Its Processing Risk Management Construction Essay

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In this chapter, the author will compare the theories of literature review and findings from questionnaire survey and interviews, and then a discussion of them will be presented.

6.2 Discussion

In questionnaire survey, 82% of the participants have been working in this industry no more than ten years. When processing risk management, people with more experience are tending to give more helpful suggestions. To the author's opinion, the participants with less experience are also familiar with the current situation of risk management in China.

From findings of questionnaires, it is clear that all the key risks, except logistics, are allocated in tolerable region. In other words, these risks can be managed by using appropriate risk management method. Logistics is allocated in negligible region which means this risk may not happen possibly or if it happens it will not have a major impact on the project. Generally, the risks facing by construction industry are accordingly the same in China and some developed countries. The outcome of the risk identification and the risk analysis workshop is the categories of risks. To the author's opinion, in the construction project, the risks can be generally addressed in four categories:

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Construction risks

When the pipeline has been constructed, there will be some unexpected changes, which could delay the delivery of the project. The project maybe completed on time but it cost over. The required performance is deficient, which cannot achieve the desired performance.

Operating risks

The pipeline is on stream in the operation phase. The risk focuses on the supplier and purchasers, because the prices increase for the gas and the inadequate demanding for the gas. Another risk comes from the cost of operating and maintaining the pipeline, and if the pipeline is broken during operation it would be an extreme loss. The last one is the pipeline is unable to work at the desired efficiency.

Political risk

This risk is outstanding in the pipeline projects. It crosses several countries, Turkey was included. One main risk is the concessions and permits of pipeline crosses of the different governments. Another one is the tariffs on the gas which will impact the final cost of the product. The new law may be enacted by one of the involved countries, which may change the legal frame and cause risks.

Financial risk

The most important financial risks are the foreign exchange risk, because, in general, the cost and revenues of international projects are computed in different currencies, which involve the foreign exchange. The project may be subjected to the inflation risk, which will cause the unexpected price of the products. The interest rate risk is another major risk, the changeable interest rate costs a lot of waste of money of the project.

It can be concluded that risk management methods have been applied in the Chinese construction industry. However, systematic risk management process has not been found yet comparing to the risk management system in developed countries. The best practice of risk management process consists of several steps, including: risk identification, risk assessment, risk reducing or risk response and emergency preparedness.

None of the interview participants considered safety as one of the most important risks in construction industry. Health and safety issue, which is often ignored in the Chinese construction industry to but paid more attention to in developed country, makes the industry more activity.

To the author's opinion, construction is one of the most hazardous industries due to its unique nature. Measured by international standards, construction site safety records in China are poor. The findings reveal that the behavior of contractors on safety management is of grave concern, including the lack of provision of personal protection equipment, regular safety meetings, and safety training. The main factors affecting safety performance include poor safety awareness of top management, lack of training, poor safety awareness of project managers, reluctance to input resources to safety and reckless operations.

By analyzing the interviews and questionnaires, it is found out that the construction industry has already paid attention to risk management. Most of the participants involving in the survey pointed out that they have applied risk management process in most of their projects. However, systematic risk management has not been applied in the whole industry. They believed that risk management played an important role in construction management as well as in improving the effectiveness of completing the project.

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Government policy change is considered as an important risk in the Chinese construction industry as mentioned by some interview participants. There is a big construction demand in China now. At this point, edge-cutting technology, updating management methods and issuing new policies would make a great influence on the construction industry and the government should revise the policies to make them fit for the industry's current situation. However, in developed country, the system of construction industry is more stable and the related policies are more completed and effective.

An obvious phenomenon should be mentioned that, in China, environmental risks are likely to be ignored since the clients and the contractors pay more attention on making profits so that the constructors are not likely to focus on the pollution caused by construction tasks. In developed country, environmental issues would be the most important consideration in the construction tasks. Environmental risks in the construction industry should be reduced in order to lead the industry advancing in a healthier way by using green materials and new techniques. The concept of sustainable construction also influenced the construction industry. It shows that the risk management methods on environmental problems are more advanced in developed country than in China.

In recent years, the construction industry is more and more concentrating on the preventing from the bad influence of construction risks and many effective risk management methods have been implied. Besides, the government has also paid much attention to the potential environmental problems. For example, Chinese government recently makes a new assessment standard on controlling the construction rubbish in order to protect the environment

China as a prosperous developing country has a huge number of construction work need to be done during this time. At this point, edge-cutting technology, updating management methods and new policies would make a great influence on the construction industry. Needless to say, the government should update the policies to make it fit for the industry and meet the current situations. However, in developed countries, construction industry has a more stable system, as well as more completed and effectively policies, which considered almost every aspect in construction industry.

In a word, since the development of risk management in a fruitful moment of revolution, more and more new approaches to management are attracting increasing attention in the Chinese construction industry.

6.3 Conclusion

In this chapter, based on comparing the literature review theories, questionnaire survey and interviews, a discussion has been presented. Recommendations to risk management in the Chinese construction industry will be given in the next chapter by comparing to the best practice.