Assessing risks in construction projects

Architectural Science Review, March, 2005

Risk Management in Project Organisations, by Peter J. Edwards and Paul A. Bowen. UNSW Press, University of New South Wales, Sydney 2052, 2004. 189 pp., ill., index. Pbk. Price: $A39.95.

The discussion of risk can be traced back to the Ancient Greek philosophers, who discussed uncertainty two thousand years ago. Mathematical consideration of risk can be traced back to the seventeenth century, when Christiaan Huygens explored the concept of mathematical expectation, and wrote the first formal treatise on probability. In the eighteenth century Thomas Bayes used the theory of probability to discuss maximisation of the expected return on an investment.

However, this book deals with the subject descriptively, without any mathematics. The first author is an Associate Professor in the School of Property, Construction and Project Management in the RMIT University in Melbourne, and the second is Professor and Head of the Department of Construction Economics and Management in the University of Cape Town in South Africa.

The book is intended to enhance readers' understanding and managing of risks, and of the nature and presence of risk in a project environment, by raising awareness of the risks faced, formalising the systems needed to deal with the risks, and then learning from that operation for future construction projects. Edwards and Bowen indicate that they wrote the book specifically for students of project management, but consider that it should be useful for students of architecture, construction, engineering, property management, finance and banking, events management, and public administration.

The authors start with a discussion of the nature of risk by looking at a number of projects, and illustrate this by several examples in which the risks, and various ways of assessing them, are discussed. They then consider various methods risk perception and risk communication, and appropriate methods of decision making. These are followed by a chapter on systematic risk management, and another on risk analysis. This leads to a discussion of appropriate risk decisions and actions, and the building of a risk management system. In the final chapter the authors argue against risk being perceived as a purely negative factor, and point out that the proper management of risk opens up opportunities for successful and profitable management.

This is a compact and easily readable book, but readers seriously interested in the subject will wish to follow it with a more mathematical text on the subject.