Why construction management and risk analysis is important for your project
Construction management and risk analysis is an integral part of the construction industry.
Construction management, also known as CM for short, takes care of the day-to-day aspects of a construction project like scheduling, budgeting, site supervision, and other coordination activities.
Risk analysis identifies potential risks that could affect your projects, such as cost overruns or delays in getting permits to start work on time.
On paper, both look simple and easy to understand, right?
But when it comes to actual implementation, the factors associated with both can make things pretty complicated. In turn, construction management can overwhelm a planner with limited understanding or experience in the matter.
This article will try to break down both talking points into something more digestible – even for someone completely new to the construction industry.
With all things said, let’s kick off things with the first talking point.
Why is construction management needed?
Construction management is all about planning, coordinating, and controlling every aspect of a construction project from start to finish.
In a nutshell, construction management is a discipline within project management that deals with the economic consumption of the resources available, such as material, funds, and human resources, to improve project efficiency and hit completion targets.
It is the job of a construction manager (CM) to ensure that a project functions as smoothly as possible, is financially viable, and that each team member understands their specific roles and goals.
If a problem occurs, the construction manager’s responsibility is to quickly address and resolve the said problem(s) to keep a project within its agreed completion date.
It is also vital for CM’s to have good communication skills. Such a skill will effectively convey work-related information to anyone associated with the project and mediates or minimises any unnecessary conflicts between team members.
What is the Main Function of Construction Management?
Construction project management is the art and science of managing, directing, controlling, coordinating and executing construction projects. It’s more than just a job; it’s an ideology.
Effective construction management requires a construction manager to understand how to complete tasks with precision and manage people and budgets effectively.
Construction managers need to plan for and anticipate any potential risks or delays during a project – known as project risk management.
Managers use project risk management to take proactive steps to prevent delays from happening later down the line. They also need to ensure the safety of workers at all times.
There are seven different functions associated with construction management.
These are:
At the end of the day, though, there are only two key factors that encompass everything.
Planning
Planning is the process of choosing how a project will be approached and completed.
It revolves around answering questions like:
The importance of effective construction management planning can be summed up by:
Scheduling
Scheduling is the process of fitting together a work plan with a timetable. The methodology considers when to do it and how long each activity will take.
Out of all the different construction management functions, scheduling is crucial as it encompasses other construction management factors like organising, staffing, directing, controlling and coordination.
Organising – entails proper allocation of work to different departments, delegating tasks to individuals, and systematically managing various operations.
Staffing – entails finding and ensuring enough skilled people to work and complete a construction project.
Directing – entails training and managing subordinates to carry out assigned tasks, supervising their work, and offering guidance. “Directing” also involves motivating teams to achieve desired results.
Controlling – ensures that the work plan is in line with project standards. It is also about identifying deviations or risks and applying appropriate corrective measures to resolve them.
Coordinating – is about managing all aspects of a construction project to ensure that each department and tasks are in perfect harmony with others. It’s about ensuring that all departments are fully aware of their role in the bigger scheme of things.
What is the difference between project management and construction management?
The main difference between project managers and construction managers is what they manage. A project manager typically has broader responsibilities than a construction manager, who may deal with the day-to-day work on a smaller scale.
For example, construction managers oversee the construction of buildings themselves, including everything from land procurement to site selection and then hiring.
In comparison to a project manager’s job, which are:
Project managers are responsible for several different tasks, including:
On the other hand, construction managers use their construction knowledge to develop proposals to provide the items needed to finish the project.
They also serve as a liaison between contractors, equipment providers, and technology companies on behalf of the customer (i.e., end-user or client).
A project manager may ask for explanations and justification of costs from the construction manager, but they don’t have any say over expenses.
Construction managers are responsible for several different tasks, including:
Why is A Risk Analysis Important?
Construction management goes hand in hand with risk assessment. And because of that, implementing a risk analysis system allows organisations to examine the potential of said risks from materialising.
Risk analysis provides stakeholders with a better understanding of whether moving forward with a decision could pose a significant problem to the project in the future.
After identifying the risks in the construction project, stakeholders can start developing strategies for mitigating them.
To prevent risks, stakeholders have to make decisions about how they want to manage them. These decisions may include deciding not to take the risk at all, cooperating with others to minimise its impact, or taking a “calculated risk” while trying to mitigate its adverse effects.
