Risks

As in other fields of life, risk in construction is a function of the quantity and quality of appropriate information. The more and better the information, the less the risk and vice-verse. However, the construction industry is generally a risky one, because complete and reliable information is seldom available. In the following paragraphs, a number of factors representing opportunities and difficulties with which the. estimator must deal with are discussed. 

Opportunities 

As already mentioned, estimators have good control over information relating to internal affairs such as cost accounting. contract management. personnel work schedules for the time frame under consideration, to assess what work is under way, what other work is just about finished, and how much work is needed to maintain any desired level of company performance. They can study the market in general and the competition in particular when bidding for any specific project; data can be assembled on the numbers, names, bidding practices and past performances of the competition, as well as their current commitments where known. The level of proof desired or expected from any specific project can be established with some certainty in advance, by following some estimating practices and by making a review of present needs and past performance. Furthermore, contractors have,considerable control over the development and introduction of innovative construction methods to make their operations more efficient. 

Difficulties 

With respect to affairs beyond the control of contractors, they have little control over the general market trends, which fluctuate throughout the year as a result of national and international political and fiscal policies. There is little that the individual contractor can do to prevent labour unrest resulting in strikes and lockouts in the industry at Large, brought about by lion activity, and government intervention. A common risk that contractors face is delay in material and equipment deliveries. Some protection against this risk can be achieved by including a damage clause in supply contracts. The best that most contractors can do with regard to the weather is to hope that it will be more or less normal for the period and to arrange insurance to cover unusual conditions. 

Another common and potentially damaging risk is escalation of cost through inflation, price changes, scarcity of supplies, or other causes, because most construction contracts include a clause that excludes claims based on escalation. Even in contracts with clauses permitting claims for escalation, there are a number of practical problems in operating such clauses. As every constriction give rise to some event that was unpredictable either in nature or magnitude, most contractors include a contingency allowance, which is a sum of money that may cover most or all of these additional unforeseen costs.