Released this past November, the list is based on data collected from the Web of Science and highlights some of the world’s most influential scientific minds by naming the researchers whose publications over the previous decade have included a high number of Highly Cited Papers placing them among the top 1% most-cited.
\\n\\n
We wish to congratulate all of the researchers named and especially our authors on this amazing accomplishment! We are happy and proud to share in their success!
IntechOpen is proud to announce that 179 of our authors have made the Clarivate™ Highly Cited Researchers List for 2020, ranking them among the top 1% most-cited.
\n\n
Throughout the years, the list has named a total of 252 IntechOpen authors as Highly Cited. Of those researchers, 69 have been featured on the list multiple times.
\n\n\n\n
Released this past November, the list is based on data collected from the Web of Science and highlights some of the world’s most influential scientific minds by naming the researchers whose publications over the previous decade have included a high number of Highly Cited Papers placing them among the top 1% most-cited.
\n\n
We wish to congratulate all of the researchers named and especially our authors on this amazing accomplishment! We are happy and proud to share in their success!
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1. Introduction
Osteoporosis is a systemic skeletal disease characterized by low bone mineral density (BMD), microarchitectural deterioration of bone tissue, and an increase in fracture risk [1]. Several drugs have been developed to treat osteoporosis: most of these are inhibitors of bone resorption. Effective treatment of osteoporosis requires not only resorption inhibitors, but also stimulators of bone formation especially in patients who already have lost a significant degree of bone. Although therapeutic alternatives are available for inhibiting bone resorption, options of bone anabolic agents are much more limited with regard to the bone resorption inhibitors.
Although patients included in randomised controlled trials have osteoporosis defined according to the WHO criteria, i.e. a T score below -2.5 SD and/or prevalent fragility fractures, a large proportion of fractures occurs at T-scores above -2.5 SD and in patients without prior fractures [1]. Therefore, therapies with proven fracture risk reduction efficacy in patients with osteopenia and/or clinical risk factors may contribute to earlier and more effective intervention against fractures.
The past decade has witnessed major advances in the diagnosis and treatment of osteoporosis. It would appear that anabolic drugs challenge prevailing paradigm by stimulating bone formation, therefore enhancing bone turnover. There is a great need to anabolic agents for reverse of osteoporosis. In this review, we summarize current informations about the anabolic agents.
2. Parathormon
Parathyroid hormon (PTH) is released from the parathyroid glands and is an important regulator in the bloodstream’s levels of calcium phosphorus. It stimulates both bone formation and resorption [2,3]. Its intermittent low-dose using increases bone formation more than bone resorption, leading to increased bone mass. Intermittent PTH administration increases the number and activity of osteoblasts, enhances the mean wall thickness and trabecular bone volume, and improves bone microarchitecture by establishing trabecular connectivity and increasing cortical thickness [2,4].
Continuous infusions, which result in a persistent elevation of the serum parathyroid hormone concentration, lead to greater bone resorption than do daily injections, which cause only transient increases in the serum parathyroid hormone concentration [5,6]. The anabolic effects of PTH on bone formation are through the medium of PTH receptor-dependent mechanisms. Teriparatide (PTH 1-34 ) is the biological active, a recombinant form of PTH [7]. Patients with fractures of postmenopausal osteoporosis administered teriparatide 20 and 40 μg/d in FPT (Fracture Prevention Trial) [8]. After 18 months teriparatide 20 μg/d reduces the risk of spine fracture by %65 and non-spine fracture risk by %53. Over a median of 18 months spine fracture risk reduced by %69 and non-spine fracture risk reduced by %54 with the 40 μg/d regimen [8].
Subbiah et al. reported the second patient to develop osteosarcoma [9]. Although teriparatide reduces osteoporosis related fractures in select patient populations, important contraindications, such as prior radiation exposure, Paget’s disease of bone, unexplained elevations of serum alkaline phosphate, open epiphysis should be considered before use.
It has been suggested teriparatide could be useful for treatment of severe and resistant forms of osteoporosis to other medications [10].
In summary, we think that the clinical benefits of parathyroid hormone reflect its ability to stimulate bone formation and thereby increase bone mass and strength. This hormone appears to be effective in preventing fractures in postmenopausal women. Hovewer, it should be used attention because of its important contraindications.
3. Stontium ranelate
Strontium ranelate is composed of an organic molecule (ranelic acid) and of two atoms of stable non-radioactive strontium [11]. Strontium naturally present in trace amounts in human body and has close similarities with calcium; act as calcium agonist in most of physiologic process [12].
Strontium is similar to calcium in its absorption in the gastrointestinal track takes place in two ways: passive diffusion and carrier mediated absorption. Both calcium and strontium share the same carrier system, which tents to be greater affinity to calcium. High dietary intake of calcium has been shown to reduce concurrent absorption of strontium [11].
Ingested strontium is distributed in the body in three compartments: plasma extracellular fluid; soft tissue and superficial zone of bone tissue; and bone itself, the greatest portion is the calcified tissues [13]. In bones, total amount of strontium relatively lower than amount of calcium. After its absorption, both strontium and calcium exhibit the same characteristics [12].
The strontium levels in bone vary according to the anatomical site. However, strontium levels at different skeletal sites are strongly correlated [14]. The strontium levels in bone also vary according to the bone structure and higher amounts of strontium are found in cancellous bone than in cortical bone. Strontium is mainly incorporated by exchange onto the crystal surface. In new bone, only a few strontium atoms may be incorporated into the crystal by ionic substitution of calcium [12, 14]. Bone strontium content is highly correlated with plasma strontium levels. Mechanism of action of strontium ranelate is shown in figure 1.
Figure 1.
Mechanism of action of strontium ranelate in bone [13]
Strontium ranelate decreases osteoclast differentiation and activity [15]. Also able to increase pre-osteoblast replication, collagen type I synthesis [16]. Therefore strontium ranelate has a dual affect on bone remodeling, being able to stimulate bone formation by osteoblasts, a property shared with bone-forming agents, and to inhibit bone resorption by osteoclasts, as do anti-resorptive agents [17,18].
Strontiun ranelate shows affect by binding calcium receptor in bone. Strontium has lower affinity for calcium sensing receptor than calcium[19].
There are higher calcium ion concentrations within the bone microenvironment in case of osteoclastic resorption. Affect of calcium receptor increases in higher extracellular calcium concentrations. Strontium ranelate intake prevents bone loss with non-osteoporotic patients in early post-menopausal period [19].
In the PREVOS study (PREVention Of early postmenopausal bone loss by Strontium ranelate) usage of strontium ranelate 1g/d for period of 2 years resulted in significantly higher increase of femur BMD (bone mineral density). There was a significant increase in the bone formation markers and concurrent increase of bone resorption markers has not been recorded [20].
In the Treatment of Peripheral Osteoporosis (TROPOS) study strontium ranelate increased bone mineral density throughout the study, reaching at 3-yr 8.2% (femoral neck) and 9.8% (total hip). Same study shows %36 decrease in hip fracture risk even in high-risk subgroup over 3-yr period [21].
The Spinal Osteoporosis Therapeutic Intervention (SOTI) study investigated the safety of strontium ranelate and its efficacy against vertebral fractures. In patients used strontium ranelate 2 g/d the risk of vertebral fractures was decreased by 41% over 3-yr [22].
In both studies strontium ranelate was well tolerated. The most common adverse events consisted of nausea and diarrhea was disappeared after third month of treatment [21,22].
Therefore, we suggest that strontium ranelate has been proving antifracture efficacy in patients with osteopenia and/or clinical risk factors and very old elderly. Also, it may contribute to earlier and more effective intervention against fractures because of well- tolerated.
4. Prostaglandins
Prostaglandins act as locally acting hormones, developed as new therapeutic approach. They show the effect and are metabolized in the tissue where they are synthesized. Prostaglandins are synthesized from arachidonic acid, a polyunsaturated fatty acid with 20-carbon chain [23].
