Research proposal for Risk Management Essay

IntroductionThe increasing pace of change, customer demands and market globalization all put jeopardize management high on the agenda for forward thinking companies. insecuritys cause cost overrun and schedule delay in m slightly(prenominal) realizes. The effectiveness of happen management becomes an important issue in project management. To make danger management more efficient and effective, all parties must broken instand jeopardize responsibilities, bump event conditions, risk preference, and risk management capabilities (Wehrung et al. 1988 Al-Bahar and Crandall 1990)Different parties involved in a look project face a variety of uncertain factors. These factors jackpot be compiled under the category of risk. Making decisions on the basis of assumptions, expectations, estimates and forecasts of future events involves taking risks. venture and uncertainty characterize military positions where the actual outcome for a ill-tempered event or activity is likely to devia te from the estimate or forecast value (Raftery 1994).The definition of risk management varies risk management is broadly speaking defined as, A formal orderly process for systematically identifying, analysing, and responding to risk events doneout the life of a project to obtain the optimum or gratifying degree of risk elimination or control (Al-Bahar & Crandall 1990).The objective of my research is to present the perception of typical Chinese contractor towards device risk. The result of surveys should pull ahead clarify the current perception of contractors regarding current construction circumstance in the indus pick up.The info and information will be lay in from published statistics, individual inter lieus and questionnaires, and the data will be apply to comp be with previous published surveys. The purpose of this comparison isto identify perception and trends in construction risk management. A introductory understanding of current attitudes and trends therefore wil l be indicated. Then I will adopt some appropriate case to enhance my understanding of my view point.The following proposal presents the What and How of my study, using an integrated approach to study risk and its management in Chinese construction industry.Brief introduction of Chinese construction industry chinawares economy has shown remark sufficient growth over the past several years and many foreign economists predict a red-blooded growth in the near future. According to the Chinese Statistical Yearbook 2002, Chinas construction industry achieved 646.2 billion yuan in quantity output value in 2001, story for 6.7 percent of the nations gross domestic product (GDP). Chinas construction industry cognize 704.7 billion yuan in total output value in 2002 an increase of 10.54 percent from the previous years 637.5 billion yuan accounting for 6.9 percent of the national GDP.Construction enterprises reached 45,893 by the end of 2001, employing 21,106,600 people and generating 1,53 6.156 billion yuan in output value and 402.357 billion yuan in added value. Areas under construction totaled 1,883,286,800 square meters realised areas covered 976.99 million square meters. Profits totaled 29.439 billion yuan in the year, with taxes at 49.903 billion yuan.Of the enterprises, 44,997 were Chinese with 20,986,800 staff members. The companies reaped 1,518.595 billion yuan in output value in 2001 and 398.022 billion yuan in added value. Areas under construction numbered 1,874,480,800 square meters and completed areas completed covered 972.532,300 square meters. Profits reached 28.83 billion yuan, with taxes at 49.392 billion yuan. (China Statistical Yearbook, 2002)Recent trends of risk management in Chinese construction industryFor years, the Chinese construction industry has had a very poor reputation for coping with risk, with many projects failing to meet deadlines and cost targets. This can be traced to many causes as Lu menti oned, including Technical, quality or p erformance reasons, such as employment of inexperienced designers, changes to the technology used or to industry standards during the project.Organizational problems, such as cost, time and scope objectives that are internally inconsistent, lack of prioritization of projects, inadequacy or interruption of funding, and resource conflicts with other projects in the organization. External problems, such as modify legal or regulatory environment, poor geological conditions and weather, force majeure. Project management, such as poor allocation of time and resources, inadequate quality of project plan, and poor use of project management disciplines. (Lu 2003)Risk management is still new to China it was introduced and applied in construction industry for a copulation short period. Survey showed that Chinese contractors are often responsible for most risk factors, meanwhile, the use of risk summary techniques for managing and controlling risk are mostly low among the Chinese constructi on industry. Basically, most contractors still resort to the subjective judgment and practice experience for perceiving and managing risks. However, according to Chinese Statistical Yearbook 2004, situation was improving. During the Tenth Five-Year Plan, Chinas construction industry has so far enjoyed a good opportunity for development, more and more parties involved in the construction projects raised their perception of risk and the attitude towards risk management improved. (China Statistical Yearbook, 2004)Literature ReviewThe belles-lettres review in this part is mainly more or less the identification of risk resources, classification of risk, perception of risk and basic theory of risk management as well.Sources of riskThere are many resources of risk that an organization must take into account before a decision is made. It is therefore important that these sources of risk are identified allowing the necessary analysis and response to take place. According to Merna and Smi th, sources of risk to business from projects including as follows political, environmental, planning, market, economic, fiscal, natural, project, technical, regulatory, human, criminal, safety, legal. (Merna and Smith 1996). A source of risk is any factor that can affect project or business performance, and risk arises when this is both uncertain and significance in its impact on project or business performance.Classification of riskIt is helpful to try to categorize risk associated with projects both as a guide to identification and to facilitate the distributeion of the most appropriate risk management strategy. Merna and smith proposed one method to separate the more general risks which might influence a project but may be outside the control of elements these are referred to as global and elemental risks.Global risks originate from sources external to