Managing risks on construction projects



By Shangjia Yu

SKEMA Business School

Paris, France




Due to the large investment and long construction period of the project, the contractor is bound to face the set goals of project impact such as quotation, construction period, quality, safety, lawsuit, natural climate and contractor behavior after it is completed and put into use. The realization of the above project objectives are agreed through the construction contract signed by the contract parties, so the ability of risk control must be emphasized so as to reduce the contract risk and reduce the loss of the parties. This article analyzes risk management and countermeasures on the construction projects. The author will set up two scenarios with the application of Addictive Weighting Technique of MADM method for each of these risk types, one for the threat and the other one for the opportunity.

Keywords: Control, Risk, Manage, Factors, Impact, Predict, Avoid, Resolve


  1. Problem Recognition

Construction projects have complex characteristics varying for different construction projects, such as bridge projects, road project, etc. The components in the contract should be defined carefully and practically, since they are often carried out in the form of, corrupt bidding, over budget, or outsourcing. Therefore, there must be a clear contracting structure in the construction contract, to determine the construction details, project scope, capital budget, material specifications and audit Standards, etc., which is to ensure not only the quality of the project, but also being effectively restricted the relationship among owners, contractors and subcontractor. This is known by organizations widely; however, the risk still exists in contracting and managing process in the modern world.

As the core management of construction projects, the increasingly intensity of contract management is necessary to manage the project effectively. The implementation of each construction project is based on the contract signed. After the project contract is signed, due to the complexity of construction, unpredictability and the impacts of external environment, the risk of financial loss will often result from the change of contract contents, such as the exchange rate, the interest rate, as a result, the organizations are supposed to form a sense of contracting, risk awareness, emphasis on risk management. Only by focusing on the core of contract management, people can co-ordinate the operating status of entire construction project and better achieve the construction objective.

  1. Step 1- Problem Definition

The purpose of risk management is to achieve the objectives of the contract and achieve the success of the project. Before analyzing how to manage risk, the author will identify the risk from the whole contracting process to correctly manage the risks, analyze the risk factors existing in the project contract, and make accurate definitions between the source of the risk and the impact of the risk, to predict, evaluate, and avoid the risk.

In summary, the purpose of this paper is to identify the risk factors that may arise in a construction contract and to analyze how to manage them in order to make that the project process is operated properly and achieve the final success. In the following article, the author will identify the nature of risk, as well as give the author’s perspective in how to deal with them.


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Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs.  This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development.  http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director [email protected].

How to cite this paper: Yu, S. (2018). Managing risks on construction projects, PM World Journal, Volume VII, Issue VIII – August.  Available online at https://pmworldjournal.net/wp-content/uploads/2018/08/pmwj73-Aug2018-Yu-managing-risks-on-construction-projects-student-paper.pdf


About the Author

Shangjia Yu

Paris, France





Shangjia YU is a clever and smart Chinese student, who is majoring in Program Project Management and Business Development in Skema Business School, Paris, France. She is certificated by Prince2 and Agile. She acquired Language and Literature bachelor’s degree in Beijing, China. In 2016, she worked on a lighting project in her family’s corporation as a temporary project manager, and led the project team to deliver the products before the scheduled time with high quality, which achieved a great benefit for the whole organization. As a result, she was recommended to ‘Programme Grande Ecole’ in Skema Business School. She is a young and talented girl who will be a promising project manager later in her career.

She is now living in Paris, and can be contacted at [email protected] .