Importance Of Risk Management In Construction Industry

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Although risk management is broad topic and defining risk depends on the profession, project or industry. For this project, anything that challenges a projects success or obstacles to achieve the set goals (specifically related to defects) can be termed as risk (Gajewska & Ropel 2011). The concept of time, cost and quality is important for project success and defects could impact all of these dimensions if not acted promptly. Quite often projects fail to meet deadlines, cost and quality targets due to the nature of construction industry it suffers from more risk and uncertainty than any other industries (http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.464.8878&rep=rep1&type=pdf
). Typically in construction industry any events that
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Thus application of risk management can help stakeholders avoid failures in construction industry.
Profit of construction industry can decrease with inefficient and careless handling of risk, thus there is a need to improve the quality of risk management in construction industry to arrest the ever-increasing defects trend. Risk management process involves three major component people, process and technology. The risk management process generally involves four major
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Quantitative analysis usually requires complex software and skill personnel as well as correct data. The techniques such as Monte Carlo analysis, sensitivity analysis, Fault tree analysis, etc. can be used for quantitative analysis.

1.1.3 Risk Response
Third step of risk management is taking necessary action. Depending on the risk various strategy and approach could be chosen. Common strategies are: avoidance, reduction, transfer and retention.

1.1.4 Risk Monitoring
All information related to identifying risks is collected and monitored in this step. Through this step new potential risks are identified and repeated throughout the project, project over all status are monitored. Discussion and sharing of experience of different risk’s owners is also the part of this step.

Typical risk associated with construction industry as stated by Edward 1995

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