Prostaglandins are produced from bone cells by mediated cyclooxygenase. Prostaglandin production is regulated by mechanical stress, cytokines, growth factor and systemic hormones. Furthermore, prostaglandins are able to regulate their own production [24]. Prostaglandins have both inhibitory and stimulatory effects on bone structuring. The most prominent effect of prostaglandin E2 (PGE2) is to stimulate bone resorption and formation [24]. PGE2 exerts its action through the cell surface receptors. Four subtypes of prostaglandin E receptors (EP1, EP2, EP3 and EP4) [25,26] have been identified. PGE2 stimulates bone formation by EP4 receptor mediation [26]. The importance and impact of prostaglandins in bone metabolism is summarized in figure 2
Figure 2.
The mechanism of action and place of prostaglandins in bone metabolism [24]
It has been reported in certain studies that prostaglandins have anabolic effect on the bone formation, therefore can be used in osteoporosis treatment [27].
It has been demonstrated that systemic PGE2 administration stimulates proliferation of osteoblast precursors or differentiation of osteoprogenitor cells in bone marrow and 4.7% increase in bone mass eventually was found in the same study [27]. Increase of total bone surface by means of osteoblast stimulation with PGE2 administration to rats has been reported [28].
Misoprostol is a methylene analogue of prostaglandin E1 (PGE1) has been administered to oophorectomized rats. Misoprostol is being used for treatment of gastric ulcer due to its cytoprotective effect by inhibiting gastric acid and pepcin secretion [23]. Rats receiving misoprostol had significantly reduced oophorectomy related bone loss at site of lumber spine. Thus, it has been proposed that misoprostol is choice for treatment of post-menopausal osteoporosis prophylaxis [29,30].
Misoprostol 800 μg/d had been administered for 6 moths to post-menopausal osteoporotic patients. At the end of the treatment increase by 8.1% in femur bone mineral density, by 5% increase in lumber spine bone mineral density and by 3.6% increase in Ward’s triangle bone mineral density have been found. It has been reported that misoprostol can be an alternative on treatment of osteoporosis [31].
We think that misoprostol may be an alternative therapy for patients with osteopenia and osteoporosis who are not suitable for hormone replacement therapy.
5. Sesamin
Sesamin is a major lignan compound in sesame seeds. Its activity on bone cell function is unclear. Recently, it has been reported that sesamin has direct effects on osteoblasts by stimulating the expression of essential genes and key enzymes of the bone mineralization process [32,33].
Wanachewin et al suggested that sesamin had the ability to trigger osteoblast differantiation by activation of the p38 and ERK/MAPK (mitogen-activated protein kinase) signaling pathway and possibility indirectly regulate osteoclast development via the expression of OPG and RANKL in osteoblasts [32].
The MAPK/ERK pathway is a chain of proteins in the cell that transmits a signal from a receptor on the surface of the cell to the DNA in the nucleus of the cell. MAPKs play important roles in cellular response to growth factors, cytokines, or environmental stress.
They are classified into four classes: extracellular signal-regulated kinases (ERKs), c-Jun N-terminal kinase or stress-activated protein kinase, p38 MAPKs, and ERK5 [34]. ERKs are involved in cell proliferation/transformation and survival. p38 MAPKs are involved in many cellular processes, such as inflammatory responses, osteoblast differentiation, apoptosis [35,36].
We think that sesamin which is a phytochemical agent, may be effective addition to osteoporotic therapy. Future studies are needed.
6. Statins
Statins are inhibitors of 3-hydroxy-3-methylglutaryl coenzyme A (HMG-COA) reductase. Usually, it has been known that they have efficacy and credibility on coronary artery diseases and hyperlipidemia [37,38]. First, Mundy et al showed that statins lead to increase 90 % in the trabecular bone volume by stimulating bone formation invitro and therefore it was started to studies investigating the place of statins for osteoporosis treatment [39]. Hamelin et al suggested that statins decrease the bone destruction by supressing the formation of the mevalonate that it is an important precursor on the control of osteoclastic activity as bisphosphonates [40].
It was reported that statins have efficacy on the bone metabolism, by increasing bone morphogenetic protein 2 (BMP2) activation stimulated osteoblastic cell proliferation and maturation [41]. Maeda et al showed that hydrophobic statins such as simvastatin, atorvastatin, and cerivastatin stimulated VEGF expression by osteoblasts via reduced protein prenylation and the phosphatidylinositide-3 kinase pathway, promoting osteoblastic differentiation [42].
In 2009 Pault et al revealed a dose-dependent effect and improved fracture healing under local application of simvastatin [43].
Fukui et al reported that the effect of the systemic administration of statins was limited due to its metabolism in the liver and high-dose administration may cause adverse side effects. They locally applied with gelatin hydrogel to fracture sites at a dose similar to that used in clinical settings and shown to induced fracture union in a rat unhealing bone fracture model via its effect on both angiogenesis and osteogenesis [44].
We suggest that the results of studies also point to the need for more information in order to particularly gelatin hydrogel form.
7. Growth hormone and IGF-I
It is known that growth hormone (GH) is important in the regulation of longitudinal bone growth [45]. Several in vivo and in vitro studies have demonstrated that GH is important in the regulation of both bone formation and bone resorption. In Figure 3 a model for the cellular effects of GH in the regulation of bone remodeling is showed [45].
Figure 3.
The mechanism of action at the cellular level for GH in regulation of bone remodeling. The left part of the figure represents osteoclast-mediated bone resorption. The right part represents osteoblast-mediated bone formation. ? indicates that both stimulatory and inhibitory effects have been shown [45]
via an induction of endocrine and autocrine/paracrine IGF-I (Insulin like Growth Factor-1).
rhGH (recombinant human Growth Hormone) increases bone turnover in normal subjects and improves bone mineral metabolism in postmenopausal females [45]. GH treatment also results in increased bone resorption. It is still unknown whether osteoclasts express functional GHRs, but recent in vitro studies indicate that GH regulates osteoclast formation in bone marrow cultures [45, 46]. Possible modulations of the GH/IGF (Insulin like Growth Factor) axis by glucocorticoids and estrogens are also included in Fig. 3 [45].
Bone is the second richest source of IGF-I in the body. Locally this peptide promotes osteoblast differentiation and growth [48]. Recently, studies show that low levels of IGF-I are associated with a greater risk of hip and spine fractures [49–51]. Hence, there is a strong opinion for considering human GH or IGF-I as potential anabolic agents for the treatment of osteoporosis. There are potential advantages for using rhIGF-I (recombinant human Insulin like Growth Factor-1) compared with rhGH in the treatment of osteoporosis. These include
more direct stimulation of bone formation,
bypass of skeletal GH resistance that can be present, and
a reduction in GH-induced side-effects such as carpal tunnel and diabetes mellitus. [47]
It was reported that low doses of rhIGF-I may directly increase osteoblastic function with only a minimal increase in bone resorption [52]. In 2008, it was suggested a potential role for IGF-1 in the early identification of women at risk for low bone mass and osteoporosis. They suggested measuring the serum level of IGF-1 in women around 40 years old. When its value is 1.5 SD below the peak, BMD measurement by DXA could be considered [53]
There are limited number studies using rhIGF-I than rhGH. Therefore, these advantages have not been validated yet.
8. Sodium fluoride
Sodium fluoride is the first anabolic agentsto be used in the treatment of postmenopausal osteoporosis. Side-effects, consisting of upper gastrointestinal symptoms and a lower extremity pain syndrome, are common.
Using slow release formulation of sodium fluoride, it was showed a 50% reduction in vertebral fracture incidence with impressive increases in bone mass [54-56]. More recently, it has been suggested that a different formulation of fluoride, monofluorophosphate when is used in lower dosages and more favorable formulations, gastrointestinal side-effects are reduced [57-59]. However, consensus about its clinical utility has still not been reached.
