In any construction project, there are many risks affecting construction cost including, external (economic, politic, legal problems), internal risk (design, contractual, technical), direct risks (inflation, changing of government regulations) and indirect risks (technical problems, delay, contractor capability). In general, risks affect project costs.
Ms. Le Ngoc Diep made a study on the managing risks affecting construction cost in construction phase including evaluation, analysis and response to help owner control the construction cost within authorized budget. The main objective of his research is to study owner’s management status of risk affecting construction cost in Vietnam construction project and suggest recommendations to improve it. In order to achieve this main objective, sub-objective were needed to accomplish such as follows: (1) study the risks affecting construction cost in construction phase and response applied in specific urban center project; (2) study other common risk affecting construction cost in Vietnam construction projects; and (3) assessment and suggestion in order to help owner manage risk more effectively
Conclusions
Construction project is risky due to huge capital, long time implementation and many stakeholders. The awareness on risk management is not that good in Vietnam construction project. In order to limit the effects of risks and control the cost within authorized budget, the owner should carry out appropriate management risk and involve all systems in this process.
In this report, Le Ngoc Diep wanted to study on the status of risk management, in terms of risk affecting construction cost and response applied of one specific construction project which is Chi Linh urban center project.
Over view of managing of risks affecting construction cost in Chi Linh urban center project
- There is no appropriate risk identification (risk list and risk symptom) in the project, and the risk management is not deeply comprehended.
- Awareness of the top management is limited, which lead to design change in construction phase.
- The cost of topography and geological survey is limited.
- The contract document and personnel management is inadequate.
- Risk monitoring and control is passive.
- Awareness of project manager and project team member is not high.
The risks affecting construction cost in Chi Linh urban center project
- Wrong estimate
- Design changes
- Inflation
- Site condition difference
- Poor capability of PMU
- Unclear contract conditions
- Poor site management
The other most popular risk affecting construction cost overrun according to Construction Magazine Census in 2009
- Poor financial capacity of the owner
- Poor financial capacity of the contractor
Responses applied in the project and recommendations are given below
His thesis abstract is copied and posted. Abstract
The construction industry is one of the most dynamic, risky and challenging businesses because of implementing time is very long with huge capital and many stakeholders.
Risk is inherent in construction projects and risk management in construction projects has been recognized as a very important management process in order to achieve the objectives in terms of time, cost, quality, safety and environmental sustainability. Let say, we are going on the road with the definitive finish, but on that way many obstacles, difficulties facing. So if we do not manage we cannot reach the finish or waste time and energy to reach it.
In construction there are some objectives, but one of the most important thing is cost of project is in authorized budget. There are many risks affecting cost and profit of project from initial to close out phase. In this study I concentrate on risks affecting construction cost and solutions helping owner manage the cost effectively and efficiently to ensure the cost is in budget of project.
