Chapter 1


Management of risk is a common focus for many business enterprises. Risk is often considered in issues that concern cost, timing, safety or loss prevention, system reliability, overall performance, and product liability. Our focus is the utilization of various techniques to achieve the desired performance in design and construction projects, and mitigation of the potential for disputes or claims after completion of the project. Therefore, effective management of risk results in improved chance for business success, customer satisfaction, and claims avoidance.

Whether the application is for product development, manufacturing, or construction of facilities and infrastructures, the risk management concepts are similar. Because these projects involve the facilities and processes for virtually all technologies, including the associated buildings, structures and infrastructure (roads, rails, utilities, power plants, etc.), the focus is on the design and construction process.

There are generally three parties involved with the design and construction of a project: the owner, the design professional (referred to by the “lead” entity—which may be an architect or engineer) and the constructor (contractor). In many cases, these functions may be combined or further divided. For example, a project owner may hire one entity to perform both the design and construction, or the owner may decide to hire multiple designers and contractors to provide the design and construction services. For product development, however, the owner has the design and or manufacturing resources but may need to hire a contractor or contractors to construct the facilities.

  • 1.1. Project Entities
  • 1.2. Delivery Methods
  • 1.3. Elements of Risks and Potential for Disputes

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