9. Other potential agents for anabolic treatment of osteoporosis
Bortezomib: There are multiple potential alternative agents for increasing bone formation. A potential treatment is to target the osteoblast proteasome. It was reported that the proteasome inhibitor bortezomib (Bzb) had bone forming effects in patients with multiple myelome [60]. The mechanism for Bzb’s effects on osteoblastic differentiation has not been clearly defined.
It was showed that Bzb with lenalidomide or thalidomide may increase bone formation by stimulating osteoblast activity and inhibiting osteoclastic bone destruction, respectively Figure 4.
Figure 4.
Bzb’s action on bone formation in the patients with multiple myeloma [60]
Oxytocin: An other approach is oxytocin (OT) that increases osteoblastic bone formation. It has been reported that OT may regulate maternal skeletal homeostasis during pregnancy and lactation. The fetal skeleton is unlikely to be mineralized effectively in the absence of calcium mobilized from the maternal skeleton [61]. It has been suggested that elevated OT levels during pregnancy and lactation not only enhance bone resorption by increasing the number of osteoclasts to make maternal calcium existing to the fetus, but also prevent unrestricted bone removal by inhibiting the activity of mature osteoclasts. Therefore, it was reported that recombinant OT or its analogs because of its skeletal anabolic action, might have potential utility in therapy for human osteoporosis [61].
Beta-blocker: Wiens et al found that beta-blocker use was associated with a significant decrease in fracture risk [62]. However, in 2008, Reid determinated that there was no any evidence to support the hypothesis that beta‚-blockers reduce fracture numbers [63]. In 2012, Yang et al reported that beta-blockers are associated with reduced risk of fracture in older adults, but the effect size is likely to be modes [64]t. In summary, there was no an adequate evidence to support using beta-blockers in the treatment of osteoporosis.
Lithium: The mean (+/-SD) bone density in lithium treated patients was reported that 4.5% higher at the spine (P<0.05), 5.3% higher at the femoral neck (P<0.05) and 7.5% higher at the trochanter (P<0.05). In addition, lithium treated patients had lower serum total ALP (P<0.005), lower serum osteocalcin (P<0.005) and lower serum CTX (P<0.05) but the totalcalcium, PTH and urinary calcium excretion did not differ significantly between patients and controls. In conclusion, it was suggested that therapy with lithium carbonate may preserve or enhance bone mass [65].
Figure 5.
Modulation of Wnt signaling by sclerostin [73]
Anti-sclerostin monoclonal antibody: Sclerostin is a protein encoded by the SOST gene in osteocytes. It inhibits osteoblastic bone formation [66,67]. The binding of Wnt proteins to the LRP5/6-Frizzled co-receptor on the cell membrane of osteoblasts leads to stabilization of intracellular beta-catenin and regulation of gene transcription that promotes osteoblastic bone formation. Sclerostin is a modulator of osteoblast function. It antagonizes Wnt signaling and inhibits osteoblastic bone formation [68]. Recent studies reported that anti-sclerostin therapy enhances fracture healing and bone repair.[69-71]. AMG 785 is a humanized sclerostin monoclonal antibody, was first studied in humans. It enhances Wnt signaling and increase osteoblastic bone formation [72]. Figure 5
Treatment with AMG 785 has been well tolerated. In postmenopausal women with low bone mineral density (BMD) after 12 months of AMG 785 administration, increase in BMD is determined. Although there is no evidence that AMG 785 increases the risk of osteosarcoma, new studies are needed to modify this risk.
10. Conclusion
Aging is associated with impaired bone formation which is a principal pathogenetic cause mediating bone fragility in osteoporosis. Ideally, patients at high risk of fracture should be identified early and treated by a combination of lifestyle changes, correction of secondary causes of osteoporosis, and specific treatments to improve bone density and decrease fracture risk. By now, there were a limited number of therapeutic agent for activating bone formation and increasing bone mass and strength. More effective and better tolerated therapies will become available soon. We think that new treatments will be able to contribute to increase the currently low treatment rate of even severe osteoporosis by allowing approaches aimed at minimising fracture risk at the individual patient level.
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Introduction",level:"1"},{id:"sec_2",title:"2. Parathormon",level:"1"},{id:"sec_3",title:"3. Stontium ranelate ",level:"1"},{id:"sec_4",title:"4. Prostaglandins",level:"1"},{id:"sec_5",title:"5. Sesamin",level:"1"},{id:"sec_6",title:"6. Statins",level:"1"},{id:"sec_7",title:"7. Growth hormone and IGF-I",level:"1"},{id:"sec_8",title:"8. Sodium fluoride",level:"1"},{id:"sec_9",title:"9. Other potential agents for anabolic treatment of osteoporosis",level:"1"},{id:"sec_10",title:"10. Conclusion",level:"1"}],chapterReferences:[{id:"B1",body:'World Health Organisation. Assessment of fracture risk and its application to screening for postmenopausal osteoporosis. World Health Organisation Technical Report Series. Geneva: WHO, 1994.'},{id:"B2",body:'Hock JM, Gera I. Effects of Continuous and Intermittent Administration and Inhibition of Resorption on The Anabolic Response of Bone to Parathyroid Hormone. J Bone Miner Res 1992;7:65–72.'},{id:"B3",body:'Schlüter KD. 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Review.'},{id:"B69",body:'Li X, Ominsky MS, Niu QT, Sun N, Daugherty B, D’Agostin D, Kurahara C, Gao Y, Cao J, Gong J, Asuncion F, Barrero M, Warmington K, Dwyer D, Stolina M, Morony S, Sarosi I, Kostenuik PJ, Lacey DL, Simonet WS, et al. Targeted deletion of the sclerostin gene in mice results in increased bone formation and bone strength. J Bone Miner Res 2008; 23(6):860-869.'},{id:"B70",body:'Li X, Ominsky MS, Warmington KS, Morony S, Gong J, Cao J, Gao Y, Shalhoub V, Tipton B, Haldankar R, Chen Q, Winters A, Boone T, Geng Z, Niu QT, Ke HZ, Kostenuik PJ, Simonet WS, Lacey DL, Paszty C. Sclerostin antibody treatment increases bone formation, bone mass, and bone strength in a rat model of postmenopausal osteoporosis. J Bone Miner Res 2009b;24(4):578-588.'},{id:"B71",body:'Ominsky MS, Vlasseros F, Jolette J, Smith SY, Stouch B, Doellgast G, Gong J, Gao Y, Cao J, Graham K, Tipton B, Cai J, Deshpande R, Zhou L, Hale MD,Lightwood DJ, Henry AJ, Popplewell AG, Moore AR, Robinson MK, Lacey DL, Simonet WS, Paszty C. Two doses of sclerostin antibody in cynomolgus monkeys increases bone formation, bone mineral density, and bone strength. J Bone Miner Res.2010;25(5):948-59.'},{id:"B72",body:'Padhi D, Jang G, Stouch B, Fang L, Posvar E. Single-dose, placebo-controlled, randomized study of AMG 785, a sclerostin monoclonal antibody. J Bone Miner Res 2011;26(1):19-26.'},{id:"B73",body:'Lawrence G. Raisz. Pathogenesis of osteoporosis: concepts, conflicts, and prospects. J Clin Invest .2005;115(12):3318-25.'},{id:"B74",body:'Amgen and UCB. Amgen and UCB announce positive phase 2 results of AMG 785/CDP7851 in patients with postmenopausal osteoporosis (PMO). http://www.amgen.com/media_pr_detail.jsp?releaseID=1553039. (accessed 1 Jun 2011).'}],footnotes:[],contributors:[{corresp:null,contributorFullName:"Tulay Okman-Kilic",address:"ajlankilic@hotmail.com",affiliation:'
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Marquez Hernandez, Toshitsugu Kawata, Masato Kaku, Masahide Motokawa and Kazuo Tanne",authors:[{id:"81412",title:"Dr.",name:"Junji",middleName:null,surname:"Ohtani",fullName:"Junji Ohtani",slug:"junji-ohtani"}]},{id:"29571",title:"Osteoporosis and Bone Regeneration",slug:"osteoporosis-and-bone-regeneration",signatures:"Shinji Kuroda, Kanako Noritake and Shohei Kasugai",authors:[{id:"61656",title:"Prof.",name:"Shohei",middleName:null,surname:"Kasugai",fullName:"Shohei Kasugai",slug:"shohei-kasugai"},{id:"84104",title:"Dr.",name:"Shinji",middleName:null,surname:"Kuroda",fullName:"Shinji Kuroda",slug:"shinji-kuroda"},{id:"90335",title:"Dr.",name:"Kanako",middleName:null,surname:"Noritake",fullName:"Kanako Noritake",slug:"kanako-noritake"}]},{id:"29572",title:"Lactoferrin – A Potential Anabolic Intervention in Osteoporosis",slug:"lactoferrin-a-potential-anabolic-intervention-in-osteoporosis",signatures:"Dorit Naot, Kate Palmano and Jillian Cornish",authors:[{id:"78754",title:"Prof.",name:"Jillian",middleName:null,surname:"Cornish",fullName:"Jillian Cornish",slug:"jillian-cornish"},{id:"84689",title:"Dr.",name:"Dorit",middleName:null,surname:"Naot",fullName:"Dorit Naot",slug:"dorit-naot"},{id:"84704",title:"Dr.",name:"Kate",middleName:null,surname:"Palmano",fullName:"Kate Palmano",slug:"kate-palmano"}]},{id:"29573",title:"How Dentistry Can Help Fight Osteoporosis",slug:"how-dentistry-can-help-fight-osteoporosis",signatures:"Plauto Christopher Aranha Watanabe, Marlivia Gonçalves de Carvalho Watanabe and Rodrigo Tiossi",authors:[{id:"76171",title:"Prof.",name:"Plauto C. A.",middleName:null,surname:"Watanabe",fullName:"Plauto C. A. Watanabe",slug:"plauto-c.-a.-watanabe"}]},{id:"29574",title:"Effect of Bisphosphonates on Root Growth and on Chlorophyll Formation in Arabidopsis thaliana Seedlings",slug:"effect-of-bisphosphonates-on-root-growth-and-on-chlorophyll-formation-in-arabidopsis-thaliana-seedli",signatures:"Ana I. Manzano, F. Javier Medina, Francisco J. Pérez-Zuñiga, Maria A. Günther Sillero and Antonio Sillero",authors:[{id:"81573",title:"Prof.",name:"Antonio",middleName:null,surname:"Sillero",fullName:"Antonio Sillero",slug:"antonio-sillero"}]}]}]},onlineFirst:{chapter:{type:"chapter",id:"64630",title:"Process of Risk Management",doi:"10.5772/intechopen.80804",slug:"process-of-risk-management",body:'
1. Definition of risk
Risk is defined in terms of uncertain events which may have positive or negative effect on the project objectives. Risks include circumstances or situations, the existence or occurrence of which, in all reasonable foresight, results in an adverse impact on any aspect of the implementation of the project. Various definitions of risks are presented in Table 1.
The combination of a probability of an event and its consequences
3
Association of Project Management Body of Knowledge [1]
Project Risk is an uncertain event or condition, that, if it occurs, has a positive/negative effect on project objectives. A risk has a cause and if it occurs, a consequence.
4
British Standard BS IEC 62198:2001
Combination of probability of an event occurring and its consequences on project objectives
5
www.business.dictionary.com/definition/risk.html
A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities and that may be avoided through preemptive action.
“A chance or possibility of danger, loss, injury or other adverse consequences” and the definition of risk is “exposed to danger.” However, taking risk can also result in positive outcome. A third possibility is risk related to uncertainty of outcome.
Risk has been interpreted as Risk = hazard × exposure where Hazard is defined as the way in which a thing or situation can cause harm and exposure as the extent to which the likely recipient of the harm can be influenced by the hazard
Table 1.
Definitions of risk.
2. Classification of risks
Classification and definition of risks is furnished in Table 2.
Risk
Definitions
Pure risk
A risk which has chance of loss or no loss. Example. A building may get affected by fire or not. These are best covered by insurance
Speculative risk
Involves chance of gain/loss. Example. A builder may take a risk by promoting a new venture depending upon the prevailing conditions in the vicinity of proposed project, but it may bring him gain/loss.
Fundamental risk
These are external to a project and which, if they materialise, would be on a large scale and cannot be prevented. These risks are associated with major natural, economic, political or social changes and generate large scale losses. Examples are: Floods, earthquakes, fluctuation of exchange rates, etc. This risk may or may not be insurable.
Particular risk
These are project specific risks and are identified within the parameters of a project and can be controlled during the implementation of a project, e.g. quality risks, safety risks, legal risks, etc.
Table 2.
Classification of risks and their definitions.
Source: Project Risk Management, D Van Well-Stam et al., Kogan Page Publications, 2003.
3. Introduction to risk management
Risk management is a planned and a structured process aimed at helping the project team make the right decision at the right time to identify, classify, quantify the risks and then to manage and control them. The aim is to ensure the best value for the project in terms of cost, time and quality by balancing the input to manage the risks with the benefits from such act. It is just a cost benefit analysis.
Risk management is a continuous process which is to be implemented in any project from inception to completion. However, in order to realise its full potential, risk management should be implemented at the earliest stage of a project, i.e. feasibility design and construction. Risk is an uncertain event or condition that, if occurs, has a positive or negative effect on a project’s objectives. Components of risk are the probability of the occurrence of an event and the impact of the occurrence of that event. There are many sources of uncertainty in construction projects, which include the performance of construction parties, resources availability, contractual relations, etc. because of which, construction projects face problems that cause delay in the project completion time. Success of a project is measured by its ability to get completed within the budgeted cost and time. These goals are interrelated where each parameter has an impact when other parameters get affected. An accurate cost estimating and scheduling should be performed in order to meet the overall budget and time deadline of a project. As such, risk management becomes an integral part of construction management which intends to identify and manage potential and unforeseen risks during the period of implementation of the project; hence, the necessity of risk management [5].
4. Definitions of risk management
Definitions of risk management are presented in Table 3.
Sl. no
Definition of risk management
1
https://en.wikipedia.org/wiki/Risk_management Risk Management is the identification, evaluation, and prioritization of risks followed by coordinated and an economical application of resources to minimise, monitor, and control the probability or impact of unfortunate events [6] or to maximize the realization of opportunities.
2
Nadeem Ehsan et al., 2012 Risk Management in a project involves the identification of influencing factors which could have negative impact on the the cost, schedule and quality objectives of the project and quantification of impact of potential risk and implementation of mitigation measures to minimise the potential impact of risk
3
Bahamid et al., 2017 Risk Management is defined as organized and comprehensive method tailored towards “ organizing”, “identifying” and “responding” to risk factors in order to achieve project goals.
4
www.stakeholdermap.com/risk/risk-management-construction Risk Management in construction consists of planning, monitoring and implemeting the measures needed to prevent exposure to risk. To do this, it is necessary to identify the hazards, assess the extent of risks, provision of measures to control the risks and to manage residual risk
5
www.vp-projects.kau.edu.sa Risk management is a systematic method of identifying, analysing, treating and monitoring the risks that are all involved in any activity/ process and is a systematic method that minimises the risks which may be an impediment to attainment of objectives
6
Cleden [4] Risk is exposure to the consequences of uncertainty. In a project context, it is the chance of something happening that will have an impact upon objectives. It includes the possibility of loss or gain, or variation from a desired or planned outcome, as a consequence of the uncertainty associated with following a particular course of action. Risk thus has two elements: the likelihood or probability of something happening, and the consequences or impacts if it does.
7
Project Risk Management, D Vanwell-Stam, Kogan Page India publications, 2004 The entire set of activities and measures that are aimed at dealing with risks in order to maintain control over a project
8
www.gpmfirst.com/risk.management-construction Risk Management is a means of dealing with uncertainty – identifying sources of uncertainty and the risks associated with them, and then managing those risks such that negative outcomes are minimized (or avoided altogether), and any positive outcomes are capitalised upon.
9
Risk Management in Construction Projects by NICMAR [2] Risk Management is the planned and structured process of bringing the project team make the right decisions at the right time by identifying, classifying and quantifying the risks and then for managing and controlling them,
10
Dr Patrick et al., 2006 retrieved from feaweb.aub.edu.lb Risk Management is “a systematic way of looking at areas of risk and consciously determining how each should be treated. It is a management tool that aims at identifying sources of risk and uncertainty, determining their impact, and developing appropriate management responses”
11
http://economictimes.indiatimes.com/definition/risk-management Risk Management refers to the practice of identifying potential risks in advance, analysing them and taking precautionary steps to reduce/curb the risk.
Table 3.
Definitions of risk management.
5. Importance of risk management in construction projects
Construction projects are extremely complex and fraught with uncertainty. Risk and uncertainty can potentially have damaging consequences for the construction projects. Hence, risk analysis and risk management has come to be a major feature of the project management in construction projects. Construction projects are unique, inherently complex, dynamic and risks emanate from multiple sources. The interests of individuals and organisations who are actively involved in a construction project may be positively or negatively affected depending upon the course which a project takes from concept to completion. Multiple stakeholders with varied experience and skills have different expectations and interests in the project which creates problems for smooth execution of the project. Risk management is a concept which many construction companies have never thought of, despite the fact that, the risks can be better controlled if they are identified in the first instance and a well-structured mitigation mechanism is in place. Risk management helps the key project participants namely the client, contractor/developer, consultant and supplier to meet their commitments and to minimise negative impacts on construction project performance in relation to cost, time and quality objectives. Success of a construction project is associated with three aspects of time, cost and quality outcomes.
Successful commissioning of any project, necessarily calls for sound planning on various fronts and getting the project executed in a competent manner. An organisation executing a project would have to reckon with the various risks to which the project may be exposed to and these have to be managed effectively. The construction industry, being vulnerable is potentially more prone to risks and uncertainties than any other industry. The process of taking a project from the conceptual stage to its final completion and putting into operation is quite complex and entails painstaking process at every stage. Construction industry is highly fragmented in that each of its participants—designers, constructors, planners, suppliers, etc. can be highly skilled in their own area and yet there is no clear perspective as to how all the players can come on the same platform for achieving the objectives.
Construction industry is also dependent on quality of its people rather than technology. The increasing technological complexity and more complex interdependencies and perpetual shortage of resources namely materials, equipment, technical/supervisory staff, finance, etc. calls for a comprehensive risk management framework which will insulate the risks of the participants to a great extent.
Given the nature of the construction sector, risk management is an extremely important process. It is most widely used in such of those projects where susceptibility to risks is very high and is characterised by planning, monitoring and controlling the risks in a more structured and formal manner. The most efficient method of identifying the risks is to study a project of similar size which was executed in the recent past which gives an insight into the failure/success of the project. In order to be sure that the project objectives are met, the portfolio of risks associated with all stakeholders should be considered across the project life cycle (PLC). In later stages, risk management when applied systemically helps to control those critical elements which can negatively impact project performance. Keeping track of identified threats will result in early warnings to the project manager if any of the objectives, time, cost or quality, are not being met. There are a plethora of risks which are to be identified in the construction industry and which can be faced in each construction project at any point of time regardless of its size and scope. Frequent change in scope is one of the major risks in any construction project. If revised scope or design is implemented, it can have effect in the form of additional resources of time and cost. Early project completion may be as troublesome as delays in a schedule. Completing too early which may be a result of insufficient planning or design problems can lead to a low quality of final product and increased overall cost. Thus it is important to keep a balance in the concept of time–cost-quality trade-off, which more widely is becoming an important issue for the construction sector. Risks may vary depending on the project scope, types and are to be treated accordingly.
Risk identification, the first step in the risk management process is usually informal and is performed in various ways, depending on the organisation and the project team. Identification of risks relies mostly on past experience and study of similar executed projects. This being a preliminary stage, a combination of tools and techniques may be used to identify the risks in any project. Here are many methods that fit specific types of challenges and projects especially at identification stage. Risks and threats may be difficult to eliminate, but when they have been identified, it becomes easy to take actions and have control over them. Risk management will be more effective if the source of the risks have been identified and allocated before any problems occur. The main purpose of risk management is that the stakeholders should prepare for potential problems that can occur unexpectedly during the course of a project. Risk management will not only facilitate anticipating problems in advance, but also preparing oneself for the potential problems that may occur unexpectedly. Handling potential threats is not only a way to minimise the losses within a project, but also a way to transform risks into opportunities which can lead to economic and financial profitability. The purpose of identifying risks is to obtain a list of risks which has got the potential to have a cascading effect on the progress of project and different techniques are applied for managing/mitigating the same. In order to find all potential risks which might impact a specific project, different techniques are applied. The project team should use a method they are familiar with so that the exercise will be effective. Effective identification of risks is the first step to a successful risk management.
Parameter
Methodology
Documentation reviews
A structured review of project documentation, study of history of execution of similar projects and quality of plans as well as the consistency between those plans and project requirements/ assumptions would be an indicator of risks in the project
Information gathering techniques
Brainstorming
Delhi technique
Checklist analysis
Cause and effect diagram
Questionnaires
SWOT analysis
Expert judgement
Table 4.
Identification of risks: tools and techniques.
6.1.1 Risk identification techniques
Tools and techniques for risk identification are presented in Table 4.
Various risks that confront a construction industry are not limited to and include financial, economical, political, legal environmental, technical, contractual, planning/scheduling, design, quality operational labour, stakeholder safety and security, logistics and construction.
6.2 Risk assessment
Risk assessment is the second stage in the risk management process where collated data is analysed for potential risks. Risk assessment is described as short listing of risks starting from low impact highest impact on the project, out of all threats mentioned in the identification phase. Risk assessment consists of qualitative risk assessment and qualitative risk assessment.
6.2.1 Qualitative risk assessment
This involves registration of identified risks in a formal manner. A risk register is used for formalising this process which is not limited to the following
Classification and reference
Description of the risk
Relationship of the risk to other risks
Potential impact
Likelihood of occurrence
Risk response/mitigation strategy
Allocation of risks to stakeholders.
6.2.1.1 Classification and reference
Classification is an aid to identifying the source of risk. Examples are furnished below (Table 5).
Risk
Classification
Environmental
Site conditions, health and safety issues at site
Contractual
Client, contractor, sub-contractor, etc.
Design
Planning permission, preliminary and detailed design, etc.
Table 5.
Classification of risk and its reference.
Referencing refers to unique reference number given for each of the identified risks.
6.2.1.2 Description of the risk
This involves giving a brief description of the risk. The description must be unique in order to avoid confusion with similar risks in the risk management process.
6.2.1.3 Relationship to other risks
In any project, it is extremely rare that any activity is independent of activities which occurs concurrently or consequentially and this will always be the case for risks also for successful implementation of risk management,
6.2.1.4 Potential impact (I)
Impact of risk on a project is measured in terms of cost and quality. Since this assessment is done at an early stage of the project, information may not be available to accurately predict the impact of risk on the project. At this stage, the risk is classified suitably and accordingly high impact risks are to be given more fundamental consideration than that of medium/low/negligible risks by ranking the impact of risks on a scale of 1 (low) to 10 (high).
6.2.1.5 Likelihood of occurrence (P) and calculation of risk factor (RF)
Based on intuition and experience, the likelihood of occurrence (P) of risks and its impact (I) is to be given on a suitable scale ex. 1–10 (1 refers to low probability and 10 refers to high probability). The risk factor for each of the identified risks is calculated by the formula RF = P + I – (P*I) (where the values of P and I are brought on a scale of 0–1 by dividing the values with 10).
6.2.1.6 Risk response/mitigation strategy
This action is taken to reduce, eradicate or to avoid the identified risks. The most common among the risk mitigation methods are risk avoidance, risk transfer, risk reduction and risk sharing. Based on the competency in handling the risks, the identified risks are allocated to respective stakeholders who will be responsible for addressing those risks.
6.3 Quantitative risk assessment
This risk assessment is normally taken for such of those risks which are classified are high/critical/unmanageable as per the qualitative risk assessment. The purpose of this assessment is to find the amount of contingency to be inserted in the estimate for the risks undergoing this assessment so that in case the risks occur, there would be sufficient budgeted amount to overcome the extra expenditure.
Quantitative methods need a lot of analysis to be performed. This analysis should be weighed against the effort and outcomes from the chosen method. Complex and larger projects require more in depth analysis as compared to projects which are small in size. The purpose of carrying out quantitative analysis is to estimate the impact of a risk in a project in terms of scope, time, cost and quality. The suitability of this analysis is more for medium and large projects as these projects have more complex risks as compared to smaller projects.
The detailed quantitative assessment of risk is the one which is identified as risk analysis. In undertaking quantitative assessment, the potential impact of risks in terms of time, cost and quality is quantified. While preparing the estimate, it is generally split into two distinct elements, namely (1) base estimate of those items which are known and a degree of certainty exists and (2) contingency allowance for all uncertain elements of a project. Historically, contingencies have been calculated on a rule of thumb basis varying from 5 to 10% on risk-free base estimate. By adopting risk management approach, contingencies are set up to reflect realistically the risks that are inherent in the project. When used correctly, contingency allowances ensure that expenditure against risks is controlled. The methods for quantitative risk assessment are described below.
6.3.1 Scenario technique: Monte Carlo simulation
The Monte Carlo method is based on statistics which are used in a simulation to assess the risks. This is a statistical technique whereby randomly generated data is used within predetermined parameters and produce realistic project outcomes. The overall project outcome is predicted by randomly simulating a combination of values for each risk and repeating the calculation a number of times and all outcomes are recorded. After completing the simulations required, the average is drawn from all of the outcomes, which will constitute the forecast for the risk. It is important to realise that parameters and appropriate distribution within which the random data is simulated is itself a series of subjective inputs. Accurate and realistic project outcomes will not be generated if inaccurate parameters are set. Different scenarios are generated by simulation are used for forecasting, estimations and risk analysis. Data from already executed projects is normally collected for simulation purpose. The data for variables is presented in terms of pessimistic, most likely and optimistic scenarios depending upon the risks encountered, i.e. pessimistic value means lot of risks and optimistic value means least risks. The result from this method is a probability of a risk to occur is often expressed as percentage. The most common way of performing the Monte Carlo simulation is to use the program Risk Simulator Palisade Software, where more efficient simulations can be performed.
6.3.2 Modelling technique: sensitivity analysis
This is a method used to demonstrate the variable impact on the whole caused by a change in one or more element or risk. It is used to test the robustness of choices made where rankings have been established, particularly when those rankings are considered to be marginal. It can identify the point where variation in one parameter will affect decision making. A typical method for carrying out sensitivity analysis is by use of a spider diagram which shows the areas in the project which are the most critical and sensitive The higher the level of uncertainty a specific risk has, the more sensitive it is concerning the objectives. In other words, the risk events which are the most critical to the project are the most sensitive and appropriate action needs to be taken (Heldman, 2005). Disadvantage with this analysis is that the variables are considered separately, which means that there is no connection between them (Perry, 1986 and Smith et al.. 2006). The method requires a project model in order to be analysed with computer software. According to Smith et al. (2006), the project stands to be benefited if the analysis is carried out in the initial phases of a project in order to focus on critical areas during the execution of the project.
6.3.3 Decision tree
Decision tree analysis is commonly used when there is sequence of interrelated possible courses of action and future outcomes in terms of time and cost. This method of analysis is commonly used when certain risks have an exceptionally high impact on the two main project objectives, i.e. time and cost. Where probabilities and values of potential outcomes are known or can be estimated, they are used for quantification to provide a more informed basis for decision making. Each decision process expected value (EV) which forms the basis for decision making process. A sample problem on decision tree is given in Table 6.
Method
Design time (months)
Construction period in months and probabilities
Total time (construction period + design time) (months)
This can be depicted in the form of decision trees and the expected value (EV) in terms of time for each of the three scenarios is furnished. The least of this i.e. construction management will be preferred since it consumes less time.
6.3.4 Multiple estimating using risk analysis
Multiple estimating using risk analysis (MERA) attempts to provide a range of estimates. These are presented as risk free base estimate, average risk estimate (ARE) and maximum likely risk estimate (MLRE). ARE is the sum of risk free base estimate and average risk allowance and MLRE is the sum of ARE and maximum risk allowance.
MERA attempts to finds a level i.e. the estimate that has a 50% chance of being successful. This is known as average risk estimate (ARE) which is found out by multiplying the average allowance with average probability of occurrence. Maximum risk allowance is found out by multiplying the maximum allowance with maximum probability of occurrence of that risk. This is added to ARE to get MLRE which is the estimate that has 90% chance of not being exceeded.
6.3.5 Quantitative risk assessment: outputs
The output of quantitative risk assessment is presented in Table 7.
Parameter
Outputs
Probabilistic Analysis of project
Estimates are made of potential project schedule and cost outcomes listing the possible completion dates and costs with their confidence levels. This output is described as cumulative distribution and also risk tolerances for permitting quantification of cost and time contingency reserves. Contingency reserves bring the risk of overshooting stated project objectives to acceptable levels to the organisation
Prioritised list of quantified risks
This list includes risks that pose the greatest threat or present the greatest opportunity in a project. These risks also have the greatest impact on cost contingency
Trends in quantitative risk analysis results
As the risk analysis is repeated, a trend becomes apparent that leads to conclusions affecting risk responses, Historical information on project’s schedule, cost, quality and performance reflects new insights gained through quantitative process. This takes the form of quantitative risk analysis report.
Table 7.
Quantitative risk assessment: outputs.
6.4 Risk response planning
The risk response will be in the form of mitigation by adopting necessary strategies in respect of positive and negative risks which is furnished below (Tables 8–10).
Risk mitigation strategy
Description
Risk avoidance
Risk avoidance involves changing the project management plan to eliminate the threat entirely. The project manager may isolate the project objectives that are in jeopardy. Examples: (a) Extending the schedule of an activity; (b) Changing the strategy or reducing the scope of work; (c) Changes in clauses of contract regarding abnormal price rise of any material or dealing with extra quantum of work.
Risk transfer
Risk transfer requires shifting some or all of the negative impact of a threat along with ownership of the response to a third party. Examples are
Risk transferred to Consultant
Design Risk, technical Risk and Foundations for all major structures
Risk transferred to Insurance Company
Security of materials at site, Fire Hazards, Boiler operations, safety of electrical rooms, loss in Turbines and Generators, Unforeseen Risks, etc.
Risk reduction
Risk reduction implies reduction in the probability and consequence of an adverse risk event to be within acceptable threshold limits. Conducting detailed tests or choosing a more stable supplier are some examples. Risk reduction is adopted where the resultant increase in costs is less than the potential loss that could be caused by the risk being mitigated. Examples are:
Preparedness to tackle any natural disaster
Detailed site investigation where adverse ground conditions are known to exist but the full extent is not known. A detailed ground investigation was performed upon which an estimate was prepared.
