Construction is a challenging and risky business. It’s not just the risk of accidents; it’s also the unpredictability of weather or how much time a contractor will take to finish their job. And if you’re an architect or engineering consultant, then you need to think about your construction project as a whole – from site layout through design and planning phases right up until building construction.

A good plan, though, can reduce these risks significantly by making sure that there are no costly delays in the process – but what should such plans include?

Risk management is an essential part of the construction process. Project managers need to understand and know the various risks associated with construction projects, such as financial, socio-economic, environmental, and construction-related risks. These risks may all potentially arise during projects, and incorporating them into initial plans is better than dealing with them as they occur.

Construction risks come about due to the influence of external factors. Project managers can accurately and adequately create project schedules, but it is impossible to account for all risks that could derail a project. Hence, risk management becomes the pivotal instrument in preventing and dealing with any possible issues in a project.

In planning and scheduling a construction project, project managers will come across numerous potential risks. Construction sites on their own pose safety and health risks to workers. Not to mention the external risks posed to the construction industry that are not within the team’s control. Listed below are some common risks that construction projects could potentially face during execution.

In the case of Malaysia, the most significant external risk posed to construction projects are environmental risks, a type of force majeure. Such risk due to the geographical location and climate of Malaysia. Set in tropical latitudes, Malaysia experiences high temperatures and humidity for some parts of the year and heavy monsoon rainfall for the rest.

Inclement weather conditions and natural disasters directly affect workers accessibility to the constitution site. Furthermore, string rains and flooding prevent work from commencing, leading to schedule delays, and there is a possible need for an extension of time to complete the project.

Socio-political factors also have an impact on the project schedule. Certain events such as sudden changes in governmental regulations and law regarding construction or labour can directly impact project plans. Moreover, factors such as the efficiency of law and order, taxes, bribery, and line jumping will also affect the overall project schedule and plan.

The area of finance is usually an unsteady one, meaning there are constant changes in material costs, demand for construction needs, and poorly managed project cash flow. In larger international projects, fluctuations in exchange rates factors as a considerable risk to project cost. Finance issues usually arise due to the lack of efficient and effective planning, leading to projects going way over the budget line. A case like this can lead to severe problems that can cause projects to come to a standstill.

One way to overcome such a risk is by involving a schedule auditor’s services (link to article) to analyse and evaluate the financial terms and flow of a project contract. The auditor can appropriately allocate funds to benefit the project owner and contractor.

While the demand for construction projects continues to rise in Malaysia, finding the right people for the job remains challenging. There are three types of workforce risks to address applicable to the construction industry.

Labour Shortage: The skilled labour shortage can put even the most well planned and designed projects at risk. It is not an option to fill this shortage with inexperienced workers, which will do more harm than good. Also, this approach will likely place staff in hazardous situations.

Labour Quality: The quality of labour comes down to choosing the right subcontracts to work with, usually evaluated during the contracting and planning stages. However, if it is the first time working with a particular subcontractor, it can be difficult to gauge their work quality. Planners can track the quality of work by using labour quality software solutions. By doing so, determining whether or not to work with a particular subcontractor in the future becomes more straightforward.

Labour Productivity: Ensuring that a project’s workforce uses their time wisely is the key to keeping everything on schedule. However, keep in mind that a workforce is human, so fluctuations in productivity are bound to happen.

The construction industry has the highest rate of safety hazards compared to other sectors. Heavy-duty equipment and high-rise working environments pose a risk to workers and the immediate environment around job sites.

Construction companies need to take into consideration on-site safety measures to keep workers safe. Furthermore, construction sites located in the middle of busy cities need to take the necessary precautions to account for pedestrians’ safety and the busy roadways. Safety risks also extend to construction sites in remote locations. Here, improper waste disposal of harmful chemicals or materials can directly degrade the environment.

In cases where sites are near bodies of water, it is essential to monitor runoff to ensure no contamination of water resources.

Keep in mind that the construction risks listed above are just a handful that contractors and the project manager need to be wary of when putting together the risk management strategy. While there are numerous variables to consider in the risk management process, such steps will more accurately define likely scenarios that could negatively impact the project.

Done correctly, decreased the likelihood of risks from occurring and the severity of their impact on the project. In short, risk management conducted in the pre-construction planning phase is a preemptive measure taken to lessen or avoid any issues from jeopardising the project during its execution.

Having response plans set for each potential risk to the project, the construction project officers now need to monitor each one to identify trigger conditions. These trigger conditions are what will signal the project manager and respective teams to initiate the response plans. To ensure that response plan initiation goes smoothly, all contractors should be aware of the risks, trigger conditions, and response plan. In this way, swift and precise action can be taken, saving valuable time.

Should the risk present itself in the project, execution of the set procedures with the aim to a solution will be set in motion. Keep in mind that construction risks can still vary in degree of impact depending on specific situations. While the standard steps and procedures are in place, always be aware of adjustments that need attention immediately. An example would be weather-related risks. Depending on the degree of the storm, the level of risk response may vary.

To properly control risks as it persists, lines of communication must remain open and transparent throughout the process. All relevant team members and leads need to stay informed on the current status of the risk response plan. Only then can there be an assurance that the controlled assessment remains accurate and the team can move according to the plan’s current state.

Updating the project deliverables and timeline occurs twice in terms of the risk mitigation process. Once a risk arises, the timeline of deliverables and activities need to adjust accordingly to accommodate the procedures required in the risk response plan.

After the risk is dealt with, it is necessary to update the project deliverables and timeline to account for any changes from the original plan, such as changes in assigned tasks, financial requirements, or scheduling changes.

Implementation of a construction project risk mitigation plan requires all sections to maintain orderly documentation of reports, emails, and communications. Contractors should accomplish this for protection against litigation by allowing them to track their efforts in preventing/mitigating the risk carefully, making it less likely that their actions are disputed as negligence or due to improper preparation and planning.

With any risk identified as possible to occur during the project lifecycle, project leads and stakeholders should always have contingency plans set in place. Meaning there should be more than one solution to dealing with a problem. Such strategies will ensure that even if the first risk response plan does not fully manage the issue, another can be set in motion to mitigate further its impact on the overall project goals and objectives.