Managing risks in construction

Construction management is the process of planning, coordinating and providing monitoring and controlling of a construction project. This style of project management is designed for the construction industry. There are few types of construction that use construction management, they are industrial, civil, commercial, environmental and residential.

Types of Construction Risks

For proper construction risk management, we need to know the types of risks inherent in construction projects. These can be financial, contractual, operational, and environmental and can be caused by both internal and external sources.

Common risks include:

·????????Safety hazards that lead to worker accidents and injuries

·????????Managing change orders

·????????Incomplete drawings and poorly defined scope

·????????Unknown site conditions

·????????Poorly written contracts

·????????Unexpected increases in material costs

·????????Labor shortages

·????????Damage or theft to equipment and tools

·????????Natural disasters

·????????Issues with subcontractors and suppliers

·????????Availability of building materials

·????????Poor project management

When risks come to fruition, they can have a serious impact on costs, schedules, and performance of your project which will lead to delays and disputes down the road. The good news is most of these risks can be managed and mitigated with proper planning and good project management.

Identifying Construction Project Risks

Now that we’ve discussed some of the risks common on construction projects, it’s time to identify the risks unique to our project. This should be done as early as possible, preferably during the preconstruction phase of the project. Remember, if we fail to identify and manage a potential project risk, we are basically accepting the risk should it present itself during your project.

Construction Risk Management Process

Avoid the Construction Project Risk

This may mean turning down a project or negotiating the contract to remove the project risks. There’s no shame in walking away from a project if the risks outweigh the potential rewards.

Transfer the Project Risk

Your company might not be the right fit to manage a particular risk. Work with the other stakeholders to determine who on the project team is best suited to assume each risk. Risks should be well assumed and should be covered under insurance policy.

Mitigate the Project Risk

Eliminating, reducing and accepting risks takes careful planning. Break down each risk into actionable items. Don’t overcommit your resources to handling multiple risks. You may need to bring in additional resources, such as hiring more workers or renting additional equipment, to manage all your risks effectively.

Accept the Project Risk

Agreeing to accept a risk is a decision that shouldn’t be taken lightly. It might be fine to accept a few low probability, low impact risks. Agreeing to accept a high probability, high impact risk without any type of management or mitigation could be detrimental to the project and your bottom line.

Final Thoughts on Construction Risk Management

Good construction risk management requires a high level of collaboration and communication with all parties involved. Keeping everyone on the same page and working together will allow you to identify and manage risks before they become a problem.