A comparative study of the measurements of perceived risk among contractors in China

Due to the unique character of construction projects, perceived risk is widely used to quantify risks in the construction industry. This study investigates the two main types of measurement of perceived risk used in construction projects: direct measurement and expected utility-based measurement. Project managers from contract firms in China assess 15 independent risks using three different strategies: direct measurement, risk probability and potential impact. The last two are combined to create the expected utility-based measurement. The results show that the risk ranking order obtained from the direct measurement strategy is significantly different from that obtained from the expected utility-based measurement. Moreover, the former measurement is in general a better predictive indicator of relative managerial input than the latter. Based on these conclusions, some suggestions are presented for better risk management and cooperation in the construction industry.