Concern by Owners and Contractors over Construction Risk Management
There are many risks involved in the construction industry. While business owners and contractor perspectives vary quite a bit, there is one aspect of construction which they can both can agree upon. In a survey done by KPMG, it was indicated that Risk Management was one of the top most concerns. It ranked in the top three list of concerns for both owners and contractors, indicating that it was indeed an important topic for further analysis. In addition to risk management, transferring risk was also a focus.
Why is Risk Management so important?
When dealing with construction, owners of major construction projects must deal with pressing issues such as capital expenditure, cost overruns, fraud, misconduct, and waste. The scope of large projects is what exposes contractors to risk, and only by having the right level of oversight can risks be managed. By effectively managing risk, both the owners and contractors benefit by eliminating issues and costs.
What are Construction Risks?
There are various risks involved in construction. Anything that causes a project to veer from the initial plan can be considered a construction risk. This is because it is something that goes beyond the scope of the project, wasting valuable time and money. Uncertainties, Liabilities, and Vulnerabilities are all examples of Construction Risk.
Construction Projects and Risk Management
There are a few steps you can take to ensure that construction risks are lowered. First off, one can devise a realistic plan and identify which aspects of a project are more risky than others. Secondly, as a contractor or owner, you can analyze situations in real time, either qualitatively or quantitatively. Qualitative analysis is when you prioritize risk by how critical certain project objectives are. Quantitative Analysis is when you use probability to measure the importance of particular task. Quick response is another aspect of risk management. By responding to issues as soon as they arise, you can eliminate avoidance of the risks, transference of the risk, and minimize project cost while, at the same time, maintain schedules and quality.
Protecting Your Construction Project From Risk
By focusing on construction risks, project development can occur quickly and efficiently. It takes proper planning and readjustment to minimize the risk involved with large contracting jobs. Take a few pointers from this article, and you will find that your company will be much better off in the long run. Risk is unavoidable, but it is the way in which you manage risk that dictates the success, or failure, of your construction business.