Order_81833557_Risk_and_Value_Management11-.doc

Order_81833557_Risk_and_Value_Management11-.doc - 1...

Info icon This preview shows pages 1–4. Sign up to view the full content.

1 Evaluation of the Importance of Effective Risk Value Management to the Successful Management of a Construction Project.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

2 Introduction Risk can be explained as an uncertain event or situation, when it occurs has both positive and negative effects to the objectives of the project (Loosemore, 2006). In current economic conditions there are many possible risks that can cause project delays, excessive spending and also total failure of a project. This has led to the rise of aconsistent structuring of organizations and continuous risk management, especially when carrying out a construction project. It is important to plan for an expected event as this makes the project team to be ready to respond if the risks arise. A good project manager recognizes that risk management is very critical and important as the success of the project depends on planning, preparation, and measuring that contribute to achieving the intended goals. This paper evaluates the importance of effective risk value management to the successful management of a construction project. The Application of Risk In order to understand the risk value management in an organization, it is important to understand what is risk management and how different organization have different level of risk appetite. There are many theories that have been developed expanding risk management, this has made it difficult to choose an explanation which is true as every researcher has his own perception on the managing and how to manage risk. According to Dallas and Director (2013), risk management is considered to be a tool that is used to ensure that those involved in a project make better decisions. Therefore, risk management can be explained as the process that involves a systematic application of management procedure that is used in is used in identifying, analyzing, assessing, treating, monitoring and evaluating (Burtonshaw-Gunn, 2009). Hwang, Zhao and Toh, (2014), emphasizes that management of risk in a construction project is very
Image of page 2
3 important as it comprises the integration of basic principles of risk policy, creating awareness of a risk-consciousness and also organizational integration. On the other hand, risk appetite can be explained as the amount and the type or risk that the company is willing to take based on the capabilities and resources so as it can achieve its strategic objectives. Generally, firms have different risk appetites, the differences are caused by factors such as the business sector, the organizational culture, the economy as well as the intended objectives. However, the range of appetites that exist for different risk changes over time. This simply means that the risk appetite is the type of equationa construction firm must constantly consider and identify the types of risks they can take on each project in the portfolio.Risk assessment fully discloses the appetite of risk in any project its participants so that the stakeholders fully understood the types of risks in the project and how they will be handled.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 4
This is the end of the preview. Sign up to access the rest of the document.
  • Spring '16
  • Mbithi
  • Construction Project

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern