Study On Contract Risk Management Of HDI Expansion Project Of Company B

In China, as the sustainable development of social economy, the investment of construction works is increasing annually. Based on the statistics of National Statistics Bureau, it is RMB67,670.80 billion for GDP of the year 2015 while the overall construction industry value is RMB18,075.70 billion, which accounts around 27% of the GDP. For such a big scale industry, a higher requirement on the construction project management is put on the table then.As we all know, construction works cover many fields, such as industry, civil, national defend, infrastructure, energy and transportation, etc. Construction project is highlighted with the long construction duration, the big amount investment, various kinds of stakeholders and the complexity, etc. Therefore, we will confront various kinds of risks during the execution of construction projects.The characteristics of construction projects determine the uncertainty of its contracts management. So the contract risk management is extremely important for the construction projects. But it is new subject for contract risk management, and there is no systematic study and research to it, furthermore, in China, we do not pay much attention to the contract placing and execution, there is no a scientific contract risk management system in place, and we are lack of adequate high quality contract risk management personnel, therefore, contract risk management is always the weakest point in the construction project management. Based on the above facts, how to control the contract risks and minimize the loss caused by such risks has become a hot topic for construction project management. My study is just started from such a background.Combining the theory of contract management and risk management together with the experience of HDI expansion project of Company B, this paper focuses on the contract management and especially the contract risk management of construction projects, such as contract definitions, contract types, contract risk definitions, the components, criterias, characteristics and sources of contract risks. Detailed descriptions and studies have been made to the contract risk management theory, such as risk identifications, risk assessments and risk controls. To prove the contract risk management methodology, evidences and analyses are given to the three most popular and important contract types, i.e engineering contracts, procurement contracts and construction contracts. In addition, Fault Tree Analysis(FTA), Experts Grading Method(called Delphi Method as well), Brain Storm Method and Analytic Hierarchy Process(AHP) are introduced for the contract risk management. Furthermore, targeted and practical contract risk management methods are presented to the above mentioned three criteria contracts based on the referred HDI Expansion Project of Company B. through the foresaid study, the aim of this paper is to improve people’s construction project contract risk awareness and strengthen the capacity of risk identification, risk analysis and risk control during the construction project execution period, so that we can maximally reduce the impacts of the various kinds of risks to ensure the smooth and successful delivery of the construction projects.