Development of a risk management system for infrastructure projects

Student: Kerasia Karaleytheri
Year: 2020
Affiliation: National Technical University of Athens/Athens University of Economics and Business
Level: Postgraduate
Thesis written in Greek


The basic success parameters of a project are the predefined timetable, budget and its required quality services. Construction projects include estimations and assumptions, which in turn lead to uncertainties, the main reason for which the construction projects fall out of budget and time schedule. The great uncertainty of the construction projects, which arises from their complexity, their size and their correlation with political and social factors, renders the management of their risks necessary in an organized environment. Bibliography research confirms that, except for a few exceptions, in construction companies there is no organized risk management structure and that most of the decisions are taken based on the experience of the responsible managers. Companies manage risks usually following their appearance, during the project, using their own executives and/or employees, out of systemized context, thus ignoring the risk management principles. Threats, as a result, are not prevented, negative consequences are not evaded and opportunities are not exploited. Simultaneously, all the project's experience, arising from its risk management, is not recorded, due to the lack of systemized method, which consists a material loss for the company.
It is thus clear, that risk management, which is incorporated systematically within the company's culture, may lead to better management, planning and security of the project's resources, thus reducing materially the costs or even increasing the profit. Even though that at the commencement of the project the procedure increases the project's cost, its application on the early stages, where the main strategies are selected, contributes impressively on the project's success. From the scrutiny of the bibliography, we can deduce that on a project management, alongside with the benefits arising from the risk management, more effective goal achievement and greater satisfaction of all interested parties are ensured, if the principles concerning the process approach through procedures are implemented.
This thesis has been prepared with an intent of transmitting the culture and the rewards of the risk management in construction companies, through the creation of an organized context of implementing its principles, thus contributing more in the practical application of its methods which will benefit the construction companies. For this purpose, a risk management system for construction projects is suggested so that this will be involved in the company's quality system and provide specific instructions and guidelines to the construction company's executives, regarding the execution of the risk management process, namely the identification, analysis and monitoring of its management.
The primary target of this thesis is to best present the methods and practices of risk management and, through the development of a system, to compose them in a structured expression for the most appropriate execution of this procedure by the construction companies, thus communicating the great value for the projects' success. Companies' direction, regarding the planning and implementation of risk management, as well as the maintenance of the projects' experience, through the registration of the risks arose, and the tactics followed to achieve it, is the next target of the thesis. This will contribute to the companies' maturity towards the risk management sector. Last, but not least target, is to provide all the directions and guidelines to the companies' executives, for the methodical execution of the procedures of the risk management process, namely the identification, analysis, treatment and monitoring of risks, through the understanding of the methods which are proposed as best by the bibliography.
For the achievement of the first target, a review of the bibliography regarding the basic principles and the suggested methods of risk management is performed. The aforementioned principles and methods, which are presented, are the base for the composition of a risk management system. For the second target, a written procedure regarding the planning of a risk management system is prepared, which provides direct guidelines for the design, planning and organizing of the procedure. Additionally, a Project Risk Register for infrastructure projects is prepared, which collects all the risks arising in every project performed by a company. For the third target, written procedures are developed, which define all the decisions and actions that a company is called to take for the risk management, thus proposing the best methods and practices for the companies and projects under consideration.
For the preparation of all the written procedures, the principles of the risk management science were investigated, as well as the principles of the quality management systems. For the preparation of the Register, a construction company was addressed in order to collect appropriate data. Data regarding risks that may arise in constructions projects, possible consequences and responses, were collected through personal interviews with executives along with group meetings. These data derive from the experience of the participating executives, both from their involvement within and outside the company. The data are collected and sorted under Risk Breakdown Structure, so as to use them in the process execution from respective companies towards those that the data were collected from. Finally, for the better understanding of not only the presented system, but also the proposed methods, possible risks which may hit the objectives of different construction projects are examined, along with the analysis and their treatment through the proposed system. So, the proposed system is comprised from five written processes: Plan Risk Management, Identification, Analysis, Plan Risk Responses, Monitor and Control Risks, Risk Register for infrastructure projects.
The written procedures provide clear guidelines for the execution of the risk management process to the project's executives. The project risk register, which include possible risk of the projects under consideration, helps in the execution of the procedures and is a dynamic part of the company. This can be supported by the fact that it logs the gravest and most usual risks of a construction project and is revised after the end of each project, thus maintaining in its knowledge management processes.
It is estimated that the system under review will help in the weak, as at today, practical application of the risk management methods by the construction companies. This will result in a most effective project management and their resources.

LinkedIn logoContact