Introduction
The financial and economic crisis has had an adverse impact on the Lithuania's economy and construction industry. The GDP of Lithuania grew slightly in 2010, in contrast to a decrease of 14.7% in 2009. Lithuania's GDP increased from 1.3% in 2010 to 4.6% in 2011. Annual GDP growth decreased from its highest point of 6.7%, reached in the third quarter, to 4.4% in the last quarter of 2011 [1,2]. Some industries, such as construction; trade, transport and communications; and the industry sectors were most affected by the crisis.
In 2010, the gross value added within the construction sector decreased by 43.3%, and in the trade, transport and communications sector — by 16.6%. In 2011, a positive change in the gross value added was observed in all groups of economic activities. The largest growth in the gross value added was observed in enterprises engaging in construction (by 15%) and trade, transport and communication services (7.3%) [1,3].
The construction sector, one of the engines of economic growth in Lithuania over the last decade, is now facing with serious challenges as companies' closures, rising unemployment, and postponed or even cancelled investments. These events also have changed the clients' and construction companies' behavior. A reduced demand and shortage of orders dramatically increased a competition between companies of the construction sector. This increased pressure to improve quality, productivity and reduce costs, and the need for project strategies and management that can appropriately and effectively manage project risk.
Risk management is one of the nine knowledge areas propagated by the Project Management Institute [4]. Furthermore, risk management in the construction project management context is a comprehensive and systematic way of identifying, analyzing and responding to risks to achieve the project objectives [5,6]. The benefits of the risk management process include identifying and analyzing risks, and improvement of construction project management processes and effective use of resources.
Construction projects can be extremely complex and fraught with uncertainty. Risk and uncertainty can potentially have damaging consequences for the construction projects [7,8]. Therefore nowadays, the risk analysis and management continue to be a major feature of the project management of construction projects in an attempt to deal effectively with uncertainty and unexpected events and to achieve project success.
Construction projects are always unique and risks raise from a number of the different sources [9,10]. Construction projects are inherently complex and dynamic, and involving multiple feedback processes [11,12]. A lot of participants — individuals and organisations are actively involved in the construction project, and they interests may be positively or negatively affected as a result of the project execution or project completion [4]. Different participants with different experience and skills usually have different expectations and interests [13]. This naturally creates problems and confusion for even the most experienced project managers and contractors.
Cost of risk is a concept many construction companies have never thought about despite the fact that it is one of the largest expense items [14]. Risk management helps the key project participants — client, contractor or developer, consultant, and supplier — to meet their commitments and minimize negative impacts on construction project performance in relation to cost, time and quality objectives. Traditionally, practitioners have tended to associate construction project success with these three aspects of time, cost and quality outcomes.
The current economic downturn and challenges in a highly competitive Lithuania's construction sector require contractors to manage risks by themselves. This paper reports the research that aims to examine the risk analysis and risk management practices in the Lithuanian construction companies.
Therefore nowadays, the risk analysis and management continue to be a major feature of the project management of construction projects in an attempt to deal effectively with uncertainty and unexpected events and to achieve project success.
Construction projects are always unique and risks raise from a number of the different sources [9,10]. Construction projects are inherently complex and dynamic, and involving multiple feedback processes [11,12]. A lot of participants — individuals and organisations are actively involved in the construction project, and they interests may be positively or negatively affected as a result of the project execution or project completion [4]. Different participants with different experience and skills usually have different expectations and interests [13]. This naturally creates problems and confusion for even the most experienced project managers and contractors.
Cost of risk is a concept many construction companies have never thought about despite the fact that it is one of the largest expense items [14]. Risk management helps the key project participants — client, contractor or developer, consultant, and supplier — to meet their commitments and minimize negative impacts on construction project performance in relation to cost, time and quality objectives. Traditionally, practitioners have tended to associate construction project success with these three aspects of time, cost and quality outcomes.
The current economic downturn and challenges in a highly competitive Lithuania's construction sector require contractors to manage risks by themselves. This paper reports the research that aims to examine the risk analysis and risk management practices in the Lithuanian construction companies.
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Editor's Note
