Construction Project Risk & Management

This assignment delves into the complexities of managing risks, emergencies, and conflicts within construction projects. It outlines a comprehensive risk management process encompassing identification, assessment, response planning, and contingency measures. The report includes a specific risk register detailing potential issues like price fluctuations, delivery delays, disasters, and scope changes, along with suggested avoidance and mitigation strategies. An emergency response plan is also developed to address situations such as fire hazards, accidents, and damages, emphasizing preparedness and swift action. Finally, the assignment explores negotiation strategies for conflict resolution, considering both cooperative (integrative) and competitive (distributive) approaches.

Luxury apartment construction
Contents
Introduction................................................................................................................................1
Planning Schedule......................................................................................................................2
Planning Checklist..................................................................................................................2
Planning Schedule..................................................................................................................4
Top Down planning................................................................................................................4
Time Limiting Project............................................................................................................5
Risk Management Strategy........................................................................................................5
Risk Identification..................................................................................................................6
Risk Assessment.....................................................................................................................7
Risk Register..........................................................................................................................8
Risk Management.................................................................................................................10
Emergency Plan....................................................................................................................13
Negotiation Strategy.................................................................................................................16
Problem Definition & Likely Response from Parties...........................................................16
Negotiation Style..................................................................................................................16
Resolution.............................................................................................................................17
Conclusions..............................................................................................................................18
References................................................................................................................................18
References................................................................................................................................18
1

Luxury apartment construction
Introduction
Harrowford & Sons is a property company which specializes in the development of
commercial and residential properties. The company also gives professional advice to people
on purchasing, selling, and leasing of properties. The company is currently working on a
luxury apartment development project near a river. The development is going to be at the
walking distance from the central business district and will be provided with public
transportation facilities. Each block would have 20 apartments including two and three
bedroom flats with each apartment equipped with reception room, balcony, bathroom, shower
room and modern kitchen. The building would have facilities of gym, parking and 24 hours
concierge. Each flat has to be sold for £420,000 and £500,000 for 2 bedroom and 3 bedroom
flats respectively. The project is about the development of luxury apartments and this report
explores how the project is planned and how risks and conflicts would be managed on the
project.
Planning Schedule
Planning Checklist
Planning checklist for the construction project can include some questions that would check
if the activities needed for successful project completion have been completed. These
questions can be categorized into different project stages that include:
Development review before planning:
Has application containing development plan and documents are submitted to get the permit
for the construction of houses?
Has the construction plan being reviewed by several divisions of the city and a development
coordinator has been assigned to the case?
Site planning and review before construction:
Has the submitted plan being reviewed by the authorities for zoning, preservation, and site
plan?
Are all review activities completed, approved, all permit fees paid, and all the other permits
reviewed?
2

Luxury apartment construction
Inspections during construction:
Have all the inspection staff been communicated about construction and invited for
inspections of foundation, concrete, flooring, plumbing, electricity, mechanical, framing,
insulation, and air barriers?
Is the information about the inspectors listed in the permits?
After completion of construction:
Are all the activities required for marking completion finished on the construction project?
Has the appointment been given for providing the certificate of occupancy to project owner?
Site planning checklist:
Permit Applications
Wreckage Application Completed?
Survey Conducted?
Demolition of site notified?
Demolition erosion control permit included?
Building Permit included?
Current residential contractor license
included?
Site plan review application included?
Application worksheet completed?
Fees paid?
Letter or email sent to nearby residents?
Design documentation submitted?
Construction Management Agreement
submitted?
Acknowledgement of contractor’s
responsibilities?
Survey on site conditions completed?
Existing elevations and site grades shown?
Location of building completed?
3

Luxury apartment construction
Are existing elevations on the corners of
building?
Are adjacent properties included in survey?
Are streets, alleys sidewalks, free hydrants
and trees included in public Right of Way?
Has a licensed surveyor approved survey?
Site Plan
Do construction documents contain location,
work nature and its extent to conform to the
building code in
Foundation plan Are all details of footing including location,
thickness, size, materials, reinforcement and
strengths included?
Are all anchors detailed including bolts,
bases and hold downs?
Is there a reference to the soil inspection
report?
Floor Plan Are dimensions provided for each level?
Is framing a part of plan and includes all
structural members such as beams, headers,
trusses, joists, and rafters?
Roof Plan Does it include bearing point details and truss
direction?
Wall section Does it identify all materials used in
construction?
Does it includes floor dimensions and height
information for each level
Exteriors Does it include all elevations in all sides such
as location, dimensions, and heights?
Construction energy code compliance
Is compliance certification worksheet
provided?
Is installation information given in
4