Contingency planning
Removal of engineering/structural barriers
Strengthening the quality assurance procedures
Paying higher amount than recommended by Govt for land acquisition
Design as per standards
Risk acceptance
This strategy is adopted when it is not possible to eliminate all risks from a project. This strategy indicated that the project team had decided not to change the project management plan or is unable to identify any other suitable response strategy. This requires no action except to document the strategy leaving the project team to deal with risks as they occur
Table 8.
Strategies for mitigating negative risks.
Risk mitigation strategy
Description
Exploit
This strategy is selected for risks with positive impacts where the organisation wishes to ensure that the opportunity is realised. This strategy seeks to eliminate the uncertainty associated with a particular risk by ensuring that the opportunity is exploited. Examples are assigning the most talented resources of the organisation to the project to reduce the time for completion or providing at a lower cost than originally planned
Share
Sharing a positive risk involves allocating some or all of the ownership of the opportunity to a third party capable of capturing the opportunity for the benefit of the project. Risk sharing, joint ventures, etc. are examples of this strategy
Enhance
This strategy is used to enhance the positive impact of an opportunity. Identifying and maximising key drivers of risks may increase their probability of occurrence. Examples are adding more resources to an activity for completing it before scheduled time
Accept
Accepting an opportunity means willing to take advantage if it comes along, but not pursuing it actively.
Contingent response strategies
Some responses are designed for implementation only if certain events occur. It is appropriate for the project team to prepare a contingency response plan that will be executed under certain predefined conditions if there will be sufficient warning to implement the plan
Expert judgement
Expert judgement is from knowledgeable individuals pertaining to the actions to be taken on a specific and a defined risk.
Table 9.
Risk mitigation strategies for positive risks/opportunities.
Source: Project Risk Management, Van Well Stam et al. 2008.
Sl. No
Contents
1
Identified risk. Their descriptions, areas of project affected, their causes and how they affect project objectives
2
Risk owners and assigned responsibilities
3
Prioritised list of project risks based on the outputs from quantitative analysis reports
4
Agreed upon response strategies and specific actions taken to implement the strategy
5
Triggers, symptoms and warning signs of risks occurrence
6
Fallback plans as a reaction to a risk that has occurred and primary response proved to be inadequate
7
Contingency reserves to be calculated based on quantitative risk analysis of the project and the threshold risk of the organisation.
Table 10.
Contents of risk response: outputs.
6.5 Monitoring and controlling risks: inputs
Inputs to monitoring and controlling of risks are presented in Table 11.
6.5.1 Monitoring and controlling risks: tools and techniques
Tools and Techniques for monitoring and controlling risks are furnished in Table 12.
Parameter
Inputs
Risk register
The key inputs to risk register includes identified risks and owners of risk, agreed upon risk responses, specific actions to be implemented, symptoms/warning signs of any risk, residual/secondary risks, list of low priority risks and contingency measures in terms of time/cost
Risk management plan
The risk management plan should contain risk tolerances, assignment of manpower including bearer of risk, time and other resources to project risk management
Work performance information
Work performance information related to various performance results is to be quantified in terms of deliverable status, schedule progress and costs incurred.
Performance reports
Performance reports will be analysed for variance analysis, earned value data and forecasting the likely date of completion of project
Monitoring and controlling of risks will result in identification of new risks, reassessment of current risks and closing of risks that are not a threat to project. Project risk assessment is to be performed regularly. The frequency and depth of assessment depends on how the project progresses relative to the objectives.
Risk audits
The purpose of risk audits is to examine and document the effectiveness of risk responses in dealing with identified risks and their root causes as well as effectiveness of the risk management process meetings. A separate risk audit meeting may be held or it may be included in routine project review meetings.
Earned value analysis
Variance analysis is done by comparing the planned results with actual. Trends in execution of a project are reviewed using performance information and based on earned value analysis, deviation from cost and schedule targets is determined which may indicate potential impact of threat/opportunities.
Technical performance measurement
This measures technical accomplishments during project execution and will help in forecasting degree of success in achieving the project scope and it may expose the degree of technical risk faced by the project
Reserve analysis
This compares the amount of contingency reserves available at any time to the amount of risk remaining in the project to determine whether the reserves are adequate
Status meetings
Project risk management should be an agenda item at all status review meetings. The amount of time for any item will depend on risks that have been identified, their priority and difficulty of response. Frequent discussions about risk make it more likely that concerned stakeholders will identify risks and opportunities.
Table 12.
Monitoring and controlling risks: tools and techniques.
To maximise the efficiency of risk management, the risk management process should be continuously developed during the entire project.
The benefits from risk management finally go to the stakeholders involved. A clear understanding and awareness of potential risks in the project contributes to better management of risks by suitable mitigation techniques. Another benefit of working with risk management is increased level of control over the whole project and more efficient problem solving processes which can be supported on a more genuine basis
Risk management when conducted effectively, reduce sudden surprises. The advantage with risk management is that the stakeholders are aware as to the risk that they have to bear among all the risks that have been identified in a project and can prepare themselves accordingly, should any eventuality occur. No doubt, this formal exercise may translate into extra cost for an activity, but if taken in holistic manner, the benefits will far outweigh the costs. This has another advantage in that there is no passing of buck as risks are either shared/retained or transferred depending upon the ability of the stakeholder to handle the risk. The three approaches to risk management are normally risk natural firm which does not invest much in risk management but is still aware of important risk, risk averse firm where no investments are made and the last one is risk seeker wherein the organisation is prepared to face all risks and is often called gambler. The outcome of the objectives of project naturally depends upon the path adopted by the firms in their approach to risk management.
8. Conclusions
The fact that there are manifold risks which can be identified in any construction project is explained by their size and complexity. Bigger the project is, the larger the number of potential risks that may be faced.
Occurrence of risk is stimulated by several factors. Most often the risks faced in any project are financial, environmental (surrounding location of project and overall regulations), time, design and quality. The technology used for construction and the internal environment also contributes to risk which can have substantial bearing on the outcome of a project.
Risks are directly proportional to complexity of a project. Bigger and more complex a project is, the more resources are required to complete it. In spite of identifying all potential risks, there might be more potential threats. Therefore, the project team should not solely focus on management of those identified risks but also be alert for any new potential risks which may arise during execution.
Risk management is a tool for managing risks in a project and a project manager should be prepared for managing uncertainties not included in a risk management plan.
Effective management of risky project demands rapid and realistic predictions of alternative courses of action and positive decision making and requires flexible attitudes and procedures.
Perception of severity and frequency of occurrence of risk is to be done in tandem between the stakeholders. This will eliminate lot of unnecessary correspondence as well as misunderstanding and friction between the stakeholders
Insurance is just one aspect of risk mitigation and it cannot absorb all the risks. Insurance is project specific and it should be taken as per the needs of client/contractor. Other ways of risk mitigation needs to be explored.
Adoption of good project management practices like proper planning and implementation, willingness of stake holders to share the risks in the project is essential for success of a project
Executing a complex project requires meticulous planning, i.e. planning to the smallest details, and this can be achieved through concerted dedication from the concerned stakeholders.
Risks are to be thoroughly studied and understood before bidding for the project.
Special care should be taken regarding the seasonal variation of labourers, so that the construction activities does not get delayed due to shortfall in manpower resources during execution, which can have adverse effects on cost and time
Proper risk allocation techniques should be framed between the stakeholders so that in the event of occurrence of a risk, this will eliminate doubts as to which stakeholder should address the risk
Given its complexity, risk management is a very important process in construction projects. It is most widely used in those projects which exhibits high level of uncertainty. Formal planning, assessment and monitoring/control process characterises risk management in such projects.
Risk management procedures should be initiated in the early stages of the project where planning and contracting of work, together with the preliminary capital budget are being chalked out. In later stages, Risk management applied systemically, helps to control those critical elements which can have negative impact on project performance.
Keeping track of identified threats, will result in early warnings to the project manager if any of the objectives, time, cost or quality, is being met or not.
Risks in complex construction projects can be mitigated by entering into various agreements like execution, operation/maintenance, etc.
Proper risk strategy formulation and research is necessary based on real life experiences so that identification of potential risks and providing solutions can produce effective and efficient risk strategies to overcome impacts of risk events.
Risk identification is the first step in the risk management process. It means that the identification of risks which is informal relies mostly on past experience of similar executed projects and that of advice from experts. There are a good number of methods for identifying the risks in a project and a combination of methods may be used for identification of risks in a project.
Handling potential threats is not only a way to minimise losses within the project, but also a way to transform risks into opportunities, which can lead to economical profitability and finally, .it is suggested that if risks are given due care at all stages of the project, stakeholders will be showered with manifold benefits subsequent to commissioning of project
\n',keywords:"risk management, risk assessment, risk mitigation",chapterPDFUrl:"https://cdn.intechopen.com/pdfs/64630.pdf",chapterXML:"https://mts.intechopen.com/source/xml/64630.xml",downloadPdfUrl:"/chapter/pdf-download/64630",previewPdfUrl:"/chapter/pdf-preview/64630",totalDownloads:1163,totalViews:1768,totalCrossrefCites:0,dateSubmitted:"April 19th 2018",dateReviewed:"August 8th 2018",datePrePublished:"March 8th 2019",datePublished:"April 17th 2019",dateFinished:null,readingETA:"0",abstract:"Cost saving and timely performance are of utmost importance to all stakeholders who are involved in a construction project that is owner, contractor, consultant and subcontractor. The prime causes of risks in construction projects involve delay and failure to complete the work at specified cost and within the agreed time frame. Unexpected delays in construction projects are caused by internal and external environments embedding several risk factors which may occur concurrently. The cost overrun and schedule overrun not only influence the construction industry’s completion of a project but can also have profound effect on the economy of a country. Even though the failure of the construction projects to get completed within the budgeted cost and time has received attention by researchers, lot more need to be researched as to what can be done to have tight leash on construction projects so that they can be brought on track. In order to meet the stiff deadlines involving complexity of construction projects, the scheduling of projects should be flexible enough to accommodate changes without negatively affecting the overall project cost and duration. This chapter deals with Perspectives on Risk Assessment and Management Paradigms as applicable to any project in general and construction industry in particular.",reviewType:"peer-reviewed",bibtexUrl:"/chapter/bibtex/64630",risUrl:"/chapter/ris/64630",signatures:"K. Srinivas",book:{id:"7573",title:"Perspectives on Risk, Assessment and Management Paradigms",subtitle:null,fullTitle:"Perspectives on Risk, Assessment and Management Paradigms",slug:"perspectives-on-risk-assessment-and-management-paradigms",publishedDate:"April 17th 2019",bookSignature:"Ali G. Hessami",coverURL:"https://cdn.intechopen.com/books/images_new/7573.jpg",licenceType:"CC BY 3.0",editedByType:"Edited by",editors:[{id:"108303",title:"Prof.",name:"Ali G.",middleName:null,surname:"Hessami",slug:"ali-g.-hessami",fullName:"Ali G. Hessami"}],productType:{id:"1",title:"Edited Volume",chapterContentType:"chapter",authoredCaption:"Edited by"}},authors:[{id:"255339",title:"Prof.",name:"K",middleName:null,surname:"Srinivas",fullName:"K Srinivas",slug:"k-srinivas",email:"ksrinivasap@gmail.com",position:null,institution:null}],sections:[{id:"sec_1",title:"1. Definition of risk",level:"1"},{id:"sec_2",title:"2. Classification of risks",level:"1"},{id:"sec_3",title:"3. Introduction to risk management",level:"1"},{id:"sec_4",title:"4. Definitions of risk management",level:"1"},{id:"sec_5",title:"5. Importance of risk management in construction projects",level:"1"},{id:"sec_6",title:"6. Risk management process",level:"1"},{id:"sec_6_2",title:"6.1 Identification of risks",level:"2"},{id:"sec_6_3",title:"6.1.1 Risk identification techniques",level:"3"},{id:"sec_8_2",title:"6.2 Risk assessment",level:"2"},{id:"sec_8_3",title:"Table 5.",level:"3"},{id:"sec_8_4",title:"Table 5.",level:"4"},{id:"sec_9_4",title:"6.2.1.2 Description of the risk",level:"4"},{id:"sec_10_4",title:"6.2.1.3 Relationship to other risks",level:"4"},{id:"sec_11_4",title:"6.2.1.4 Potential impact (I)",level:"4"},{id:"sec_12_4",title:"6.2.1.5 Likelihood of occurrence (P) and calculation of risk factor (RF)",level:"4"},{id:"sec_13_4",title:"6.2.1.6 Risk response/mitigation strategy",level:"4"},{id:"sec_16_2",title:"6.3 Quantitative risk assessment",level:"2"},{id:"sec_16_3",title:"6.3.1 Scenario technique: Monte Carlo simulation",level:"3"},{id:"sec_17_3",title:"6.3.2 Modelling technique: sensitivity analysis",level:"3"},{id:"sec_18_3",title:"Table 6.",level:"3"},{id:"sec_19_3",title:"6.3.4 Multiple estimating using risk analysis",level:"3"},{id:"sec_20_3",title:"Table 7.",level:"3"},{id:"sec_22_2",title:"6.4 Risk response planning",level:"2"},{id:"sec_23_2",title:"6.5 Monitoring and controlling risks: inputs",level:"2"},{id:"sec_23_3",title:"Table 11.",level:"3"},{id:"sec_26",title:"7. Benefits with risk management",level:"1"},{id:"sec_27",title:"8. Conclusions",level:"1"}],chapterReferences:[{id:"B1",body:'Association of Project Management Body of Knowledge. Retrieved from: http://www.cs.bilkent.edu.tr/~cagatay/cs413/PMBOK.pdf'},{id:"B2",body:'Banaitiene N, Banaitis A. Risk Management in Construction Projects. Retrieved from: https://cdn.intechopen.com/pdfs/38973/IntechRisk_management_in_construction_projects_pdf'},{id:"B3",body:'Chicken JC, Posner T. The Philosophy of Risk, Vol. 21. London: Thomas Telford; 1998'},{id:"B4",body:'Cleden D. Managing Project Uncertainty, 1st ed. Great Britain: Gower Publishing Ltd; 2009'},{id:"B5",body:'Cooper D, Grey S, Raymond G, Walker P. Project Risk Management Guidelines—Managing Risk in Large Projects and Complex Procurements. Wiley Publishers; 2005. ISBN 9780470022825'},{id:"B6",body:'De Marco A, Thaheem MJ. Risk analysis is construction projects—A practical selection methodology. American Journal of Applied Sciences. 2014;11(1):74-84'},{id:"B7",body:'Institute of Risk Management. Retrieved from: https://www.theirm.org/media/886059/ARMS_2002_IRM.pdf'},{id:"B8",body:'Adams J. 1995. Retrieved from: http://www.john-adams.co.uk/wp-content/uploads/2017/01/RISK-BOOK.pdf'},{id:"B9",body:'Hopkin P. Fundamentals of Risk Management. 5th ed. Great Britain: Kogan Page Limited; 2013'},{id:"B10",body:'Project Management Institute. Guide to Project Management Body of Knowledge. 4th ed. USA: PMI; 2008. ISBN 978-1-933890-51-7'},{id:"B11",body:'Risk Management. India: School of Distance Education, National Institute of Construction Management and Research'}],footnotes:[],contributors:[{corresp:"yes",contributorFullName:"K. Srinivas",address:"ksrinivasap@gmail.com",affiliation:'
National Institute of Construction Management and Research, Pune, Maharashtra, India
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Openness - We communicate honestly and transparently. We are open to constructive criticism and committed to learning from it.
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