Antonius P.

Bramono

Risk Management in
Construction Project
 Table of contents

01 02 03
Introduction What Is Construction Risk Why Construction Risk
Management? Management Important?

04 05 06
When to Start to Develop What Are the Types of The Construction
Construction Risk Risk in Construction Risk Management
Management? Projects? Process
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 01.
Introduction

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 Few things are as risky as
construction projects. There
is heavy equipment, crews
working in precarious
situations and complicated
logistics, safety hazards and
risk factors to manage. How
do you meet your deadline
while managing all that risk?

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 The answer is construction risk
management. It can be mind-
bogglingly complex, which is why
you should make a detailed
construction risk management plan.
Let’s take a look at the basics,
what a construction project
manager is responsible for, types
of risk in construction projects and
how to deliver a successful project.

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 02
What Is Construction
Risk Management?

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 Construction risk management is
the process of evaluating and
implementing procedures to reduce
the impact of risks in construction
projects. This risk management
process involves thorough planning
to create a risk management plan
that allows project managers to
identify, monitor and mitigate risks
as they arise.

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 03
Why Construction Risk
Management Important?

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The major risks that usually
crop up in front of a project
manager while helming a
construction project are safety,
financial, legal, construction
related and environmental.

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 Risk management process is nothing but a
series of steps that help identify and
migrate the risks for the successful closure
of a project. If done correctly and sincerely,
construction risk management will reduce
not only the likelihood of an event
occurring, but also the magnitude of its
impact.

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 In the simplest terms, Risk management
process is taking preemptive actions to
avoid and minimize any kind of jeopardy
to a project in future.

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 04
When to Start to Develop
Construction Risk Management?
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 A construction risk
management plan is
developed in the early
stages of the construction
planning process. It details
what project risks might
occur and the risk
response to resolve them.
This includes designating
someone on the crew to
own the issue and address
it.
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 05
What Are the Types of Risk in
Construction Projects?

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  Safety Risk: Your crew is your most
valuable resource. Nothing can be done
without them. They are also subject to
safety hazards, as many of the tasks
assigned to them can be dangerous.
While your crew is skilled and
experienced, accidents can happen.
Know the safety risks to your crew, what
hazards they might fall prey to and
create a safety plan to ensure employee
safety.

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 Financial Risk: Without money, nothing
happens. No one gets paid, you can’t rent
equipment—you get the idea. That’s why
any factors that can interrupt your cash
flow need to be identified. This can
include a cost increase for materials,
competition in the market and so on. The
more you understand the financial risk,
the more likely you’ll stay within budget.

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 Legal Risk: Managing a construction
project involves more than the
constraints of time, cost and scope. There
are legal constraints, such as regulations,
code violations and contract terms
disputes with your clients, vendors and
subcontractors. Any of these things can
send your construction project off track.

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 Project risks: Project risks are
universal project management
risks associated with managing
any project. These include poor
management of the resources,
failure of logistics, labor
disputes, design changes, labor
productivity, missing deadlines
and falling behind schedule,
etc. The construction project
manager must be thorough and
aware of difficulties that can
throw the project off track.

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 Environmental Risk: AKA an
“act of God,” such as
floods, earthquakes and
other kinds of natural
disasters. Anything nature
unexpectedly unleashes
that makes the construction
site inaccessible is costly
and potentially destructive
for a construction project.

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 06
The Construction Risk
Management Process

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The process of mitigating risk for a
construction project is no different than any
other project. The only difference is the type
of risks you’re managing in the construction
industry. Here are the five steps of the risk
management process.

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1. Identification: First, make a list of every
possible issue that could arise. Do the
research, talk to your crew and explore
historical data from past construction
projects that are similar to yours. While
this identification list is always open for
edits and updates, you should have a set
deadline so that you don’t get bogged
down in analysis.

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 2. Assessment: Not all risks are equal. Some
are more likely to occur, others less so.
One way to assess your list of risks is to
use a risk assessment matrix, which
charts the likelihood of each risk and the
size of the impact it can have on your
project. Creating a risk assessment matrix
helps you when addressing the risk if it
appears.

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 3. Mitigation: This is where you implement a
contingency plan that will reduce the
likelihood and impact of the risks you
identified earlier. The top priority, of
course, is those you defined as highly
likely and having the greatest impact.
These should be given an owner, who will
be responsible for identifying the risk (if
it occurs) and managing its resolution.

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 4. Monitoring & Control: This step is always
ongoing, as you attempt to identify these
risks when they show up. That includes
monitoring & control the effectiveness of
your mitigation plan. Also, stakeholders
should be consulted & kept updated on
these project risks. Engage other department
leaders to help & empower the team to
respond to risk & take corrective actions as
per the requirement.. Have them note if a
risk has moved to a different spot on your
risk assessment matrix.

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 5. Reporting & Communicating: Your
construction risk management plan should
be analyzed, shared and communicating
with the crew and stakeholders. The
reports on risk mitigation allow you &
team to evaluate the effectiveness of the
contingency plan.

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There are risks throughout the life of a
construction project you should avoid. You
need to know how to identify the risk as it
shows up and address it quickly with the
appropriate risk response. An area to keep
an eye on for example is the design process.
Errors or omissions there can come back to
bite you during execution.
There are also external risks, like dealing with
new stakeholders and their change requests.
Those can wreak havoc on your construction
risk management plan.

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You also need to keep an eye on the crew.
Make sure you hire experienced
professionals and offer them safety training
because an inexperienced workforce is
asking for risk. So is poor morale, which can
lead to staff turnover or conflict. These are
just a few of the many factors to account for
when managing your construction risk
management plan.

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“If you don't invest in risk
management, it doesn't
matter what business you're
in, it's a risky business.”
- Garry Cohn

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Terima kasih
Thank you
Merci
Gracias
Antonius P. Bramono
[email protected]

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