Luxury apartment construction
description?
Adjoining Property protection
Is all needed protection measures installed?
Are plans for protective measures submitted
to city before getting permit?
Is engineering allotted for checking condition
of measures installed?
Construction contract Does a contract copy given for cost
verification?
Ground Water information
Are groundwater conditions evaluated and
included in plan?
Is a temporary water discharge permit taken?
Planning Schedule
Top Down planning
1.0 Zoning
1.1 Zoning Staff Meeting
1.2 Application meeting
1.3 Planning commission hearing
1.4 Public hearing
1.5 Approval
2.0 Site Planning
2.1 Site Plan development
2.1.1 Utility plan
2.1.2 Water plan
2.1.3 Sewer plan
5

Luxury apartment construction
2.1.4 Drainage plan
2.1.5 Tree plantation plan
2.2 Site Plan submissions
2.2.1 Entrance permit
2.2.2 Utility Permit
2.2.3 Erosion and sediment control permit
2.2.4 Utility construction permit
2.2.5 Land disturbance permit
2.3 Site plan approval
3.0 Construction Design
3.1 Site inspection
3.2 Landscaping
3.3 Architecture
4.0 Construction
4.1 Foundation
4.1.1 Excavation
4.1.2 Structure
4.1.3 Concreting
4.1.4 Filling
4.2 Apartments Construction
4.2.1 Wall Cladding
4.2.2 Floor tiling
4.2.3 Ceiling work
6

Luxury apartment construction
4.1.8 External work
5.0 Project Closure
5.1 Closure report
5.2 Sign off
Gantt chart
7

Luxury apartment construction
Time Limiting Project
This project would use the time limiting approach and involve choice of activities and
resources according to the available time. Dependent and parallel tasks can be sequenced in
such a way that the construction time if minimized. Activities that can be carried out at the
same time would be done parallel by allocating different resources to them at the same time
such as:
 Different inspectors would be used for inspection of different aspects or parts of the
construction project at the same time
8

Luxury apartment construction
 The taking of permits can be handled by different staff that would collectively get all
the needed permits
 Approvals can be taken from different people at the same time if authorities for
different approvals are assigned to different managers
Risk Management Strategy
This section explores various kinds of risks that can occur in the luxury apartment’s
construction project. Risk management strategy is usually planned considering the triple
constraints of a project that include project scope, cost and schedule. Risk management
begins with planning which includes identification of potential risks that can affect either of
these constraints. Risks can be identified at every stage of the construction project. These
risks would be assessed on the basis of the probability of the occurrence of the risk and
impacts on the project. Based on this assessment results, appropriate risk response can be
identified from risk avoidance, risk transfer, risk acceptance or risk mitigation. Risks are
documented in a risk register that contains risks, their probability of occurrence, risk
response, and more (SLAC, 2009).
Risk Identification
There can be several risks faced on a construction project such as:
 Prices of the construction materials and equipments used on the site can increase
during the project execution leading to a rise in costs of the project development.
 The operational cost can increase with the fees given in the permits and for hiring the
labor with market fluctuations during the project.
 IF the contract labor goes on strike during the project, the construction would face
halt and the deliveries of the project would be severely affected (Foreign &
Commonwealth Office, 2015).
 The organization can miss taking some needed permits before construction which can
later cause issues at the time of provision of occupancy certificate as the project may
not get sufficient level of approvals.
 There can be delays in approvals from the government officials or authorities in
providing permit which would cause delays in construction
9

