How procurement options influence risk management in construction projects

Before proceeding with a project, a client has to choose an appropriate procurement option that facilitates an effective project organization in general and a thorough risk management process in particular. By identifying three procurement variables that have a major influence on risk management: project delivery method, form of payment, and use of collaboration or partnering arrangements, the effect of each variable is studied. An exploratory study and a series of interviews with clients, contractors and consultants involved in 11 Swedish construction projects, were performed in order to examine how risk management was carried out in each project. Irrespective of the procurement option, many projects suffered from variations in cost affecting one or more actors. Risk management was not carried out systematically throughout project phases. However, in the projects with early involvement of the actors, their participation throughout the project, and opportunities for open dialogue and collaboration, a more thorough risk management process was found. While project delivery methods define formal risk allocation, the use of incentives and collaboration or partnering arrangements help to establish a collaborative approach to risk management.