DEFINITION

SUMMARY :
Risk involves chances or probability that an event, specifically a danger, an injury, a loss or a hazard will occur

RISK IN CONSTRUCTION WORKS

Development Risk Employers Risks Contractors Risks Construction Risk Development Risk Construction Risk

Employers Development Risks

Competition from other developers

Design not attractive to purchasers

Change in governments policy on development Change in the law Financial Continued Finance Economic fluctuation Suitability of site and design Availability of goods and materials

Employers Construction Risks Change in the law or governments policy Economic fluctuations Contractors delay Poor quality of workmanship and materials/good Availability of materials/good Completeness of design (variations) Contractors bankruptcy or insolvency Termination of contract by contractor

Contractors Development Risk Competition from other contractors Fixing tender price Government s policy Change in the law- new regulations Economic fluctuations Financial risk Continued finance

Contractors Construction Risk Weather Site conditions Method of working Accidents Payment delay Employers bankruptcy or insolvency Termination of contract by employer

TENDER AUDIT RISK ASSESS

Risk Management Procedure Risks Identification Risks Analysis Cost Benefit analysis

Identification of the appropriate risks management method

Employers Risks Clause JKR2007 5 6 35 28 51 PAM2006 2 3 6 30 26 SO s/A s Instructions Sufficiency of contract Documents- Variation Materials and workmanship Overpayment Contractor's bankruptcy or insolvency, other defaults Description

51 65

25 34,35

Abandonment by contractor Disputes with contractor and others

Contractors Risks Clause JKR PAM Description

6 8
19 11 14,15,1 617 23 14,16

3,6,14 3
5 9 18,19,20 24 19,20

Scope of contract- materials, workers Sufficiency of contract documents

Setting out Site condition Safety of workers & insurances Payment of wages Contractors public liability

15
28 65

19,20
30 34,35

Safety of the works

Payment Disputes with employers or others
9

Shared Risks Clause Description

JKR 74
30 65

PAM Nil
Nil 34,35

Epidemics & medical attendance

Fluctuation of price Disputes

10

Risk Management Procedure Avoid the risk (redesign/ redefine/ abandon) Ignore the risk (doing nothing about the risk) Accept the risk and take the risk and not transfer it) Transfer the risk Contractual terms Subcontract out Insurance

11