Along with helping stakeholders arrive at an informed decision of dealing with said risks, risk management can also help relieve the stress and anxiety that accompanies said decisions – especially when it comes to critical ones.
It’s essential to be thorough with your risk analysis. When looking at risks, you must know how they will impact the work environment and other people associated with the project.
What are the benefits of risk analysis in a building construction project?
Construction projects are often messy, complicated, and frankly fraught with uncertainty. In the construction of buildings, uncertainty and risk have the potential for causing significant harm.
Risk analysis is essential in a construction project as it allows stakeholders to deal with uncertainty and unexpected events, which would otherwise threaten the project’s success.
Attempting to understand and predict the outcome of a construction project is an inherently complex task. A project is never a one-person undertaking.
The success, availability of resources, or the satisfaction of everyone involved in the project can be dramatically impacted by how a project manager manages, implements and monitors a project.
Different participants with different experience and skills will often have vastly different expectations regarding implementation procedures and assessment outcomes. Therefore, this naturally creates problems and confusion even for the most experienced project managers and contractors.
Risk analysis helps key stakeholders like the project owner, contractor or developer, consultant and supplier meet their commitments with ease, ensuring a much smoother project implementation and on-time project completion.
The specific benefits of risk analysis to a building construction project are as follows.
Identification of trouble areas
Risk identification management can make it easier to identify troubled projects.
Project managers should evaluate possible risks and the plan how he/she can effectively address them before said risk materialises and spirals out of control.
Risk identification will help identify high probability/high impact risks events in the project’s initial planning stages. Assessing the trajectory of the construction effort helps evaluate changes in critical factors like new participants, funding patterns, or progress.
Analysis can also reveal the accumulation of risk, typically a warning sign that swift and decisive action needs to be taken by management before any accidents happen.
No surprises
A robust risk identification system reduces potential surprises.
Yes, there will always be unpredictable events, but it won’t be as many, and they won’t have a substantial impact.
Risk management forces the project team to focus on what might occur – prepared for when something does happen. It also allows project team members to discuss the impacts of unanticipated events early and often to create effective strategies that can protect different areas of the project.
It provides accurate project data
Project planners can only execute risk analysis if all necessary data is available.
If you’re going to evaluate risks, then you need the correct information (e.g., documents, details of schedule and budget status) in place first before conducting any analysis.
It’s easy to get tempted thinking you know the risks and challenges of your building project without any data on hand for assessment. But the fact of the matter is, asking what’s missing will help ensure that you are addressing all the issues (and those that might surface) that need your attention.
Improved communication
Implementing a construction risk management process for your building project will help improve communication between everyone involved while the project is underway.
Meaning, anyone involved in the project, regardless of rank, has full knowledge of what’s currently happening.
It can help a project stay on budget
Like what we mentioned earlier, risk management entails gathering and analysing project data.
If done correctly, this can help managers spend funds more efficiently.
It helps create a proactive management approach
Again, the data gained from risk analysis allows stakeholders to take a more proactive stance when dealing with potential risks or problems.
Rather than wait until a risk (issue) materialises, risk analysis forces stakeholders to either snip risks right off the bud or halt its growth before it significantly impacts the entire project.
What are the types of risk in construction?
Construction risks can come in the form of financial, contractual, operational, and environmental – and can be due to internal and external factors.
Identifying these risks and mitigating them will allow for more efficient, safer, and less costly building processes.
At its core, a construction project faces different levels of exposure depending on its scale (size), specialisation (type), and scope (scope).
And when it comes to handling said risks, smaller managing firms may lack resources; larger ones might have too much capacity or not enough demand.
In contrast, specialised firms often find themselves constrained by geography as well as customer base size.
Setting all of that aside, there are several common construction risks stakeholders must be aware of for the time being. These are:
With that said, prioritising each risk should be determined when planning and monitoring responses to risks.
Understanding the relative degree of importance between all risks is the best way for a project team to determine how they should react in any given situation.
Stakeholders need to precisely determine what type of risk they face to either reduce or contain them.
Removing (or containing) risks leads to decreased costs, better workmanship and more successful projects.
What is the difference between risk analysis and risk assessment?