Luxury apartment construction
 There can be some minimum conditions related to workplace provisions and wages in
the country as per the regulatory acts that are required to be adhered to. In case of the
failure to adapt to these measures, the construction organization can get into litigation
problems.
 If there are delivery delays from suppliers then the company would take more time for
construction than planned which would affect the project schedule as well as the costs
as increased duration would mean more cost of labor.
 If the design contractor is unable to provide an effective or strong design then it can
cause the problems later at the time of construction
 If the contractor increases the price of work during the project, it would affect the
project costs in the case where the charges are on actual.
 If all the project requirements are not sufficiently identified in the scope, it would
later lead to a rework which would add both time and cost to the project.
 There can be conflicts with contractors over the schedule, budget or cost
reimbursements that can affect their performance on the construction project and can
also lead to conflicts.
 If the resources hired for the work on the construction project does not have sufficient
knowledge and training on the construction and project aspects, it would lead to a
reduced performance of the team and also reduced level of motivation in them
 There can be unforeseen circumstances causing delays in deliveries or construction
 If the material quality needed for the project is not available then it can affect the
quality of construction
 If machines are faced with some technical or mechanical issues that can lead to
disruptions in the construction work.
 Project stakeholders or owners can come up with demands for the change in the scope
or requirements of the project which can affect the project by causing rework.
 Inflation can cause rise in prices of materials and equipments which can cause a major
impact on the project cost over years.
10

Luxury apartment construction
Risk Assessment
The risk assessment involves understanding of the impact or risks and the likelihood of their
occurrence. The table above bifurcates projects into categories based these assessment
parameters. Those highlighted in green have very low risk and thus, not any major actions are
required to be taken. The risks highlighted in blue are the moderate ones that affect the
project at a moderate level while yellow area highlights high risk factors. Red area highlights
risks that can be extremely dangerous for the project and thus, are mostly avoided (HubPages,
2015). However, in some cases, disastrous risks cannot be avoided such as in case of a
natural disaster in which the impacts of damage can only be mitigated and measures for
business continuity taken.
The table below provides assessment of the risks that were identified in the previous section:
Risk Probability of
Occurrence
Level of Impact Severity
Rise in construction
material prices
Moderate - 3 Moderate - 3 9
Permit fee increasing
costs
Moderate - 3 Moderate - 3 9
Labor strike on
construction site
Unlikely - 2 Major - 4 8
Permissions not
taken on time
Unlikely - 2 Major - 4 8
Approval delays Moderate - 3 Moderate - 3 9
Litigation issues
because of regulatory
practices not
followed
Unlikely - 2 Catastrophic - 5 10
Delays in deliveries
from suppliers
Moderate - 3 Moderate - 3 9
11

Luxury apartment construction
Faulty or
inappropriate design
for construction
Unlikely - 2 Catastrophic - 5 10
Price increased by
contractors
Moderate - 3 Moderate - 3 9
Scope creep or
addition in scope
Moderate - 3 Major - 4 12
Conflicts between
people
Moderate - 3 Major - 4 12
Insufficient training
of employees
Unlikely - 2 Catastrophic - 5 10
Unforeseen
circumstances
causing major delays
in construction
Rare - 1 Major - 4 4
Material quality not
at par
Unlikely - 2 Catastrophic - 5 10
Technical issues in
machines causing
disruption in
construction work
Unlikely - 2 Major - 4 8
Scope changes made
by stakeholders
Moderate - 3 Major - 4 12
Inflation causing
price rise
Moderate - 3 Moderate - 3 9
Risk Register
12

Luxury apartment construction
S.
No.
Category
of Risk
Specific
Risk
Impac
t on
projec
t(1-5)
Potential
Cause(s)
Potential
Response(s) Owner Trigger
Respon
se
Strateg
y
1.1
External
Infrastructu
re damage
5
Natural
disaster
Project would
be halted and
damage
recovery steps
taken
Project
owner
Sponsor
Mitigat
ion
1.2
External
Bad quality
of
constructio
n material
2 Specificati
ons not
defined
properly
or wrong
materials
delivered
Check the
quality of
material before
accepting from
suppliers to
avoid this from
happening
Procureme
nt
manager
Project
manager Avoid
1.3
Internal
Technical
failure of
equipments
4 Machinery
not of
good
quality or
is old
Get new
machine as
soon as possible
and resume the
work
Procureme
nt
Manager
Site
Engineer
Mitigat
e
1.4 External Scope
changes
4 Changes
made by
stakeholde
r
Ensure that
sufficient
interviews are
taken of
stakeholders at
the time of
planning such
that all their
needs and
studied and
Project
Team
Project
manager
Avoid
13

