES OF UNCERTAINTYTop 10 ranked risks as per their significance in relation to project objectivesThe key risks that influence project objectives and their abbreviationsRisk Management in Construction Projects

DefinitionAn uncertainty problem is the main that influence the projects implementation parameters. It can be predicted with some possibility level but it is better to foresee possible optimistic and pessimistic "what if" scenarios with detail solving solutions and "stop threat" means for effective construction project management. Managing risks in construction projects has been recognized as a very important management process in order to achieve the project objectives in terms of time, cost, quality, safety and environmental sustainability. Risk management may be described as a systematic way of looking at areas of risk and consciously determining how each should be treated.

DEFINITION OF UNCERTAINTY AND RISKIn recent years scientists describe uncertainty as associated with uncertainty management , which is the process of integrating risk management and value management approaches of construction process. Theoretically uncertainty can be defined as a lack of certainty involving variability and/or ambiguity. Alike uncertainty management is concerned as managing perceived threats, opportunitiesand their risk implications but also managing the various sources of uncertainty which give rise to and shape risk, threat and opportunity.In uncertainty situations, parameters are uncertain, and furthermore, no information about probabilities is known.Whereas in risk situations, there are uncertain parameters controlled by probability distributions are known by the decision maker.

DEFINITION OF UNCERTAINTY AND RISKThe uncertainty in undertaking a construction project comes from many sources and often involves many participants in the project. Since each participant tries to minimize its own risk, the conflicts among various participants can be crucial to the project. Failure to recognize this responsibility by the owner or manager often leads to undesirable results. What is why risk management is the means by which uncertainty is systematically managed to increase the likelihood of meeting project objectives.Most of scientist emphasize that the key word is systematic, because the more disciplined the approach, the more we are able to control and reduce the risks.

Difference Between Risk And UncertaintyThe difference between risk and uncertainty is usually expressed in terms of whether it is possible to quantify the inexactness with which future values of a particular quantity are known Mathematically stated differences between uncertainty and risk are important.

SOURCES OF UNCERTAINTYUncertainties and risk cause the range of problems during the implementation of construction project. In this part of article five Parts are presented with description of uncertainty sources andpossible consequences.

SOURCES OF UNCERTAINTYTable One:-Sources of uncertainty and consequences due to un-unified communication and undefined Project language.

SOURCES OF UNCERTAINTYTable No 2:-Sources of uncertainty and consequences due to low qualification and professional training of employees.

SOURCES OF UNCERTAINTYTable no 3:-Sources of uncertainty and consequences Due to Un-estimated work amounts in project's estimate and unacceptableplanning of works.

SOURCES OF UNCERTAINTYTable no 4:-Sources of uncertainty and consequences due thelack of management tools and ineffective-irrational organizationof works on site.

SOURCES OF UNCERTAINTYTable No 5:-Sources of uncertainty and consequences dueunclear responsibility limits and no strict contractual obligations.

Top 10 ranked risks as per their significance in relation to project objectives1_Cost related risks:-Tight project schedule.Design variations.Variations by the clientUnsuitable construction program planningOccurrence of disputePrice inflation of construction materialsExcessive approval procedures in administrative government departmentsIncomplete approval and other documentsIncomplete or inaccurate cost estimateInadequate program scheduling

Top 10 ranked risks as per their significance in relation to project objectives2_Time related risks:Tight project scheduleDesign variationsExcessive approval procedures in administrative government departmentsVariations by the clientIncomplete approval and other documentsUnsuitable construction program planningInadequate program schedulingBureaucracy of governmentHigh performance or quality expectationsVariations of construction program s

Top 10 ranked risks as per their significance in relation to project objectives3_Quality related risks:Tight project scheduleInadequate program schedulingUnsuitable construction program planningIncomplete or inaccurate cost estimateLow management competency of subcontractorsHigh performance or quality expectationsVariations of construction programsUnavailability of sufficient amount of skilled labourDesign variationsLack of coordination between project participants

Top 10 ranked risks as per their significance in relation to project objectives4_Environment related risks:Tight project scheduleVariations of construction programsUnavailability of sufficient professionals and managersExcessive approval procedures in administrative government departmentsVariations by the clientInadequate or insufficient site information (soil test and survey report)Low management competency of subcontractorsHigh performance or quality expectationsInadequate program schedulingSerious noise pollution caused by construction

Top 10 ranked risks as per their significance in relation to project objectives5_Safety related risks:Tight project scheduleLow management competency of subcontractorsUnsuitable construction program planningVariations of construction programsGeneral safety accident occurrenceHigh performance or quality expectationsDesign variationsLack of coordination between project participantsExcessive approval procedures in administrative government departmentsUnavailability of sufficient amount of skilled labourUnavailability of sufficient professionals and managers

The key risks that influence project objectives and their abbreviations

Risk Management in Construction ProjectsIn todays post-crisis economy effective risk management is a critical component of any winning management strategy. Nine knowledge areas typical of almost all projects. The nine knowledge areas are:1. Project integration management.2. Project scope management.3. Project time management.4. Project cost management.5. Project quality management.6. Project human resource management.7. Project communications management.8. Project risk management.9. Project procurement management.

Risk Management in Construction Projectsproject risk management includes:Risk management planning;Risk identification;Qualitative risk analysis;Quantitative risk analysis;Risk response planning;Risk monitoring and control.

Risk Management in Construction ProjectsThe performance by the project management team highly influences the success of a construction project. Some of the incidental risks associated with poor project management performance are:Unclear or unattainable project objectives;Poor scoping;Poor estimation;Budget based on incomplete data;Contractual problems;Insurance problems;Delays;Quality concerns;Insufficient time for testing.

Risk Management in Construction ProjectsRisk factors on construction projects can be split into two major groups:1. Internal risks, which fall within the control of clients, consultants and contractors.2. External risks, which include risk elements that are not in the control of key stakeholders.

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