We have already discussed what risk analysis is throughout this article, but we realised that some individuals tend to interchange risk analysis with “assessment”.
And though both may look the same at first glance, risk assessment has different factors involved. Risk analysis is only but a part of risk assessment.
Risk control measures can identify all the potential risks that could impact your ability to complete a construction project.
Risk assessment and risk response planning consists of two main components: identifying and analysing.
The first step in the process is to identify what potential risks may be out there and then analyse those specified items.
After that, risk assessments are organised into a matrix of probabilities versus consequences to decide how much resources need an allocation to mitigate their impacts.
For example: if you’re working on a construction project where one failure could cause significant damage with potentially costly results, your assessment will look like this:
Probability – Consequence (high) > Probable no damage; or ‘Low’ risk of injury to personnel, property or materials – Low impact on operational readiness and efficiency
Keeping track of everything all at once and all the time can seem impossible, especially when it comes to high profile construction projects.
Risks also evolve throughout the construction process – and so must you, or risk losing control of your initial construction timeline.
Continuously monitoring your processes can apprise you in real-time of potential risks. But this can be a very meticulous and sensitive process that seasoned professionals should handle.
And this is where we come in.
We at RMPS have been in the risk assessment industry for over a decade and have efficiently managed high profile construction projects within and outside Malaysia.
Our expert team of risk analysts and assessors are more than capable of pinpointing and resolving risks – lowering whatever impact it may have on your construction project.
Get in touch with us today, and ask us how we can help.
Why construction management and risk analysis is important for your project
Construction management and risk analysis is an integral part of the construction industry.
Construction management, also known as CM for short, takes care of the day-to-day aspects of a construction project like scheduling, budgeting, site supervision, and other coordination activities.
Risk analysis identifies potential risks that could affect your projects, such as cost overruns or delays in getting permits to start work on time.
On paper, both look simple and easy to understand, right?
But when it comes to actual implementation, the factors associated with both can make things pretty complicated. In turn, construction management can overwhelm a planner with limited understanding or experience in the matter.
This article will try to break down both talking points into something more digestible – even for someone completely new to the construction industry.
With all things said, let’s kick off things with the first talking point.
Why is construction management needed?
Construction management is all about planning, coordinating, and controlling every aspect of a construction project from start to finish.
In a nutshell, construction management is a discipline within project management that deals with the economic consumption of the resources available, such as material, funds, and human resources, to improve project efficiency and hit completion targets.
It is the job of a construction manager (CM) to ensure that a project functions as smoothly as possible, is financially viable, and that each team member understands their specific roles and goals.
If a problem occurs, the construction manager’s responsibility is to quickly address and resolve the said problem(s) to keep a project within its agreed completion date.
It is also vital for CM’s to have good communication skills. Such a skill will effectively convey work-related information to anyone associated with the project and mediates or minimises any unnecessary conflicts between team members.
What is the Main Function of Construction Management?
Construction project management is the art and science of managing, directing, controlling, coordinating and executing construction projects. It’s more than just a job; it’s an ideology.
Effective construction management requires a construction manager to understand how to complete tasks with precision and manage people and budgets effectively.
Construction managers need to plan for and anticipate any potential risks or delays during a project – known as project risk management.
Managers use project risk management to take proactive steps to prevent delays from happening later down the line. They also need to ensure the safety of workers at all times.
There are seven different functions associated with construction management.
These are:
At the end of the day, though, there are only two key factors that encompass everything.
Planning
Planning is the process of choosing how a project will be approached and completed.
It revolves around answering questions like:
The importance of effective construction management planning can be summed up by:
Scheduling
Scheduling is the process of fitting together a work plan with a timetable. The methodology considers when to do it and how long each activity will take.
Out of all the different construction management functions, scheduling is crucial as it encompasses other construction management factors like organising, staffing, directing, controlling and coordination.
Organising – entails proper allocation of work to different departments, delegating tasks to individuals, and systematically managing various operations.
Staffing – entails finding and ensuring enough skilled people to work and complete a construction project.
Directing – entails training and managing subordinates to carry out assigned tasks, supervising their work, and offering guidance. “Directing” also involves motivating teams to achieve desired results.
Controlling – ensures that the work plan is in line with project standards. It is also about identifying deviations or risks and applying appropriate corrective measures to resolve them.
