Risk Management Techniques For Construction Projects

Working to understand the risks a project may endure along with the cost associated is critical in every project management plan. Understanding potential risks based on the project type, resources needed, timeline and budget still leaves gaps that creates uncertainty for actually predicating the outcome of the project. There is not a true way to predict when and where a project risk will occur but designing a plan to properly address and manage those risks will increase confidence while eliminating the element of surprise.

Indeed, Project Risk Management includes the processes of conducting risk management planning, identification, analysis, response planning, and controlling risk on a project. (PMBOK Guide - Fifth Edition, 2013).

When the manager of project carried out its work plan should take into consideration the possible risks that may occur within the project. The risk is the possibility that occurs a problem within a project and that may cause some change within the same (Heldman, 2011). It should be noted that not all risks are bad since they can be potential opportunities to make some changes that will improve the overall status of the project. In the same way a risk not taken into account in time can create one problem in the project and can completely change the final performance of the project. The project manager can take several elements to identify the risks. Some elements and documents that can be used to identify risks are: search internal risks of the project, such as resources

Risks management is an important step during the process of a project. Failing to manage a risk may result in unforeseen event happening and a project’s failure. For example, with limited budget, an unforeseen event or an accident occurs in the middle of a project and this matter has not been considered and needs a big sum of expense, then the project may be stopped because of this unexpected event. We should know it is necessary to understand how to identify risks and assumptions based on the information. After identifying risks, it is important for project managers to set contingency plans to prevent and deal with these risks when they occur. Of course, several problems may happen during considering

Risk or threat is common and found in various fields of daily life and business. This concept of risk is found in various stages of development and execution of a project. Risks in a project can mean there is a chance that the project will result in total failure, increase of project costs, and an extension in project duration which means a great deal of setbacks for the company. The process of risk management is composed of identifying, assessing, mitigating, and managing the risks of the project. It

The identification of risk normally starts before the project is initiated, and the number of risks increase as the project matures through the lifecycle. When a risk is identified, it is first assessed to ascertain the probability of occurring, the degree of impact to the schedule, scope, cost, and quality, and then prioritized. A risk’s probability of occurrence, number of categories impacted and the degree (high, medium, low) to

The project manager working with the project team and project sponsors will ensure that risks are actively

Identifying risks will involve the entire project team and will include an evaluation of all factors including the project management plan. Careful consideration to the project deliverables will be given when analyzing the risks. Analysis of possible risks have been prioritized by calculating the risk numerically from 1-10, from less likely to likely to occur and minor impact to severe impact to project success, respectively. A numerical rating is applied to the values of occurrence, outcome, and detection and then calculated to a risk priority number (RPN) to assess the risk to the project.

Project Risk Management – identifies potential risks (good and bad) that can affect the objectives of the project.

To Identify risk you need to use different techniques such brainstorming technique, assumption, SWOT analysis, cause and effect, historical records review, check lists, diagramming techniques and checklist analysis. In my work place brainstorming technique was used widely to identify the potential risks that may arise during the project life cycle. Other technique such historical records review also were used but generally brainstorming was the most favorable to me and to other team members. Brainstorming technique promoted creativity and cooperation within my project team. Having regular team brainstorming session encouraged my team members to put their creative ideas forward. This technique helped us with decision making to developing

6. Establish risk thresholds 7. Define risk communications 8. Define risk tracking process Risk Management and Project Selection Techniques Two commonly used project selection techniques are Benefit Measurement Models and Mathematical Models, i.e. (Mathematical Models used for extremely complex projects). In the workplace, Benefit Measurement Models are more often used. Some techniques in this category are: (1) Cost-benefit analysis: Which provide a net gain. Typically, the net gain is proportional to the risk level, i.e. the higher the risk, the higher the gain. (2) Weighted Scoring models: Risk of Incompletion is a factor that needs to be considered when comparing projects, using the Weighted Scoring Model for Risk Management and Project Selection to help you select a project. (3) Cash flow analysis: Takes into account the payback period, AND (4) Time Value of Money: Uses Net Present Value (NPV) and Internal Rate of Return (IRR). Generally, the higher the NPV, the better the project is. There are positive risks in every project that require knowing how to respond to them. Risk Management and Project Selection should also account for positive risks. Risk Identification Risk identification is the process of understanding what potential events might hurt or enhance a particular project. The customary origins

The Project Management Body of Knowledge (PMBOK), stated that project risk is an uncertain event or condition that, if it occurs, has positive or negative effects on at least one project objective, such as time, cost, scope, or quality (PMI 2004). PRM includes the processes concerned with conducting risk management (RM) planning, identification, analysis, responses, and monitoring and control on a project; most of these processes are updated throughout a project. According to the PMBOK RM has been designated as one of the nine PM knowledge areas (the other eight being integration, scope, time, cost, quality, human resources, communications, and procurement management). Consequently, RM is considered as an important activity of the PM process. Mining projects are subject to high risk because of their size, complexity and high cost. Unfortunately, very little research related to a particularly mining project risks have been conducted up to date. Most of the research related to mining project risks studied oil and petroleum well development projects. Del Cano and de la Cruz (2002) noted that RM becomes an integral part of project management and plays such an important role that its application goes beyond the traditional scope which normally center on the construction phase. Williams (1995) stated in his paper titled “A classified bibliography of recent research relating to project risk

Project risk is defined by PMI as 'an uncertain event or condition that, if it occurs, has a positive or negative effect on a project 's objectives '. A Risk can be virtually anything. It can be the upcoming implementation of an activity that has never been performed before and therefore the outcome or duration is very uncertain. It can be the potential loss of a key project personnel resource to another project. It can be the unknown status of funding from the customer side for an upcoming phase of the project. It can be the use of a new technology for the overall solution or for accomplishing specific tasks on the project.

Risks can be neglected by construction firms at certain times in the construction industry which can cause other issues like finance, design failure, accidents and many more. There are a number of articles which talk about the various types of risks in construction, some of the basic risks we come across in most of the projects would be risk of procurement, defective design, funding problem, accidents /safety, temporary structures and risk of unforeseen events etc.

To begin this paper, it is important to understand the meaning of project risk management and the various concepts that are involved in this knowledge area. The first part that companies should understand is the definition of the word risk. The term risk is defined as the potential of causing a negative effect on projects and cause delays. However,