McKim, R A (1990) Risk management for the construction owner. PhD thesis, University of Waterloo, Canada.
Abstract
Human beings and the organizations of human beings do not act rationally when dealing with risk. The optimum actions indicated by probability theory when an organization is placed in risk are often not the actions chosen by the individuals directing the organization. Deviations from the actions predicted as optimal by probability theory can be measured and modeled by Utility theory. Utility theory, with utility functions, describe the risk behaviour(s) of organizations and individuals and can be used to predict reactions to risky situations. Using the risk behaviours (utility functions) of the parties to the construction undertaking the owner can identify an efficient allocation of risk between the parties. A study of contracting strategies will allow the owner to select the contract that will allocate the construction risks according to the risk allocation model thereby improving the productivity through lower contingencies and improved claims negotiation. An in-depth review of a construction sector provides realistic data to test the model. Conclusions and recommendations discuss the findings and the direction of potential future research.
| Item Type: | Thesis (Doctoral) |
|---|---|
| Uncontrolled Keywords: | negotiation; owner; probability; productivity; risk management; utility theory |
| Index terms: | utility theory, strategy, risk behaviour, construction sector, deviation, productivity, owner, risk management, risk allocation, negotiation |
| Subjects: | decision-making and reasoning, financial risk, management, conflict resolution, sociology, industry analysis, economic theory, risk assessment, financial and cost management |
| Topics: | Risk Management, Stakeholder Management, Research Practice, Business Strategy, Cost Management |
| Descriptive scope: | 3 PCT |
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