Effects of Risk Management on Project Performance

Abstract

Risks are very common in construction sector. Risk is the Possibility of suffering loss and the impact on the involved parties. All projects are inherently risky because they are unique, constrained, complex, based on assumptions, and performed by people. As a result, project risk management methods must be built into the management of projects and should be used throughout the project lifecycle. Many construction projects fail because organizations assume that all the projects would succeed and they therefore do not identify, analyze, and provide mitigation or contingencies for the risk elements involved in the project. Society desires that all projects should be performing and has become less tolerant of failure. Pressure is exerted on project managers to minimize the chance of project failure. This increasing pressure for performance which suggests that it is prudent for anyone involved in a project to be concerned about the associated risks and how they can be effectively managed. Traditionally, performance of a project is analyzed on the criteria of quality, budget and time of completion.