Construction Risk Management: An Introduction

Construction projects are really too risky. You need to take into account many details and critically important aspects. This includes the equipment itself, hiring competent specialists, and most importantly – arranging working processes during hazardous working conditions.

Therefore, special attention should be paid to risks. Prevention of accidents and different on-site risky situations is a top-priority task of all reputable contractors. Some risk management tasks can be performed by digital tools. For example, both estimating and building estimator software includes most algorithms and formulas to avoid errors and wrong predictions in the initial stage (project bidding and budget planning).

Remember that the responsibility for the project profitability relies on the top manager of the building company. That is why the most perfect risk management starts with the highest competence of the contractor in the context of all the required standards, measures, and approaches.

What Is Construction Risk Management?

To prevent construction risks, a number of instructions and requirements must be implemented from the beginning of the project to ensure that all project participants follow them closely in real-time.

The plan should be developed at the initial stage. Take into account all the risks and ways of their occurrence. This control point should be entrusted to one of the team members. We are going to take a look at the main kinds of risks that can take place during construction projects.

It is worth noting that all the well-thought management programs and strategies that are focused on the reduction of any form of challenges should take into consideration all the varieties of dangerous cases contractors can face. That is why the classification of risks and their review is a must for successful management plans and approaches to choose.

What Are the Types of Construction Risks in 2022 to Take into Account? 

Risk in construction is a possible (and even common) event. It Any challenge and force majeure is accidental, so it causes undesirable consequences for the parties to the contract or third parties. The contractor should take into account all the risks at once:

• Financial;
• On-site;
• Organizational;
• Uncontrolled (weather extremes, etc.);

The concept of risky situations (including force majeure cases) applies to both construction sites and the processes that occur during different building processes. Risks can lead to material damage and loss of human health.

Quantitatively, risk can be estimated as the ratio of the probable number of dangerous events per unit of time to the number of objects at risk. Identified and categorized by the Risk Breakdown Structure (RBS), the standard provided, project risks that most often affect the effectiveness of project implementation in the construction industry.

Taking into account the specifics of the project organization of construction activity, it is proposed to structure and organize risk management measures by the phases of the life cycle of the projects.

What Are the Basic Strategies of Construction Risk Management in 2022?

From this point of view, the basic strategies of risk management of construction projects are considered and the preliminary threat response plan is substantiated. Risk in construction is accompanied by financial investments from the moment concluding a construction contract before the transfer of the construction object to the customer.

In general, the risk that arises in the relationship between the customer, investor, and contractor is equal to the unit distributed among the construction entities. The risk level for any subject of the fulfillment of obligations under the construction contract depends on the establishment of the order of settlements.

The risk management process allows us to identify potential hazards and undesirable cases, understand their consequences, and if necessary, develop preventive measures to neutralize the negative consequences. Various standards are used to optimize it. There are many of them now, but most of them are fragmentary and need to be adapted.