Abstract:

The general consensus in the construction industry and academia alike is that good risk management is pivotal to project success. However, quantitative evidence supporting this conjecture is lacking. The SCIRT alliance, formed after the 2011 earthquakes in Christchurch, provided the opportunity to compare projects with different risk management strategies and analyses the effects of changes in scope and forecasted final cost on project success. Data from more than 200 projects was used in statistical and qualitative analysis. It showed that early contractor involvement and risk workshops in the design stages significantly improved the financial performance of projects. Project managers changed their forecasted final project cost more frequently and the changes led to improved cost certainty. Changes in project scope were linked to poor financial performance. Enhanced risk management techniques employed in the design stages of a project provided project managers with a better platform from which to manage project risks. The results of this study quantitatively support the intuitive notion that proactive risk management has favorable effects on the financial performance of projects. The general consensus in the construction industry and academia alike is that good risk management is pivotal to project success. However, quantitative evidence supporting this conjecture is lacking. The SCIRT alliance, formed after the 2011 earthquakes in Christchurch, provided the opportunity to compare projects with different risk management strategies and analyses the effects of changes in scope and forecasted final cost on project success. Data from more than 200 projects was used in statistical and qualitative analysis. It showed that early contractor involvement and risk workshops in the design stages significantly improved the financial performance of projects. Project managers changed their forecasted final project cost more frequently and the changes led to improved cost certainty. Changes in project scope were linked to poor financial performance. Enhanced risk management techniques employed in the design stages of a project provided project managers with a better platform from which to manage project risks. The results of this study quantitatively support the intuitive notion that proactive risk management has favorable effects on the financial performance of projects.

Description:

Risk Management, Financial, Performance, Industry.