Coordinating – is about managing all aspects of a construction project to ensure that each department and tasks are in perfect harmony with others. It’s about ensuring that all departments are fully aware of their role in the bigger scheme of things.
What is the difference between project management and construction management?
The main difference between project managers and construction managers is what they manage. A project manager typically has broader responsibilities than a construction manager, who may deal with the day-to-day work on a smaller scale.
For example, construction managers oversee the construction of buildings themselves, including everything from land procurement to site selection and then hiring.
In comparison to a project manager’s job, which are:
Project managers are responsible for several different tasks, including:
On the other hand, construction managers use their construction knowledge to develop proposals to provide the items needed to finish the project.
They also serve as a liaison between contractors, equipment providers, and technology companies on behalf of the customer (i.e., end-user or client).
A project manager may ask for explanations and justification of costs from the construction manager, but they don’t have any say over expenses.
Construction managers are responsible for several different tasks, including:
Why is A Risk Analysis Important?
Construction management goes hand in hand with risk assessment. And because of that, implementing a risk analysis system allows organisations to examine the potential of said risks from materialising.
Risk analysis provides stakeholders with a better understanding of whether moving forward with a decision could pose a significant problem to the project in the future.
After identifying the risks in the construction project, stakeholders can start developing strategies for mitigating them.
To prevent risks, stakeholders have to make decisions about how they want to manage them. These decisions may include deciding not to take the risk at all, cooperating with others to minimise its impact, or taking a “calculated risk” while trying to mitigate its adverse effects.
Along with helping stakeholders arrive at an informed decision of dealing with said risks, risk management can also help relieve the stress and anxiety that accompanies said decisions – especially when it comes to critical ones.
It’s essential to be thorough with your risk analysis. When looking at risks, you must know how they will impact the work environment and other people associated with the project.
What are the benefits of risk analysis in a building construction project?
Construction projects are often messy, complicated, and frankly fraught with uncertainty. In the construction of buildings, uncertainty and risk have the potential for causing significant harm.
Risk analysis is essential in a construction project as it allows stakeholders to deal with uncertainty and unexpected events, which would otherwise threaten the project’s success.
Attempting to understand and predict the outcome of a construction project is an inherently complex task. A project is never a one-person undertaking.
The success, availability of resources, or the satisfaction of everyone involved in the project can be dramatically impacted by how a project manager manages, implements and monitors a project.
Different participants with different experience and skills will often have vastly different expectations regarding implementation procedures and assessment outcomes. Therefore, this naturally creates problems and confusion even for the most experienced project managers and contractors.
Risk analysis helps key stakeholders like the project owner, contractor or developer, consultant and supplier meet their commitments with ease, ensuring a much smoother project implementation and on-time project completion.
The specific benefits of risk analysis to a building construction project are as follows.
Identification of trouble areas
Risk identification management can make it easier to identify troubled projects.
Project managers should evaluate possible risks and the plan how he/she can effectively address them before said risk materialises and spirals out of control.
Risk identification will help identify high probability/high impact risks events in the project’s initial planning stages. Assessing the trajectory of the construction effort helps evaluate changes in critical factors like new participants, funding patterns, or progress.
Analysis can also reveal the accumulation of risk, typically a warning sign that swift and decisive action needs to be taken by management before any accidents happen.
No surprises
A robust risk identification system reduces potential surprises.
Yes, there will always be unpredictable events, but it won’t be as many, and they won’t have a substantial impact.
Risk management forces the project team to focus on what might occur – prepared for when something does happen. It also allows project team members to discuss the impacts of unanticipated events early and often to create effective strategies that can protect different areas of the project.
It provides accurate project data
Project planners can only execute risk analysis if all necessary data is available.
If you’re going to evaluate risks, then you need the correct information (e.g., documents, details of schedule and budget status) in place first before conducting any analysis.
It’s easy to get tempted thinking you know the risks and challenges of your building project without any data on hand for assessment. But the fact of the matter is, asking what’s missing will help ensure that you are addressing all the issues (and those that might surface) that need your attention.
Improved communication
Implementing a construction risk management process for your building project will help improve communication between everyone involved while the project is underway.
Meaning, anyone involved in the project, regardless of rank, has full knowledge of what’s currently happening.
It can help a project stay on budget
Like what we mentioned earlier, risk management entails gathering and analysing project data.
