- Project plans
- Project activities
- Legislation and standards
- Industry context
Last edited 13 Oct 2020
Residual risk in building development
The development of buildings is carried out in several phases, all involving hazard, uncertainty and risk. Risks which may occur on construction projects can sometimes be designed out or avoided. Remaining risks may be:
According to NRM2: Detailed measurement for building works, the term ‘residual risk’, or ‘retained risk’ refers to risks retained by the employer, that is, unexpected expenditure arising from risks that materialise, which are retained by the employer rather than being transferred to the contractor.
Residual risks retained and managed by the employer or their project team are described as the employer’s residual risk exposure. Risk allowances should be included in cost plan to provide for this exposure.
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