Every construction project comes with significant risks, but what are they and how do they affect you, the construction project Owner?
Any uncertain event or condition which can impact the progress or completion of a project in a positive or negative way can be considered a construction risk. Managing these risks is one of an Owner’s most important functions in making any major project a success. And, you have the ultimate responsibility for identifying, analyzing, mitigating, and controlling project risks, including acceptance of the project risks, modification, or termination of the project.
The first step in risk management is recognizing the different types of risks, such as:
- Financial
- Unexpected price increases
- Poor planning
- Costly delays
- Missed savings opportunities
- Change orders
- Problem with the economy
2. Quality
- Building defects
- Design errors
- Discrepancies in the scope of work or plans and specs
- Rework
3. Legal
- Contractual disputes
- Potential litigation
- Statutory regulations
4. Environmental
- Unknown site conditions
- Inclement weather or natural disasters causing damage to the construction site
- Unexpected artifacts/objects found on site
- Health and safety hazards
5. Time
- Searching for missing documents and information
- Confusion around changes
- Inaccurate time estimates
- Information silos
- Labor shortages and productivity problems
You may believe that risks won’t affect you or your projects because you’ve hired a GC and the risks are transferred to them. Unfortunately, that isn’t entirely true. While your GC can and will manage certain risks, in the end, risks and uncertainties in your project can lead to cost overruns, schedule delays, and poor quality.
There are three major players during the construction process – the owner, design team, and contractor; managing risks should be communicated between all three. When you, the Owner, are aware of and proactively managing these risks, you can be confident that operations are streamlined, costs are on budget, and the quality of your project never suffers.
The easiest, and most fool-proof, method to mitigate these risks, is using construction project management software as a risk tracker. It
practically does the work for you.
So, how are you managing your construction risks? If you want to learn more about managing Owner risks, join us for our May 18 webinar where you’ll learn how you can protect your projects from unplanned risks by using an ongoing Risk Management Process, including the use of a Risk Register to help identify, understand and respond to threats as well as opportunities.