If done correctly, this can help managers spend funds more efficiently.
It helps create a proactive management approach
Again, the data gained from risk analysis allows stakeholders to take a more proactive stance when dealing with potential risks or problems.
Rather than wait until a risk (issue) materialises, risk analysis forces stakeholders to either snip risks right off the bud or halt its growth before it significantly impacts the entire project.
What are the types of risk in construction?
Construction risks can come in the form of financial, contractual, operational, and environmental – and can be due to internal and external factors.
Identifying these risks and mitigating them will allow for more efficient, safer, and less costly building processes.
At its core, a construction project faces different levels of exposure depending on its scale (size), specialisation (type), and scope (scope).
And when it comes to handling said risks, smaller managing firms may lack resources; larger ones might have too much capacity or not enough demand.
In contrast, specialised firms often find themselves constrained by geography as well as customer base size.
Setting all of that aside, there are several common construction risks stakeholders must be aware of for the time being. These are:
With that said, prioritising each risk should be determined when planning and monitoring responses to risks.
Understanding the relative degree of importance between all risks is the best way for a project team to determine how they should react in any given situation.
Stakeholders need to precisely determine what type of risk they face to either reduce or contain them.
Removing (or containing) risks leads to decreased costs, better workmanship and more successful projects.
What is the difference between risk analysis and risk assessment?
We have already discussed what risk analysis is throughout this article, but we realised that some individuals tend to interchange risk analysis with “assessment”.
And though both may look the same at first glance, risk assessment has different factors involved. Risk analysis is only but a part of risk assessment.
Risk control measures can identify all the potential risks that could impact your ability to complete a construction project.
Risk assessment and risk response planning consists of two main components: identifying and analysing.
The first step in the process is to identify what potential risks may be out there and then analyse those specified items.
After that, risk assessments are organised into a matrix of probabilities versus consequences to decide how much resources need an allocation to mitigate their impacts.
For example: if you’re working on a construction project where one failure could cause significant damage with potentially costly results, your assessment will look like this:
Probability – Consequence (high) > Probable no damage; or ‘Low’ risk of injury to personnel, property or materials – Low impact on operational readiness and efficiency
Keeping track of everything all at once and all the time can seem impossible, especially when it comes to high profile construction projects.
Risks also evolve throughout the construction process – and so must you, or risk losing control of your initial construction timeline.
Continuously monitoring your processes can apprise you in real-time of potential risks. But this can be a very meticulous and sensitive process that seasoned professionals should handle.
And this is where we come in.
We at RMPS have been in the risk assessment industry for over a decade and have efficiently managed high profile construction projects within and outside Malaysia.
Our expert team of risk analysts and assessors are more than capable of pinpointing and resolving risks – lowering whatever impact it may have on your construction project.
Get in touch with us today, and ask us how we can help.
Why construction management and risk analysis is important for your project
Construction management and risk analysis is an integral part of the construction industry.
Construction management, also known as CM for short, takes care of the day-to-day aspects of a construction project like scheduling, budgeting, site supervision, and other coordination activities.
Risk analysis identifies potential risks that could affect your projects, such as cost overruns or delays in getting permits to start work on time.
On paper, both look simple and easy to understand, right?
But when it comes to actual implementation, the factors associated with both can make things pretty complicated. In turn, construction management can overwhelm a planner with limited understanding or experience in the matter.
This article will try to break down both talking points into something more digestible – even for someone completely new to the construction industry.
With all things said, let’s kick off things with the first talking point.
Why is construction management needed?
Construction management is all about planning, coordinating, and controlling every aspect of a construction project from start to finish.
In a nutshell, construction management is a discipline within project management that deals with the economic consumption of the resources available, such as material, funds, and human resources, to improve project efficiency and hit completion targets.
It is the job of a construction manager (CM) to ensure that a project functions as smoothly as possible, is financially viable, and that each team member understands their specific roles and goals.
If a problem occurs, the construction manager’s responsibility is to quickly address and resolve the said problem(s) to keep a project within its agreed completion date.
It is also vital for CM’s to have good communication skills. Such a skill will effectively convey work-related information to anyone associated with the project and mediates or minimises any unnecessary conflicts between team members.
What is the Main Function of Construction Management?
Construction project management is the art and science of managing, directing, controlling, coordinating and executing construction projects. It’s more than just a job; it’s an ideology.
Effective construction management requires a construction manager to understand how to complete tasks with precision and manage people and budgets effectively.
Construction managers need to plan for and anticipate any potential risks or delays during a project – known as project risk management.
Managers use project risk management to take proactive steps to prevent delays from happening later down the line. They also need to ensure the safety of workers at all times.
There are seven different functions associated with construction management.
These are:
At the end of the day, though, there are only two key factors that encompass everything.
Planning
Planning is the process of choosing how a project will be approached and completed.
It revolves around answering questions like:
The importance of effective construction management planning can be summed up by:
Scheduling
Scheduling is the process of fitting together a work plan with a timetable. The methodology considers when to do it and how long each activity will take.
Out of all the different construction management functions, scheduling is crucial as it encompasses other construction management factors like organising, staffing, directing, controlling and coordination.
Organising – entails proper allocation of work to different departments, delegating tasks to individuals, and systematically managing various operations.
Staffing – entails finding and ensuring enough skilled people to work and complete a construction project.
Directing – entails training and managing subordinates to carry out assigned tasks, supervising their work, and offering guidance. “Directing” also involves motivating teams to achieve desired results.
Controlling – ensures that the work plan is in line with project standards. It is also about identifying deviations or risks and applying appropriate corrective measures to resolve them.
Coordinating – is about managing all aspects of a construction project to ensure that each department and tasks are in perfect harmony with others. It’s about ensuring that all departments are fully aware of their role in the bigger scheme of things.
What is the difference between project management and construction management?
The main difference between project managers and construction managers is what they manage. A project manager typically has broader responsibilities than a construction manager, who may deal with the day-to-day work on a smaller scale.
For example, construction managers oversee the construction of buildings themselves, including everything from land procurement to site selection and then hiring.
In comparison to a project manager’s job, which are:
Project managers are responsible for several different tasks, including:
On the other hand, construction managers use their construction knowledge to develop proposals to provide the items needed to finish the project.
They also serve as a liaison between contractors, equipment providers, and technology companies on behalf of the customer (i.e., end-user or client).
A project manager may ask for explanations and justification of costs from the construction manager, but they don’t have any say over expenses.
Construction managers are responsible for several different tasks, including:
Why is A Risk Analysis Important?
Construction management goes hand in hand with risk assessment. And because of that, implementing a risk analysis system allows organisations to examine the potential of said risks from materialising.
Risk analysis provides stakeholders with a better understanding of whether moving forward with a decision could pose a significant problem to the project in the future.
After identifying the risks in the construction project, stakeholders can start developing strategies for mitigating them.
To prevent risks, stakeholders have to make decisions about how they want to manage them. These decisions may include deciding not to take the risk at all, cooperating with others to minimise its impact, or taking a “calculated risk” while trying to mitigate its adverse effects.
Along with helping stakeholders arrive at an informed decision of dealing with said risks, risk management can also help relieve the stress and anxiety that accompanies said decisions – especially when it comes to critical ones.
It’s essential to be thorough with your risk analysis. When looking at risks, you must know how they will impact the work environment and other people associated with the project.
What are the benefits of risk analysis in a building construction project?
Construction projects are often messy, complicated, and frankly fraught with uncertainty. In the construction of buildings, uncertainty and risk have the potential for causing significant harm.
Risk analysis is essential in a construction project as it allows stakeholders to deal with uncertainty and unexpected events, which would otherwise threaten the project’s success.
Attempting to understand and predict the outcome of a construction project is an inherently complex task. A project is never a one-person undertaking.
The success, availability of resources, or the satisfaction of everyone involved in the project can be dramatically impacted by how a project manager manages, implements and monitors a project.
Different participants with different experience and skills will often have vastly different expectations regarding implementation procedures and assessment outcomes. Therefore, this naturally creates problems and confusion even for the most experienced project managers and contractors.
Risk analysis helps key stakeholders like the project owner, contractor or developer, consultant and supplier meet their commitments with ease, ensuring a much smoother project implementation and on-time project completion.
The specific benefits of risk analysis to a building construction project are as follows.
Identification of trouble areas
Risk identification management can make it easier to identify troubled projects.
