Discover Resources by Tags: scrm
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Digitalisation, digital planning, local
authority
Shared with the World by Elangkathir Duhindan
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