Analysing Risk Management In Iran Construction Essay

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IRAN is a developing country, as a result, the demand for founding infrastructures is highly increasing. Currently, the government of IRAN is enforcing the fifth development plan. Falling behind this plan will impose financial burden on national economy. Therefore, it is important to recognize the barriers through deeper understanding of the risks that endanger the program. Since a major portion of Iran's budget is spent on investment in the construction industry, identifying the risk-generation factors in the construction process and having information about the extent and types of effects and analyzing them will result in reducing the losses caused by such possible incidents. The application of risk management will result in taking correct, regulated, and prompt decisions through being informed about the environment despite the complications and swift changes in the construction industry.

Problem statement

In today's world where changes rapidly take place and risks are imminent, the prerequisite for survival and success is knowing the environment and being capable of decision-making in a correct and prompt manner. In case of not recognizing both internal and external risk factors of the project, the managerial decision-making errors take place. Moreover, time and cost assessment forecasts also go wrong. Risk management can identify the risk-generating factors. Furthermore, risk management can control or remove such risk factors through analyzing and choosing suitable strategies.

Despite the paramount importance of risk management as one of the subfields of project management, unfortunately less attention has been paid to risk management in IRAN. In very few organizations, employers or contractors can be seen who have a proper insight into risk management. Based on the official statistics in IRAN, there is a substantial progress in OIL,GAS, AND PETROCHEMICAL industry about risk management, in case of issued researches, and implementation. While in construction industry, except for some articles in conferences, there is not any practical guidelines to be properly implemented for risk management in this industry. Furthermore, as a result of lack of binding regulations, current regulations cannot force construction parties to undertake risk management.

Therefore, adopting a scientific approach to risk management, introducing its process and eventually its compliance with the existing realities in urban development plans, particularly construction projects are a necessity.

The issue of risk management was for the first time raised in mid-1990s in the US. Laws and regulations for applying risk management in the projects have now been adopted. Since risk management is a new field, except for several seminars and university research projects, applied research has not taken place in this field in Iran.

Research questions

The questions raised in this research are as follows:

What kinds of risks threaten the construction projects and what are their effects?

Can application of risk management at studies and contract stages determine the type of risks and conditions of risk management in the best possible manner?

How can risk management be institutionalized in the construction sector in order to bear positive results similar to those of time management and cost management in projects?

Aim and Objectives

This study aims to investigate the implementation of risk management in IRANIAN construction industry as well as to evaluate the perception of risk management from contractors' point of view. In order to achieve the aim, the following objectives have been identified:

To identify and classify the risks in construction projects,

To identify the barriers of implementation of risk management in construction projects,

To propose a theoretical strategy for implementation of risk management in construction projects.

Scope of the study

This research focuses on the implementation of risk management in the IRANIAN construction industry. Therefore, the area of research is limited to only IRAN in which the respondents are randomly being selected from this boundary.

Furthermore, for the purpose of this study, the respondents consist of only contractors in IRAN who registered with Management and Planning Organization in Grade 1 and Grade 2. This is because the classifications of grade of the contractor represent the size of the firm and the approximate size of the project they carry out. Contractors that are registered in Grade 1 and Grade 2 are considered as quite large organization with bigger size of project. The risks they faced varied with the size of project and the size of their organization. Thus, to ensure the reliability of the data gathered, it is essential to limit the lists of respondents according to the size of the organization and the size of the project.

The interview session will be carried out with the key personnel of IRANIAN construction companies. The questionnaire will be distributed among professionals who worked with these contractor-organizations and have direct involvement in construction projects.

Research Methodology Flow Chart

For the purpose of this study, through conducting library research, the reference works in the field of risk management will be studied, and after conducting the required field studies through reviewing the existing records and documents on the project, as well as preparing the checklists, questionnaires and evaluation forms will be prepared, and interviews with project managers will be conducted. Figure 1.1 will outline the main steps in research methodology.

Preliminary interviews

Identify the issues

Literature Review

Data Collection



Data Analysis

Conclusion & Recommendation

Figure 1.1: Research Methodology Flow Chart

Expected Findings

There are several valuable advantages expected by implementing this study. One of those is to increase the awareness of different project key personnel to deliver a project responsibly by also focusing on aspects such as risk management in handling projects. This can be achieved by applying theoretical concepts discussed in many literatures into practice in real projects. It can ensure good practice of project management in an effort to avoid common problems in construction project such as delays, cost overruns and poor quality of products.

Moreover, this study is expected to provide a better procedures in delivering construction projects by considering risk aspects throughout project delivery to produce successful projects by identification of risks and reduction or mitigation of risks factors. It also aims to reduce the repetition of similar risks in the execution of other construction project in the future.

Furthermore, results and findings of the research can be used by those responsible for urban development projects, for risk management and prevailing costs of projects. The proposed techniques of this thesis can help organizations to successfully implement projects within a specific cost and time framework with an acceptable quality and meeting the expectations of beneficiaries of a project.