Luxury apartment construction
incorporated
1.5
External/
internal
Labour
Strikes
4 Dissatisfa
ction of
workers
from
compensat
ion,
working
facilities
or profiles
Understand the
needs of
workers and
arrive at an
acceptable
negotiation
Project
Manager
Labour
Union
Mitiga
te
1.6
External
Rise in
prices
1 Inflation
causing
rise in
material
and
equipment
prices
Keep
contingency
sum while
planning to
cope with such
emergencies
Finance
Manager
contracto
r
Mitigat
e
1.7
External
Delays in
delivery
3 Supplier
unable to
make the
material
or
equipment
available
on time
Ensure the
availability of
the material or
equipment
before ordering
to a supplier
Procureme
nt
Manager
Project
Manager Avoid
1.8 Internal Underperfo
rmance of
labour
4 Lack of
training or
experience
of the
labour
Ensure that
contractor
supplies labour
that has
experience of
construction
work by
verifying their
Human
Resource
Manager
Contracto
r
Avoid
14

Luxury apartment construction
credentials and
work
experience
details.
1.9
External/
Internal
Conflicts
happening
between
labour,
contractors,
or project
team
4
Communi
cation
problems
or
conflicts
of interest
between
people or
entities
Ensure that the
needs and
expectations of
all those
involved on the
project are
understood in
advance to
avoid conflicts
and if conflicts
are still faced,
appropriate
negotiation
practice must be
followed to
reduce impact
Contractor
Project
Manager
Avoid
or
Mitigat
e
Risk Management
For management of the risks on a project, it is important to identify the severity of risk based
on which appropriate response and contingency plan can be decided. One must also identify
the person responsible for mitigating the risk identified as shown in the table below:
Risk
Description
Response(s)
Responsibility Contingency
Plan
Infrastructure
damage
Natural calamity
or other disaster
Project
would be
halted and
Project
Clean the
damaged area
and restart the
15

Luxury apartment construction
can cause
damage to the
constructed
structure
damage
recovery
steps taken
Manager construction
work for which
contingency
fund reserved
for
emergencies
can be used.
Bad quality of
construction
material
The
specifications are
not given right or
the supplier
delivered wrong
material. It may
also happen due
to unavailability
of desired quality
Check the
quality of
material
before
accepting
from
suppliers to
avoid this
from
happening
Project
Manager
If the issue is
internal then
contingency
fund may be
used to reorder
material or the
risk can be
transferred to
the supplier
who could be
ask to deliver
the required
quality of
material
Technical failure
of equipments
Old or faulty
equipments or
machines used in
construction can
fail
Get new
machine as
soon as
possible and
resume the
work
Contractor
Use
contingency
funds to get
new machines
or change
schedule to use
available
machines in
batches
Scope changes Scope changes as
the stakeholders
or project owner
demands
Ensure that
sufficient
interviews
are taken of
Project
Manager
Assess scope
change
requests and
approve only
16

Luxury apartment construction
additions or
modifications in
the building
features
stakeholders
at the time
of planning
such that all
their needs
and studied
and
incorporated
those can be
accommodated
in given
budget or
approval can
be taken
Labour Strikes Labour may be
dissatisfied with
work, working
environment,
people around ,
policies,
compensation or
other factors
Understand
the needs of
workers and
arrive at an
acceptable
negotiation
Contractor
Ensure that
labour needs
are understood
and they are
sufficiently
given attention
to avoid
conflicts
Rise in prices Several factors
like inflation,
contractor issues,
lack of material
availability, lack
of workforce,
project changes,
etc. Can cause
rise in prices
Keep
contingency
sum while
planning to
cope with
such
emergencies
Finance
Manager Ensure that
funds are
utilized
conservatively
to reduce
impacts of
price rise
Delays in delivery Suppliers may
not have the
products or
materials
available on time
or there could be
Ensure the
availability
of the
material or
equipment
before
ordering to
Procurement
Manager
Monitor
project
progress
against plan
and give
sufficient time
to suppliers for
17

