Construction contract risk management: a study of practices in the United Kingdom

Although formal analytical processes are applied to the management of economicrisks in construction projects, very little is reported on the application of similar processes to themanagement of construction contract risks. Evidence from other industries however, point tothe benefits that such rigorous approaches will offer the construction industry. This article presentsthe findings of a study conducted to assess the extent to which available techniques foridentifying and analyzing risks are applied to construction contract risks by construction professionalsin the United Kingdom. The study also sought to evaluate the appropriateness of thepredominant techniques used by determining whether the techniques adequately address thenature of contract risks and the significant impact that personal perceptions and biases have ontheir analysis. The study employed a structured questionnaire survey to collect primary data collectionfor analysis in order to provide an empirical basis for the major conclusions of theresearch study. The study found that the predominant approaches to construction contract risksidentification and analysis are inappropriate as they rely heavily on single expert assessmentsand as such do not address the effect of individual perception and biases on the subjective estimatesused in their analysis.