Project managers should evaluate possible risks and the plan how he/she can effectively address them before said risk materialises and spirals out of control.
Risk identification will help identify high probability/high impact risks events in the project’s initial planning stages. Assessing the trajectory of the construction effort helps evaluate changes in critical factors like new participants, funding patterns, or progress.
Analysis can also reveal the accumulation of risk, typically a warning sign that swift and decisive action needs to be taken by management before any accidents happen.
No surprises
A robust risk identification system reduces potential surprises.
Yes, there will always be unpredictable events, but it won’t be as many, and they won’t have a substantial impact.
Risk management forces the project team to focus on what might occur – prepared for when something does happen. It also allows project team members to discuss the impacts of unanticipated events early and often to create effective strategies that can protect different areas of the project.
It provides accurate project data
Project planners can only execute risk analysis if all necessary data is available.
If you’re going to evaluate risks, then you need the correct information (e.g., documents, details of schedule and budget status) in place first before conducting any analysis.
It’s easy to get tempted thinking you know the risks and challenges of your building project without any data on hand for assessment. But the fact of the matter is, asking what’s missing will help ensure that you are addressing all the issues (and those that might surface) that need your attention.
Improved communication
Implementing a construction risk management process for your building project will help improve communication between everyone involved while the project is underway.
Meaning, anyone involved in the project, regardless of rank, has full knowledge of what’s currently happening.
It can help a project stay on budget
Like what we mentioned earlier, risk management entails gathering and analysing project data.
If done correctly, this can help managers spend funds more efficiently.
It helps create a proactive management approach
Again, the data gained from risk analysis allows stakeholders to take a more proactive stance when dealing with potential risks or problems.
Rather than wait until a risk (issue) materialises, risk analysis forces stakeholders to either snip risks right off the bud or halt its growth before it significantly impacts the entire project.
What are the types of risk in construction?
Construction risks can come in the form of financial, contractual, operational, and environmental – and can be due to internal and external factors.
Identifying these risks and mitigating them will allow for more efficient, safer, and less costly building processes.
At its core, a construction project faces different levels of exposure depending on its scale (size), specialisation (type), and scope (scope).
And when it comes to handling said risks, smaller managing firms may lack resources; larger ones might have too much capacity or not enough demand.
In contrast, specialised firms often find themselves constrained by geography as well as customer base size.
Setting all of that aside, there are several common construction risks stakeholders must be aware of for the time being. These are:
With that said, prioritising each risk should be determined when planning and monitoring responses to risks.
Understanding the relative degree of importance between all risks is the best way for a project team to determine how they should react in any given situation.
Stakeholders need to precisely determine what type of risk they face to either reduce or contain them.
Removing (or containing) risks leads to decreased costs, better workmanship and more successful projects.
What is the difference between risk analysis and risk assessment?
We have already discussed what risk analysis is throughout this article, but we realised that some individuals tend to interchange risk analysis with “assessment”.
And though both may look the same at first glance, risk assessment has different factors involved. Risk analysis is only but a part of risk assessment.
Risk control measures can identify all the potential risks that could impact your ability to complete a construction project.
Risk assessment and risk response planning consists of two main components: identifying and analysing.
The first step in the process is to identify what potential risks may be out there and then analyse those specified items.
After that, risk assessments are organised into a matrix of probabilities versus consequences to decide how much resources need an allocation to mitigate their impacts.
For example: if you’re working on a construction project where one failure could cause significant damage with potentially costly results, your assessment will look like this:
Probability – Consequence (high) > Probable no damage; or ‘Low’ risk of injury to personnel, property or materials – Low impact on operational readiness and efficiency
Keeping track of everything all at once and all the time can seem impossible, especially when it comes to high profile construction projects.
Risks also evolve throughout the construction process – and so must you, or risk losing control of your initial construction timeline.
Continuously monitoring your processes can apprise you in real-time of potential risks. But this can be a very meticulous and sensitive process that seasoned professionals should handle.
And this is where we come in.
We at RMPS have been in the risk assessment industry for over a decade and have efficiently managed high profile construction projects within and outside Malaysia.
Our expert team of risk analysts and assessors are more than capable of pinpointing and resolving risks – lowering whatever impact it may have on your construction project.
Get in touch with us today, and ask us how we can help.