Luxury apartment construction
technical or
operational
issues in
production
causing delays in
deliveries.
Delays can also
be caused by
infrastructure or
transportation
issues
a supplier
deliveries
considering
probable
challenges that
can add to
delays to
minimize
delays
Underperformance
of labour
Labour is
inexperienced or
is not provided
sufficient
training on the
work needed
Ensure that
contractor
supplies
labour that
has
experience
of
construction
work by
verifying
their
credentials
and work
experience
details.
Human
Resource
Manager
Hire only
experienced
staff
Conflicts
happening
between labour,
contractors, or
project team
Communication
gaps or conflicts
of interest
between different
people can cause
issues
Ensure that
the needs
and
expectations
of all those
involved on
the project
Project
Manager
Use
appropriate
negotiation
strategy to
resolve
conflicts
18

Luxury apartment construction
are
understood
in advance
to avoid
conflicts
and if
conflicts are
still faced,
appropriate
negotiation
practice
must be
followed to
reduce
impact
Emergency Plan
The purpose of an emergency plan is to ensure that sufficient resources and action plans are
ready in the cases of emergency situations. This includes details of roles, responsibilities,
procedures, and policies that have to be in place. An emergency plan would have the
following sections:
 A first response guide which would provide the immediate steps in case an emergency
is faced. This guide can include protection priorities such as people’ safety,
environment protection, and safeguarding of the commercial or business interests of
the project owner.
 Prevention measures that have be taken in the cases of emergency situations like
hazards, collateral damages or accidents.
For ensuring that the company is prepared to deal with the situations in emergencies, project
team has to be trained on emergency procedures through regular meetings and the emergency
drills. Data should be collected and made available in appropriate places of the people to be
contacted in emergencies, maps of the place, records of emergency response equipments or
supplies, procedural documents, and records.
19

Luxury apartment construction
An emergency response planning guide can provide the following steps for responding to
emergency situations:
 Develop a response plan containing details of contacts, records, and procedures
 Take an effective response measure which considers all people working or those
visiting for emergencies management
 A communication system can be used for the emergency alert situation
 A safe route for evacuation and meeting in case of emergencies has to be allotted
 Fire fighting equipments and medical equipments must be provided at appropriate
locations
 Reliable communication systems including radios and mobile phones would be kept
in place
 Conduct training of workers to ensure that they are aware of emergency procedures
and resources
 Appoint a safety manager to deal with the emergency situations on the site
 Maintain a record of people and of emergency trainings
 Record details of daily workers and visitors at the site in a register
 Establish medical center with nurses and doctors made available to deal with
emergencies
 Liaison with local emergency services that can be called immediately in case of
emergency
Emergency planning is majorly a responsibility of the project manager who would have to
ensure that an effective plan is developed, training and drills are conducted regularly and
appropriate incident notification process is put in place. Safety and emergency needs can be
understood by the manager after connecting and interviewing stakeholders and appropriately
a plan may be modified or updated. The project manager must have a way to contact anyone
required for emergencies in situations of emergencies such that situation can be efficiently
controlled. Project manager would identify and hire appropriate staff for managing
emergencies, keeping site records, and taking actions in case of emergencies with timeframes
identified for responding to every emergency situation.
The emergency response manager who would be appointed would ensure that an emergency
situation is immediately notified to required people and actions for evacuation or meeting are
20

