Construction Risk Management: An Introduction

Construction Risk Management: An Introduction

Construction risk management is the process of evaluating and implementing procedures to reduce the impact of risks in construction projects. A construction risk management plan is developed in the early stages of the construction planning process and details what project risks might occur and the risk response to resolve them. Risk is anything that will delay the project or create further costs, and it is essential to know what risks there are and where they will occur. The most important details in this text are the five steps of the risk management process for a construction project: safety risk, financial risk, legal risk, project risk, and environmental risk. Safety risk involves knowing the safety risks to your crew, what hazards they might fall prey to, and creating a safety plan to ensure employee safety.

Financial risk involves identifying factors that can interrupt cash flow, such as cost increases for materials, competition in the market, and legal constraints. Legal risk involves legal constraints such as regulations, code violations, and contract terms disputes. Project risk involves poor management of resources, missing deadlines, and falling behind schedule. Environmental risk involves natural disasters, such as floods, earthquakes, and other kinds of natural disasters. The construction project manager must be thorough and aware of difficulties that can throw the project off track.
The most important details in this text are that it is important to identify and assess potential risks, create a risk assessment matrix, implement a contingency plan, monitor the effectiveness of the plan, engage other department leaders to help, and empower the team to respond to risk. Additionally, the construction risk management plan should be analyzed and shared with the crew and stakeholders. Finally, project management software can be used to gather data automatically, create dashboards, and generate reports that are easily distributed.