Construction Risk Management is a crucial aspect of the building process. If neglected, risks revolving around either health and safety or unplanned financial costs can rise. Therefore, it’s of the utmost important for project managers to detect and find solutions for any risks related to a construction project, including health and safety, as well as project funding.
There are two main components to construction risk management, being risk sources, followed by risk management. We go through each below.
A good understanding of where in a construction project risk may come from is required, in order to be able to predict and minimise overall risk. Risk sources can be divided into the following areas:
It’s quite clear that any of the above risk sources have the potential to cause severe damage to a construction process. Thus, we trust that you are understand why being able to foresee these risks is important.
Now, let’s just into managing these risks.
Developing a proper risk management plan is fundamental for appropriate and successfully dealing with risk sources. This complex process can be divided into six major steps, being:
Now, we will explain each of these step in more details.
Above, we classified the risk types. Now, it is your task to figure out, which of these categories apply to your project. Identification of these risks should always be done prior to the launch of your project. Provide your management with enough time to tackle the assessment of risks and deal with them.
Bringing together multiple members of your team in a brainstorming session can be a useful practice. Each team member can contribute with their experience and expertise.
Ranking all emerging risks and prioritising them is crucial when it comes to risk management. There are two factors, based on which you can give priority to the various risks you have identified. They are: the impact that the risk can cause to your business, and the probability of risk actually emerging. Appropriate risk ranking is a crucial process in evaluation of possible jeopardy for your project.
Risks that have a high likelihood and high impact should be tackled first. Those that are less likely to occur and impact the project can be postponed for later.
There are four simple ways to deal with such a complex issue such as construction risks:
No matter which of these four methods you opt for when handling your risks, there are various support systems that will help optimise the process. The most common resources that construction companies use in these cases are:
If you want effective risk management for your construction project, involve all of your staff member. Updates or risk reviews should be transmitted to all your team members no matter their position. Informing your stake holders about risks is an important step in the overall process. Your message should be communicated in a clear and easy to understand manner.
Creating a backup plan or alternative approaches is important in order to stay on track with project timelines if danger actually appears. Creating contingencies of backup plans is also important, as sometimes both first and second plan can fail. This practice will shorten delays and will help bring your project to an end quicker.
To sum up, construction risk management plans will boost the confidence of your teammates and encourage them to follow safety measurements. Valuable assets such as time and resources will be saved, as well as your precious company’s finances. On the other hand, if you decide to take on some unsupervised risks, have in mind that they might hurt your business and your company’s profit.