Luxury apartment construction
taken on time. He or she has to investigate the incident and report the same to the project
manager. He must also provide support to people involved in emergency management.
First step to emergency response is hazard identification and assessment. It involves review
of the incident and identification of the source or cause of emergency which could be
anything from transportation, equipment installation, material handling, commissioning
activities, environmental concerns, and hoisting. For each kind of emergency, the level of
impact of the risk has to be understood. For each hazard that is found, certain questions can
be asked for this assessment such as “What can be the consequences?”, “What can go
wrong?”, “are sufficient resources available to deal with the emergency?” and more.
Experienced people would be involved in the assessment process.
After assessment, immediate response steps would have to be taken. Some emergency actions
that would be taken immediately by those working on the site in case of an emergency
include:
 Calling emergency services if the situation cannot be handled internally
 Contact the emergency manager immediately notifying of the damage
 Refer to the emergency contact list and call required people and services
 Meet at the nearest emergency location to keep safe after evacuation
 Shut down all the equipments that are inflammable
 Activate the emergency siren and other communication instruments like radio
 Treat the injuries caused to people immediately with the help of doctors and nurses
 Identify and notify the cause of emergency to manager
 Manager must see the daily site register and risk assessment sheets to identify who all
were there and what risk management procedures can be taken
 Call emergency services like ambulance and fire extinguisher for relief
 Access the map of the site to ensure that people know locations of doors, medical kits,
and equipments while evacuating or taking responsive actions.
Different types of emergencies would be handled in different ways as follows:
MEDICAL EMERGENCY: A medical emergency could be caused due to several factors like
a medical condition in a person, an isolation incident, injuries due to natural disaster, and
exposure to hazardous material. Reponses that can be taken immediately include giving
21

Luxury apartment construction
assurance of relief to injured person, first aid to injured, check of level of injuries and number
of people affected, and giving CPR to person in case of breathing issue.
FIRE RESCUE – A fire alarm must be raised immediately and the fire extinguisher must be
called. At the same time, all the people must evacuate the site to reach a safe place. All the
inflammable equipments must be switched off. Fuel or inflammable substances would be
removed from the fire area and temperature would be reduced.
ELECTRIC SHOCK: All the other people must be separated from the power source and then
the affected person must be treated. Power sources would be shut down and the injuries
caused would be treated using appropriate treatment procedures from breathing,
compressions, or CPR. Qualified personnel who can give relief in such situations must be
called. All the information about the incident must be recorded in the emergency register. The
injured would be given immediate medical facility (AGL, 2012).
Identification of needed resources is necessary to be able to respond to emergencies.
Contingency plans would be in place in advance to deal with situations of lack of required
resources in the case of emergencies. Emergency response resources can include dire
extinguishers, first aid kits, onsite medical staff, lifting equipments, spills containment
equipments and other facilities.
Besides these resources, it is also essential to ensure that all communication systems are
working properly and the people working know how to use them effectively in emergencies.
They should be provided with the needed contact numbers along with the equipments to start
the communication process immediately (CSAO, 2003)
Negotiation Strategy
Problem Definition & Likely Response from Parties
Construction projects can deal with several cases of conflicts that can arise on the project
especially in the cases where routine conditions are not present causing dissatisfaction in
people involved in the work. It is thus, essential that all the responsibilities, authorities,
provisions and resource details are well planned and recorded such that in the case of
conflicts, they can be referred to identify the best response to deal with the conflicting
22

Luxury apartment construction
situation. A decisive authority must be put in place who can be the construction project
manager who would take charge in case of conflicts.
Parties can respond to conflicts in different ways such as by shutting down the
communication, by pushing complaints against the conflicted party, or by putting up the
fight. These responses differ with differences in the personalities of the people such that the
negotiator must have an understanding of their personalities. Thus, the project manager
would take the first step to resolution of conflict and in case it does not work, an experienced
person in conflict management must be approached for intervention.
Conflicts can also be major such as between the contractor and the project owner or supplier
in which case, the legal actions or arbitration actions may be taken. Negotiations happening
in such situations can be very complex and the outcome can affect the project. In any case, an
initial settlement would be reached for temporary handling of the situation by the project
manager and only after that extensive bargaining would be followed in the presence of a
professional negotiator.
Some of the reasons that can cause conflicts between parties involved in the project include
change in orders, accidents, claims for damage or reimbursements, etc. Negotiation can
happen at one time or can include a continuum of negotiations between parties.
Negotiation Style
Negotiation can take different styles from direct to tacit and formal to informal. Negotiating
actions are normally selected by multiple decision makers jointly and negotiation must ensure
that the interests of all parties in conflict must be protected to some extent. The cooperation
demanded from them must not be disproportionate. No matter what type of negotiation is
used, basic structures may be same as all negotiation situations may have some common
characteristics including:
 There would be minimum of two parties involved in a conflict
 Parties need to be cooperative to taking joint decisions
 The payoff given to any party must depend either on the consequences of the decision
or on the available alternatives that are external to negotiations
 The parties must exchange information honestly during negotiation.
23

