Risk Profile in General Contracting
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This article is going to give an overview of Risk Profiling in General Contracting. General contracting is the most common project coalition in the construction site, and preferred by the EU procurement directives. .<ref> G.M.Winch (2010), "Managing Construction Projects", Chapter 5.4.1 ,Second edition, Wiley-Blackwell.</ref> | This article is going to give an overview of Risk Profiling in General Contracting. General contracting is the most common project coalition in the construction site, and preferred by the EU procurement directives. .<ref> G.M.Winch (2010), "Managing Construction Projects", Chapter 5.4.1 ,Second edition, Wiley-Blackwell.</ref> | ||
The general contractor has a contract with a client for the entire execution of the project, and is responsible for the day-to-day overview on the construction site. | The general contractor has a contract with a client for the entire execution of the project, and is responsible for the day-to-day overview on the construction site. | ||
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Risk profiling in Construction industry are complicated because these kinds of projects carries complex risks for all involved in the project, not only the stakeholders, but for the process alone. When the construction takes place the risk increases extremely, especially in congested or populated areas. | Risk profiling in Construction industry are complicated because these kinds of projects carries complex risks for all involved in the project, not only the stakeholders, but for the process alone. When the construction takes place the risk increases extremely, especially in congested or populated areas. | ||
==Introduction to Risk Profile== | ==Introduction to Risk Profile== | ||
| − | To explain risk profiling it is important to define the word risk, this is a well-used term with many definitions. How risk is defined is different from person to person, it depends on experience, attitude and viewpoint. <ref> Walewski J, Gibson GE, Dudley G (2003) Development of the international project risk assessment (IPRA) tool. Construction Industry Institute, Austin.</ref> Some will argue that risk is something with a consequent negative outcome. <ref>Baloi D, Price ADF (2003) Modelling global risk factors affecting construction cost performance. Int J Proj Manage 21(4):261–269</ref> Other will say that it is both negative and positive, like a threat and an opportunity.<ref>Segal S (2011) Corporate value of enterprise risk management. Wiley, Hoboken </ref> International Organization for Standardization defines a risk as “the effect of uncertainty on objectives” (p. 1) in ISO 31000:2009. The last definition has been adopted in the British Standards Institution (BSI) <ref>Zhao X (2015) Enterprise Risk Management in International Construction Operations. Springer, Singapore</ref> and will | + | To explain risk profiling it is important to define the word risk, this is a well-used term with many definitions. How risk is defined is different from person to person, it depends on experience, attitude and viewpoint. <ref> Walewski J, Gibson GE, Dudley G (2003) Development of the international project risk assessment (IPRA) tool. Construction Industry Institute, Austin.</ref> Some will argue that risk is something with a consequent negative outcome. <ref>Baloi D, Price ADF (2003) Modelling global risk factors affecting construction cost performance. Int J Proj Manage 21(4):261–269</ref> Other will say that it is both negative and positive, like a threat and an opportunity.<ref>Segal S (2011) Corporate value of enterprise risk management. Wiley, Hoboken </ref> International Organization for Standardization defines a risk as “the effect of uncertainty on objectives” (p. 1) in ISO 31000:2009. The last definition has been adopted in the British Standards Institution (BSI) <ref>Zhao X (2015) Enterprise Risk Management in International Construction Operations. Springer, Singapore</ref> the theory of looking at a risk as a uncertainty of outcome, either positive opportunity or negative threat <ref>HM Treasury. 2004. The orange book: Management of risk principles and concepts.</ref> will also be adopted in this article. |
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| + | Fraser described a Risk Profile as “A periodic documentation of key risks to an organization to achieving its stated objectives over a specific future time” (Fraser 2010: p. 171)<ref> Fraser J (2010) ENTERPRISE RISK MANAGEMENT. John Wiley & Sons, Hoboken</ref> or as ISO defines it “a description of a set of risks” (p. 1) in ISO 31000:2009 | ||
| + | Risk Profiling is a document that should contain the overall prioritized assessment of specific risks an organization faces.<ref>HM Treasury. 2004. The orange book: Management of risk principles and concepts.</ref> This can be used as a method to find the optimal level of risks an individual or corporation are willing to accept. A corporation’s risk profile usually shows how eager a company is to take a risk and how that will affect the firm’s strategy, or it can be an evaluation of a risk the corporation exposes too. <ref>Risk Profile Available from: www.investopedia.com, (20.09.2015)</ref> | ||
<references/> | <references/> | ||
Revision as of 00:25, 29 September 2015
This article is going to give an overview of Risk Profiling in General Contracting. General contracting is the most common project coalition in the construction site, and preferred by the EU procurement directives. .[1] The general contractor has a contract with a client for the entire execution of the project, and is responsible for the day-to-day overview on the construction site.
Risk profiling in Construction industry are complicated because these kinds of projects carries complex risks for all involved in the project, not only the stakeholders, but for the process alone. When the construction takes place the risk increases extremely, especially in congested or populated areas.
Introduction to Risk Profile
To explain risk profiling it is important to define the word risk, this is a well-used term with many definitions. How risk is defined is different from person to person, it depends on experience, attitude and viewpoint. [2] Some will argue that risk is something with a consequent negative outcome. [3] Other will say that it is both negative and positive, like a threat and an opportunity.[4] International Organization for Standardization defines a risk as “the effect of uncertainty on objectives” (p. 1) in ISO 31000:2009. The last definition has been adopted in the British Standards Institution (BSI) [5] the theory of looking at a risk as a uncertainty of outcome, either positive opportunity or negative threat [6] will also be adopted in this article.
Fraser described a Risk Profile as “A periodic documentation of key risks to an organization to achieving its stated objectives over a specific future time” (Fraser 2010: p. 171)[7] or as ISO defines it “a description of a set of risks” (p. 1) in ISO 31000:2009 Risk Profiling is a document that should contain the overall prioritized assessment of specific risks an organization faces.[8] This can be used as a method to find the optimal level of risks an individual or corporation are willing to accept. A corporation’s risk profile usually shows how eager a company is to take a risk and how that will affect the firm’s strategy, or it can be an evaluation of a risk the corporation exposes too. [9]
- ↑ G.M.Winch (2010), "Managing Construction Projects", Chapter 5.4.1 ,Second edition, Wiley-Blackwell.
- ↑ Walewski J, Gibson GE, Dudley G (2003) Development of the international project risk assessment (IPRA) tool. Construction Industry Institute, Austin.
- ↑ Baloi D, Price ADF (2003) Modelling global risk factors affecting construction cost performance. Int J Proj Manage 21(4):261–269
- ↑ Segal S (2011) Corporate value of enterprise risk management. Wiley, Hoboken
- ↑ Zhao X (2015) Enterprise Risk Management in International Construction Operations. Springer, Singapore
- ↑ HM Treasury. 2004. The orange book: Management of risk principles and concepts.
- ↑ Fraser J (2010) ENTERPRISE RISK MANAGEMENT. John Wiley & Sons, Hoboken
- ↑ HM Treasury. 2004. The orange book: Management of risk principles and concepts.
- ↑ Risk Profile Available from: www.investopedia.com, (20.09.2015)
