Risk is an uncertain event or condition that,
\nif it occurs, has either a positive or negative
\neffect on the project objectives.3 Parties to
\nconstruction agreements, for the most part,
\ndo not spend significant resources attempt-
\ning to allocate favorable uncertainties; those
\nrisks that, should they occur, will favorably
\nimpact project execution or delivery (e.g.,
\nweather much better than average or a de-
\ncrease in some basic commodity prices).
\nNor do they pay large insurance premiums
\nto cover the spectrum of possibilities that
\ncould, if they occur, result in lower proj-
\nect costs. Construction managers tend to
\nfocus on negative risk.4 Prior analyses have
\ndemonstrated that the interaction between
\ndifferent types of risk can cause a nonlin-
\near impact on project outcomes.5 In other
\nwords, the cumulative or synergistic effect
\non project cost and schedule due to risks
\non a project may be greater than the sum
\nof the discrete impacts caused by each in-
\ndividual risk factor. In order to effectively
\ncontrol the project risks and their associated
\ncost, project owners and managers utilize
\nprocesses to identify, analyze, monitor, and
\nmitigate risk. Collectively these processes
\nare referred to as risk management.6<\/p>\n","protected":false},"excerpt":{"rendered":"