There are few industries that face the same variety of risks as construction. A risk is any plausible event that would derail your plans. And accounting for every possible risk in construction projects is very challenging indeed. If we compare construction to other industries, it quickly becomes clear why risk management is so much more complex for builders. Other sectors also deal with fairly stable or predictable risks.
Risk analysis is used to investigate the dangers of causing damage in the construction sector, to evaluate the possible dangers numerically and to determine the critical ones. Risk analysis can be carried out in 3 ways;
- For normal cases, a quality management plan is applied. The quality management plan is the plan that considers how to meet all the needs of the project from the very beginning.
- Action plans are prepared for foreseen risky situations. Action plans are a list of tasks that need to be completed to reach the end of the project, prepared for the purpose of situation recovery.
- Crisis management is applied for unexpected and sudden risks. In these cases, emergency plans are prepared. In emergency plans, the project manager makes the necessary measurements and plans to avoid the shocking effect.
In order for the analysis and management of all these risky situations to yield good results, it is necessary to regularly update the analysis and to comply with the decisions taken. Generally, risks are not taken into account when surveying construction and submitting bids. Many companies in the construction sector are in a difficult situation; erroneous assumptions, errors and optimism in the cost calculation are due to unconsidered risks.
Every project manager knows that construction work involves high levels of uncertainty. However, when time is tight, conducting an exhaustive risk assessment may not always seem like the best use of resources. Furthermore, studies highlight the following benefits of analysing risk in construction projects:
- Helps assess and ascertain project viability
- Can minimise losses
- Identifies project risks and quantifies the potential cost of each
- Determines if you will make an adequate profit on a particular project
- Keeps insurance premiums at acceptable levels
- Limits professional indemnity claims
- Protects your company’s credibility and reputation
Which risk factors are there in construction?
- Strategy mistakes
- Price Increase Risks
- Forced Reasons
- Risks Due to Calculation and Acceptance Errors
- Application Risks
- Factors Due to Not Recognizing Laws and Rules
4 Step Framework To Manage Risk in Construction Projects
Research into construction project risk shows it can be successfully managed using the following four-step process:
- Risk identification: Work collaboratively with stakeholders to identify everything that could go wrong with a project.
- Risk assessment: Score the risk on a sliding scale to decide how much of an impact it would have on your project if it were to happen. Prioritise the biggest risks.
- Risk mitigation: Develop plans to minimise the risks so they are less likely to happen. Then outline protocols defining what you will do should the risk arise.
- Risk monitoring: On a regular basis, assess your project and scan the horizon for risks that may occur.
To use this framework, it’s especially valuable for the project manager to organise meetings with stakeholders (the architect, owner, contractors and sub-contractors) to define all the risks facing this project in particular. However, technology can support construction project risk management.
Credits: https://www.sanalsantiye.com/ Şeyma Kaya
https://www.planradar.com/ Zeina Hazem
