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Capturing the way in which risk appetite is integrated within the bid/ no bid heuristics of a contractor’s business unit

Morren, K. (2014) Capturing the way in which risk appetite is integrated within the bid/ no bid heuristics of a contractor’s business unit.

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Abstract:A critical decision that have to be made by contractors in the construction industry is whether or not to bid for a new project when an invitation has been received. A bidding decision made on any one project has a significant influence on the short-term profit of the firm, with consequent impact on the firm’s long term strategy and performance. Most contractors realize the importance of considering internal and external factors that affect the bid / no bid decision before committing themselves to a project. Based on these internal- and external factors, the risks and opportunities related to conducting a new project can be described and evaluated. During the evaluation of these risks and opportunities, a contractor wonders which types and amounts of risks and opportunities, and therefore which new projects, are acceptable to take with regard to our strategic objectives. Within Enterprise Risk Management (ERM) this challenge is captured by the concept ‘Risk appetite’, a concept that provides insights about which types and amounts of risks are acceptable to take for an entity in realizing their mission(s). Royal BAM Group, a Dutch contractor, aspires to further intensify their current ERM procedures with a special focus on shaping the concept ‘Risk appetite’. However Royal BAM Group lacks insights about the way their business units arrive at their bid/ no bid decisions and the way risk appetite is integrated within these decisions. This research therefore aspires to capture the bid/ no bid decision making process of a contractor with a special focus on creating insights about the way risk appetite is integrated within this decision making process.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:56 civil engineering, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/64486
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