From the course: Construction Management: Managing Risk
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Risk vs. project type
From the course: Construction Management: Managing Risk
Risk vs. project type
- Let's start by revisiting that risk versus reward concept. As a project gets more complex, the risk goes up, therefore, so should the reward. Let's look at a building contractor, one doing vertical construction work. In that case, something like a big box store or a spec warehouse building is less complex than a lab or science facility at a university, or a high-end multistory residential project. The margin on these less complex jobs that planned profit built into the price is generally going to be lower than it is on the more complex projects because you're essentially taking on less risk. Think about it, if I'm hired to build a 100,000 square-foot spec warehouse for an owner, no interior build out in my contract, just the big rectangle box with minimal sight work, there are not a lot of moving parts there. There aren't that many trades or work items, not many potential unforeseen conditions, and each work item is fairly straightforward to the respective trades involved. Compare…
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