1、 Risk Analysis of the International Construction Project By: Paul Stanford Kupakuwana Cost Engineering Vol. 51/No. 9 September 2009 ABSTRACT This analysis used a case study methodology to analyse the issues surrounding the partial collapse of the roof of a building housing the headquarters of the St
2、andards Association of Zimbabwe (SAZ). In particular, it examined the prior roles played by the team of construction professionals. The analysis revealed that the SAZs traditional construction project was generally characterized by high risk. There was a clear indication of the failure of a contract
3、or and architects in preventing and/or mitigating potential construction problems as alleged by the plaintiff. It was reasonable to conclude that between them the defects should have been detected earlier and rectified in good time before the partial roof failure. It appeared justified for the plain
4、tiff to have brought a negligence claim against both the contractor and the architects. The risk analysis facilitated, through its multi-dimensional approach to a critical examination of a construction problem, the identification of an effective risk management strategy for future construction proje
5、cts. It further served to emphasize the point that clients are becoming more demanding, more discerning, and less willing to accept risk without recompense. Clients do not want surprise, and are more likely to engage in litigation when things go wrong. KEY WORDS:Arbitration, claims, construction, co
6、ntracts, litigation, project and risk The structural design of the reinforced concrete elements was done by consulting engineers Knight Piesold (KP). Quantity surveying services were provided by Hawkins, Leshnick & Bath (HLB). The contract was awarded to Central African Building Corporation (CABCO)
7、who was also responsible for the provision of a specialist roof structure using patented “gang nail” roof trusses. The building construction proceeded to completion and was handed over to the owners on Sept. 12, 1991. The SAZ took effective occupation of the headquarters building without a certifica
8、te of occupation. Also, the defects liability period was only three months . The roof structure was in place 10 years before partial failure in December 1999. The building insurance coverage did not cover enough, the City of Harare, a government municipality, issued the certificate of occupation 10
9、years after occupation, and after partial collapse of the roof . At first the SAZ decided to go to arbitration, but this failed to yield an immediate solution. The SAZ then decided to proceed to litigate in court and to bring a negligence claim against CABCO. The preparation for arbitration was reus
10、ed for litigation. The SAZs quantified losses stood at approximately $ 6 million in Zimbabwe dollars (US $1.2m) . After all parties had examined the facts and evidence before them, it became clear that there was a great probability that the courts might rule that both the architects and the contract
11、or were liable. It was at this stage that the defendants lawyers requested that the matter be settled out of court. The plaintiff agreed to this suggestion, with the terms of the settlement kept confidential . The aim of this critical analysis was to analyse the issues surrounding the partial collap
12、se of the roof of the building housing the HQ of Standard Association of Zimbabwe. It examined the prior roles played by the project management function and construction professionals in preventing/mitigating potential construction problems. It further assessed the extent to which the employer/clien
13、t and parties to a construction contract are able to recover damages under that contract. The main objective of this critical analysis was to identify an effective risk management strategy for future construction projects. The importance of this study is its multidimensional examination approach. Ex
14、perience suggests that participants in a project are well able to identify risks based on their own experience. The adoption of a risk management approach, based solely in past experience and dependant on judgement, may work reasonably well in a stable low risk environment. It is unlikely to be effe
15、ctive where there is a change. This is because change requires the extrapolation of past experience, which could be misleading. All construction projects are prototypes to some extent and imply change. Change in the construction industry itself suggests that past experience is unlikely to be suffici
16、ent on its own. A structured approach is required. Such a structure can not and must not replace the experience and expertise of the participant. Rather, it brings additional benefits that assist to clarify objectives, identify the nature of the uncertainties, introduces effective communication syst
17、ems, improves decision-making, introduces effective risk control measures, protects the project objectives and provides knowledge of the risk history . Construction professionals need to know how to balance the contingencies of risk with their specific contractual, financial, operational and organiz
18、ational requirements. Many construction professionals look at risks in dividually with a myopic lens and do not realize the potential impact that other associated risks may have on their business operations. Using a holistic risk management approach will enable a firm to identify all of the organiza
19、tions business risks. This will increase the probability of risk mitigation, with the ultimate goal of total risk elimination . Recommended key construction and risk management strategies for future construction projects have been considered and their explanation follows. J.W. Hinchey stated that th
20、ere is and can be no best practice standard for risk allocation on a high-profile project or for that matter, any project. He said, instead, successful risk management is a mind-set and a process. According to Hinchey, the ideal mind-set is for the parties and their representatives to, first, be int
21、entional about identifying project risks and then to proceed to develop a systematic and comprehensive process for avoiding, mitigating, managing and finally allocating, by contract, those risks in optimum ways for the particular project. This process is said to necessarily begin as a science and en
22、ds as an art . According to D. Atkinson, whether contractor, consultant or promoter, the right team needs to be assembled with the relevant multi-disciplinary experience of that particular type of project and its location. This is said to be necessary not only to allow alternative responses to be explored. But also to ensure that the right questions are asked and the major risks identified. Heads of sources of risk are said to be a
