Content and motivation

Every human being interacts with buildings in some shape or form, which means that everyone has an opinion about construction (Woudhuysen and Abley, 2004). Nevertheless, the complexity behind the management of a construction project is not understood by all individuals. This complexity results in project risk. In fact, there are researchers who state that construction projects are those which are plagued most by risks (Harris, 1998; Tah and Carr, 2000). But what is risk in a construction context and for whom are the risks greatest? In a previous paper (Demir et al., 2011) the authors argued that stakeholders are involved in the risk management process in two ways. Firstly, there are risks which can arise out of a stakeholder’s engagement with the project, which need to be identified, analysed and treated in an appropriate way. Secondly, the views, perceptions and perspectives of stakeholders have to be considered when establishing the context and dealing with risks. The former has been covered in the previous paper so the aim of this paper is to deal with the later. Risk means different things to different individuals. Consequently different project participants often perceive different types of risks, because each involved party in a construction project has a different view on the project. Therefore this research seeks to propose a collaborative way of managing risks which has the ability to take advantage of the different views from the different parties involved in a construction project.

2. Background

2.1 Occupational culture in construction

A construction project requires a high variety of workman (Eccles, 1981) and increasing variety of experts (Walker, 2007). Even on a small project large numbers of parties and contributors are involved (ibid). These involved parties and contributers can be categorised into three groups, namely: the owner/project manager (owner’s representative), designers and contractors (Nassar et al., 2005; Kochendoerfer et al., 2007). Each of these individual parties has their own objectives and perceived threats and opportunities, i.e. risks, when undertaking a construction project (Zhi, 1995).

It is often the case that the owners do not have the required skills and qualifications to undertake their projects on their own (Reve and Levitt, 1984). Therefore owners normally hire a project manager to manage the design and the construction processes of the project (ibid.; Low, 1998; Sommer, 2009). A central role of project management is to manage the parties involved in construction (Edum-Fotwe and McCaffer, 2000; Kochendoerfer et al., 2007; Lonergan, 2009). Kochendoerfer et al. (2007) explain how the parties involved in construction have different perspectives on the project aims and objectives, which is related to their occupational culture. They argue further that the owner will always try to achieve the maximum in quality and functionality at the lowest costs and risks. The same applies for the designers, but with the difference that their focus on better solutions might cause higher costs. The focus of the contractors is on costs rather than other factors.

Smircich (1983) as well as Hatch (1993) explored how organisational behaviour and culture has a high impact on an organisation’s performance. Marosszeky et al. (2002) also confirmed this for project success in the construction industry. Ankrah and Langford (2005) compared the organisational cultures of architects and contractors. This research was expanded through Akiner and Tijhuis (2007), who established that the work goal orientation of both involved parties were in agreement, but the sequence of importance was different. The results of the research from Akiner and Tijhuis (2007) is summarised in table 1.

Table 1: Work goal orientation of architects and contractors (from, Akiner and Tijhuis, 2007)

Rank Architects Contractors

1 Freedom Employment security

2 Challenge Contribute to

company

3 Contribute to

company Challenge

4 Employment security Freedom

Prior project management research has also focused on the organisational and occupational culture between the owner and the project manager (Edum-Fotwe and McCaffer, 2000; Turner and Müller, 2004; Bryde and Robinson, 2005; Enhassi and Abu Mosa, 2008). According to Turner (2004), the best results in projects are achieved when the owner and project manager work together in partnership and when the project manager is empowered to take decisions about the best way of achieving the project’s aims and objectives. Turner and Müller (2004) found that this cannot be always achieved, because there is a difference between the owner’s need for information and the information supplied by the project

management. This means that the information expected by the owner about his/her project is in some cases less than that submitted by the project management, which results in distrust between these two involved parties (ibid.). Pavia et al. (2006) also found that there is often a gap between the expected performance of the client and the delivered performance. One of the main reasons for poor performance on construction projects are conflicts between the parties involved in construction (Ankrah and Langford, 2005). These conflicts are mainly based on misunderstandings of cultural differences between the occupational groups (Akiner and Tijhuis, 2007). They argue that “an understanding of occupational, organizational and other subcultures affecting and affected by national culture will reduce or minimize the problems” (ibid. p. 1173). Because of their different occupational cultures, each of these involved parties perceives the project risks differently (March and Shapira, 1987; Mulholland and Christian, 1999; Sjöberg, 2000; Chapman, 2001; Sjöberg et al., 2004; Dastous et al., 2008; Enhassi and Abu Mosa, 2008). Another reason for differences is that the type of risks where realistic perceptions can be made, are those risks in which the occupational groups have direct or indirect experience (Sjöberg, 2000). That means that for implementing and for carrying out risk management on a project, the project management needs “[...] both ‘hard’ technical skills to help control the iron triangle of time, cost and functional scope, as well as relationship management skills to work effectively with people and get the best out of them” (Bourne and Walker, 2004: 226).

2.2 Construction project risk management

A project risk can be defined as “[…] an uncertain event or set of circumstances that, should it occur, will have an effect on achievement of one or more project objectives” (Association for Project Management, 2006: 26). In general, all project undertakings are risky, because they are unique, complex, based on assumptions and done by people (Association for Project Management, 2006). But, the construction industry is one of the industries with many risks (Tah and Carr, 2000). Roesel (1987, p. 251) identified reasons why construction projects are exposed to more risks than projects from other industries, which are as follows: changing designer teams consisting of architects and engineers and formed only for that project; use of unknown contractors, where decisions are made because of the lowest tender price; the uncertainty about the qualitative, quantitative and physical performance of the successful tenderers and their staff; ground conditions; changing material costs; and weather conditions. Hence, construction projects need to have an effective risk management system, because they are exposed to such risks, and those risks can create a variation (positive or negative) from the project objectives, which needs to be controlled. Therefore risk management can be defined as a “[…] structured process that allows individual risk events and overall project risk to be understood and managed proactively, optimizing project success by minimising threats and maximizing opportunities” (Association for Project Management, 2006: 26). The International Organisation for Standardisation (2009) suggests the following process steps for undertaking risk management: (1) establishing the context, (2) risk assessment, (2.1) risk identification, (2.2) risk analysis, (2.3) risk evaluation, and (3) risk treatment.

According to Rohrschneider (2003) and Pinnells and Pinnells (2007) risk management is implemented in practice when the risky events are occurring or are clearly visible. However, risk management has to be practiced pro-actively (Association for Project Management, 2006; Project Management Institute, 2008; International Organization for Standardization, 2009), because when practiced reactively it ends up in crisis management (Hubbard, 2009). Risk management should not be seen as additional effort for the project management team or project manager but rather as a supportive tool during all project phases (Girmscheid, 2006). Further, Rohrschneider (2003) argues that risk management has to be implemented as soon as

possible, because the risks for the construction project already exist, even before project start- up.