Rahman, M M and Kumaraswamy, M M (2001) Appraising the potential for joint risk management. In: Akintoye, A (ed.) Proceedings of 17th Annual ARCOM Conference, 5-7 September 2001, Salford, UK.
Abstract
Construction risks are apportioned by contract conditions that are eventually interpreted by 'self-interested economic agents' of the contracting parties. This may lead to prolonged claims and costly disputes. Moreover not all the risks are foreseeable at the planning stage, some foreseeable risks may change as a project progresses and some others may need joint efforts of the contracting parties for their effective management. Contract conditions alone are thus not sufficient to allocate risks properly. Unforeseen risks need to be managed with a Joint Risk Management (JRM) strategy that will work dynamically through coordinated efforts, provision for which should be made in the contract conditions. Attitudes of the contracting parties and cooperative relationships among the project participants are therefore important for successful project delivery. These are examined in the light of Transaction Cost Economics (TCE) and Relational Contracting (RC) principles. It is found that RC should reduce transaction costs, while also fostering cooperative relationships and better teamwork that in turn facilitate JRM. The usefulness of the latter is reinforced by relevant observations from a Hong Kong-based survey, and a pilot study on a follow-on (second) survey.
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | indexicality; joint risk management; relational contracts; risk allocation; survey; transaction cost economics |
| Index terms: | project delivery, agent, risk allocation, risk management, indexicality, survey, contracting party, dispute, strategy, teamwork, transaction cost, relational contracting, Hong Kong, contract condition |
| Subjects: | project delivery, contractual arrangements, practitioner, dispute resolution, data collection methods, risk assessment, financial analysis, financial risk, Geography, semiotics, management, contract structure |
| Topics: | Contract Administration, Organizational Design, Legal Issues, Procurement, Risk Management, Roles and Professions, Research Practice, Geographical Context, Business Strategy, Cost Management |
| Descriptive scope: | 5 PCTEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here