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Introduction
Risk management is a key component of project management as unmanaged or unmitigated risks are one of the primary causes of project failure ([20] Royer, 2000). Review of literature on risk management also reveals that there has been a notable increase of awareness and application of risk management over the past decade or so. For example, the recent survey of project management topics in key project management publications found risk management to have one of the highest rates of occurrence ([24] Themistocleous and Wearne, 2000). Risk management is fundamentally a decision-making involving careful consideration of the facts and risks, which can have significant consequences on the final outcome of a project.
Owing to its peculiar nature the construction industry is subjected to more uncertainty and risk than many other industries. [16] Ofori (1993) pointed out that the structural problems of the construction industry in developing countries are more fundamental, more serious, more complex and overall, much more pressing than those confronting their counterparts elsewhere. Contractors have traditionally used high markup to cover risk but as their margins have become smaller this approach is no longer effective. In addition, the construction industry has witnessed significant changes, particularly in procurement methods with clients allocating greater risks to contractors, making risk management a necessity, with organizations needing to look across the whole life of a project from inception to occupancy.
The main purpose of risk management is to take the right type and right level of risk. It is important to notice that risk management will not remove all risk from the project. Its principal aim, as mentioned by [13] Hayes et al. (1986) is to ensure that risks are managed in the most efficient way. [25] Toakley and Ling (1991) stated that risk identification is a necessary first step before risks can be analyzed and an appropriate treatment strategy can be determined as the processes of risk analysis and risk treatment management may only be performed on identified potential risks.The risk identification process, which is a foundation for later risk assessment and response development needs some form of judgment input from the leading players in the project teams. Therefore, the acquisition of right judgments is extremely important to create an information base for further steps...