the project environment. They are often predictable but not almodal values controllable. Global risks can be subdivided into fo ur sections political, legal, commercial and environmental risk. Elemental risks are those risks associated with elements of the project, namely implementation risks and operation risks, and for some projects there will be financial risks and revenue risks. These risks are more likely to be controllable or manageable by project parties. (Smith 2003)Perceptions of riskDifferent people will respond to seemingly interchangeable risky situation in very different ways. Risk perception has a crucial influence on risk taking behavior. The perceived impressiveness attached to decisions influences teambehavior and the consequent implementation methods. Subjectivity, according to Merna, is a key factor in assessing risk. Whether a problem is perceived in hurt of potential gains or losses will not be assessed as a simple mathematical calculation of the problem, but as a subjective fear, often linked to consequences of outcomes. Furthermore, he stated that risks are perceived by different st akeholders at different business level.Risk management processIn construction projects each of the three primary targets of cost, time and quality is likely to be subject to risks. In terms of project implementation, managers need to be able to undertake or propose action which reduce or eliminate the effects of risks. To achieve this aim, a suggested systematic approach to the management of risk is followed*Risk Identification To identify the risk resource*Risk Analysis To quantify the effects*Risk Response To develop management response to risk methodologyIn order to collect data and information for the research and examine the main questions raised, the following methodology will be possibly employed utility(prenominal) AnalysisSince direct observation is not very accessible in construction industry in China, secondary analysis is more preferable. Secondary analysis is the reanalysis of data that was originally compiled by another researcher for other purposes than the one the pr esent researcher intends to use it for. The sources that I would use include archives, newspaper, and magazine articles. I will try to choose the sources which are more objective. I will adopt appropriate methods to find the useful data and information for myresearch on risk management.QuestionnaireQuestionnaires are an inexpensive way to gather data from a potentially large number of respondents. Often they are the only feasible way to reach a number of reviewers large enough to allow statistically analysis of the results. For my study, the questionnaire is designed to collect data. The data will be compared with data collected from a similar survey conducted in 1979 by the American Society of Civil Engineers (ASCE). The purpose of this comparison is to identify ant trends in construction risk that will facilitate risk management.The reasons for me to choose questionnaire as research method as follows Firstly, a Questionnaire can save resources and money. Although preparation may b e costly, any data collection scheme will have similar preparation expenses. The administration cost per person of a questionnaire can be as low as postage and a few photocopies. Time is in like manner an important resource that questionnaires can maximize. Secondly, Questionnaires are easy to administer confidentially. Thirdly, in studies that have resources to quest after other data collection strategies, questionnaires can be a useful confirmation tools. Thus, questionnaires are versatile, allowing the collection of both subjective and objective data through the use of open or closed format questions. Modern computers have only made the task of collecting and extracting valuable material more efficient. someone InterviewsInterviews will enable me to do most of the qualitative part of my research, and the information gained here is usually more realistic. I plan to interview some engineers, some project management team and some experienced project managers as well. In addition, Individual interviews by a way of structured questionnaire will also be used to collect information about the risk management perception. The interview is especially important for some proposed examining questions. I will also search to interview someprofessional journal editors relating to construction industry.Case StudyCase study research is the most common qualitative method used in risk management. As Yin (2002) defined, the scope of a case study as follows A case study is an empirical inquiry that*investigates a contemporaneous phenomenon within its real-life context,*especially when the boundaries between phenomenon and context are not clearly evident.For my research on risk management, I will choose some upstart cases which relating to risk management as a way of identifying the perception and trends of risk management in construction industry in China. I will select both success and failing cases in Chinese construction industry.Proposed research TimetableI will cast of f about 4 months for my studies. I plan to spend the first month developing my proposal and methodology and completing the literature review. During this time, I will also try to obtain relevant published data and information. Then I plan to spend about one month in China obtaining statistics, doing questionnaires and interviews. I will spend the next two months in China so as to do some intensive fieldwork, and some follow-up jobs as well.May 2005 June 2005*Develop proposal and methodology and complete the literature review*Obtain relevant published statisticsJune 2005 July 2005*Intensive fieldwork in China*Analysis the statistics and data obtainedJuly 2005 August 2005*Follow-up questionnaires and interviews and fieldwork in ChinaAugust 2005 family line 2005*Mainly work on the thesis(Details see attached Gantt chart)ReferencesAl-Bahar, J. F., and Crandall, K. C. (1990) Systematic risk management approach for construction projects. Journal of Construction Engineering Management , 1163, 533-546.China Statistical Yearbook, 2002, China Statistics Press.China Statistical Yearbook 2004, China Statistics Press.Lu, Y. J. (2003) Risk Management for Large-scale Infrastructure Projects in China, 11Merna, A. and Smith, N. J. (1996) Projects procured by privately financial concession contracts, vol.1. Asia Law and Practice, Hong Kong.Raftery, J. (1994) Risk Analysis in Project Management. E & FN Spon, London.Smith, N. J. (2003) Appraisal, Risk and Uncertainty. 6, 42-43Wehrung, D. A., Lee, K., Tse, D. K., and Vertinsky, I. B. (1988). Adjusting risky situations A theoretical framework and empirical test. Journal of Risk Uncertainty, 2, 189-212.Yin, R. K. (2002) Case Study Research, Design and Methods, 3rd ed. Newbury Park, Sage Publications.