Risk in The Construction Industry

 

FEATURED PAPER

By Eng. Haytham Baraka, Prof Dr. Mostafa H. Kotb, Dr. Moustafa I. Abu Dief

Cairo, Egypt

 


 

  1. Abstract

Risk is inherent in each project within the construction industry in different forms. It can be a threat, which has a negative impact on the project objectives. On the other hand, it can also be an opportunity, which has a positive impact, or a business risk that has either a negative or positive impact. This paper provides a brief about risk in the construction industry, risk definition and types of risks. Moreover, it provides an overall view of risk management processes.

Keywords: Risk, Management, Threat, construction, project objective, impact, Uncertainty.

  1. Introduction

All over the world today, the construction industry is the main driver of development, social welfare, and national economy. It contributes greatly to the jobs market by providing many jobs and in different specialization such as Engineers, Accountants, different labors, and many other titles. Additionally, with regard to the urban and industrial development, it supports both by providing the feasibility studies, conceptual design, cost estimate, construction and maintenance services. Therefore, we agree that construction deserves more attention and researches in order to decrease the uncertainty as much as possible, which will maximize the likelihood of achieving the objectives of the different projects within the construction industry.

Uncertainty range differs from project to another based on the project`s circumstances. There are many sources of uncertainty and on the other, hand, we can manage this uncertainty by using some tools and processes. Uncertainty may come from the undefined scope, undefined project objectives, project constraints, improper design, ambiguous contract, and other unknowns. This uncertainty is always translated into risks because both are causing events with a probability of less than 100%, which is defined as a risk.

The above discussion indicates that there are some tools and processes to manage risk either proactively or reactively. By the way, the difference between proactive and reactive can be summarized at the time of managing the risk. If we manage the risk before occurring, definitely it`s a proactive approach, while the reactive approach is managing the risk after occurring.

Risk management is a collaborative effort to drive the project forward the targeted success through some processes. It’s not mean or aims to avoid all project risks. Certainly, it aims to determine the probable events and maximize the probability or the impact of opportunities and minimize the probabilities or the impact of the threats.

Every day, the construction parties are requested to make decisions, which always  have great impacts on their project. Risk management is very important to make an informed decisionwhich means basing the decision on clear information although it includes an amount of uncertainty.

  1. Risk Definition

A risk is a probable event that has a probability, a cause or more and an impact or more. Usually, the probability is not a fixed number and it`s changed along the project period. It may be very high at a time and becomes very low at another time based on the project circumstances. The cause of risk is something that converts the probability of occurring into a hundred perfect. It may be one cause and may be a group of causes. Furthermore, the occurred risk may represent a cause for another risk. Also, the response of the risk may represent a cause for a new risk which called a secondary risk. The impact of the risk can be positive or negative or a mix between both.

More…

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How to cite this paper: Baraka, H.; Kotb, M.; Dief, M. A. (2019). Risk in The Construction Industry; PM World Journal, Vol. VIII, Issue IV (May). Available online at https://pmworldlibrary.net/wp-content/uploads/2019/05/pmwj81-May2019-Baraka-Kotb-Dief-risk-in-construction-industry.pdf

 


 

About the Authors

 

Haytham Baraka

Cairo, Egypt

 

 

Eng. Haytham Baraka, B.Sc., PMP, CCP, PMI-SP, PMI-RMP, graduated from Zagazig University as a Civil Engineer, and his graduation project was construction management for the Cairo metro project. He worked in several roles of Civil Engineering (Site Engineer, Technical Office Engineer, Planning Engineer, Project Controls Manager). He is active in professional project management associations and is a certified Project Management Professional (PMP), Certified Cost Professional (CCP), Scheduling Management Professional (PMI-SP), and Risk Management Professional (PMI-RMP). For more information, visit https://www.linkedin.com/in/haytham-baraka-pmp-ccp-sp-rmp-apc-rics-candidate-765a9b28/

Mr. Baraka can be contacted at: h_baraka14@yahoo.com or  Haytham@built.com.sa

 

Prof. Dr. Mostafa H. Kotb

Cairo, Egypt

 

 Prof. Dr. Mostafa H. Kotb is Professor of Structural Engineering in the Faculty of Engineering at AZHAR University in Egypt, since 2006. Fields of interest include behavior of design of steel structures, strengthening and repair of reinforced concrete elements for structure interactions, and rehabilitation of civil infrastructure,  He was Vice-dean from 2011 through 2015, Assistant chair of Al-AZHAR International Engineering Conference from 2000 till 2014.  For more information, visit https://www.linkedin.com/in/dr-mostafa-kotb-85ab353a/?ppe=1.  He can be contacted at Dr_mostafakotb55@yahoo.com

 

 

Dr. Moustafa Abu Dief

Egypt and Kingdom of Saudi Arabia

 

 

Dr. Moustafa Ismail Abu Dief, Ph.D., FICCP, CFCC™, CCP, PMOC, PMP®, Certified Forensic Claims Consultant, is a project management professional with over 25 years of experience in the field in Egypt and Saudi Arabia, mainly in contract and claims domain. Moustafa is delivering training courses in FIDIC, NEC3 contracts and claims management.  For more information, visit https://www.linkedin.com/in/moustafa-ismail-a-dief-ficcp-cfcc-ph-d-ccp-pmoc-pmp-93798a16?trk=nav_responsive_tab_profile . Dr. Moustafa Ismail can be contacted at the following: E-Mail: mousrafa.ismail@benaa-pm.com
 or dr.moustafa@Zamilagc.com