A New Risk Management Model

Abstract

The identification of the source of project risk has been a troubling issue in construction management. A new risk management model has been developed. Analysis of the risk in the IT industry, construction industry, and also industry structure and supply chain delivery has resulted in the identification of the major source of risk: the major source of risk is the buyer. The buyer's attempt to transfer this risk to the contractor causes confusion and an increase of risk. The owner's lack of expertise and accountability, their use of management, direction and control to minimize risk, their inability to listen to the expert contractors who have no risk and the owner's decision making and expectations has resulted in increased project risk. This study uses deductive logic to design the new risk model. The new risk model is used by the expert contractor to minimize the risk they do not control. The new model identifies risk, mitigates risk by use of transparency and dominant information. The new model has been tested and the results have been documented. The preliminary test results are encouraging.