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Digitalisation, digital planning, local authority
Over the past few decades, conventional guaranteed maximum price (GMP) contracts “transferred” the construction cost risk to contracting and sub-contracting entities and protected the developer from escalating costs. In a post-pandemic inflationary market, conventional practices fluctuate as price inflation, supply-chain disruption, import logjams, and long lead times push contractors and subcontractors beyond their ability to absorb cost risks. The inability to fix construction prices removes the option to ‘transfer’ risk, and in response, developers are adding contingencies to absorb the newly ‘retained’ risk. This dissertation explores the viability of this assumption through professional peer interviews as developed through qualitative data analysis. In counter-response to material cost risk or supply chain (SC) risk that continually emerges amongst a myriad of evolving global health, social, and political volatility, this dissertation theoretically positions the construction and project risk management (CPRM) framework as the methodology for “internal” risk management (RM). The CPRM framework that sequences risk identification, risk analysis (through techniques like decision analysis, Monte Carlo Simulation, ENPV, SA, EMV, and more), and risk response offers insight into mitigating construction cost risk. In addition, an “external” perspective cultivates the Supply Chain Risk Management (SCRM) literature to enhance and evolve the understanding of dated CPRM techniques. Outside the literature review, qualitative data focuses on integrating CPRM theory in contemporary development. The dissertation research finds that developers—as supported by the literature review—utilize a mixture of formal and informal RM structures that rely heavily upon intuition and professional experience to mitigate transient market-led risk variables. Despite showing interest, some—if not many—developers lack the technical processes or the desire to holistically quantify the added risk of ‘retaining’ construction cost risk. The data reveals CPRM relationships that become recommendations to redefine and recategorize areas for future research and framework improvement.

Shared with the World by Elangkathir Duhindan

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