Luxury apartment construction
A common approach taken for negotiation is negotiation analytic approach as it is systematic,
theoretically sound and logically consistent. This approach draws upon multiple theories in
the field of negotiation including game theory, behavioural decision theory, and decision
analysis. The approach captures the four negotiation characteristics and pursues a broad
scope of its application with practical value.
It includes the following:
 Analysis of interdependent decision making involving contractors and clients
 The interactions that happened between parties in conflict must be analyzed
 The problem which is the root cause of conflict must be defined clearly
 Resolution choices must be structured and sequenced with choices given to parties in
conflict allowing them to assess probabilities and values of each option
 A negotiating party may need to understand how people think and why they think that
way which can be done using Behavioral decision theory (BDT)
 Descriptive assessments of the situation must be done such that negotiators can
stimulate certain behavior in parties, identify any hidden agendas they have and
trigger a round of discussions for negotiation
Resolution
The structure of negotiation can be affected by different factors like time dimensions,
the players in negotiation, terms of the agreements and more. The negotiation flow
may also be affected by the parties to contract and time dimensions. The key would
still be ensuring logical consistency in negotiations by maximizing the realization of
self-interest of each party in a realistic manner.
Parties in conflicts could be fighting over a number of issues and each of these issues
can have different resolution options. If an option is fixed for each issue, the
combination of these options can help in arriving at a complete solution which can be
converted into a negotiation contract. This contract may be evaluated by both parties
to contract such that an agreement can be reached. A negotiator assigns a subjective
payoff to the contract arrived at which can be a combination of the possible payoffs
given to different parties. A combination of contracts can also result from multiple
options incorporated as solution. For instance, if there are five issues that have to be
24

Luxury apartment construction
resolve and each issue have 3 different options then rather than a single contract, a
contract set of 35 contracts may be created. Each party in the contract must have
defined a best alternative with best course of action for the respective party. While
deciding a payoff for each party to contract, a lower bound may be identified for
minimum payoff for satisfaction as well as the maximum surplus benefit one can be
given. An agreement is achieve balancing between the two for respective parties such
that the resulting contract does not dominate the interest of either party.
A reasonable evaluation criterion for negotiation is maintaining of fairness for both
parties to contract such that similar level of benefits are given to both parties resulting
from execution of the contract. This approach to negotiation in contracts is called
integrative approach.
In certain cases, a distributive bargaining structure is used for deciding payoffs
instead of fairness as the basis. This approach is used when the two parties are clearly
against each other such that payoff given to one can reduce the payoff given to other.
Thus, negotiations can result into win or lose situations for either party. An analytical
approximation of negotiation is need in either case with a simplified time dimension
(Murtoaro & Kujala, 2007)
Conclusions
This report explored a case of a construction project to understand how risk, emergencies and
conflcicts are dealt with in the construction projects. A risk management process was used
involving risk identification, risk assessment, risk response planning and contingency
planning. A risk register was prepared that identified different types of risks that can be faced
in a construction project and the possible resolution and contingency measures that can be
taken. Some of the identified risks included price rise, delays in deliveries, disasters causing
damages, and scope changes. For most risks, steps were identified for avoiding them through
control and in case they could not be controlled, then mitigation steps were suggested. The
report also identified situations of emergencies and prepared an emergency response plan that
included details of how situations like fire hazards, accidents, and damages can be managed
with least damage. It was suggested that the company has all the records, resources and
procedure documented and in place with appropriate staff allocated to deal with emergency
situations. Lastly, the report included a negotiation strategy that needs to be used in the cases
25

Luxury apartment construction
of conflicts’ on the project. Two types of strategies can be used including integrative where
cooperative approach is taken such that both parties get benefits or a bargain approach which
is more aggressive. Integrative approach is taken when conflicting parties are ready to
cooperate while aggressive approach is taken when they are strictly against each other and
their payoffs would affect the payoffs of others.
26