Risk consideration in the handling of a large scale engineering project

Large Scale Engineering (LSE) projects involve high capital cost, demanding technology, high complexity and high uncertainty, therefore resulting in higher risks for cost overrun, delays and poor quality. This paper attempts to identify the risk and classify the risk elements of LSE projects by Hierarchical Risk Breakdown Structure (HSBS) including practitioner's generated risk, technical and performance risk, contractual and financial risk, industrial risk, physical risk and institutional risk. The framework of risk management includes risk identification, risk classification, risk analysis, risk attitude and risk response. Risk management has increasingly concerned in construction industry. The limitation and barriers for its application are discussed. The paper concludes that risk perception and attitude in the risk analysis process are the most critical elements in risk management. The risk attitude of decision makers will affect the accuracy of their assessments of risk and impact on decision makers' behaviour. There is therefore a need to investigate differing risk attitudes among project participants.